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Inside Fargo, America's Most Undervalued Tech Hub
Post Date: Dec 21 2015

By Fortune
Editor's Note: Congratulations to the many Fargo-area businesses mentioned in this article. Many of them have participate in ND Commerce programs such as Innovate ND, Centers of Excellence and Centers of Research Excellence, Research ND and the North Dakota Development Fund.

It gets 50 inches of snow a year and is so cold that its bikeshare moves inside for the winter. But its homegrown tech community is on fire.

The morning of Nov. 12, 2014 was well below freezing in Fargo, the largest city in North Dakota. By the time Shawn Muehler took the stage before an audience of 150, the theater, located just a few blocks west of the Red River, had warmed up. Entrepreneurs, students, professors and business leaders shuffled down the aisles with free cups of coffee. For the audience, it was time for Fargo’s 1 Million Cups, a robust startup community-building initiative from the Kaufman Foundation that’s a kind of church for entrepreneurs. For Muehler, it was time to talk about drones.

Standing on stage with one of his drones, Muehler—a Fargo native, Air Force officer, and seasoned pilot—had six minutes to present his business idea, the result of several months of white-board calculating, late-night brainstorming, and endless code tinkering. He described the collision risks found in an airspace that is increasingly crowded with aircraft and drones. The software that he and his small team of pilots, developers, and engineers wanted to build, he explained, would create a safety net for drone pilots, enabling them to track their unmanned vehicles in real time using existing cellular networks.

Muehler’s presentation was followed by vigorous applause and a round of questions. As is tradition at 1 Million Cups, the entrepreneur was asked one final query: “How can we as a community help you succeed?” And so he answered. Within five days, Muehler tells Fortune, he had five funding opportunities from people in the community. The ensuing $500,000 seed investment allowed him to double his workforce and move to a larger office downtown.

Last spring the company, now called Botlink, launched the beta version of its drone-tracking application, which it says is the world’s first commercially available drone safety and control platform. In June, Botlink announced a joint venture with Fargo’s power management company, Packet Digital, to raise $15 million on the same day that it co-hosted Fargo’s inaugural Drone Focus Conference. By this fall, the company had launched its first product: a piece of data-processing hardware that’s compatible with every drone on the market.

When I visited the Botlink office in September, the staff had just returned from a drone conference in Las Vegas where they’d run out of brochures the first day and flummoxed some West Coast startups who didn’t realize they had competitors in Fargo. Half-empty containers of drones now littered the floor around the reception desk, making the office look like the home of a robot family unpacking from a long trip. In the workshop down the hall, a plane with a 14-foot wingspan sat on a desk, and Muehler, wearing a Batman t-shirt, was one of the first to tell me what makes Fargo special.

Well before I arrived in Fargo, I’d heard about Silicon Prairie—the Heartland’s version of Silicon Valley—with noteworthy startup activity in larger cities like Omaha, Des Moines, and Kansas City. I knew Fargo was on the eastern border of the state, far from the oil activity in the Bakken region. I’d read that it’s home to the country’s third-largest Microsoft  MSFT 0.65% campus and nearly 30,000 college students. The average age of Fargo residents is 31. Its unemployment rate is among the lowest in the nation. I had already grasped enough about this city of 105,000 to easily dismiss the Siberia-esque picture painted in the 1996 Coen brothers film of the same name. I envisioned a burst of Technicolor popping from a vast expanse of plains.

The tech scene that I visited in September was markedly different from the one I had first heard about in 2013. Two years ago Emerging Prairie, a startup news and events organization, was beginning to establish itself; today it co-organizes wildly popular events such as 1 Million Cups, TEDxFargo, and a monthly gathering called Startup Drinks. Thanks to local startup Myriad Mobile, which spun out of a student-run incubator, Fargo has begun hosting the annual Midwest Mobile Summit. A nonprofit has started offering coding classes for women. Meetups have launched for hackers, gamers, developers, geeks, and even bitcoin enthusiasts.

Fargo companies are also beginning to appear in the national spotlight. Intelligent InSites, which provides tracking real-time operational intelligence for the healthcare industry, is experiencing explosive growth. So is Appareo Systems, a leader in electronic and computer products for the aerospace and defense industries. A handful of gaming companies have surfaced in the area; one is developing a virtual reality horror game and another is building a woodland survival adventure game called On My Ownfor Xbox One. A team from North Dakota State University has engineered an affordable, 3D-printed prosthetic arm. Two locals have started a funeral webcasting service. Another startup has developed an autonomous tractor.

With all of this activity, how does a place like Fargo end up as one of the most undervalued, overlooked tech communities in the United States? That’s why I wanted to meet Greg Tehven, the executive director and co-founder of Emerging Prairie and affectionately known as Fargo’s ambassador, when I visited the city this fall. On a warm Sunday afternoon, I found him at a community lunch for new Americans, set up for several hundred on a basketball court on the west side of town. Characteristic of the region, the wind blew like it was trying to prove something; strong guests sent naan cartwheeling across curry vegetables and off paper plates. Young Bhutanese girls danced barefoot on the asphalt in sequined dresses the color of Gerber daisies.

Tehven is a soft-spoken, dyed-in-the-wool millennial, a fifth-generation Fargoian who grew up on a farm and came of age during the Buffalo Commons era, when people debated a proposal to let buffalo take over the Great Plains. Tehven left Fargo for college, wandered around, felt unfulfilled and returned, determined to build the type of community he wanted to call home. Today, he travels around the country speaking about community-building and teaches social entrepreneurship in India.

“Barriers are being eliminated to contribute to the community here,” he told me. “People who have moved away know they can come back here and do things quickly.” He talked about a radically inclusive culture that has an extraordinary speed of trust. In economic terms, what’s happening in Fargo is that a magnetic downtown is attracting and retaining talent. But Tehven contends that it’s really about love.

“It’s about increasing the amount of love in our community,” he said, noting that it’s hard to be successful on your own. “There’s a co-dependence here.” He said people need each other, whether it’s for harvesting crops or recovering from a flood. If emotional support is absent, innovation will falter.

The next morning, I met Tehven at Prairie Den, a new coworking space in the center of town, above a Chinese restaurant called King House Buffet. Until this summer, it was run by Minneapolis-based CoCo, but they didn’t last a year, Tehven said, because they didn’t embrace the philosophy of giving before getting. Shortly after they left, the space was resurrected as the Den, a funky, art-filled workspace that’s home to Emerging Prairie and a couple start-ups. Hearing the story of this rebirth made me think of the new growth that quickly emerges in forests after controlled burns.

One of the reasons Emerging Prairie was created was to act as a publicity machine for locals who think it’s uncouth to celebrate one’s own achievements. The organization, which is in the process of becoming a nonprofit, now has a staff of four, including a writer, Marisa Jackels, who produces daily stories about the startup scene. She never runs out of content. Tehven has each new staff member read Startup Communities: Building an Entrepreneurial Ecosystem in Your City by Foundry Group co-founder Brad Feld.

If Fargo had to limit itself to a single story, it would be that of Great Plains Software, a fledgling startup built by North Dakotan Doug Burgum over nearly two decades and acquired by Microsoft in 2001 for $1.1 billion. Today, Microsoft is located on the south side of town and has grown to four buildings with more than 1,500 employees—the company’s third-largest campus in North America.

Burgum went on to found Kilbourne Group, a downtown redevelopment company, and co-found Arthur Ventures, a venture capital group that’s investing in software companies out of a $45 million fund raised in 2013. He’s as close to a godfather as the humble Fargo community will allow. Incidentally, it wasn’t until well after a conversation with a community leader named Joe—who started a downtown farmer’s market, worked on Uber-friendly legislation and is now building a giant mobile sauna—that I found out he was Burgum’s son.

Burgum said Great Plains employees focused on service and had a lot of humility and gratitude; he sees that today in the dozens of startups that employ Great Plains alumni. Like others, he told me that the region’s land and history play a role in today’s technology growth.

“Every farmer and rancher is an entrepreneur and tinkerer and inventor,” he said, “and there’s some of that DNA here. You wouldn’t have ended up here if you weren’t a risk-taker—moving your family from Sweden to a new land with no electricity and very little infrastructure.”

Shane Waslaski, president and CEO of Intelligent InSites, also grew up in the state and said the strong tech community in Fargo can be attributed to a pioneering spirit and an “altruistic desire to nourish each other.” Tenaciousness and perseverance are rooted in the heritage, he said.

From Prairie Den, Tehven and I walked around downtown, popping into offices and meetings unannounced and intercepting folks on Broadway and Roberts Street—as was his plan. I was reminded of the familiarity and ease with which students can have impromptu and rich conversations while walking across a college quad. Time and again, talking to Muehler and other entrepreneurs, I heard stories that made it easy to root for the underdog that is Fargo. I found a level of enthusiasm typically reserved for young political candidates offering hope and promising change. More than once, I saw someone get choked up talking about the place they call home.

We ran into Drew Spooner, a baby-faced serial entrepreneur who started the Hammock Initiative and speaks deadpan about the health benefits of swaying. He now has sponsors and a national following. Then we ran into the woman behind Unglued, a shop selling locally made crafts; and one of the brewers behind Fargo Brewing Company, which makes Wood Chipper India Pale Ale. Much of the day, Tehven, wearing jeans and flannel, walked around with a cup of coffee in his hand. He told me there’s a sense in Fargo that if you talk about something enough, it will become real—whether it’s a hammocking craze or a spontaneous tailgate party.

Among the challenges in a town with so much startup activity is making sure the entrepreneurs have enough support to get over the first-generation hump and maintain momentum even when the initial spotlight fades.

“In cities like San Francisco, Boston, New York, there’s a lot of experience and expertise,” said Miguel Danielson, another Emerging Prairie co-founder. “That’s great for entrepreneurs because it’s scary to do alone. So a lot of what we do at Emerging Prairie is try to bring these folks together.” He lovingly describes Fargo—remote, hundreds of miles from Minneapolis and Winnipeg—as a Gilligan’s Island of sorts. “You’re stuck with the folks you’ve got in the immediate vicinity, so you better be nice to them,” he said, adding that in a small place, he feels especially blessed when he finds others with common interests.

Danielson grew up in Fargo and left for college and Harvard Law School. If it weren’t for the startup culture—which is helping Midwestern communities fight brain drain–he may never have returned. After practicing in Cambridge for several years, he opened Danielson Legal in Fargo, specializing in technology law, and he created Fargo Startup House, where entrepreneurs can live for free.

In the next five years, Danielson predicts a more robust Fargo tech scene, with a few wild successes and some wild failures. When the city sees its first exit success story of this new era—someone who starts with nothing and ends up with hundreds of millions of dollars—he said that will be “one that looms in the minds of people forever.”

At the end of my day in Fargo, I returned to Prairie Den. Spooner was setting up hammocks for an evening event. An Emerging Prairie Tweet read, “We sway while we work.”

That night, I watched a video of Tehven’s TEDxFargo talk. He was speaking at the Fargo Civic Center in 2014, outside of which sits a stone slab with the Ten Commandments.

“The Coen brothers were wrong,” he told the audience. “It isn’t a place of barrenness. It isn’t a place of cold. It’s a place of the most amazing people in the world.”

The following week I had dinner back home with a friend who works in the technology industry, and I told him I thought he should move to Fargo. Yes, it’s a place that gets an average of 50 inches of snow a year, and it’s so cold that the bikeshare moves inside for the winter. But there’s a lot going on there, I told him. Shortly thereafter, I woke up from a dream in which I was on my way back to Fargo. In it, I was with someone—perhaps my tech friend—and felt a sense of urgency. Eager to find housing, I sped westward, not wanting to miss out.

Inside Fargo, America's Most Undervalued Tech Hub - Fortune.com
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