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Selling the city to software; developers work to attract high-tech to Anchorage.

Back in September, you may remember, heads of 10 small Outside computer software companies came to Anchorage for a "fam tour" -- one of those familiarization affairs where the host expects to sell something. Fresh from high-tech hot spots like San Francisco, Boston and Seattle, these entrepreneurs came to hear Anchorage pitched as a place to set up shop for their future operations.

Paying their own way up here, the business guests met state legislators and business leaders. They heard about Alaska's advantages: bright computer graduates coming out of the university system, low taxes statewide, a strategic Pacific Rim location and grant money available from a state development agency. They took a float plane ride, saw the vast panorama of mountains and water, and discovered the great recreational opportunities in Anchorage's back yard.

When the software businessmen left town a few days later, the Anchorage Economic Development Corp. (AEDC), sponsor of the business trip, issued an optimistic press release: "Of the 10 software development companies that AEDC recently invited to Anchorage, one will move here in the next year, and six others are seriously considering some form of presence in Anchorage in the near future. The remaining three also expressed interest in relocating to Anchorage at some future time. This extremely positive and exciting response seems to support AEDC's theory that Anchorage has a future in the high-tech, high-paying software development industry."

Reality Check. But now, several months after the glow of the $10,000 familiarization trip has faded, does Anchorage still seem so appealing to these Outside computer wizards? Would they really want to move away from the Bay area, where the annual Mac Expo computer extravaganza is just minutes away? Would the giant Carrs store on Huffman Road in Anchorage be as much fun as Seattle's Pike Place Market? Would employees happy in L.A. move north with their company?

"Well, we've been thinking about Anchorage a lot," says Fred Taucher, president of Corporate Computer and one of the executives thought by AEDC to be most enthusiastic about moving to Anchorage. "But moving my entire business to Anchorage would not be profitable," he adds. "In fact, I was always thinking that I would keep my basic headquarters operation in Seattle and just move our software development operation to Anchorage. Unfortunately, some of my key people absolutely do not want to move to Anchorage."

Some of Taucher's apparent back-pedaling to the Lower 48 probably has to do with his recent frustration in dealing with what he hoped would be a burgeoning Russian market for his computer software. "I have given up on it |the Russian market~ at this time," he says. "It has not been profitable. They still don't quite know the U.S. way of doing business."

But what does the tarnished appeal of the Russian market have to do with Anchorage? Plenty, for executives like Taucher, who had viewed Anchorage's proximity to Russia as a real plus. "We still hope to eventually market to the Far East," he notes. "But |at best~ Anchorage would be strictly a branch office, not a headquarters operation. I have not completely cut |Anchorage~ out of my mind."

City boosters have long touted Anchorage as the "air crossroads of the world." At the same time, AEDC has also used Anchorage's off-the-beaten path, not-yet-spoiled allure as an advantage.

"Software developers don't necessarily have to be close to their markets or suppliers," says Scott Hawkins, AEDC president. "They can be anywhere. And sometimes of more importance to these professionals is the quality of life where they live and work." Hawkins thinks Anchorage is a strong contender when it comes to lifestyle considerations for these entrepreneurs and their future employees.

Far From Green Pastures. Being off the beaten path gives another advantage: It's harder for your employees to jump ship. A big problem for the software industry these days is retaining good employees. In places where software firms tend to congregate -- like the Bay area or Seattle -- well-established firms offer too many lures for young companies to compete with.

Anchorage's quality of life was an important issue to Smita Desai, president of International Business and Accounting Systems in Boston. Like Taucher, she was one of the most positive trip participants last fall. In fact, she already has her Alaska business license. Interested in concentrating her marketing activities in China, Hong Kong and Russia, she found Anchorage's spot on the globe important. She shares Taucher's concerns in doing business outside the United States, but for her, a move to Anchorage is still a possibility. "I still hope to relocate," she says. "I'm still looking for financing. It is attractive up there."

The possibility of money from the Alaska Science & Technology Foundation (ASTF) was one of the carrots dangled in front of the software visitors. Created by the Alaska Legislature in 1988, the agency is mandated to promote growth through -- among other areas -- nurturing Alaska's science and engineering capabilities. The foundation grants money to projects with technology, science and engineering leanings -- especially if they look promising for future jobs.

Companies like the ones invited to Anchorage last fall face the problem of finding money for the extensive research and development required in the software industry, according to AEDC project director Joe Crosson. That's one reason ASTF's grants look so attractive.

Of the 10 software companies visiting Anchorage last fall, Ventura Computer Systems seemed most likely to relocate. In fact, AEDC referred to Ventura in its October 1993 press release as " ...one that will move here next year."

"Ventura is still interested in coming up here," says Crosson, who has kept in touch with the California company's president, John DeGregorio. "They planned to come back up and look at potential sites. They are filling out grant applications for the Alaska Science and Technology Foundation. It still looks good for them coming up here."

Micro, Yes. Microsoft, No. Nobody, including the staff at AEDC, thinks Anchorage is on the cusp of a Silicon Valley economic explosion. Even if all the companies lured last fall came to Alaska, only a few individuals would arrive at Anchorage's employment doorstep from Outside. Some companies indicated that a move north would involve just the company's owner. The potential software newcomers to Anchorage are micro, and not on a scale to compete with giants like Microsoft. Presumably, they would grow and hire locally.

AEDC's Hawkins takes a long-term view. "The seed has been planted. These software companies are small. Financing is always an issue, and it's going to take time to evolve. Even if we only get one of these companies in the next year, we would be encouraged."

The Anchorage Advantage

Joe Crosson, projects director for Anchorage Economic Development Council (AEDC), says, "We're really promoting our Anchorage lifestyle. We're promoting the community itself and not the location."

In targeting companies, Crosson explains that AEDC looked for small companies in places like the East Coast and California that had high crime and taxes and whose employees would find Anchorage's quality of life a welcome relief. He says small companies were recruited to save the customs and consulting work for local business.

Crosson also emphasizes that AEDC's effort to recruit new business is ongoing, with another software group tour scheduled for the fall.

Some of the Anchorage pluses AEDC touts:

* Telecommunications system -- the largest capacity fiber optic system in the Pacific, capable of handling 85,000 calls simultaneously.

* Education and labor force -- Anchorage School District students score well above average on standardized tests, and there is a well developed university system. The labor force is young (average age 29), motivated and well-educated.

* Tax structure -- lowest tax burden in the country, with no sales or personal state income tax and below-average corporate tax.

* Living -- lowest population density of any city in the country with very low commute times.

* Culture and recreation -- Native culture, the Performing Arts Center, two museums, unlimited outdoor recreation activities in one of the world's greatest natural playgrounds.
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Title Annotation:Alaska
Author:Reid, Sean
Publication:Alaska Business Monthly
Date:Apr 1, 1993
Words:1324
Previous Article:Inside Alaska industry.
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