In Michael Jordan's heyday, it was natural for kids to want to "be like Mike."
In today's technology-fueled business world, the entrepreneur's goal is to be like Bill, or Steve, or Jeff or Jeong -- just plug in the name of your favorite techionaire.
Finding out exactly where new crops of entrepreneurs are sprouting is the mission of Cognetics Inc., David Birch's Cambridge, Mass., consulting firm. Cognetics annually measures both the concentration of successful, small start-up firms in each of the nation's states and regions, and the places where entrepreneurs are having the most success, measured by job growth.
In Cognetics' latest report on Entrepreneurial Hot Spots, the Washington metropolitan area remains near the top of the list, ranked sixth in a combined scoring system using both measures of the concentration and growth of start-up companies. Among the 50 largest metro areas nationally, only Phoenix, Salt Lake City, Atlanta, Raleigh-Durham, N.C., and Indianapolis score higher than the capital region.
More newsworthy, however, is Maryland's performance. The Baltimore metro area, including Baltimore and Anne Arundel counties, was ranked 27th, but jumped 10 places from last year's ranking. In a comparison of the 50 states, Maryland ranked sixth, ahead of Virginia (eighth), and Maryland jumped eight places ahead of the 1998 ranking.
These results are in line with other evidence that small start-up companies are finding increasing success in Maryland, from information technology and bioscience firms in the Maryland suburbs, to specialty manufacturers in and around Baltimore, to distribution companies along Maryland's Interstate corridors. The message appears to be that Maryland, despite its reputation as an older, somewhat tired economy with a tougher regulatory climate than Virginia's or that of the faster-growing Sunbelt states, has its own entrepreneurial "hot spots."
"Maryland has been outpacing the national economy for about a year and a half in job growth, led by technology companies," says Towson University economist Anirban Basu. He predicts that performance will continue.
"Many Marylanders will find that counter-intuitive," he adds. When his state's residents look at Virginia, they feel inferior, he says. No wonder. Northern Virginia has one of the top-performing economies in the nation, generating growth around a powerful cluster of private technology companies that has never existed in the Washington area until now, Basu said.
"Marylanders see that and they ask, `Why isn't that happening here?' " And the answer is that Maryland does not yet have that same concentrated critical mass of technology firms that Northern Virginia now boasts, he adds.
But when Maryland is compared with the rest of the nation rather than its Potomac neighbor, its strong points stand out more brightly. "Maryland seems solidly poised to be a major player in technology in its own right," Basu concludes.
Footnote: Cognetics' analysis attracts both clients and critics. The rankings are designed to capture the economic changes that Birch is interested in -- the growth of a relative handful of successful smaller companies that he calls gazelles -- companies that lead the way in generating innovation and job growth, he argues.
As such, Cognetics approach ignores job creation by big, older firms, a point his critics focus on. His job-growth rankings are limited to companies that were 10 years old or less in 1995. The concentration rankings are based on the number of companies started in the past 10 years that have at least five employees today as a percentage of all the firms in a state or metro area.
To get a top score, a company must produce strong job growth in both numerical and percentage terms: A company that grew from 50 workers to 70 workers, for instance, would obviously score higher than one that grew from 1,550 to 1,570, and it is these smaller firms that draw Birch's attention.
Entrepreneurial Hot Spots
The nation's best sites for small, fast-growing companies in 1999:1998 rank
2. Salt Lake City 2
3. Atlanta 4
4. Raleigh-Durham, N.C. 3
5. Indianapolis 5
29. Norfolk, Portsmouth,32
Virginia Beach, Va.
SOURCE: Cognetics Inc.