The Newsroom: Articles
No Longer Limited by Location, Rural Entrepreneurs
Unfold on Internet Small Businesses Discover They Can Deliver Anywhere
Steve Waters and Wade Griffin seem like two very unlikely entrepreneurs based in a very unlikely place - Blackshear, GA., a rural community where tobacco has taken away King Cotton's title.
Waters, 37, runs his family's Ford dealership. His earliest childhood memories involve heading to the woods to hunt. "I was raised a deer hunter and still am," he says.
Griffin, 30, grew up 9 miles away, in Waycross, a railroad town whose turn-of -the-century heyday is long past. Griffin now works as an administrator at a local community college.
Yet, from this tiny outpost, population 3,677 and falling, Waters and Griffin - partners in business and life - have started an Internet-based company producing fashion boxer shorts and briefs marketed to gay consumers.
The story of their company, TractorBoy, illustrates how the Internet is stitching together far-flung markets and helping to drive entrepreneurship in rural America.
The number of Internet-related jobs created in rural areas in recent years is unknown; such figures are difficult to track. But anecdotal evidence suggests it's happening in places where adding even a handful of jobs is significant. What's more, venture funds - which have fueled the Internet boo, -- are staying to target Net - and tech-related job creation in rural communities, where business costs are low.
Economic development experts are cautiously optimistic that there will be more such jobs as long as rural America gets access to the high-speed Internet lines common in the heart of the Net industry in Silicon Valley, New York's Silicon Alley and bigger cities in between.
Waters and Griffin designed their product, found sewing factories in other rural communities, shopped for investors, and sold more than 5,000 pairs of underwear around the world -all over the Internet.
Their company hasn't grown big enough to require employees yet. But others have. Consider.
*Waitsfield, Vt., population 1,600, and home to Small Dog Electronics, which sells Apple computer products on its Web site. Don Mayer, 52, was the sole employee when he co-founded the company in 1995. Today, he's one of 14, and expects to add one or two jobs this year. The entire operation, including warehouse and customer service, is in Waitsfield. Mayer says the company, which ships worldwide, has been profitable since the start.
*South Whitley, Ind., population 1,700. Wendy and Shep Moyle started their ShindigZ party-supply Web site 2 years ago as an online division of a 75-year-old catalog retailer, Stumps Inc. The site helped increase Stumps' 400-employee workforce by 25%. Ten staffers answer 1,000 customer e-mail messages a day. The company may add as many as 100 jobs this year.
*Harleysville, Pa., population 7,405. The Geiger Cos., a 72-year-old horticulture wholesaler, last July started an online unit, Hortnet, to reach beyond the mid-Atlantic states. That's created five jobs at the 100-worker firm. The site may break even in the next year. "In the next 2 years, we anticipate 25 to 30 new jobs resulting directly or indirectly from our Internet business, "says Chief Net Officer Matthew Soldo.
Out in the countryside
A quarter of all Americans - more than 60 million people - live in rural areas. To be sure, there are plenty of challenges to Net commerce in these out-of-the-way places, including a shortage of the lightning-fast Internet access required for e-commerce. "It's a huge barrier," says June Holley, CEO of ACEnet, a non-profit in Athens, Ohio, that's promoting technology as a job source in impoverished Appalachian Ohio.
Nearly 60% of cities with 100,000 residents or more have high-speed, digital-subscriber lines (DSL) vs. less than 5% of communities with fewer than 10,000 residents, the federal government says. A report last spring by the Agriculture Department and other agencies blamed the disparity on the cost to bring the service to sparsely populated markets. Both ShindigZ and Hortnet worked with AT&T to bring in dedicated high-speed lines, called T1's.
To encourage tech development, ACEnet (www.acenetworks.org), started its own venture capital fund, which it expects to total $3 million by next fall. And the group has developed a student entrepreneurship program that's putting computers in local high schools in an effort to build a stronger workforce.
That's to overcome another major challenge rural areas face: finding people with technical savvy to build and maintain Web sites.
Small towns offer a relaxed pace and lower cost of living - qualities that draw a limited number of candidates from the pool of young techies, who are often more interested in big-city life. Still, there are some who fit the bill. "When you (find) the people, it's not hard to recruit them," says Matt Harris, CEO of Village Ventures in Williamstown, Mass.
The firm helps form venture capital funds to invest in rural start-ups. Begun a year ago, Village Ventures and its affiliates expect to have $250 million to deploy by spring.
There are few pure technology-based jobs in Blackshear and surrounding Pierce County, Ga., about halfway between Savannah and Jacksonville, Fla., where TractorBoy is based. The Census Bureau's most current figures, from 1997, show fewer than 20 computer and data processing jobs out of 2,425 non-agricultural, non-governmental jobs countrywide.
TractorBoy, founded in 1998, solved the labor problem when Griffin, whose first introduction to the Internet was through American Online, taught himself Web design. He built the company's site, including the script used by customers to place orders.
TractorBoy is profitable, but still very much in its infancy. Having reached a growth plateau, founders Waters and Griffin are wrestling with a problem common to start-ups: finding financing, and the courage, to move their venture forward.
They run the company out of their home in their spare time. In addition to designing the site, griffin models the underwear in the online catalog. Their marketing is word of mouth.
Each pair of underwear produces a profit of about $6. The $30,000 in start-up costs came out of founders' pockets.
Waters and Griffin hadn't planned to start a business when Waters stumbled across the idea for TractorBoy's signature design - a rainbow-colored stripe circling the waistband - while surfing the Internet 5 years ago.
They hoped to capitalize on two consumer trends:
*Growth in gay-affinity merchandise, such as bumper stickers, hats, coffee mugs, and other items adorned with a rainbow, widely adopted during the past 20 years by gay men and lesbians as a symbol of community pride.
*The popularity of wearing fashion underwear with the waistband, and the designer's name, visible above the pants waistline. Think Calvin Klein or the more recently trendy 2(x)ist brands.
TractorBoy sells just two product lines: men's underwear in three styles, for $12.95 each; and $16.95 baseball caps with the company's logo, an antique tractor bearing the company's name above the words "Blackshear, Georgia." The name and old-time design are meant to evoke the community's rural character.
To expand, TractorBoy needs perhaps another $200,000 to buy office equipment, build inventory and allow our of the two founders to work on the company full-time. Waters and Griffin have approached venture capitalists, and received a few nibbles. There's been no deal, but they haven't given up.
"I still believe in it", Waters says. "I still believe there's great potential there."