Rural economies, seeded with connectivity, are bridging the digital divide and growing a local crop of tech-based business.
The aha moment, according to Shawn Irvine, struck during an ag-tech meetup in Indy Commons.
A storefront coworking space in downtown Independence, Indy Commons regularly hosts after-hours get-togethers like this. Representatives from government, tech associations and business gather with locals to network, chitchat and hope for the creative collision that sparks the next big idea. That night’s cross-section of stakeholders included the governor’s regional solutions coordinator, a representative from the state’s Department of Agriculture, someone from Intel, a few local growers and people from City Hall, including Irvine, Independence’s economic development director.
The group mused about the possibility of a mechanical strawberry harvester. Long considered the holy grail of ag automation, a machine that could pick delicate fruit without damaging it would disrupt agriculture, revolutionize harvesting and make a whole lot of money.
Irvine recalls what happened next.
“One of the farmers banged his fist on the table and said, ‘Forget about harvesting, what about the food-safety paperwork? It takes so damn long to complete, half the time the crops rot in the field!’”
“Everyone got quiet,” according to Irvine. “We knew that should be a solvable problem.”
It was. Well, at least part of it was. Intel introduced their Connected Logistics Platform in December 2018 after testing the system’s low-cost sensors in the blueberry fields of Independence. The sensors detect location, condition and handling of sensitive, high-value goods, like computer chips or biopharma products or delicate blueberries, and sends the information back to shippers in real time.
The Connected Logistics Platform creates a transparent supply chain that simplifies logistics and reduces loss. The rest of the solution, a distributed ledger that uses blockchain technology to digitize and certify food-safety paperwork, remains unfinished. And the farmer’s pain point continues.
Still, the small city of Independence, population 8,600, tucked away in Polk County about a 15-minute drive from Salem, was the inspiration and test bed for this product and many others. With MINET, its city-owned high-speed broadband, as well as forward-thinking city government, proximity to two state universities and a handful of local entrepreneurs, Independence has emerged as a poster child for rural technical innovation.
But can the model be replicated across the state and the country?
It’s an example that’s sorely needed. The U.S.’s rural areas were hit hard by the Great Recession and continue to suffer while cities prosper. The story holds true in Oregon, where the state’s median rural-county economy finally clawed its way back to recovering 80% of the jobs that existed pre-Great Recession. In contrast, Portland and other urban areas have been at historic highs for years, according to the Oregon Office of Economic Analysis.
Matt Dunne, founder and executive director of the Center on Rural Innovation, calls that lag “the greatest opportunity gap in our country’s history.” A former Google executive who helped bring data centers to rural locations, Dunne believes that fostering digital-economy ecosystems will bring a much-needed rural economic revival. “Solving big problems with a laptop, good connectivity and collaboration has always been the promise of the internet,” he says.
Good connectivity: That’s both the key and the challenge. A 2016 Rural Broadband Strategy report found that only 55% of Oregonians living in rural areas have broadband access compared to 94% of urban dwellers. The biggest barrier to high-speed rural connectivity is cost — $70,000 per mile of installed fiber — according to Nick Green, city manager of John Day in Grant County, and not enough people on that mile for private business to recoup the investment.
“We were seeking forward-thinking rural communities that are looking to digital-economy ecosystems as a pathway forward. Independence fits the sweet spot of broadband availability, partnerships with two colleges and downtown assets.”
Matt Dunne, founder and executive director of the Center on Rural Innovation
Back in 2007, leaders in Independence knew the internet was the future. In the middle of a bigger vision to refashion Independence into a vibrant, full-service rural community, the city had already built a lot of momentum. They restored their historic downtown, transforming empty storefronts into a charming destination. The widened sidewalks and added streetlights attracted art galleries, restaurants and a bakery. They built parks along the Willamette River and constructed an amphitheater.
With a reason to visit downtown, high-speed internet was the next step in attracting entrepreneurs to town. Instead of waiting the estimated 15 to 20 years for a private provider to roll out service, Independence partnered with neighboring Monmouth and created MINET at an initial cost of about $28 million.
The fiber network landed a big fish right away. Eugene-based FCR, a provider of outsourced live-agent call centers, opened a facility in 2016, bringing 200 tech-enabled jobs with capacity for 100 more. A win for the city for sure, but not quite the “smart rural community” city leaders were envisioning.
However, the combination was enough to attract Kate Schwarzler, owner of Indy Commons, to Main Street. With a consulting business in Denver, the Oregon native came to Independence to visit her parents, who had relocated from Alsea, a tiny logging town, a decade earlier. “I was impressed with what the city had in place and their road map for moving forward,” she says.
Shawn Irvine and Kate Schwarzler in Indy Commons. Photo: Jason E. Kaplan
Schwarzler opened the coworking spot two years ago. At first uptake was slow. “People didn’t know what coworking was. They thought I invented it,” she says. Today the 12-desk space houses a mix of remote workers, small businesses and three government entities. It’s grown into a hub of entrepreneurship, networking and a place to host those project-generating meetups.
Indy Commons also played a vital role in Independence taking part in the Rural Innovation Initiative. Beating out 130 communities, Independence joined a nine-city cohort receiving technical assistance from the Center on Rural Innovation. Together the nine are sprinting toward a goal: entering the Regional Innovation Strategies Grant Competition. The grant helps communities seed, build and scale high-tech, job-generating business.
It’s a big advantage for a small town with limited resources.
“We were seeking forward-thinking rural communities that are looking to digital-economy ecosystems as a pathway forward,” says Dunne. “Independence fits the sweet spot of broadband availability, partnerships with two colleges and downtown assets.”
Whether they win the grant or not, Independence looks poised for success. “For a city of its size, it is shocking how much is done there and how well-known they are as an ag-tech incubator,” says Mike Reich, CEO, Seabourne Consulting.
Reich had his own aha moment in Independence. He created Sensamo, a cloud-based platform that allows tech-enabled irrigation and weather systems to talk to each other, after speaking to a grower during an Indy Commons ag-tech meetup.
Ironically, he based the company in Portland.
“We’re really looking for someone to build a company here,” says Irvine. (Sensamo is no longer active due to a lack of federal funding, according to Seabourne.)
There are plenty of other projects in the works. A local couple started a drone company. The Oregon State University Extension program is working on a pilot to create a microclimate computer model for the wine-growing industry. Success, according to Irvine, is close. He’s helping create a pipeline of local tech talent, from the high school, from OSU and from neighboring Western Oregon University, that stays in Independence, engages with the city and finds or — even better — creates opportunity.
Other rural communities are harnessing broadband connectivity to boost their business — with varying success.
Jacob Valentine, owner of Darkside Shearing, is leveraging tech to create his own opportunities. A fifth-generation sheep shearer from Crabtree, a 10-minute drive east of Albany, Valentine shears live on Facebook while members of a closed group, Darkside Live, bid on the fleeces. Most of the 800 members are hobbyists who spin or felt the fleeces for their own projects. They enjoy the community, connection and access to a product with guaranteed quality.
It’s an issue in a sector where buyers have to rely on a seller’s integrity and hope that their pictures and descriptions match the product. “Shearing live creates transparency,” according to Valentine, who brings a crew of shearers and a wool classer to his real-time events. “Buyers know exactly what they’re getting and how the animal was treated.”
Jacob Valentine of Darkside Shearing, left, and associate Zane Van Horsen, right. Photo: Jason E. Kaplan
This model allows Valentine to sell fleeces at between $20 and $50 a pound. It’s great business for him and a good deal for his wool producers. He pays them between $2 and $2.50 a pound, a much better deal than the 70 cents a pound a wholesaler would pay.
Yet connectivity still dogs his business model. If a rancher has a bad connection, he advises them to get a Wi-Fi booster or transport the animals to his farm. Even with these fixes, he offers a weeklong silent auction on some fleeces because “not everybody has great internet.”
Valentine’s business is small scale, but in a rural economy, a few small successes can add up to impactful change. “It doesn’t take much to tip the scales,” says Skip Newberry, president and CEO, Technology Association of Oregon, pointing to organizations actively looking for test beds. The secret sauce, he says, is finding “a community with the right people in place, who are willing to take some risks and have the political cover to conduct a pilot.”
View Jason E. Kaplan’s Photo Essay: On the Job with Darkside Shearing here.
It appears that tiny Maupin, population 430, in Wasco County, found their secret sauce. City officials just unveiled their 1-gigabit-per-second high-speed internet. The $2 million project took three years and financing from seven partners to roll out.
The state of Oregon was their biggest financial booster, investing more than $935,000 in the project. QLife Network, an intergovernmental agency, helped facilitate the project. Private partners Gorge.net, Google, the Columbia Gorge Health Council and LS Networks,a Portland telecommunications service provider, pitched in financially.
LS Networks also designed and installed the network. For a small community, these partnerships are key. “Locally owned, rural internet-service providers are less concerned about returning profits to shareholders and more concerned about building long-term relationships with communities,” says Byron Cantrall, CEO of LS Networks. “Smaller rural providers are in it for the long haul.”
Like Independence, Maupin hopes to leverage the local agricultural economy to develop a drone-testing site, specialty-crop startups and value-added agricultural facilities. Also, like Independence, the city is investing in improving downtown, adding pedestrian walkways and a new 3,000-square-foot library as part of a 6,000-square-foot civic center.
Economic success, according to Mayor Lynn Ewing, wouldn’t take much. Enticing a few telecommuters to relocate and bring a job with them when they come would be ideal. “A big win would be attracting one or two small businesses that would each employ between five and 10 people and offer family-wage jobs,” he says via email.
Maupin Mayor Lynn Ewing
Michael Jones, director of research at San Francisco-based Salesforce, is halfway there. He and his wife are moving from Portland to Maupin, where he will work remotely most of the time. “I absolutely rely on high-speed internet to do my job,” he says in a press release. “But when I’m not working, I want to spend time getting to know my neighbors and being on the river.” Jones is confident that more telecommuters and tech companies will follow him to Maupin.
Bringing connectivity is a hot topic on both the federal and state level. The Senate Agriculture and Rural Development Appropriations Subcommittee secured $1.15 billion for deployment through the U.S. Department of Agriculture. Help is also coming on the state level with last year’s creation of the Oregon Broadband Office. The office will serve as a policy and planning hub and manage state funds earmarked for rural broadband expansion.
Yet for all of the forward motion, bringing broadband to the rest of rural Oregon remains a “hard nut to crack,” according to John Day’s Nick Green. Green points to those USDA grants like Community Connect and ReConnect that define rural as five people per square mile. Grant County is a frontier community, a subset of rural, with 1.6 people per square mile.
RELATED STORY: Desert Prospector
“Broadband costs the same, $70,000 per mile, for us as a rural community, with 20% less opportunity to recoup the investment,” he says.
Sen. Jeff Merkley has pushed back, querying the USDA about ReConnect’s design and limitations. “Access to high-speed internet, especially for rural communities, is crucial in connecting our constituents to the wealth of information and resources that remains critically underutilized in these areas,” he says in a press release.
If the federal scoring changes, it will still take “three to five years to bring broadband to John Day,” says Green. Without it, he estimates it will take a decade — or longer.
John Day City Manager Nick Green. Photo: Kim Moore
Green is moving forward with other improvements to John Day, including a new wastewater treatment plant, improvements to the John Day River, and the creation of an innovation gateway with greenhouses, gardens and a place for agriculture research. John Day also offers an aggressive 7% cash-back incentive on any new home built in the city. So far three new homes have taken advantage of the program, a win considering only three homes total were built over the past 10 years.
But without connectivity, John Day will never attract the active retirees and digital commuters vital to a resurgence. Without connectivity, Green fears the city’s economy will continue to decline and disparity will grow. “That’s bad for business and bad for the state. We’re part of Oregon’s heritage; we can’t afford to lose this part of the state’s identity.”
Technological advances may change the calculation. The Technology Association of Oregon’s Newberry points to Microsoft’s Airband Inititive, which seeks to wirelessly deliver service by deploying broadband through the vacant spectrum or white spaces between broadcast television channels. The Boston Consulting Group suggests that this approach can reduce initial capital and operating costs by roughly 80%. The FCC seems ready to approve the idea, and the National Association of Broadcasters appears to be somewhat onboard as well.
“Access to high-speed internet, especially for rural communities, is crucial in connecting our constituents to the wealth of information and resources that remains critically underutilized in these areas.”
Sen. Jeff Merkley
There’s no doubt that better connectivity will diversify rural economies and make them more resilient. These communities have long bemoaned that their biggest export is their kids. Faster internet will help stem that brain drain, attract newcomers and grow their tax base.
Of course, too much success comes with its own issues. Bend is now the fourth fastest-growing city in the nation according to the U.S. Census Bureau. Much of the growth is fueled by tech workers outpriced in Silicon Valley and willing to telecommute, fly their private plane or make the 10-hour drive to Mountain View. The majority of Bend residents — 58% — don’t like it, according to a study by the Bend Chamber of Commerce and DHM Research.
It’s a scenario that’s crossed Independence’s Irvine’s mind more than once. He knows his city is too well located not to grow; his goal is to steer that growth. “If in 10 years our median income is high, I don’t want it to be because we imported a bunch of rich tech people,” he says. “I want to create an ecosystem of expertise and feed our people into it.”
To subscribe to Oregon Business, click here.