High-tech startup in central Pennsylvania has trouble finding employees

BYLINE: Dan Miller, The Patriot-News, Harrisburg, Pa.

Nov. 6--Joe Chiarella opens his laptop computer and goes online at Smoothe Joe's Juice & Java in Lower Allen Twp., checking to see who wants to be in on what could be the next big thing.

Chiarella has received nearly 30 resumes for a software developer job at Exploit Prevention Labs, a small high-tech startup based in the Silver Spring Twp. home of company CEO Bob Bales.

Chiarella has sought candidates for months by advertising in newspapers and on Internet job boards such as dice.com, which targets information technology workers.

The applicants are from all over, including Canada, India, Los Angeles and New York City. But Chiarella said he has been unable to attract a serious candidate from central Pennsylvania, and he's running out of time.

Midstate employers generally find it tough to attract and keep workers because of the region's low unemployment rate and the large number of state-government jobs. The challenge can be greater for small high-tech firms, which often don't have the resources to offer competitive benefits or pay.

Graduates from area colleges and universities are drawn to places that offer a certain research cachet, such as Silicon Valley in California, Boston, Atlanta and Research Triangle Park in North Carolina.

Exploit Prevention Labs, known as XPL, has co-founders who call Atlanta and San Francisco home. But at least 80 percent of the capital to start the company came from midstate investors.

XPL is a "virtual" company. It has no offices in the area, and most of the handful of midstate residents who work for XPL still have other full- or part-time jobs. They work for XPL over the Internet and communicate by cell phone, e-mail, instant messaging or webcams. They get together at places like Juice & Java, where the Wi-Fi connection is free.

People can work for XPL from anywhere in the world. But at this stage in the company's growth, it makes more sense for XPL to find a software developer from central Pennsylvania. Area labor costs are generally lower, and the company's servers and data-storage equipment are in the midstate.

Chiarella said having the software developer live elsewhere would be inconvenient, but not an insurmountable challenge. If the company hires from outside the region, the new employees won't be required to move here.

XPL was founded to produce and market software to counter the viruses that exploit weaknesses in computers and networks.

Microsoft Corp. issues patches to find and destroy new viruses as part of its normal Windows updates. But this can take weeks to months, said Chiarella, who is XPL's product manager.

XPL has developed a product called SocketShield that can protect computer users before a Microsoft fix is in place.

Bales has a solid track record. His last company, PestPatrol in Carlisle, was sold for $40 million in 2004 to Computer Associates, a national computer security company.

Before that, Bales co-founded the National Computer Security Association in Carlisle, which grew to 100 employees before moving to Washington, D.C. The company, now known as Cybertrust, has more than 2,000 employees and more than $200 million in annual revenue.

Working for Bales sounds like a good idea. But XPL doesn't offer benefits such as health insurance or a retirement plan. Some vacation time is offered. The pay is less than similar jobs in the marketplace, but with stock options.

However, XPL offers the chance to be part of something that might develop into a golden opportunity. But "you can't promise that," Chiarella said.

Chiarella had received promising resumes from several local candidates who changed their minds. One, an immigrant from Asia, had a 3-month-old baby and didn't want to change employers until his green card came through. Another had two kids in college.

Chiarella acknowledged that it's now increasingly unlikely that the software developer he hires will be from central Pennsylvania.

"I've intensified my search in Atlanta," he said. "The business has to come first, and I'll go where I have to go."

Finding such talent in the midstate might not have been as big a challenge a few years ago. In 1999, the Murata Business Center small-business incubator in Carlisle was turning away companies for lack of space. The region spawned startups such as Mapquest.com and Traffic.com that have since left and are now known everywhere.

Then came the dot-com bust. People who got burned here left for a new start, or, if they stayed, found secure jobs to support their families and buy homes. They have become "risk-averse," Chiarella said.

This isn't unique to the midstate. But Chiarella said the area has an economically conservative mind-set that doesn't always embrace "gazelle" companies like XPL.

The typical midstate startup is a retailer whose business grows slowly over time. The gazelle needs more capital investment to get going. But if it hits pay dirt, the growth can be dramatic.

"We'll invest millions before we get $1 of revenue," Chiarella said.

Many people in the midstate aren't familiar with gazelle companies and the role they play in the economy. The companies create hundreds of jobs, and when they are bought up, many people who worked for them stay and start new companies. The investors reinvest in new companies like XPL.

Yet the same conservatism that sends cutting-edge entrepreneurs packing often brings them back.

Chiarella, 43, grew up here but left to go to college in New York City. He came back for family and because he thought this would be a better place to raise children.

Another person who returned to the midstate was Treff LaPlante, the founder of Express Dynamics at Murata Business Center.

Express Dynamics develops software for businesses. It was chosen this year as one of the top five emerging small businesses in the midstate in a competition held by Capital Region Economic Development Corp.

LaPlante graduated from Central Dauphin East High School and got a degree in chemical engineering from Penn State University.

"I struggled for years" looking for opportunity here before being accepted to the master's in business administration program at Pepperdine University in California, LaPlante said. It was the late 1990s, and he embraced the West Coast technology scene. The culture was fast-paced, and people moved from job to job.

LaPlante started Express Dynamics, but said he "burned through a lot of investment money. We couldn't sustain it. It was too expensive."

He returned to the midstate in 2003 to save money and be closer to family.

LaPlante said the midstate is "a fabulous environment" for high-tech startups, only "it's not marketed and publicized that way." The help is here, but it isn't always easy to find.

Much of the help comes from organizations linked to the state Department of Community and Economic Development and Ben Franklin Technology Partners, a state-funded economic development operation.

Ben Franklin does more than provide funding, LaPlante said. It offers mentors, investors and media access. The partnership also sponsors the Transformation Business Services Network, where new companies get help with bookkeeping, human resources, hiring and firing, employment law and patent and intellectual property issues.

LaPlante also factors in Murata, which in seven years has gone from turning away startups to not finding enough.

"I am amazed with my jaw open that there are empty spaces" at Murata, LaPlante said. The center provides eligible companies with below-market rent, shared services, mentors and networking. LaPlante said Murata opened doors for him to the Central Penn Technology Council and Penn State.

LaPlante expects to rely on Penn State and other colleges and universities in the region for the young talent his company needs to grow. He said the area must build a nucleus of high-tech companies so graduates don't go elsewhere.

"As businesses like ours establish a presence, there's going to be less of a proclivity to leave because there will be recruitment," LaPlante said.

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