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Tech Startups Say Iowa Offers Perfect Environment

University of Iowa students Fredrick Galoso and Stephen Ausman knew they wanted to start their own business, and when they couldn’t find a web hosting service they thought would be useful to support their new venture, they decided to build their own.

That was two years ago.

Today, that idea has become their business venture—and a profitable one at that. Their highest-traffic customer has had more than 48 million individual page views since last May, Galoso said.

In the end, the two created Stackd, a collaborative web hosting service that is tailored to offer customers the capacity they need and tools and infrastructure that make the program manageable for even the most novice web page designers, Galoso said.

"We were marrying the best of both and made the administration far simpler than it ever used to be," Ausman said.

Ausman, Galoso, and other local business people say that despite what some may think, Iowa City, and the state in general, provide a good atmosphere and resources for those starting their own businesses, especially tech companies.

"I think there’s an entrepreneurial spirit that is increasing in Iowa, especially with a lot of these web-based and software-based companies because you don't have to live out in San Francisco or New York to start one of these companies. It's all Internet-based and you can do that very easily from anywhere," said Ross Johnson, a recent UI graduate who now works at the university and runs Mazira LLC with his sister, Amanda, and two others from the university.

The company offers web-based storage software that allows people to save items on a timeline, making them easier to locate later, said Johnson, 23.

Galoso said he and Ausman have been able to tap some of the top tech minds in Iowa for ideas and advice for Stackd, something Galoso said would probably be unthinkable in larger cities.

"If you go to Chicago or New York City to an event, people aren't accessible in the same way they are here," he said. "I can go to a code meet-up here and they are more than willing to talk with you. We all watch out for each other."

Rich Lineback did the Silicon Valley thing for 18 years after college and was a part of several successful companies before he moved back to Iowa in 1998.

He worked for Pearson for several years before joining another local start-up.

Now Lineback is the president at Cyber-Anatomy, a company that offers virtual training software.

"For my personality, working at a larger company isn't really my specialty," he said.

Lineback, 52, said that perhaps one of the biggest drawbacks for Iowans is their hesitance to move forward with good entrepreneurial ideas.

"That comes with seasoning," he said. "Having been at other companies here, we talk about that strong Midwestern work ethic. I think there's an equal reluctance about start-up opportunities and jumping off into the unknown. It sort of runs counter to Midwestern principles to some degree."

When Cyber-Anatomy was founded about six years ago, it offered virtual cadavers to aid in the training of medical students. The virtual human model includes every bone, nerve, and ligament, which can be dissected and labeled. Today, the company also offers Cyber Physiology and Cyber Science 3D, which include virtual models and simulations in everything from astronomy and botany to chemistry, microbiology and paleontology.

While Cyber-Anatomy and Cyber Physiology are targeted more to medical and professional schools, Cyber Science 3D is designed for K-12 schools. The company's software is used in more than 500 schools, including Harvard, Stanford, and Cornell, Lineback said. Now the company is looking to expand its reach into elementary and high schools by reaching out directly to states to adopt the software for all their school districts.

They're currently in the process of developing an iPad app that will feature many of the same virtual models, Lineback said.

Cyber-Anatomy has seen strong growth since it was founded in 2007, and Lineback said that success was possible in large part due to support from the Iowa City Area Development Group and the Iowa Department of Economic Development.

"There are support mechanisms here for small business," he said. "I think if you can't succeed with a small business here, it's more likely you don't have good strategy than you don't have adequate support. It's a pretty positive environment."

Editor's Note: Mazira is a BELL startup and has won seed grants in five JPEC business plan competitions between 2011-2012. Fredrick Galoso and Stephen Ausman competed in JPEC’s Fall 2011 Rose Francis Elevator Pitch.

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