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Small towns energized by rural entrepreneurs
Milwaukee Journal Sentinel
HILBERT, Wis. — This rural hamlet of 1,089 residents and no traffic lights was a decidedly sleepy place until Todd Thiel returned and began to globalize his hometown.
After a 10-year stint as an investment banker, Thiel moved back, acquired the town's red-brick bank building — built in 1908 for the State Bank of Hilbert — and turned it into the international headquarters of his financial-services group.
As he settled in, Thiel lobbied Cingular Wireless to upgrade its local network. Before long, also at Thiel's behest, the village had rigged a wireless Internet transmitter to its bright blue water tower.
"I love where I'm from," said Thiel, chief executive officer and founder of the McKinley Reserve, an investment firm with offices around the world and $1 billion in assets under management.
Thiel, 36, is one of a new breed of entrepreneurs who gravitate toward rural venues because digital technology untethers companies from congested urban centers. If the American heartland is to survive in a global economy, it will need more like him, economists say.
"Innovation and entrepreneurship will be decisive in the economic well-being of the rural Midwest," said Sarah Low, a researcher at the Center for the Study of Rural America, an arm of the Federal Reserve Bank of Kansas City, Mo.
Competitive pressures of globalization hit rural areas harder than metropolitan regions, the center's findings show. Rural America, which often relies on one-factory towns, has a 16 percent greater concentration of low-tech industries that fare worse against global competitors, the center found, while metropolitan areas have synergies and businesses better suited for international business.
Factory farming, meanwhile, often puts small farms out of business. Census figures show that some of the nation's poorest communities are in rural America, not always in the inner cities.
"Globalization tilts the economic advantage to urban areas," Low said.
None of that deters Thiel, who grew up on a dairy farm in Hilbert, about 30 miles south of Green Bay.
Not even the rumble of freight trains outside his building annoys him.
"I'm in Mayberry," Thiel said.
Inside his office, Thiel said, the phones ring incessantly. One of his subsidiaries, Capital Partners FZ, last year launched what it calls the biggest direct U.S. investment in Dubai, which is the financial center of the United Arab Emirates: a $1 billion, 38-acre development of a riverside promenade in the heart of the city. Thiel opened an office in Dubai in 2002.
His stable of diverse businesses includes the Prophecy private equity firm that has holdings in paper-mill suppliers, manufacturers and media companies. He presides over a hedge fund called Divinity. His personal-investment portfolio includes a firm that owns and leases railroad freight cars.
From his headquarters Thiel opened offices in New York; Dallas; Irvine, Calif.; Milwaukee; southern China; and Dubai. Tommy Thompson, former Wisconsin governor, joined a year ago as a senior adviser. To staff the Milwaukee office, Thiel hired Charles Mulcahy, a lawyer with expertise in international trade and Wisconsin's current consul to Belgium.
"One minute, you're talking high finance," Thiel said. "It's like being in New York. But as soon as you step out, you get the reality that this is a refreshing place. It's clean and has good people."
Boost to town
Dennis DuPrey, Hilbert's village clerk and treasurer, said Thiel provides a welcome burst of investment in a community that once boasted three cheese factories. Today, it has only one cheese-processing plant. DuPrey points to the other buildings on Main Street that Thiel built from the ground up. Not all are occupied, but to him, they signify new life.
Thiel returned with his wife, Jane, who also grew up in Hilbert, and their young boys.
"Most people know each other here," said Marisa Thiel, a cousin who serves lunch specials at the Village Hearthstone on Main Street.
Rural entrepreneurs such as Thiel may be in short supply, but by no means is he the only one in the state.
In 1986, Judi and Terry Paul started an educational software company in central Wisconsin. Today, Renaissance Learning has offices in India, Britain and Canada and 500 employees at its headquarters in Wisconsin Rapids.
Even better known is Trek Bicycle, which, among other products, builds racers for Lance Armstrong. Trek makes bikes in Waterloo, Wis., because it's situated between the company's two founders.
Lee Munnich, a senior fellow who directs the State and Local Policy Program at the University of Minnesota, talks hopefully about the formation of "rural knowledge clusters."
The rigors of overcoming obstacles can lead to the innovative spark, Munnich said. He cites the history of the snowmobile, which was developed to deliver mail in northern Wisconsin and Minnesota.
"Innovation is survival," Munnich said.
One key, Thiel said, is to make sure that rural towns are sufficiently wired. Hilbert, it turns out, lies on the intersection of high-speed, fiber-optic cables that cross the state.
That was just the start. Until Thiel began pressing for mobile phone service, Hilbert was a "dead area" without reliable cellular service, DuPrey said. Thiel lobbied Cingular to expand its wireless network to Hilbert.
DuPrey said a cell tower is scheduled for construction.
Thiel earned a bachelor's from St. Norbert College before earning a master's in business administration from Marquette University. He learned the investment-banking trade from 1991 to 2001 at Salomon Smith Barney in New York and Milwaukee before making his way home to Hilbert.
"I'm shocked most people aren't doing what I'm doing," he said.
Copyright © 2006 The Seattle Times Company