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Home > Community Development > BullStreet Development > TCube’s $1.7M Investment Could Be a “Big Whale” Moment for Midlands Insurance Tech. Here’s why.

TCube’s $1.7M Investment Could Be a “Big Whale” Moment for Midlands Insurance Tech. Here’s why.

sam mcguckin sandy mcguckin tcube solutions

“One of the challenges we often have in South Carolina is we do a good job at starting companies but we see a gap in ability to scale companies,” says SC Council on Competitiveness’ Ann Marie Stieritz. Startup TCube Solutions has recently become a very welcomed exception to that rule here in the Midlands.

An Navy brat, Sam McGuckin found his home in Columbia at the precise time he entered the world of Insurance Technology. The year was 1984, he had graduated from College of Charleston and had taken his first position with Columbia-based Policy Management Systems Corporation (PMSC). From there, McGuckin would eventually be recruited to Duck Creek Technologies Senior Vice President of Client Operations by PMSC founder Larry Wilson.

bull street development tcube solutions

Construction at BullStreet. TCube Solutions will occupy 25,000SF of the First Base Building.

McGuckin’s well-rounded and extensive experience led him to understand that insurance technology applications needed to be built with the end user in mind. By utilizing local entrepreneurial networks and senior-level talent from the Midlands’ historic insurance sector, McGuckin was able to launch and grow TCube Solutions to over 100 employees in Columbia and 350 worldwide in the matter of only 3 years. Not surprisingly, the company’s announcement of expansion to the BullStreet First Base Building and $1.7 Million investment has drawn much attention in the past couple of days.

Economic development and regional leaders have been quick to weigh in on TCube’s announcement as it relates to the Midlands’ Insurance Tech cluster:

“TCube’s growth in Richland County, and its decision to invest an additional $1.7 million, is another success story that shows that Team South Carolina has developed a business environment where companies of all kinds can thrive. We’re excited to thank TCube for the commitment they have shown to our people by creating 100 new jobs, and look forward to seeing the positive impact it will have on our state.” Gov. Nikki Haley

“The City of Columbia is excited to see TCube Solutions, one of our own local insurance tech start-ups, graduate from the USC Technology Incubator into a highly-successful and innovative solutions provider. This $1.7 million investment will create 100 new jobs and will support BullStreet Commons by locating to the First Base Building. TCube’s commitment confirms that Columbia is indeed a vibrant, world-class entrepreneurial city.” –Columbia Mayor Steve Benjamin

Indeed, TCube Solution’s quick rise in a traditionally competitive market has a similar feel to the Upstate’s landing of BMW in the 1990s. For the Upstate, which has historically maintained a strong manufacturing presence, BMW’s arrival complimented and revived the traditional textile manufacturing industry. Big names like Michelin provided a major boost just ahead of the auto giant’s success, but much work had been done to nurture the industry as early as 1950. At that time the Chamber of Commerce (of both Greenville and Spartanburg) began recruiting suppliers to relocate in the region in order to serve the textile mills that currently dominated the industrial base. With the arrival of Michelin and later BMW, the textile workforce eventually adapted to automotive and engineering-based manufacturing. Similarly, the Midlands region has been recruiting and supporting insurance companies and spinoffs ever since Siebel Bruce’s (formally Siebels & Ezell) entrance into the market in 1869. As the sector grew, the demand for innovative technology has followed.

Insurance in Columbia: A History Lesson

We’ve known Columbia has held the title for “insurance center of the world” for several years now, but few people realize just how impactful the Insurance Tech sector has been for the Midlands and the state at large. According to the South Carolina Council on Competitiveness, the Insurance Tech industry boasts 1,138 companies, 28,879 total employees, a whopping $6.7 Billion economic impact and an average annual wage of $62,000. Of those employees, 14,900 reside in the Midlands. These stats date back to 2011 and have undoubtedly seen an upward tick since, as evidence by TCube Solution’s expansion announcement and a number of other wins for the region and state.

There is a strong case that most of the Midland’s current Insurance Tech enterprises, now totaling $4.9 Billion in annual sales, have roots in PMSC, established in the 1970s, and/or Computer Sciences Corporation (CSC), which acquired PMSC back in 2000. CSC eventually spun off Eagle Eye Analytics and PMSC’s Larry Wilson invested in Duck Creek Technologies. That company relocated to Columbia from Missouri after Wilson recommended the prime labor market. Likewise, according to USC/Columbia Technology Incubator Executive Director Bill Kirkland, many of the employees from the since departed NCR Corporation have gone on to form spinoffs and become regional leaders in the Insurance Tech industry. McGuckin adds, “If you’re in the insurance business, chances are you have an office in Columbia, SC.”

More recently, the region has aggressively focused public and private resources to expand the Insurance Tech cluster. New Carolina, now The South Carolina Council on Competitiveness, established Insurance Technology and Services South Carolina (iTs|SC) in 2008 as a “New Carolina cluster dedicated to promoting the Greater Columbia area’s wealth of opportunities within the insurance technology and services industry.”

TCube Expands to BullStreetIn 2010, the group’s mission was “to foster a collaborative environment where the private sector, government, and higher education work to strengthen industry competitiveness, a world class talent pool, and South Carolina’s reputation as a premier destination for insurance and technology.”

As TCube Solution’s experience seems to suggest, many of these missional elements seem to be actively at play in the current market. Bob Adams, TCube’s Director of Resource Management, stated that he’s “impressed” with how the state has launched and developed programs that have greatly benefited the insurance tech company’s business development thus far. He mentioned ReadySC, Apprenticeship Carolina, Central SC Alliance and the federal grants awarded to Midlands Technical College that have offered highly specialized training for their employees, as just a few of the resources TCube has taken advantage of. Behind the scenes, ITs|SC works directly with educational institutions to bring the type of insurance knowledge and program training to the curriculum in order to best prepare students for employment at innovative companies.

ITs|SC is also going as far as recruiting “first class” students for training and educational opportunities, then “looking for member companies to bring those students on”. In order to achieve its mission, Executive Committee Chair Maria Price notes that ITs|SC regularly collaborates with the SC Council on Competitiveness, City of Columbia, EngenuitySC and other active economic development groups to “reach the goal to bring the talent here, retain the talent, and continue to grow the industry”.

University Town with Entrepreneurial Spirit

When asked the single greatest economic development benefit to McGuckin and his team in the past three years, he answered, “The incubator has been most helpful because of the connections they’ve made for us”. He continued, “It was great, when you’re starting up your focus needs to be selling. The last thing you want to be doing is worrying about office equipment, infrastructure, Internet, desk, chairs, accounting firms, payroll providers. The more of that stuff you can hand off to the incubator the better.”

Being able to walk down the hall and talk to Bill Kirkland about current challenges was incredibly helpful to McGuckin. He was pointed towards Tom Pietras of Bauknight Pietras and Stormer, PA, who routinely spent a day a month at the incubator offering free advice. Pietras eventually became McGuckin’s full time CPA and more or less an “outsourced CFO” while TCube has focused on growth. Kirkland also connected him to Tim Bradley, President & CEO of Bradley & Associates, local marketing firms, and a number of other local services that were well equipped to cater to the startup business model.

McGuckin went as far to say that the incubator model could even be “amped up” by offering a network of services for a subscription fee. As isTCube Expands to BullStreet
important for any early stage business, “your first and only focus is building and delivering your product”.

Adams agrees. His advice to other companies is to “use every networking channel you can”. He believes there is a synergy that is derived from sharing advice and experiences, and that the incubator is going in the right direction by promoting more “cross-pollination” opportunities. He says these experiences allow companies to receive advice on proprietary issues, legal and operating support, and whatever is crucial to the team at the time.

Perhaps even more interesting is the many natural (less orchestrated) elements at play that inevitably encourage entrepreneurial success in the Midlands. Namely, access to premier higher education institutions and easy, cheap living.

McGuckin and Adams both quickly lauded the incredible talent pool at TCube’s disposal as a primary advantage for the company’s success and adaptability.

Adams finds it surprising and noteworthy that “people don’t connect the dots that we’re (Columbia) a talent pool”. At events like USC’s Startup Weekend, they’ll bring a team of ten employees to not only take advantage of the creative group exercises, but to allow those employees to network with and recruit other great individuals who are problem solvers and visionaries. Adams notes that the students who attend these events already have a mentor mindset and are prime employee candidates. He says it keeps the pipeline sharp and engaging.

McGuckin has recruited several A-list employees directly from USC undergraduate and graduate programs. As a sign of his belief in well-rounded employees, he often hires math and risk management majors to tackle the constantly evolving pipeline at TCube. He admits the company is “better served to have a math major who’s used to solving complex algebraic problems, who think logically, they’re problem solvers, they’re ok doing research. Those are the ideal guys to put in front of an insurance executive.”

As well as college students, McGuckin proudly claims, “We go find people who are incredibly experienced and under valued and under utilized [and then] we give them big job responsibilities. People thrive in a culture where it’s ok to make mistakes because if you don’t let them make mistakes they won’t take risks or try anything new. It zaps the life right out of them”.

Thus, TCube Solutions is benefiting from the talent pool that has richened after many years of insurance development and competition.

Stieritz explains, “We had a base of insurance technology companies here, an understanding of [the history] of this industry in the Midlands as well as now dedicated efforts in business incubation. [TCube] started in the USC/Columbia Technology Incubator and that has grown much more robust in I’d say the past 5 years. So the ability to surround the company with that mentorship and that support and connections has been a great attribution in addition again to our higher education institutions on various levels, from Midlands Technical College to Columbia College to USC for providing a talent base.”

Opportunity for Regional Competitiveness

Venture capitalists and technology leaders are enthusiastically examining the TCube Solutions’ expansion for signs of future regional growth. Though they are aware of the hurdles ahead in the competitive economic development environment around the US and internationally.

“In areas like NY and Austin, you can simply have a good idea and generally be successful because of the ample amount of support for new ventures. Here, entrepreneurs need a broader skill set to be successful. It’s an invisible barrier to entry that needs to be addressed,” says Patrick Rogers, Co-founder of Midlands-based Savvy Foods and internationally experienced venture capital consultant. He also adds, “motivated people will find capital”, which is certainly true of McGuckin’s proven ability to amply-utilize the resource network available in the Midlands.

TCube Expands to BullStreet

USC President Dr. Pastides; Photo by Jeff Blake

Heather Dughaish, Campus Director of The Iron Yard Columbia campus, shares that“TCube’s move to BullStreet is encouraging and one more step in building a strong tech corridor in the Midlands. In order to grow tech companies such as TCube, access to applicable talent is crucial, which is why the Iron Yard made its move to BullStreet. I believe that tighter, more reciprocal relationships between talent producers, companies and economic developers is what will take our tech scene to the next level. That is something I have strived to do as the Campus Director; with higher education institutions, nonprofits, businesses, local government, etc. We have to be willing to all work together, and not throw elbows, because in the end tech growth is going to benefit everyone.”

Charlie Banks, Co-founder and Managing Director of VentureSouth, added, “Developing a strong entrepreneurship ecosystem is a lengthy, cumbersome process that can be frustrating at times. The one thing that will almost always boost this process is a “win”. TCube Solutions’ continued growth epitomizes a “win” and it’s something we should all celebrate. Not only does this provide legitimacy to our region as a great place to start and grow a business, it will give others confidence to continue to push the innovation envelope. We congratulate TCube Solutions and look forward to seeing them continue to thrive.”

Kirkland agrees that the ability of the Midlands region to collectively market economic successes is crucial to regional competitiveness. He notes that many other neighboring regions have done an excellent job on this front, whereas the Midlands hasn’t exactly learned how to celebrate growth within the metro region despite the substantial recent accomplishments. Indeed, Midlands Anchor dedicated an entire five-part comprehensive series to regional ‘wins’ because that much space was needed for proper coverage.

On the same note, Kirkland believes collaboration between the local chambers of commerce and economic development groups will go a long way in providing the support system needed to accelerate and nurture more companies like TCube. McGuckin emphasized that many individuals and groups have been extremely helpful as development resources, but that Midlands startups would benefit from a one-stop-shop to “better understand the services that are available and how to take advantage of them.”

TCube Expands to BullStreet

Photo by Jeff Blake

Jack Beasley, Managing Director of the USC/Columbia Technology Incubator, believes that McGuckin has a special personality and expertise that aided him in making the most out the assets available. He states, “TCube saw the opportunity, nailed it, worked at it, believed in it and valued the community’s resources”. He believes it’s entrepreneurs like McGuckin who will inspire leaders to carefully examine TCube’s success story and develop from that a strong regional vision.

On January 13th, EngenuitySC and the Midlands Business Leaders Group (MBLG) released the third annual Competitiveness Report analyzing economic competitiveness in the Columbia metropolitan statistical area (MSA). MBLG, a coalition of more than 40 CEOs and executives from the regions largest employers who regularly convene and work on issues that are important to the Midlands, will be using the Competitiveness Report as a road map to catalyze action through the formation of community working groups – mapped to the five areas of competitiveness. In other words, local movers and shakers have publicly announced and committed to targeting specific areas of regional improvement and employing collaborative groups to achieve that mission.

In an area that is only beginning to recognize and harness its greatness, these are promising and important signs for our rapidly growing capital region. Indeed, Adams believes we have all of the components necessary to make this region a bustling international hub in twenty years. He reminds us, “as insurance changes we’ll have the ideas and the talent ready to know how to adapt, a very good nurturing ground for future growth.”

And as McGuckin points out, “It took a big whale like BMW to get [regional leaders] to work together to clearly articulate South Carolina’s value proposition”.

A $1.7Million dollar investment, 100 new innovative jobs and development of a new 25,000 square-foot work space might just be the big whale needed to invigorate and solidify the Midlands’ value proposition. Let’s make it happen.

 

 

A special thanks to Patrick Cloney for all of his incredible work researching these subjects and the rest of our Startup Spotlight features.

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