For all the talk about being the Capital of Creativity, when it comes to business Richmond is more like "The Man in the Gray Flannel Suit." The city is a top-down, nuts and bolts place. Despite valiant efforts to fuel entrepreneurial spirit and push beyond tradition, corporate power remains firmly entrenched in old-style boardrooms, clubs and corner offices, supported by button-down recruiters and rafts of lawyers.
Evaluating the local economy from the bottom up, there isn't a lot to see. When it comes to new businesses, Richmond is no Silicon Valley — it's not even Charlottesville.
"Richmond is really behind the curve on money for true start-ups," says Patrick Galleher of Boxwood Capital Partners, a Richmond-based merchant bank and private equity firm.
There are signs things are starting to change. But for now, business muscle is strongest at the top of well-managed, old-line companies that seem like throwbacks to the 19th century. Their leaders control a vast array of local resources — tax revenue, brainpower, human capital, connections to lawmakers and philanthropic foundations.
Besides state government, Virginia Commonwealth University and money giant Capital One Financial, with more than 11,000 employees, there's Marlboro maker Philip Morris USA with 3,900 workers and revenue of $23.8 billion in 2011. Kevlar maker DuPont is another powerhouse, with $34 billion in revenues in 2012 and broadening the local mix of ex-pat workers from abroad. Both Philip Morris and DuPont hold many of the patents developed in the area. Dominion Resources, a powerful lobby at the General Assembly, generates electricity efficiently but not much from renewable sources. A major problem is that Richmond doesn't have a truly first-string research university.
More big business is on the way. China's Shandong Tralin plans a $2 billion state-of-the-art pulp mill in eastern Chesterfield County, which will employ 2,000 and use farm waste for raw materials instead of trees. Not far away from the plant site is a relatively new fulfillment center owned by Amazon. Together with another similar facility in Dinwiddie County, Jeff Bezos' muscular empire now employs 3,127 full-time equivalent workers locally and may someday use drones here for deliveries.
The core power mode remains very much top-down vertical, with venerable executives such as packaging giant MeadWestvaco's John A. Luke. When not in Richmond, the media-shy maven is in Washington pushing the generally anti-Obama national policies as director of the National Association of Manufacturers. Martin J. Barrington maintains the reputation of Altria, Philip Morris' parent company, for running as a finely ticking watch while working state and local chambers of commerce and helping deliver fat checks to philanthropic causes.
How long will this last? The foreseeable future, at least, but there are small signs of bubbling from the ground up.
Leading the list of new growth is Health Diagnostic Laboratory, a company spawned at the Virginia Biotechnology Research Park. Headed by Tonya Mallory, the company makes new forms of diagnostic tests. It's moved into a new 283,000-square-foot building downtown and since January has grown its work force from 823 to 909, many of them young employees, the kind city boosters like to court. The Martin Agency keeps its sharp creative edge by producing such innovations as a documentary on the 1962 Cuban Missile Crisis for the John K. Kennedy Presidential Library and Museum, winning an Emmy for the work last year.
Some of the more interesting start-ups include the self-service yogurt retailer Sweet Frog Enterprises, which was founded in 2009 and has spread to 350 stores in this country, the Dominican Republic and the United Kingdom. Derek Cha, an immigrant from South Korea, says much of the growth happened in the past two years, and the Midlothian-based company is now looking for a steadier pace.
What's helping outfits such as Sweet Frog are a few new sources of speculative money — something rather rare in conservative Richmond. The yogurt firm was helped by Galleher's Boxwood Capital Partners, which was reorganized in 2007 and tends to help young companies once they start to make money.
Another recently created outlet is New Richmond Ventures, which acts somewhat more like a traditional venture capital company and was founded by three of the area's wealthier businessmen — Jim Ukrop, Ted Chandler and Bob Mooney. "We don't create a fund and then look for companies," Ukrop says. "We find companies and then raise capital."
For example, the company examined 300 candidate firms before settling on 10. Some of the winners are Plugless, which can charge batteries wirelessly, n1Health, a concierge health provider and Knotts Creek, which uses electrochemical platforms to treat industrial waste.
Each has a distinct, society-saving aspect, says Ukrop, but there are doubts about the approach. "When I started I had friends who said you'd never raise venture capital in Richmond," he says. "But I want to help young people with ideas."
Some day, more youthful and dynamic economic change will come, but don't look for a Richmond-spawned Google or Tesla anytime soon.
- Scott Elmquist
- William H. Goodwin Jr.
1. William H. Goodwin Jr.
Chairman and President
Goodwin perhaps is the single most influential businessman in directing capital and policy. He's on boards galore, including the controversy plagued University of Virginia, and owns the showcase Jefferson Hotel. There was a flap when it was disclosed he that feted former Gov. Robert F. McDonnell, on trial for corruption, with a $23,000 stay at his golf resort, Kiawah Island in South Carolina.
2. Thomas F. Farrell
Chairman, President and Chief Executive
His latest gig is pushing a Civil War movie regarding ill-fated Virginia Military Institute cadets, but don't let his dip into Hollywood fool you. He keeps a steady hand on the utility. Coal and nuclear-heavy Dominion has taken lumps for not pushing, in fact, sometimes blocking, use of renewable energy like wind and solar. Farrell also is a major political donor and is involved in about every city project.
3. Michael Rao
Virginia Commonwealth University
Rao took some managerial lumps when he fist came to town — but that's yesterday. He's now taking a page from predecessor Eugene Trani, bulldozing away to grow a VCU whose reputation is flourishing. Besides erecting lots of dorms, he's bringing Pulitzer Prize-winners to his writing programs and building a fancy new Institute for Contemporary Art, adding value to a school strong point.
4. Martin J. Barrington
Chairman and Chief Executive
Altria Group Inc. (Philip Morris USA)
Traditional tobacco use continues to slide but Barrington remains a huge local booster, bankrolling local project after project. The venerable and renovated Landmark Theater is now the Altria Theater. Now challenges include less health-harmful electronic cigarettes. Philip Morris USA was slow to move on them, taking a wait-and-see approach on regulation. Now that there won't be much oversight, PM is playing catch-up. Rivals Reynolds American and Lorillard are in a $27 billion merger that will extend their strength in e-cigs.
5. Peter J. Bernard
Bon Secours Virginia
Bernard continues to guide the only local hospital contender in a hotly contested market against giant HCA. Bon Secours is still involved in the successful Redskins Summer Training Camp and is branching into new urgent-care, walk-in clinics. Bon Secours still is working hand-in-glove with VCU Health Systems and others to build a separate children's hospital despite opposition from the VCU Health System Authority, which controls the medical school and sees it as unnecessary and a threat.
- Scott Elmquist
- Tony Mallory
6. Tonya Mallory
President and Chief Executive
Health Diagnostic Laboratory Inc.
Mallory is the area's poster girl for the successful business executive. She grew her company, now employing in the hundreds, from a small start-up at the biotech park downtown. Besides recruiting young workers, she's developing more sophisticated products that help patients interact with doctors. Plus, she's getting a national reputation by being a keynote speaker at events put on by the U.S. Chamber of Commerce.
7. Jim Ukrop
Investor and Businessman
Former head of Ukrop's Super Markets and First Market Bank
His family name was synonymous with shopping for many Richmonders and Ukrop is still very active. He's been pushing for a baseball field at Shockoe Bottom along with a slavery museum. Never one to think old, Ukrop has teamed up with two other old boy millionaires to start one of Richmond's rare venture capital companies aimed at helping creative young people.
8. The Markel Family and Alan L. Kirshner
The ultimate niche company, the high-flying Markel has staked out a giant claim in specialty insurance. With stock having soared from the $525-a-share to the $625-a-share range during the past nine months, Markel continues to do well after buys of Alterra Capital for $3.13 billion last year. The Markels are major area philanthropists and were big supporters of former U.S. Congressman Eric Cantor who took a drastic tumble in the Republican primary election.
9. Richard Cullen
This powerhouse law and lobbying firm is everything in this politics-crazed capital. Exhibit A is the ongoing corruption case against former Gov. (and former Power Lister) Bob McDonnell and his wife. Firm partner Jerry Kilgore, a former attorney general, represents star prosecution witness Jonnie R. Williams, who gave the first couple more than $150,000 in cash, gifts and loans. Cullen has overseen such politically related endeavors for years, dating well past the days when Cullen's firm represented former Mayor Doug Wilder in his many court battles. The $110 million Gateway Plaza building rising downtown mostly will be filled by McGuireWoods.
10. Thomas J. Folliard
President and Chief Executive
One of Richmond's most innovative and admired companies received news in June that retired founder Richard L. Sharp had died of an unusually fast-acting form of Alzheimer's disease. Folliard, who now has at least 128 locations since CarMax started here in 1993, said mournfully that his company would maintain Sharp's philosophy of using high technology to keep used-car customers happy. Haggle-free pricing is a plus. The company is known for its community involvement in Boys and Girls Clubs, and, of course, Alzheimer's research.Editor's note: This version reflects a correction to the print edition, which incorrectly referenced the VCU Health System Authority.