Return of the Rocky Mountain high

Towns in the Mountain West, once held back by their isolated geography, are luring a new generation because of their scenic beauty. The hub of the 'Green Coast' movement: Bozeman, Montana.

Cover Story

Greg Gianforte, a charismatic man with a goatee who resembles Mr. Clean, is known for passionately stalking opportunity in the West – both in the boardroom and in the woods. He tells the story of once rising before dawn during hunting season, suiting up in camouflage, and disappearing into the rugged foothills around this small Montana city.

After shooting a black bear with a bow and arrow, he hurried home to put on jeans and a starched shirt, and headed into the office just in time for a 10 a.m. conference call with clients on the other side of the world. They, of course, had no idea what he had done that morning before work.

Yet the chance to get in some early morning hunting is a prime reason Mr. Gianforte, the founder and former chief executive officer of RightNow Technologies, a customer-service software firm, moved to Bozeman to begin with. After selling a different high-tech company in Silicon Valley in the mid-1990s, he and his wife settled here intending to retire as 30-somethings. But the restless entrepreneur soon came up with another idea for a start-up firm.

Venture capitalists in California told him he would never be able to make it work in such an isolated area, one closer to geysers than sales markets and software engineers. Undeterred, in 1997, he converted a guest bedroom into an office and put up $50,000. In 2011 he sold RightNow to Oracle for $1.5 billion. It had become the largest private employer in Montana, with 550 workers, and has inspired numerous spinoffs.

"The Internet removed geography as a significant obstacle that formerly prevented out-of-the-way places from being active players in the New Economy," says Gianforte. "I think this is the future."

Gianforte's successful venture, and his passion for the outdoors, helps explain why the Mountain West is now one of the most robust regions in the United States. Drawn by the area's natural amenities, a new generation of entrepreneurs and professional service providers, many of them well educated, is moving into towns like Bozeman and other scenic communities across the West.

From Kalispell, Mont., near the Canadian border, down the spine of the Rockies to places like Durango, Colo., and Taos, N.M., and over to Flagstaff, Ariz., they are adding an entrepreneurial dynamism to the region, a phenomenon first identified by analysts with the Federal Reserve banks of Kansas City and Minneapolis who track economic barometers.

These software engineers, biotech researchers, medical specialists, outdoor-gear manufacturers, and day traders are being joined by a wave of retirees who want to take advantage of the outdoor lifestyle and relatively inexpensive living costs. Together, economists say, they helped the Mountain West enter the recession later than other parts of the US and come out of it sooner. Now the region leads in population and job growth.

While the boom in energy production – coal in Wyoming and oil and gas in the Bakken formation of eastern Montana and the Dakotas – gets most of the attention, experts say the New Economy growth, rooted in the region's scenic wonders, is one of the most important forces shaping the West. Call it the rise of the "Green Coast."

"The notion used to be that if you weren't mining the landscape of its ore, or cutting down the forest for its trees, or covering the range with cattle, you were doing something wrong and your economy would stagnate," says Ray Rasker, the cofounder of Headwaters Economics, a think tank in Bozeman that analyzes socioeconomic-environmental trends. "But Bozeman and a handful of other communities in the West have evolved beyond that frontier mind-set. They're thriving not in spite of being surrounded by protected public lands and putting certain kinds of development off limits, but because of it."

A recent study by the Manhattan Institute for Policy Research, a New York-based think tank, identified four economic provinces that it believes will shape America's economic revival. One is the "third coast," an area stretching from Texas to Tampa, Fla., along the Gulf of Mexico. Another is the manufacturing belt of the Southeast – extending from Alabama through Tennessee and the Carolinas – and a third is the Great Plains, from the Dakotas down through Oklahoma and Texas, where oil and natural-gas development is indeed helping spur a renaissance.

But the study identified the Intermountain West as having the highest rate of job growth over the past 10 years – 14.7 percent, more than three times the national average. The region's population climbed 20 percent. Its major urban hubs are Provo-Salt Lake City along the Wasatch Mountains of Utah; Colorado Springs-Denver-Boulder-Fort Collins along the Front Range of the Colorado Rockies; Spokane, Wash.; and Boise, Idaho.

"At some point, the Intermountain West could well become a true rival of Silicon Valley, as more trained workers and entrepreneurs flock to the area," writes Joel Kotkin, author of the Manhattan Institute study "America's Growth Corridors: The Key to National Revival."

No one is suggesting that quaint Bozeman will become the next Santa Clara, Calif. It's considered a generation behind the evolution, even, of Boulder. But many do believe it epitomizes the emergence of the Green Coast economy – and could be a model for other rural communities across the West.

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Mr. Rasker likes to speak of the ironic din. Every day in the dark early hours before dawn, he's awakened by the clatter of coal trains, some of them more than 100 cars long, passing through Bozeman.

The railroad traffic has become a resurrected symbol of wealth creation in this corner of the West. With metronome regularity, vast amounts of coal, mined in huge open pits on the high plains of Wyoming, whisk through town bound for port cities in the Pacific Northwest and ultimately power plants in Asia. The number is expected to increase threefold as the US moves to export the carbon-rich fuel.

To Rasker, an economist, the sight of the cavalcade is poignant, especially in Bozeman, which he considers a rapidly emerging hub of the green-amenity economy, casting its lot in many ways as a counterpoint to the traditional resource-extraction economy of the American West. In places like this, he believes forest groves are more valuable as scenery than they are in the lumberyard.

Such declarations are considered heresy – interpreted as a flat-out rejection of traditional cultural identity and much of the politics of the region. But Rasker, who migrated here himself for the lifestyle and who has the lean frame of someone who has spent hundreds of hours on the seat of a mountain bike, marshals a wide variety of statistics to show that quality-of-life issues matter in today's microeconomies.

According to a recent Headwaters Economics study, prepared with Stanford University, Western rural counties with more than 30 percent of their land safeguarded as national parks, federal wilderness, or national forests collectively increased job creation by 345 percent over the past 40 years. By comparison, similar counties in the West with little or no protected federal lands increased employment by 83 percent.

Rasker estimates that 95 percent of the net new jobs in the region are professional service positions. These are not low-paying hamburger flippers in fast-food restaurants or ski bums operating chairlifts. They are software sultans, accountants, architects, lawyers, and "Internet cowboys" riding bandwidth in search of their fortunes.

Some of the new arrivals can be found in nondescript offices in Bozeman, near the intersection of Technology Boulevard, Analysis Drive, and Research Drive (yes, these are actual street names, which exist in contrast to older lanes around the city named after 19th-century pioneers).

Zoot Enterprises makes software that helps companies expedite credit-card approval when consumers make purchases. The firm is located, enviably, near the banks of the Gallatin River, the blue-ribbon trout stream featured in the Robert Redford movie "A River Runs Through It." In another building, the upstart firm Schedulicity produces virtual secretaries – online appointment calendars that help people organize their schedule.

Nearby, on the campus of Montana State University, one professor, a lifestyle migrant from South Africa, is pioneering aspects of nanotechnology for use in artificial intelligence, medicine, and information storage. Like colleges in many cities with high-tech corridors, MSU is helping spur commerce. Its faculty pulled in more than $100 million in research grants and contracts just last year.

Similarly, TechLink, an offshoot of the university, works with companies trying to develop products based on intellectual capital and patents invented by federal agencies such as the Pentagon. Between 2000 and 2011, TechLink's director, Will Swearingen, says it helped facilitate the transfer of Defense Department technology nationwide that, he estimates, had a total economic impact of $3 billion, supporting 17,800 jobs – 1,700 of them in Montana.

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Nor are high-tech companies the only new arrivals drawn to the West by its lifestyle and sylvan scenery. In May, rock climber Peter Metcalf, president and CEO of Black Diamond Equipment, a Salt Lake City-based purveyor of mountain-climbing gear, spoke at a conference in Jackson Hole, Wyo., sponsored by a confederation of Green Coast businesses.

Mr. Metcalf noted how the outdoor-gear industry is ascending as a 21st-century force in the New Economy. Destinations that have natural amenities are enjoying the fruits, he says, of an industry that contributes $650 billion annually to the US economy – $110 billion in the West. When politicians in Utah called for opening more of their state wildlands to energy development, the Outdoor Industries Association, which represents thousands of companies, said it would pull its annual convention out of Salt Lake in protest. The conclave annually pumps millions into the local economy and has helped bring green commerce to the state. Ultimately, the politicians backed down.

K.C. Walsh is a member of the booming outdoor-recreation industry and a political conservative in the mode of Theodore Roosevelt – in other words, a green conservative. He was a senior manager with a Big Eight accounting firm in Los Angeles, and became so enthralled with trout fishing that he bought a Bozeman-based company, Simms, that makes premium waders. He calls Bozeman "the fly-fishing capital of the Western world."

Though he settled here two decades ago, Mr. Walsh continues to expand the firm's operations. Last year he added 15,000 square feet to a manufacturing facility west of town, where workers now turn out the only waders made in America. It employs 120 people.

As the new entrepreneurs arrive with their REI wardrobes and collapsible hiking poles, so does new money to fund some of their ideas – the kind of start-up capital that Gianforte's friends in Silicon Valley told him couldn't be raised in the provincial West. Rob Irizarry stares out his office window at the rumpled Bridger Mountains. A former RightNow employee, Mr. Irizarry runs StartupBozeman, a nexus for entrepreneurs and venture capitalists. He and some colleagues recently launched a new company with the equivalent of pocket change: They used 11,000 hours of advanced computing capability provided by Amazon for $1,300.

"That's crazy cheap," he says. "A few years ago, we would have been looking at having to raise half a million dollars."

Irizarry, like many others, wouldn't be in Bozeman, if it were just about seed money and prosaic cowboy capitalism. "When I or my colleagues are working on a business challenge and need to clear our minds, we head to the ski slopes for a powder day or jump on a mountain bike and, within a few minutes, we can be on a trail where we may encounter only a handful of people," he says.

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In 2011, a Congressional hearing was held in Washington on the value of protected lands in the West. Rasker went to Capitol Hill to deliver his findings, and he squared off against Jerry Taylor, mayor of tiny Escalante, Utah, a town that has long been a symbol of anti-environmental sentiment in the West.

Some 15 years earlier, President Clinton created by executive order the Grand Staircase-Escalante National Monument, which protects 1.9 million acres of spectacular red rock canyons surrounding the community. Essentially, it barred coal mining, fossil fuel drilling, and other kinds of resource extraction, leaving many locals enraged.

Mr. Taylor testified that the prosperity mentioned by Rasker never materialized in his community. But when Taylor returned home he caught flack from some constituents who had started businesses catering to growing numbers of tourists and backcountry adventurers. Today, two years later, Taylor, when reached by phone, is less strident and would welcome the kind of job creation and inward flow of lifestyle pilgrims. Ironically, perhaps, he notes that several young people from Escalante left town to find jobs as roughnecks in the energy fields of Wyoming and North Dakota.

"This is a beautiful place, and I understand why they [the Clinton administration] made it into a monument. But as far as jobs go, our numbers are down. I wish we had jobs that could bring those young men home," says Taylor. "The state of the economy is really a touchy topic. We're having to depend upon tourism to get us through where we need to be."

Talk of the "amenity economy" is met with incredulity by many traditional Westerners. Jonathan Schechter, a demographer who makes his living analyzing the West, is known in the Rockies for coining a maxim: "Economies change faster than perceptions, perceptions change faster than politics, and politics change faster than laws."

No one is claiming that traditional resource extraction isn't or hasn't been significant, but, according to Green Economy denizens like Rasker and Mr. Schechter, it's all a matter of perspective. If measured as a percentage of overall jobs being created, then the extraction industry ceased to be dominant long ago.

Just as technology has transformed the timber, auto, coal, manufacturing, and steel industries, supporting huge outputs with only a fraction of the human labor it needed in the past, so, too, says Schechter, has it changed the energy sector. The paradox is that even as higher profits, measured in the billions of dollars, are being generated, it takes fewer workers to get the raw materials out of the ground.

The tension between the New and Old Economies undergirds almost every preservation and public land-use issue in the West. At the core of the dispute is how much industries in each contribute to the region's overall growth, and everyone has his own point of view.

A prevailing perception is that the massive Bakken field, the poster child for America's newfound energy boom, is a juggernaut of profit. North Dakota, thanks to the twin gushers of oil and gas, now has a budget surplus of more than $1.6 billion. Skilled and unskilled roughnecks are pulling down high five-figure salaries. And the grandchildren of 19th-century European immigrants who were sodbusters have become millionaires overnight leasing their land to energy companies.

But consider this: Williston, N.D., regarded as the capital of energy development in the Bakken, has more than doubled in size, to a population of 36,000, notes Chris Mehl, who also works at Headwaters Economics and is a Bozeman city commissioner.

"Yes, for a small town and one of the least populous states in America, that's impressive, but it creates a distorted sense of how big it is in the eyes of the rest of the country," Mr. Mehl says. "Twenty thousand jobs isn't really that many in the big picture, and they'll exist for how long? Then what?"

Wyoming remains the most resource-extraction-dependent state in the West. Coal, oil, gas, and mining are cornerstones, but this year the state had to implement significant budget cuts as drillers shuttered thousands of wells that weren't profitable given a glut of natural gas in the market.

Schechter, who runs a Jackson Hole think tank called The Charture Institute, offers his own employment statistics. In Wyoming, Montana, and Colorado, the total number of jobs created through agriculture, mining, and forestry ranges in each sector, on average, between 3 and 5 percent, he says. While those industries are flat, the percentage of professional service jobs is growing fast, as is the percentage of the economy represented by retiree income.

"It's not that I'm unsympathetic to the energy industry, but it is not the answer to building a sustainable economy in the West," says John Baden, who served on the National Petroleum Council during the Reagan administration and founded the Foundation for Research on Economics and the Environment, a free-market environmental think tank in Bozeman. "Those who say it is are using the same kind of rhetoric that came out of the Sagebrush Rebellion of the 1970s, but no one really buys into it anymore. Most of the West has moved on past the mind-set of the frontier."

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One question is how far the Green Economy can carry the West. How many Bozemans are there out there, really? It does, after all, have an idyllic setting – ringed by the Bridgers and not far from Yellowstone National Park, not to mention all those cutthroat trout. Its downtown is postcard quaint – historical red-brick buildings with boutique shops and trendy restaurants that serve more than just various parts of a Black Angus.

The town of 38,000 has a vibrant university, a citizenry steeped in athletic hedonism, and more people in Giro bicycle helmets than Stetsons. A dog seems de rigueur in every office warren.

No wonder Outside magazine has just named Bozeman as a top 10 finalist to be "best town ever" (readers to cast the final vote), which is just the latest publication to trumpet the community's virtues – to the horror of many locals who don't want it known.

Yet Rasker (who chides a reporter for showing up at his office in a car rather than on a bike) argues that the point isn't to reproduce other Bozemans. It's for towns in the West to understand the relationship between a healthy ecology and a healthy economy and to develop, to the extent they can, stable industries, such as tourism, recreation, and Knowledge Age businesses, that take advantage of the natural amenities.

Whenever Rasker delivers lectures around the country, he recommends that people read Enrico Moretti's book "The New Geography of Jobs," which maps out an emerging new economic landscape. Mr. Moretti's central thesis is that America's greatest raw material is ingenuity and brainpower. What will help secure a region's place in the world, and lead to dynamic microeconomies in the years ahead, will be the ability to attract human capital. That means, to Rasker, protecting the West's scenic beauty as much as possible – looking at trees rather than cutting them down.

"The legacy of resource-extraction economies is one of boom and inevitable bust, and there are few, if any, exceptions," he says.

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Others aren't quite so evangelical in their dismissal of the Old Economy for the New. Steve Daines is Montana's lone congressman – the first from Bozeman – and in many ways is a product of both economies. The son of a prominent construction company owner, he spent summers driving a dump truck and pouring concrete.

When he graduated from MSU with a degree in chemical engineering, he had to leave town to find a job in his field. He worked for Procter & Gamble for 13 years, in Iowa and Asia, before returning to Bozeman to take a position at RightNow Technologies. He tells the story of how, in the mid-2000s, the company couldn't attract top-flight software engineers. So it placed an ad in the San Francisco Chronicle showing a downhill skier plying waist-deep snow, with the words "Work Where You Also Like To Play."

Hundreds of résumés poured in. "It surprised us," says Representative Daines.

A self-described free-market Republican, Daines embraces the Green Economy – ardently. "We need to try and foster the kind of synergy you see in Bozeman across the rest of the state," he says. But he also wants Montana to develop more of its natural resources, especially oil and natural gas and its prodigious deposits of coal.

Max Baucus, the powerful Democratic senator from Helena, Mont., plans to retire to Bozeman after his current term ends. He echoes the need for what he calls a balanced approach. "The diversity of Montana's economy is key to its strength – from the bedrock of traditional natural resource development to agriculture to developing cutting-edge technologies and cloud computing," Senator Baucus says.

Boosters of the Green Coast idea know it can't solve all the region's problems. Mehl, the Bozeman city commissioner, for one, notes that widespread challenges exist across the rural West, such as high unemployment, vanishing traditions, and stagnant wages, and that scenery alone can't sustain every town. "Other places are hurting," Mehl says. "Geography still plays an important role, and, unfortunately, there are geographies where people either can't or don't want to live."

Even Eden has its shadows. In Bozeman, rising real estate prices, rents, and cost of living have forced working-class people to outlying communities. In recent years, for the first time ever, the city has had to open up a homeless shelter in winter, and in the summer small hobo camps have sprung up on the edge of town where people live who came looking for nirvana and didn't find it. Demand at a local food bank has been growing, too.

But many of Bozeman's challenges stem from too much growth – an enviable problem to have – and the town remains one of the premier symbols of an isolated community, once dismissed as a parochial cow town, that has found new relevance in the modern world. Couple that with the self-sufficient, bootstrap culture of the West, locals say, and the town will continue to be a magnet for the Patagonia-wearing digital generation – and a model of the Green Coast economy.

As Gianforte, whose trophy room at his house now includes not only that prized bear, but also a mountain goat and other big-game animals, puts it: "A lot of these kids have gone to Montana State University and become engineers, but they go to work for Boeing in Seattle. They would have stayed if there had been a job here. That exodus is reversing itself, and they're applying that same sense of can-do problem solving to grow jobs."