By Roger Alford
The Associated Press

HARLAN, Ky. - Sometimes eyebrows raise when Charleen Combs mentions that her software development firm is based in the Appalachian mountains.

Old stereotypes die hard, and some people think eastern Kentuckians are too busy feuding or making moonshine whiskey to run successful businesses, especially high-tech ones.

"People especially don't expect to find businesses in southeastern Kentucky that operate nationally," said Ms. Combs, co-founder and chief executive officer of Data Futures, a Harlan firm that develops software for a nationwide clientele in education and health care.

Douglas Thorpe, founder of a research and development firm in the tiny town of Irvine, said his former job as an engineer with NASA gave his company, Irvine Technologies, credibility that he couldn't have achieved starting from scratch in the region.

The unfortunate truth is that the handful of high-tech companies in eastern Kentucky suffer from hillbilly stereotypes that have lingered since the days of the Hatfields and McCoys, said Ewell Balltrip, executive director of the Kentucky Appalachian Commission.

"An entrepreneur's ability to do business is based upon the perception of customers," he said. "If a customer perceives the area as being populated by workers incapable of performing high-tech tasks, that hurts business."

Television, Mr. Balltrip said, has been especially unkind to Appalachia by producing shows that "present rural residents as simple minded, as being locked in a time warp, as being generally out of step with contemporary business practices."

"That all comes together to work against us," he said.

Data Futures started out developing administrative software for school districts, but secured a niche in the health care industry by developing cutting-edge software for harried health workers to use on home visits, said Elmer Whitler, director of research and planning for the University of Kentucky Center for Rural Health.

"These are some of the most talented persons with whom I have ever worked, and I have been doing this for 30 years," Mr. Whitler said. "These people had worked in firms in much larger cities, but they preferred to live in small towns like Harlan. This was talent coming home, and we're beneficiaries of that."

Data Futures now has 28 employees, more than 800 customers and annual revenues of $2.5 million. The firm has also opened satellite offices in Lexington and Kingsport, Tenn.

Duane DeBruyne, spokesman for the Appalachian Regional Commission, said mountains are no impasse for high-tech firms.

"The beauty of the Internet is that you can be located literally anywhere in the world and provide services," he said. "Clients could care less where you're located."

Mr. DeBruyne said the Appalachian economy is increasingly diversified, roads have been widened and straightened across the region, and the telecommunications capacity is growing exponentially.

Linda Johnson, president of the Center for Information Technology Enterprise at Bowling Green, said some people still have difficulty thinking of Kentucky as high-tech.

"I certainly think that it raises eyebrows," Ms. Johnson said. "Outside of Kentucky, there is a perception of Kentucky as predominantly a manufacturing and tobacco farming state. People in general outside Kentucky have not thought of Kentucky as a high-tech Mecca."

Ms. Combs and Bob Harris, Data Futures co-founder and president, were working as computer programmers for Eastover Mining Co. in Harlan when they got the idea for Data Futures.

Ms. Combs said she and Mr. Harris wanted Data Futures to be based in Harlan because the small town, they said, is a great place to live.

"The difficulty lies in the geography and our distance from a major airport," she said. "That is a challenge at times. But I think the quality of life here, the atmosphere, and all the things that go along with living in a small town offset the negatives."

Mr. Thorpe, an eastern Kentucky native whose company holds contracts with NASA to develop leak-proof valves and linear motors, agreed. He chose to move back to his home town to free-lance his engineering skills, hoping for the best but preparing for the worst.

"This has worked out beautifully," he said. "I consider this one of the most beautiful places in the country."