A subtle but significant economic change is afoot in Nevada. Gaming, for years Nevada’s dominant and unrivaled industry, shows no sign of relinquishing its throne, but one relatively new sector has established a foothold and holds tremendous potential as an engine for future growth and diversification of Nevada’s economy – Nevada’s emerging technology industry.
Many Nevadans have witnessed the fledgling Nevada tech industry firsthand. Even those outside the state, however, have taken notice. For instance, in 2001, the Milken Institute, a non-profit economic think tank, identified Reno as an “emerging technology city.” Reno was profiled in a Wall Street Journal article in January 2001, as a city whose efforts toward economic diversification have enjoyed success. According to the article, a good measure of that success came from advances in Reno’s relatively young tech industry.
In 1999, TechAlliance was created to foster technology and entrepreneurial opportunities in Nevada; it is headquartered in Reno. Touting such selling points as “quality of life, no income taxes, low employee turnover and reliable energy,” TechAlliance has been a visible promoter of Northern Nevada as a technology hub.
Its Southern Nevada counterpart, the Technology Business Alliance of Nevada, or TBAN, devotes itself to the same mission of facilitating high-tech growth. Other organizations, such as the Economic Development Authority of Western Nevada (EDAWN) and the Nevada Development Authority (NDA), were not formed with the tech industry in mind, but nonetheless champion high-tech growth as a means of diversification in the two major urban centers of Nevada.
The Meaning and Importance of Tech
If Nevada is serious about tech, just what is it serious about, and why? Alison Schwartz, executive director of TechAlliance, notes that in general parlance, “tech” tends to mean anything Internet-driven. But Internet-driven companies are not the only players in an economy’s tech sector. In fact, while many Internet businesses were wiped out by market adjustments over the past two years, some tech companies still flourish. “We are looking to broaden the scope of what a tech company means,” Schwartz said. “Tech companies are those that capture and utilize technology, not just ‘net’ companies.”
This definition would certainly apply to many of the casino-resort operators, regardless of whether they view themselves as tech firms. Tom Williams, executive director of the UNLV Research Foundation, said, “The gaming industry has a high demand for persons involved in information technology and computer software design.”
The usual tech suspects are here as well: tech giants such as Cisco Systems, Oracle and Microsoft all have a Nevada presence. And many lesser-known companies with undeniably “tech” names, such as Server Technology, Silicon Quest International and CommScope to name a few, either call Nevada home or have operations here.
Even though some tech companies have established roots here, most people seeking to promote technology in Nevada’s economy believe there is still much to do. It is easy to see why.
It is no secret that gaming has floundered after the current downward trend in the economy nationwide. Nevada’s gaming sector likely will come under increased and continued assault as Indian gaming proliferates in California. Northern Nevada is especially at risk. A significant percentage of the Reno market’s patrons travel a short distance from Northern California, but the distance to planned or existing tribal casinos is shorter still. Consequently, the economic future of the state will undoubtedly depend more and more on non-gaming companies.
To be sure, the tech industry’s role will not be limited to just softening the impact of Indian gaming on the local economy. Mike Reed is dean of the College of Business Administration at the University of Nevada, Reno and is a firm believer in tech’s importance to Nevada’s future. Speaking specifically about Northern Nevada, Reed said, “The tech industry is critical to Reno’s future because it brings a different dimension of business. It offers a wider range of positive opportunities for young people and the general population.” The principle applies equally to Southern Nevada. In short, more tech means more economic diversity, which is generally perceived as the mainstay of a healthy local economy.
A number of factors will determine whether the tech sector will continue to develop and evolve over time in Nevada. Some of them have been present here for years, long before the recent romance with tech. The various components that comprise Nevada’s business climate – for instance, no personal-income taxes – should help in luring tech businesses to the region.
To a certain degree, the market fallout forced entrepreneurs to think twice about where to locate their businesses. The costs of operating a business, from taxes to energy expenses, are relatively low in Nevada. These costs are now becoming the first figures punched into the entrepreneur’s calculator when he or she is deciding where to locate an enterprise. During the Internet boom they were an afterthought. While the tax landscape in Nevada will undoubtedly change after the current legislative session, new taxes are not expected to disadvantage Nevada as compared to other states. Scott Frost, the head of TBAN, noted that, “Even though Nevada might end up creating a tax that helps pay for growth, it would still pale in comparison to what business leaders are paying now in California.”
A favorable business climate can help lure any company, but that alone will not incubate a tech sector. A viable tech hub does not develop simply by luring existing tech companies from Silicon Valley and transplanting them here. Nevada must be an environment that fosters entrepreneurism at the most fundamental level. For this reason, some of the most important components to the future of tech in Nevada are its institutions of higher learning.
The University-Tech Nexus
By all accounts, UNR, UNLV and even Nevada’s community colleges are crucial to the continued development of the tech sector. Said Reed: “Every study I’ve seen indicates that if you don’t have a strong, vibrant university, you don’t have tech companies. Without a strong university presence there are no tech clusters.”
Tom Williams, executive director of the UNLV Research Foundation, echoed Professor Reed by saying, “There is a whole list of universities we’ve all heard of that are at the forefront of technology development and driving new inventions and new sciences in regional areas. What seems to resound through all of these institutions is a linkage between them and the businesses outside the universities.” Williams mentioned Silicon Valley, San Diego and North Carolina as excellent examples of regions where this nexus can be seen. Those regions play host to many of the jewels of the NASDAQ, the predominantly tech-based stock exchange.
Already UNR, UNLV and the Community College of Southern Nevada (CCSN) have played a role in their respective local tech sectors. UNR students can be found working as interns at many Northern Nevada tech companies, and more and more graduates are settling in to permanent positions. UNR faculty members including, among others, Mike Reed and Linda Brinkley, vice president for research at the university, work with various players in the local tech sector.
Williams said at UNLV, “Most of the computer-science students are grabbed up before they get out of school.” UNLV’s institutional involvement with tech appears poised to reach an even grander scale. The beneficiary of a recent land acquisition, the university is investigating ways to develop and build a new research park. And CCSN has forged a symbiotic relationship with one of the powerhouses among tech firms, Cisco Systems. CCSN serves as a Cisco Systems Regional Training Academy for instruction toward network certification, as well as a U.S. Area Training Center for professional networking training and certification.
Why Nevada’s University and Community College System Matters
The contributions of Nevada’s institutions of higher learning can be broken down into two categories: labor and ideas, which work hand in hand. Through the work of a student or researcher, a tech idea is formed. This generation of ideas often spawns companies determined to bring those ideas to the market.
“Tech companies need the churn of ideas that comes from universities,” Reed said. “Creating a strong university presence leads to spin-offs. Tech companies are not just looking for research or students, but are looking for spin-offs coming from the universities. The more robust the start-up community, the more likely you’ll find the tech companies – it becomes a cumulative impact.”
That said, tech business do not survive on ideas alone – a workforce is needed to staff the newly created companies, as well as existing firms. To survive and flourish, their workforce must be conversant in the language of the industry. As the source of future employees for the growing tech industry, one of a university’s many functions is to ensure that students who go on to join tech firms leave campus with the requisite skills.
In fact, a skilled labor pool, by some accounts, is the most important contribution a local university can make to the tech sector. Schwartz opined that labor is the first factor that CEOs of tech companies consider when deciding where to locate their businesses or whether to open additional operations in other cities. According to Schwartz, “Margaret Whitman, the eBay CEO, said, ‘Don’t tell me about tax breaks, tell me about your workforce.’” Without workers to staff and operate a company, other factors such as tax breaks, reliable energy and high quality of life become irrelevant.
Frost also agreed: “People in the tech industry are saying, ‘I need people who can service computers, who can program routers, who can understand networking.’ This is what the private sector wants – graduates who can hit the ground running in the real world.”
Just about any university can train students to be savvy in the skills required by tech companies in Nevada, but Nevada’s institutions in particular bear a unique responsibility in staffing local firms. Some believe the local universities’ ability to graduate well-trained engineers will have a compounding effect on the ultimate success of local tech companies. Arguably, fostering local talent reduces the reliance a company must place on its ability to import talent, and can also stabilize the workforce and provide deeper roots for these companies.
Putting The Tech Foot Forward
University involvement in the tech sector has not been accidental, and is not limited to a few faculty members and students. In fact, both UNLV and UNR seem to have embraced their roles as promoters of tech’s future in Nevada, even on an institutional level. For example, Professor Reed reported that, “A concerted and focused effort is underway with UNR President John Lilley, who is making sure people are engaged.”
Similarly, Williams candidly allowed that Northern Nevada has been more successful at diversifying its economy largely because of UNR’s historical role as a science- and research-driven institution, but concluded that UNLV is not far behind. “UNR has typically been involved in engineering and the sciences for most of its existence,” said Williams. “But UNLV is catching up, and UNLV President Carol Harter believes promoting research at the university ultimately will benefit, and lead to the diversification of the local economy.”
Curriculum changes and priority shifts, geared toward addressing the needs of the tech industry and diversifying Nevada’s economy, are evident at the schools at both ends of the state. UNR’s College of Business Administration now offers a class in new venture financing, one in project management and a minor in e-marketing. The College of Arts and Sciences created a biotechnology degree. Even art at UNR has gone tech – students can now enroll in digital art courses.
In the south, UNLV is building technology laboratories to advance the school’s biotechnology department, and the university is using its affiliation with the Nevada Test Site to assume a larger role in homeland security research. Williams hopes private firms and individuals will sponsor cooperative research in these two fields.
Perhaps the most important introduction to the tech industry for students, however, is the assortment of student internships offered at Nevada’s universities. These internships serve as both laboratory and proving ground. Spending real time inside the walls of the tech firms, students gain workable skills on the job and develop relationships with regional companies before receiving their diplomas.
The work of these institutions toward engendering interest in technology is palpable, but there is still much left to do. Some envision a seamless connection between the tech industry and the universities, and insist that such a connection is crucial to the ultimate success of their efforts. “We must make the boundaries between industry and the campus transparent,” Reed offered.
It seems fair to question whether Nevada’s schools should have been doing more all along to broker tech’s advancement throughout Nevada. In particular, as a land grant school, UNR was founded to serve the local professional community. Said Reed, “UNR has had an uneven record as a land grant school. It hasn’t been the resource it needs to be. For Nevada to continue with some of the changes to its industries, UNR must be engaged. The engineering, computer sciences and business schools must all be involved in tech-focused development.”
UNLV’s mission historically has been focused differently – on the entertainment and hospitality industries. Williams suggested the university’s research efforts exemplify an adjustment in this vision.
TechAlliance and TBAN need to facilitate even greater, more efficient involvement by the universities and community colleges in local industry. “TechAlliance could help in pooling the resources at UNR,” Schwartz said. “Many of UNR’s efforts are fragmented. There are a lot of good individual projects, along with some duplicative ones.”
Frost views TBAN as a similar instrument for the Las Vegas Valley. Referring to those in both the private and public sectors, Frost said, “What I’ve tried to do with TBAN is make sure everyone is on the same page and that we’re all singing from the same sheet of music.” Without question, the chorus includes UNLV and CCSN. In the wake of budget shortfalls throughout the public sector, including Nevada’s higher-education system, this assistance could in fact be critical to streamlining UNR, UNLV and the community colleges’ vision and output with respect to tech.
For it to actually become seamless, the schools’ connection to the tech industry will need continued attention. The number of students and faculty involved with the industry, and the breadth of that involvement, will have to multiply in order to continue the trend of tech-industry incubation and economic diversification. Such a result will be achieved through the vision of the institutions as a whole, along with individual efforts like those already in progress.
Added Frost, “We have a unique opportunity. The window is wide open to Nevada. There are businesses that are disgruntled from other states, especially California – they are being taxed to death, the promise of IPO riches is gone, the cost of living is out of sight, and people are actively seeking alternatives. It’s up to us to raise our hand and say, ‘Look over here.’” Nevada’s institutions of higher learning must not only do the same, they must also continue to extend their hands to the tech industry as well.