As part of its monthly Industry Outlook series, Nevada Business Journal recently brought high-tech experts together to discuss the technology boom in Nevada, and the challenges it has created for their companies. They confronted concerns such as marketing VoIP (voice-over Internet protocol) for businesses, the need for Nevada schools to promote tech employment, recruiting tech talent to Nevada and preventing spam. Connie Brennan, publisher of the Nevada Business Journal, served as moderator for the roundtable discussion, which was held at the Stirling Club in Las Vegas. Following is a condensed version, beginning with introductions.
Kris Richards: I’m president of Insight Technology Solutions in Reno, a telecommunications management and consulting firm. We audit companies’ telecom services, verifying their line services and billing accuracy, and look for billing errors by the carriers, all on a contingency basis. We help companies looking to upgrade the technology on their telecom system from whatever they have today to voice-over IP, connectivity of voice and data circuits, and so forth. We do infrastructure-cabling design for businesses looking to set-up a new infrastructure or new businesses building out their infrastructure.
Jonathon Snyder: I’m the CEO of KeyOn Communications, a wireless broadband and voice-over IP provider, serving five markets across the United States, with headquarters in Las Vegas. We formed the company in 2002 and operate a market focusing on the residential customer. We provide a product that is comparable to cable modem servers or DSL service, using unlicensed or licensed-exempt spectrum and our own proprietary software to manage the interaction between the way we broadcast a signal and the way the signal is processed at the customer’s premises.
Bob Beers: Acuity Solutions is about 16 years old. We sell, service, modify and train people on a high-end modular brand of accounting software published by Best Software called MAX200, as well as Peachtree and a couple of other related products.
David LaPlante: Twelve Horses has business communication systems for large enterprises. Businesses come to us because they believe no single mode of communication is 100 percent effective. We all have cell phones and e-mail, and we still get faxes occasionally, but companies are looking for a simple, single application to manage all those communications, as well as marketing or service automation.
Rob Roy: I am the CEO and founder of Switch Communications. We have full carrier-class services with an emphasis on disaster avoidance. We’re opening a new 55,000-square-foot disaster avoidance facility in Las Vegas on November 26. We have very large bandwidth and voice cores now, and IP, PBX and VoIP cores we’ll be releasing in January. Next year I’m going to focus on bringing large-scale companies into Nevada. Southern Nevada has a $1.4 billion fiber hub unique to the United States, and with nine hurricanes in the last 11 months that did $100 billion of damage to the coastline, the Citigroups, the eBays and the Wachovias are realizing they need to get their data centers out of those areas.
Jason Mendenhall: I’m the president and founder of Verde Communications. We’re a commercial wireless broadband provider with high-speed Internet services that start where DSL leaves off. Our core business is setting up a symmetrical, five-megabit-per-second connection within 48 hours. Because we’re wireless and we own the network 100 percent, we’re an alternative path for broadband. If people are looking for redundant or back-up solutions, we’re a great product and we have services that include remote backup, domain hosting, off-site backup and other ISP services on a commercial level.
Mark Cenicola: I’m president and CEO of Cenicola-Helvin Enterprises, an Internet information resource company. We publish Web sites ranging from technology news to on-line classifieds. We provide e-business solutions via our BannerView.com brand, including e-mail, marketing software, Web site development, e-commerce systems, Web site hosting and maintenance and on-line database solutions.
Frank Yoder: I’m president and founder of Advanced Information Systems. We do application software development, layout software, primarily in Microsoft, and a lot of dot-net programs. Our biggest challenge is finding good dot-net programmers in the Valley because of the distinct increase in the IT activity in town.
Michael Ballard: I’m here representing TBAN, the Technology Business Alliance of Nevada. The challenge at TBAN is recruiting companies, convincing them to believe Las Vegas has a technology core, and providing resources to those companies when they get here. Nevada ranks in the bottom 10 states for technology jobs, but we’re also in the top five fastest-growing states for technology jobs. We just need to build the infrastructure here.
Henry Valentino: I’m with SmartConnect. We’ve created software that makes surveillance useful. This city has more security cameras than any city in the world, so we deploy software that synchronizes cameras or digital video with point-of-sale transactions. In the old days, food and beverage here in Las Vegas was free. Now it’s a huge part of business, and our software helps more efficiently deliver that service. We can tell the employer if the bartender is working out of an open drawer or if someone is giving away free tickets to a show. Those types of things can add up to big money.
Paul Singleton: I’m the CEO of the Singleton Group, an information security services firm. We handle disaster recovery support, older building assessments and remediation. We also do electronic discovery for law firms in Reno, and we’re trying to break into the Las Vegas market. Where there’s legal activity, there’s electronic discovery. One of the biggest challenges is getting companies to realize that information security is a process, just like anything else they need to work on in their company, and it should be built into the things they do every day. Nevada just legislated SB347, which goes into effect in January. It requires the private, educational and public sectors to adopt minimum standards for protecting client information.
Darik Volpa: I’m the founder and CEO of UnderstandSurgery.com in Reno. Healthcare literacy in the U.S. is terrible, so we created 3-D interactive animations that explain diseases, conditions and procedures to patients who are going to have ACL reconstruction, total hip replacement or plastic surgery. The plan is to expand into every specialty, because our competitor is WebMD. Understand.com will become a destination URL for people looking for healthcare information. Our customers are surgeons; they license our animations and content. A larger piece of our business is corporations like Johnson and Johnson and a company called Stryker, which produces orthopedic products. We’re in a high-growth start-up phase and are getting acclimated to the Reno area.
Douglas Geinzer: I’m president of Recruiting Nevada. We operate a network of job boards to attract professionals to Nevada, like the ones on the Web site for the Las Vegas Chamber, the Reno-Sparks Chamber and TBAN. We target areas with critical shortages and are heavily concentrated on the healthcare industry. We also need to attract technology professionals, to get people from other markets to move here. Voice-over IP, a New Paradigm
Connie Brennan: Voice-over IP is just starting to be understood by the business community. What are the real benefits to businesses using this technology?
LaPlante: Two-thirds of our 60 employees are in the U.S., with the rest in Europe, Asia and South Africa. Without voice-over IP, telecom costs would be through the roof. It’s easy to implement and it saves money. It changes the paradigm of how businesses think about their telecom costs.
Mendenhall: It takes the location out of doing business, because you’re able to communicate at an extremely low cost. The other benefit is business continuity. When you do a voice-over IP solution that has a hosted PBX, the major component of that system is in a facility like Switch or in a secure, offsite facility where it’s protected. A hosted PBX means your building could burn down, and the next day you can just get a phone, plug it into the wall and you’re back operating. There’s no loss of data or equipment.
Snyder: You used to go through a whole programming task to add another line to your telephone system, and now it functions just like a computer. It’s IP-based, so you define what the rules are, and you can change them instantaneously. Voice-over IP is great, but the profit margins aren’t where they need to be. Hopefully, it can provide an opportunity to sell other value-added services.
Brennan: Are businesses embracing this?
Several voices: Yes.
Mendenhall: When we rolled out our enterprise voice-over IP, almost every customer we have was interested in it. As an example, a four-person office moves into a new location. Rather than buying a $10,000 to $12,000 phone system, they’re buying four phones and paying $35 a month for each line. They’re running with auto-attended voice mail and all the benefits they would get in a voice mail system, at 10 percent of the cost up front.
Snyder: It’s like any computer problem: you have to factor in maintenance because it doesn’t work perfectly all the time. We’re early in the development of voice-over IP technology, so you can expect a learning curve and technology improvements.
Brennan: If your profit margin’s not adequate, what’s your motivation for selling it?
Snyder: It’s feasible because you provide customers with a bundle of services rather than one, and the more services you’re providing, the more likely they are to keep you as a provider.
Roy: We’re looking at 100,000-line systems right now in Las Vegas at the casinos. We’re going to build two big cores, one in the U.S. and one overseas, and run thousands of phone lines off two off-site PBXs, rather than the multi-million-dollar, on-site PBXs that the casinos now have. For systems like these, the cost benefits for the clients are enormous. It’s much harder to make a decent profit when you’re doing SOHOs (small office, home office) customers.
Mendenhall: Here’s an example: A guy was moving into a new office. He called us on Tuesday and said, “I need five lines. I need Internet. I need phone lines. I need voice mail, auto-attendant, the whole thing.” He had it by Friday because of voice-over IP and broadband.
Roy: All the voice-mail messages that come into my phone are dropped directly into my computer as WAV files. I can just click on a message and the WAV file plays over the computer. I click on a contact to call back directly. More importantly for some of our large clients, every e-mail is stored indefinitely in their file because of the VoIP system, and that includes voice-mail messages, which can be re-played later if a verbal commitment or change order needs to be verified.
Singleton: Taking WAVs and dropping them into the customer file has been a successful selling point for VoIP. If they have a question, we can play the voice message back to them.
Richards: Voice-over IP has some challenges that have been overcome in the last two or three years. We’ve hit a maturity level where a lot of businesses are comfortable with the technology and are starting to adapt it more. This is the first year where the sales of voice-over IP handsets has exceeded traditional talk-on handsets. The advantage is the ability to take the data infrastructure that lets companies communicate between their branch offices and other locations and convert it to Internet protocol technology data circuits and overlay voice on those same circuits. The cost savings comes from dialing branch-to-branch over my existent data network and eliminating traditional voice circuits. Businesses are able to manage their phone systems while traveling around the world. Anywhere they can get a high-speed Internet connection, they are accessible.
Roy: After Hurricane Katrina, we brought a trading group out of Houston with one day’s notice, put them in the Venetian and built a trading room for them on our voice-over IP network. They didn’t miss a beat in trading during that entire event. The whole world is moving to that flat Ethernet platform. Everything is IP. Voice is going to IP, and video very shortly, even in this town, will go to IP.
Richards: We just need more bandwidth.
LaPlante: Nevada has an advantage over other states, because chances are you’re in a commercial office building that was built five years ago at the most, which means the infrastructure is there, with wireless services in place. If we had this building boom 20 years ago, we’d be suffering like other major metro areas, which are trying now to upgrade everything.
Ballard: Because we’re the new big city in America, we’re the new power-grid. Data network thrives on power, which is a big selling point. Finding Tech Talent.
Brennan: How much of a problem do you have getting the tech talent you need?
Yoder: It’s a major problem. We end up trading employees with other companies. I may hire away an employee from Henry today, but David may have one of mine tomorrow. It’s the nature of the business. The only thing we can do is draw people into town. We constantly advertise on Monster.com and Dice.com across the nation to try to pull people here, but it’s difficult with the margins here in town. No one wants to pay a lot of money for IT. It’s better than it was 10 or 15 years ago, but not like San Francisco or New York. Companies here are only willing to pay so much for IT talent. That means I can only pay so much to my employees, which means I can’t pay to pull people in from other states. When my ability to pay employees increases, I can recruit more from out of state.
Geinzer: One of the biggest challenges the technology community faces as a whole is forming a better relationship with the educational sector, and making sure that as we’re attracting companies here, there are levels of continuing education. High-Tech Education.
Brennan: Are the local education facilities doing a good job in supplying qualified people?
Yoder: UNLV is a talent pool that we do draw on, but it’s never enough.
Snyder: To use a baseball metaphor, we need a have a good farm system. We approached the UNLV engineering school and said, “What talent can you provide? We’re willing. We’re a tech company. Let’s open these doors.” And I couldn’t get on the dean of the engineering school’s calendar for six months. We need an institution that can act as a feeder and provide talent from our own community for tech resources.
Valentino: I had a different experience. I moved here from Northern Virginia when AOL, UUNET and MCI were expanding in the late nineties. The problem there was more dramatic because of the demand for talented people, and we were paying them a lot of money. Even marginal employees were being paid as much as high-level executives. In Nevada, I found talented young programmers who have been key to what we’ve accomplished. UNLV is a source of local talent, which is not easy to find.
Cenicola: Our biggest challenge is finding reliable employees who are trained in the technologies we use. The local educational market doesn’t tailor its solutions to what we’re doing; it’s more desktop-based applications, programming development and Microsoft.net. Some of our talent comes from people who learned this as a hobby, not in school. The problem finding tech talent is compounded with the unemployment rate at 3 to 4 percent. The community college is readying people to start their own businesses. If you hire these people, they come into your business, use it to learn, and then start their own business. The entrepreneurial atmosphere of Las Vegas as “a place to make it rich” makes it harder to get great employees.
Mendenhall: I had the same experience Jonathon did in trying to talk to the professors and the deans at UNLV. They’re shutting the door to local business. At the community college, they’re doing a good job on the telco-infrastructure side, but aren’t pumping out programmers.
Yoder: Through a friend, I met a professor at UNLV who wanted to promote technology in the Valley and help his students get out into the workforce. He wanted to help businesses come in and recruit his people. But if the professor you run into doesn’t have that same attitude, you’re not going to get anywhere.
Cenicola: I had a great experience with the trade school, ITT Tech. They’re aggressive about training their students to be job-rated and are pumping out graduates ready to work. They contacted us to come see their program and talent. They gave us the opportunity to speak about how they should structure their program to get their graduates ready to work.
Ballard: There is a computer and engineering group at UNLV and also the business school, which has its own MIS program. They’re in the process of putting together an advisory board. I had a debate recently with a gentleman about the university system and he was beating up the university system by comparing us to universities that are a hundred years older than ours. We don’t have the alumni base yet to derive donations from. Given what we’ve accomplished in such a short amount of time, we’ve got a lot to be proud of. The changes in the MIS department in the last year are awesome.
Roy: I sit on UNLV’s MIS board, and we are focused on helping the job market, but it takes time. We have intern programs from Switch going on at UNLV and CCSN, and our lead engineer is going to be on the advisory board for CCSN. There are some tremendous success stories in this town that we need to bring to the forefront. Zappos left California for Nevada and brought hundreds of employees, doing $300 million of business this year. Infogenesis made that same step. We need to get the tech community, from a business standpoint, to help support UNLV and CCSN.
Brennan: Are they having the same problems in Northern Nevada in terms of recruiting talent?
LaPlante: Our relationship with UNR sounds like it’s the same as yours with UNLV. There’s always a lag in producing people trained in cutting-edge technologies.
Beers: I would like to see TBAN be the center point for a multi-member vendor task force, with the mission of communicating to all levels of the university system. When you run into a dean who gives you the cold shoulder, together as a group we can enlist people to put pressure on a chancellor, president or dean to get that door opened. We’re supposed to be interested and responsive to what people want. I’m reasonably confident the majority of the legislators want more high-tech people in Nevada and want you guys to be hiring more people.
Roy: We had CCSN people sit down with our engineers and they were reporting what they’re going to teach next year, and our people were saying, “No. That’s not what we need.” It’s so hard, because technology has changed about 30 times since we’ve been sitting here today. We need to build a teaching curriculum that has the foresight to understand how rapidly things are changing. I’ve found doors to be amazingly open, but communication is the key, and the colleges are looking for help from groups like us.
LaPlante: If there’s anything we look at in hiring more than the actual core curriculum, it is the applicants’ aptitude to learn, and the skill sets that will enable them to function in the business world. Core curriculum is not as important as fundamental business skills. You need to be able to participate in business social networks, and I think we do a good job in producing those students.
Dealing With Spam
Brennan: What’s going on with spam and how do businesses get rid of it?
Cenicola: You don’t. You deal with it.
Beers: The same way you get rid of junk mail in your mailbox.
LaPlante: Spam is a large part of what we battle in our business. People are sick of unsolicited and unwanted communications, whether its e-mail, fax or telemarketing calls. We turned to our politicians to put laws in place to combat this, but at a significant cost. There are laws out there that can really hurt you. For example, in Utah and Michigan, it is illegal to send e-mails to minors about events sponsored by tobacco companies. You have to scrub your e-mail list in the state of Michigan and Utah, at a cost of 1.2 cents for every address in your database, to ensure there isn’t a minor in it. If you have a million records in your database and you have to do that monthly, it’s a huge cost to make sure you don’t go to jail because someone is fighting to stop spam.
Mendenhall: Businesses have to realize if they want to get rid of spam, they have to pay. We rolled out a service that would eliminate spam from the customers we are hosting through our e-mail server. It was $25 a month, and with it, you maybe received one junk e-mail a day. The rest of them were rejected. But the businesses thought $25 a month was too much money.
Cenicola: We did the same thing, but for free. They just pay for hosting. We just did it because we didn’t want all that junk coming into our network. But businesses won’t pay for it. It’s a cost problem we’re dealing with, but it won’t fall on the users to deal with that cost. It’s up to the companies providing the service to cut down on spam if they want to stay in business.
Singleton: Dave mentioned laws that are putting the burden on businesses to screen their lists before sending marketing material to make sure no minors are on the e-mail list. That’s a burden on a company’s bottom line. Laws prosecuting people for sending spam aren’t going to be effective, because it’s a one-in-10,000 chance of being caught. To be chased down and prosecuted, you’ve got to be a huge spammer. We were called to a business that thought its server had been hacked, because it was so slow. They had 35 employees and 40,000 spam messages a day. You can’t even work when you’re getting spam like that, because your server can’t cope. We set them up with a company that’s an upstream gateway that filters e-mails by signatures. The future solution for the spam problem is going to be the upstream gateway.
Mendenhall: We’ve had small businesses that were inundated with spam, paying us $1,800 to come in and clean up their network. That’s a big expense, but they had to do it because they had come to a screeching halt. It’s the gateway shared-service model that’s going to solve the problem.
LaPlante: A lot of startup companies are now seeing the positive side to this problem. Developing technologies to fight spam can provide an opportunity to generate the next great wave of technology that will put capital into the business.