The Brookings Report; Unify, Reorganize, Diversify: An Economic Development Agenda for Nevada, commissioned by the Governor’s Office of Economic Development in 2011, identified seven industry clusters Nevada should develop, specifically naming the technology and aerospace industries.
In 2013, many in those industries are looking at and locating in, Nevada.
Tech Comes to Nevada
Technology is a very broad category, covering crossover industries and specific sectors, and Nevada is seeing growth in a variety of tech areas. In particular, data centers are looking at Nevada as a nearly perfect place to locate. The days when companies could put their server in an unused conference room or hall closet are passing as business owners understand the need to find the best solution for housing critical infrastructure. Today they look at purpose-built data centers.
Data centers, where a large group of networked computers serve clients with offsite backup, storage and processing of data, are attracted to Nevada for three primary reasons: a lack of natural disasters (locating on an earthquake fault, for example, isn’t advised), a friendly meteorological climate (temperature is important) and a friendly business climate. Other benefits in Nevada include a major fiber-optic highway running through the I-80 corridor, low energy costs, good employment base – “You can see why it’s an ideal place to put a data center,” said Doug Erwin, vice president, entrepreneurial development, Economic Development Authority of Western Nevada (EDAWN).
Now Apple is building a data center in Reno, with a downtown presence. Additionally, NJVC, a government cloud computing and cyber security firm, is headed that way, too. While data centers may not employ massive numbers, the jobs are high paying. “Any job that increases average wage is important,” said Erwin. “One worker making $80,000 a year has a ripple effect on other services, and the credibility of Apple is huge for our community.”
In Southern Nevada, Switch works in colocation, connectivity and cloud. Switch created SUPERNAPS, advanced technology ecosystems that combine secure data storage, affordable and fast connectivity and Internet with uninterrupted up-time. “For us, it’s about creating the total solution for companies to take advantage of,” said Jason Mendenhall, executive vice president of Switch.
Components of the technology sector are gathering steam on both ends of the state. The Brookings Report identified aerospace as another technology-intensive industry cluster now doing well in Northern Nevada, said Dave Archer, president/CEO, Nevada’s Center for Entrepreneurship and Technology (NCET). One of the aerospace companies in Northern Nevada, Digital Solid State Propulsion, produces products for rockets.
In addition, the technology industry cluster has cross-over applications outside its own sector. A Reno startup, Pinoccio, created a water sensor to control irrigation remotely to help with home landscape watering difficulties. The project translates into sustainable agriculture applications. SpecTIR is a global hyper-spectral and geospatial company that works with Nevada mining and agricultural industry sectors. Interest in safety systems in mining operations is bringing about technological research at the University of Nevada Reno (UNR). “There’s absolutely cross-over,” said Erwin. “There are very few industries where technology doesn’t play a critical role.”
Software companies are interested in the state because they’re not capital-intensive businesses; people can move or start businesses in Nevada with very little capital investment. “Essentially you can become a successful software company with not much more than a laptop,” said Archer. “Combine that with the quality of life and the favorable business climate, this is a great place to start a software company.”
Companies looking for easy access to the Bay Area, where venture capital and angel investors are more prevalent, find Nevada an attractive home because of the lower operating cost environment, recreation opportunities and quality of life.
Silicon Valley Part II?
So should Nevada be making plans to be known as the next Silicon Valley? Probably not.
“The first question is do we want to be,” said Archer. “I lived in the Bay Area during the dot com boom and the dot com bust and so I think it’s two questions. One, do we want to be the next Silicon Valley, and two, can we be. Do we want to have the housing prices, the traffic congestion, the general craziness that comes with being Silicon Valley? Do we want to have the boom and bust cycle that comes with being Silicon Valley?”
There really is only one Silicon Valley. “We don’t have the critical mass of population density in Northern or Southern Nevada to support something like that, we don’t have Stanford University, we don’t have 30, 40, 50 years of high technology businesses here that fuel Silicon Valley and vice versa,” said Archer.
Silicon Valley is currently experiencing a post-recession boom of sorts, with lots of start-ups and employees bouncing from company to company, not staying anywhere for long. For companies looking for a little more stability from their employees, locating in Nevada might be the answer.
“Typically we find folks who call Northern Nevada home are those individuals who crave more balance,” said Michael Thomas, partner, Noble Studios, a homegrown web marketing, web application development company. “They want the ability to work on high caliber projects, but also access to outdoors and everybody in the Bay. The traffic, the congestion, the high cost of living, it all impacts their ability to take advantage of the recreation that exists a short drive away.”
This is why Noble Studios reverse-engineered a business model to service clientele based out of the easily accessible Bay Area with a talent base and placement just far enough away to obtain a competitive bubble. Noble can enjoy a low churn rate, and a high level of talent that’s more willing to stay put.
“The more brand names we can ensure are moving to the Reno Tahoe area like, Apple and Microsoft, the more we validate that this is a quality place to do business,” said Thomas. “The efforts that are working now to change our brand are very important. When we are down in the Bay Area now and we’re saying we’re based in the Reno Lake Tahoe area, I would say six or seven years ago we would have gotten a lot of quizzical looks. Now people say, ‘I’ve heard something about that, why are you guys located there?’ We’re able to quickly explain why for our business model it makes sense, and we get a lot of nods.”
Nevada tech companies are playing in the global tech arena. Switch is located in Nevada for the exact reasons the state is perfect for data centers – business friendly tax and corporate climate, technology friendly meteorological climate, geography that’s pretty much natural disaster-free, and connectivity. In 2004, the company acquired the former Enron facility, a connectivity hub unrivaled for speed and reliability. Switch now owns the most technologically advanced telecommunications network consortium in the country, according to Mendenhall. “This network redundancy and reliability allows us to optimize our company’s solutions throughout the world.” Switch also developed Combined Ordering Retail Ecosystem, or C.O.R.E., a cloud cube business exchange where 40 cloud and technology providers exist in one place to provide unique tech solutions. Clients utilizing Switch technology who also have a presence in Nevada, include eBay, DreamWorks, Cisco and Zappos.com.
Noble Studios lists clients such as Google, Autodesk, EBay and Barnes & Noble. For Cobalt Data Centers located in Southern Nevada, the planets are aligning as telecommunications improve dramatically in Southern Nevada and the region has one of the newest electrical grids in a major U.S. city. Coupled with ease of access through a world-class airport for a global clientele and Las Vegas is the right time and place for Cobalt’s secure, high-density, network-rich collocation center, indicates Jeff Brown, president of Cobalt.
It’s also the place people want to live and, in many cases, live/work/play. The axiom many cities spoke of hopefully at the beginning of the century is becoming reality as downtowns draw residents who want cultural diversity, entertainment, a great place to live and a high tech job, and want it all in one place. Las Vegas’ downtown project, furthered by Zappos.com’s CEO Tony Hsieh, is creating a vibrant, energetic, technologically advanced downtown revitalization that’s drawing people from all over the country to locate in Southern Nevada. In turn, those people are developing innovative new businesses.
“Technology workers are interested in vibrancy of community and what are the other things going on in places they choose to live,” said Erwin. “That’s one area Reno can excel right now. We have a cultural renaissance going on with the arts and Burning Man and the local food scene, all those things add to a community and quality of life and more technology workers value that highly. That makes it a great place to live.”
The Human Component
Nevada is unique in having both high unemployment rates and an environment in which employers can’t always find the skilled workers they need. In part, that’s due to the disconnect resulting from the recent recession – many unemployed workers in Nevada are coming from construction, entertainment and gaming professions and the new economy jobs being created are part of a much more technology-oriented workplace.
Training and home-growing the workforce to meet the needs of new technology could mean more jobs for Nevadans and benefit the local economy. A $2.2 million grant from the U.S. Economic Development Administration for the renovation of the Truckee Meadows Community College (TMCC) IGT Applied Technology Center was recently awarded.
“It’s the coolest place on Earth,” Archer said about the center. “It has labs for every type of technology you can think of, those things on the cutting edge of workforce development.”
For employers relocating, expanding or starting up new tech divisions in Nevada, TMCC works with EDAWN and Department of Employment, Training and Rehabilitation (DETR) to design curriculum for students and train local workforce for high tech jobs. Internships put top students to work getting real-world knowledge, and creating a workforce for employers to recruit from, according to Dr. Maria Sheehan, president, TMCC. Employers looking for employees with specific skills, rather than degrees, can find customized training.
Data centers have had no challenges finding technology workers, said Erwin; with students graduating from UNR and leaving the community, we still need more high tech companies in town. “We definitely have the skills, but not a critical mass of companies,” said Erwin. “But if you’re trying to hire software engineers, it’s complicated no matter where you are in the world. Those skills are in such high demand, they’re hard to fill.”
Michael Thomas said Northern Nevada is strong for entry level positions from the university and community college. Given the quality of life and lifestyle Northern Nevada offers, if companies can’t hire locally they can likely find someone who wants to move to the state.
More draws for technology-oriented companies looking at Northern Nevada include the Reno Collective. Founded four years ago, the Reno Collective offers co-working space to a maximum of 70 software developers, writers, photographers, videographers and designers where they can interact, freelance, work with remote clients and hone their skills.
“We’re seeing two things happen,” said Colin Loretz, founder of the Collective. “People growing locally into companies – a lot of freelancers are teaming up with other freelancers and starting cool companies that are hiring more people, so we’re seeing organic growth locally. Then we’re seeing people who are moving out of California or San Francisco where rents are skyrocketing and they’re moving here and starting two to five man shops. Those jobs are very high skilled, high paying jobs, and people have moved here to have more disposable income in the economy and the ability to hire more people and grow businesses here in Nevada.”
In Southern Nevada, Switch has created the inNEVation Center to help support economic diversification in Nevada. The brain-child of CEO and founder Rob Roy, Switch’s inNEVation Center hosts industry events and provides meeting and co-working space as well as executive suites and space for corporate headquarter development. The mission of the center is to “boost and diversify Nevada’s economy by providing startups access to the world-renowned SUPERNAPS and their collaborative ecosystems.” The 65,000 square foot center is located in the Las Vegas Digital Exchange Campus (LVDEC).
The Next Wave
So what’s next? In terms of the next big technology, the crystal ball is fuzzy. But in terms of Nevada technology, growth is in the works.
Switch isn’t ready to name names, but new clients are heading into the ecosystem, and there are expansion plans underway that should have a positive effect on the economy.
Cobalt is gearing up to build its next phase, which means construction jobs in Southern Nevada.
Noble Studios, which has rapidly grown its business in recent years, is looking at power social marketing networks being used to drive true ROI and marketing perspective as the company continues to grow.
NCET is rolling out a series of monthly luncheons focusing on technology for small businesses and issues tech business owners deal with daily and didn’t have to think about five years ago. In addition, jellies, or monthly co-working events, provide opportunities for programmers and developers to interact with each other, creating an atmosphere for serendipity and synergy in the Nevada tech world.
“I don’t necessarily think we should be the next anything,” said Thomas. “I think we should define ourselves similar to Austin and emerging technology cities like Boise and be strong and not try to recreate Silicon Valley, but pick areas of excellence where we can be sure we have the right type of workforce for support and do everything we can to keep a positive business environment. Then I think our success will come naturally versus trying to recreate what made the Silicon Valley what it was. If we chart our own course, I think we will be more successful.”