Although there are challenges facing the technology industry in Nevada, leaders are working to grow the field in the Silver State and attract larger tech companies, foster startups and support STEM education. Recently, technology experts met at the Las Vegas office of City National Bank to discuss these challenge and opportunities.
Connie Brennan, publisher of Nevada Business Magazine, served as moderator for the event. These monthly meetings are designed to bring leaders together to discuss issues relevant to their industries. Following is a condensed version of the roundtable discussion.
How big of an issue is security in technology?
Nathan WHITTACRE: There are a significant amount of threats out there, and they grow each day. The average user/employee isn’t aware of the significance they can have on a security network. A lot of small businesses don’t take appropriate precautions to make sure their systems are secure. Most of the large hacks that have happened come from social engineering, whether it’s socially engineering an email in a way to convince you to open it and you get the CryptoWall virus which encrypts all the data on your network [forcing you to] pay a ransom fee or passwords that give complete access to a hacker.
George MONCRIEF: Maintaining backups of your IT infrastructure and being able to redeploy that in an effective and timely manner is definitely one of the key things you can do to protect yourself. When something like that happens, you can say “Well, I have it up until the last hour anyway.” It mitigates the risk.
Adam ENGLANDER: One of the things we’ve learned is, unless you’re a very large company, don’t do it yourself. It’s probably not your area of expertise. What we’ve seen time and again is that things go really well until you try to implement something yourself and it goes terribly wrong. You end up in the newspapers with some terrible breach because you did everything right except this one piece. The ability to outsource now is much greater. With services like ours and Okta and OneLogin, you can secure your systems using their sign on technologies. Making security easy for the user yet super secure for the organization is always a challenge. There are lots of nefarious individuals and there’s big money in being able to find these loopholes. Someone was just paid $1 million for a vulnerability to be able to remotely jail break an iOS device.
David HANSEN: It’s direct profit. Before you had to gather information that you can sell to somebody. Now you just encrypt the data. You don’t care what it is. If you think it’s valuable to that person, then you put a dollar fee in front of them. It’s the most profit and most direct way to make money if you’re writing those viruses. The biggest security threat is the internal. That’s how most of them get in these days. The perimeter is a really big wall that’s hard to get through, but it’s simple to get that email in there or get somebody infected at home. They take a USB drive home, back and forth, and that’s usually the biggest problem.
Paul ANDERSON: Stick to your core competency and make sure the experts are dealing with those things that need to be in niche markets. Another piece is educating the consumer of the data, whether it’s users and attachments or your own iPhones. The technology is advancing to where, on the enterprise level, you can control some of those mobile devices a lot better than you could even just six, eight or 12 months ago. Education is probably the only piece that we really have a full ability to control, and basic stuff like [telling employees not to] open those attachments if [they] don’t know where they’re from.
HANSEN: As much as I want to agree that education is the answer, there’s only so much you can educate certain people. That’s a daunting challenge. It’s going to come back to building more innovative ways and more levels of protection. It’s the end user at the computer not knowing what they’re doing.
What are the funding challenges for tech companies?
MONCRIEF: Access to capital is a challenge, more specifically, later stage series A and beyond of funding rounds. There are not a whole lot of institutional venture capital firms here in Las Vegas. Vegas TechFund is probably the largest. There are smaller funds [in Northern Nevada] that don’t necessarily have deep pockets. They’re funding usually in the C rounds. The challenge that I see with startups in Vegas is that, it’s easy enough to get C round funding. However, to get later stage, like series A rounds, that’s much more difficult. That’s across the world, essentially, but it’s particularly more difficult here in Vegas.
Billy O’GRADY: That’s actually a common theme across everywhere you go in the world outside of the Bay Area. The series A is your first institutional round of financing that a startup technology company will receive. That’s not typically a managed services company, but an actual software development - something that’s going to revolutionize or change the world. Series A is typically your, “I found a product that works. We’re going to go after the customers with $4 to $5 million and spend that on engineering talent, market talent, business development talent,” then raise a series B to provide growth financing to really attack your target market that you’ve hopefully figured out by then. Getting your seed round is the easiest round you’ll do, then it just progressively gets more difficult. That is an area of concern because we’ve have a nice, steady couple years of growth. Hopefully we can continue that trajectory, but it is unknown and it is scary.
How do you find and retain talent?
ENGLANDER: Our biggest challenge for the next year is going to be talent. It’s nothing new. The last 10 years, we’ve been hiring people from all over the country and bringing them to Vegas. The problem there is, because it’s Las Vegas, you’re getting 25 and under for the most part. They view Vegas as, “I’m going to go there and have a great time.” Almost no one who lives here spends any time on the Strip. We spend time at the parks. We spend time on the mountain. We spend time doing a lot of outdoorsy things. It’s not gambling and drinking, but there is that perception. That’s a difficultly internally that every company has. You have to dedicate a lot of time to ensuring there are paths for people to go to, they have somewhere to move and something new to do. That’s a lot of work.
ANDERSON: In our office, things you start doing is building game rooms and places that you wouldn’t find at a bank, for example. The company culture is key because you can become stagnant. We probably don’t have the growth factor that a startup would; that ceiling doesn’t raise quite as fast. I have guys that have been with us for 10 to 15 years and part of that is because I hired them when they were 18 and I finished raising them. That’s part of building that culture and that trust and them seeing the business grow and being able to grow in the company.
WHITTACRE: That’s what’s working well for us - hiring younger talent and people who love tech, want to grow up in it and defining their certification or education path, paying for that and walking them through it. We tell our guys when we hire them early on that we understand they’re not going to be here for the rest of their career. We’d love it if they would, but we understand they’re probably not and we’re going to build them the best career while they’re here. We’re going to get you the education that you want and take you down that road, and if you stay with us, we’ll keep nurturing that. We’re not going to have them forever, but we’ll do the best we can with them while we have them.
MONCRIEF: Developing local talent from our kids here in Vegas is definitely a very large challenge. Once you get them trained up, then keeping them here is a bigger challenge. It’s easy for any capable software engineer to get a job in San Francisco at the drop of a hat. It’s definitely a seller’s market in that regard. You can get a $150,000 job there as opposed to a $70,000 a year job here. One of the biggest challenges for talent retention in our community is that there are very few larger, more established, more cutting-edge startups here like the Twitters, the Facebooks or other companies that are on par with that. What I’ve seen over and over again is a startup does not get their series A, so they shut their doors. Here you are with 30 to 40 amazing software developers that now don’t really have anywhere else to go except for larger startup communities like Boulder, Austin, Seattle, LA, San Francisco, New York. They need other options. We need to attract other anchor tenants, larger tech companies, that are also creating those jobs and can absorb that talent.
O’GRADY: Having a staple company that represents technology is huge. [Venture capitalists] don’t understand the community outside of the Strip. There’s been a lot of efforts from Tony [Hsieh] and that group to do stuff in downtown and build Work in Progress and show there is this tech community. Then it comes down to making sure people stay here and not jump to the Bay Area. They may only get paid $85,000 to $100,000 here, but it goes way further.
How Can Nevada become a tech hub?
O’GRADY: This is Las Vegas and you don’t think of technology, but ten years ago when you thought of LA, did you think of tech? No, you thought of Hollywood. What happened there was the government and the schools and educational support systems, accelerators and incubators came together and started building the community showing the graduates that leave these schools, USC and UCLA, that it’s okay to stay in the community that you went to college and help build something special there. You now see a tech center everywhere. Go back to the roots and that’s how it started. In Vegas and Reno, the right people are here doing the right things. It’s just going to take time.
ENGLANDER: If you take a look at all the incubators and all the places that have these vibrant startup and technology communities, it’s about the university. In San Francisco, they go to the University of California or Stanford. In Austin, they’re going to the University of Texas. In Colorado, they’re going to UC Boulder. Even where I’m from, Orlando, which is a very similar economy - similar size, all tourism-based - they made a huge investment in the University of Central Florida with biotech and computer engineering, and now they have a bustling tech scene. It all just spawns from the university. The best talent go to the recognized universities because they have to if they want to get that great job. The engine for growth has got to be UNLV. I know last year when I was talking to UNLV, they said their computer science classes are half full. They expanded and tried to build up computer science, they just couldn’t get the students in. They’re making strides with curriculum, but have a tough time filling the classrooms.
MONCRIEF: There’s a lot of great work going on, especially here in Nevada. There’s the Nevada STEM initiative. There is Hour of Code, which is always a good introduction. One of the challenges is breaking down the perceived barrier to get into this industry. It’s really straight forward. It’s pretty much black and white - if this, then that.
ENGLANDER: If you have talent, you’ll get a job and make good money. Even terrible developers can get jobs.
WHITTACRE: The unemployment rate is ridiculously low. We stayed under 5 percent in our industry even through the recession. There’s more jobs available than there are people to fill those jobs.
ANDERSON: Vegas is behind the curve when it comes to diversifying the economy. That’s certainly been a focus on the state level. Reno’s done a tremendous job of developing venture capital firms, entrepreneurial tracks and bringing in companies. Now you’ve got Apple, Tesla, Amazon, eBay investing almost half a billion dollars and Switch building the largest data center in the world up there. Their sole focus is to get away from casinos. We can’t do that in [Las Vegas], but I think a lot of that will trickle down. We’ve got some big announcements coming out of Apex about new technology, and you’ll be able to develop industrial parks we just don’t have here in Southern Nevada yet. Our investment in STEM was $200,000 in the previous cycle. We bumped that up to $10 million in 2015. We’ve recognized there’s vocational tracks that need to be focused on. A big part of that is making sure we have the educated workforce.
How diverse is this industry?
WHITTACRE: I actively look for diversity in my organization, whether that’s female or male. Having the different personalities and different styles of approaching things is really good. Unfortunately, it has traditionally been a male dominated industry. I don’t know if it goes back to STEM education and getting more girls involved in that type of education early on, but it is difficult to find qualified candidates that want to work in the industry. My company is very much leaning towards the male side.
MONCRIEF: That’s engineering in general - hardware, software, electrical, mechanical - you name it. I taught at UNLV in a lot of different courses and if you go to any engineering class, there’s maybe two or three women in the classes. I don’t know what it is and I definitely don’t have a solution to it. However, it seems that women are just not being attracted to the engineering business.
ANDERSON: I think you’ll see a shift in that because you have a whole new generation now. We grew up without a device in our hands. Now my children have anxiety if they don’t have a device in their hands. That’s male and female both. The technology is now interwoven into their lifestyle. I think the interest level of how they can integrate this more into their businesses where they choose to work will just naturally change. It’s less about engineering anymore, just because the interfaces are almost an emotional attachment in many respects. I think there will be a shift, but I agree, anytime we get a resume from the other gender, we’re excited. There is maybe a lack of talent on that side of the pool, but I think we all look for diversity and we all look for the best people to do that job.
O’GRADY: You need to have every culture or every person exposed to the sciences, to math, to technology, and they already are through the consumable nature that we have. It’s on education and the parents, political or non-political, to get the community involved and to educate everyone on these industries and the opportunities there.
How are cloud solutions received?
HANSEN: As much as we could easily group every business together in the functions they do, every business still operates differently, even inside the same industry. Sometimes it’s just innovation of how to get new businesses to adopt and embrace the technology, especially the push to the cloud. It’s a big thing. Some people in our area are scared of it. We’re one of the companies that embrace it. We want to put our clients out there as soon as we can, as soon as they’re ready for it.
WHITTACRE: It’s the “Apple-ization” of technology. You buy an iPad, you buy an Apple laptop and you can seamlessly sync your data between multiple devices and it just works on a personal market - a consumer market. That doesn’t necessarily always translate to an enterprise situation and getting those similar technologies people are used to on a consumer basis to work on an enterprise level. When you’re dealing with a small amount of data, it’s easy to synchronize. Across many devices, across the cloud, it’s a lot more difficult to synchronize an entire enterprise’s data that anybody can have anywhere they want.
ANDERSON: A big part of that, though, is helping the client understand the business intelligence piece. It’s really the end game and what you’re trying to accomplish and how mobile you need to be. We don’t get a lot of push-back at all when it comes to taking their stuff to the cloud. The compliance piece is critical, depending upon their industry and on the size of the entity. In that area, they’re relying solely upon us to be that trusted advisor and take us at our word when it comes to making sure their compliance is safe and secure along the way. There are certain things you have to mitigate, line of business apps that have to stay on premise and can’t go to the cloud. But, for the most part, the general apps go right to the cloud and transition smoothly. The difference is that you’re becoming device agnostic where you can function with your data wherever you need to on whatever device is available. As you look at the vision of what the cloud is, that’s really what it’s migrating to.
HANSEN: There’s certain institutions that will never go [to the cloud] because of compliance issues. You’re going to find larger corporations are going to segregate. Some internal concepts will always be on premise. One of the first to go to the cloud was Salesforce. What salesforce.com was essentially built on was taking part of your organization and saying, “We don’t want to keep them tethered behind this firewall.” They’re out and about and need to have access to information all the time wherever they are. You’re going to see those types of things happening in corporations much more where you take certain departments or certain aspects of what they do to the cloud, but there’s still internal things on premise. Some of that might be line of business applications. Maybe they’re interacting with other equipment that physically needs to be located there and the connectivity between the cloud and that just isn’t sufficient. You’ll see hybrid applications like that. You’ll never see 100 percent. I’d be surprised if, in even 20 years, it’s over 70 or 80 percent.