When smartphone-operated robot maker Romotive, the poster child for Las Vegas startups, relocated to the Bay Area in March, the move left many locals wondering about the future of the city’s burgeoning tech scene. After staying in Vegas for a year and a half and facing rapid growth, the company’s founders left in search of senior talent that the area lacked.
The news came as a second hit to the local tech community, after another successful startup, a website for healthy kid products called Ecomom, was liquidated and sold to a company in Washington following the sudden suicide of founder Jody Sherman.
Both incidents fueled skepticism about Zappos CEO Tony Hsieh’s plans to remake Las Vegas into a vibrant tech town. But 2013 brought good news, too. This week marks the first time music and technology conference South by Southwest has hosted an event in Vegas. Incubators and networking events are starting to spread throughout the city and new startups are popping up.
So, if Las Vegas aspires to become a hotbed of technology companies, what does it need to get there? To answer that, we turned to a few successful entrepreneurs from tech hubs San Francisco, Austin and Boulder. Here’s what they told us.
For any startup community to thrive, you need a successful anchor company to draw people in, serving the same function as a Macy’s or Nordstrom would in a shopping mall, says Vinay Bhagat, CEO of TrustRadius in Austin.
Startups rarely have the money to recruit new talent from outside the local community, but an anchor company does, says Bhagat, who relocated to Austin in 1998 and founded software company Convio. The company went public a decade later and was acquired in 2012 for $325 million.
“I’ve lived that journey of moving to a new city and growing a team,” Bhagat says.
As recruiting grows, so does the pool of local tech workers, now armed with new skills from working at successful larger companies. Some of those employees will then form their own ventures, Bhagat says.
While Zappos could function as an anchor company—especially with Hsieh leading the charge on Downtown’s revitalization—Las Vegas might fail to entice tech workers with salaries. The median salary for software engineers is $91,000 across the United States, $118,000 in San Francisco and in the low $80,000s in Austin and Boulder, according to Indeed.com. Las Vegas trails at only $74,000.
Las Vegas does rank highly in another area mentioned by our interviewees: affordability. Young entrepreneurs seek attractive, low-cost housing so they can stay in the area and raise families, experts said.
According to real estate website Trulia, Las Vegas’ median sales price for homes is just above $150,000 for 2013, lower than both Austin’s ($191,000) and Boulder’s (over $400,000).
Not surprisingly, the cost of doing business also plays a role.
Austin was recently named the best place to start a new business based on cost and taxes by tax-planning nonprofit GoodApril. Boulder ranked third on GoodApril’s list, partly due to the inexpensive office space (at $21.50 per square foot) and low property tax (.66 percent).
A vibrant networking scene is another essential ingredient, according to Ken McDonald, VP of Customer Acquisition at TeamSnap—a platform for organizing sports teams—in Boulder. When he arrived in Colorado after spending over a decade in the Bay Area, McDonald found meetups and events where companies would present ideas for critique.
“It was always standing room only,” he remembers. “There was always something going on.”
In 2010, Bloomberg Businessweek reported that Boulder had the highest per capita concentration of software engineers in the nation. With the University of Colorado adding to the bustle, a young, energetic “We can do it!” attitude reverberates throughout the startup community, McDonald says.
But networking doesn’t need to be limited to software engineers or students. As in many cities, including Vegas and Austin, there is limited venture capital in Boulder compared to the early 2000s, says McDonald, who spent three years of his two-decade career as a venture capitalist. With little financing, Boulder startups have turned to merging technology with other major local industries. For Boulder, that’s outdoor sports and natural products. For Vegas, that could be gaming and hospitality.
Tech incubators and networking events are growing in Vegas. Work in Progress recently opened workspaces for startups on 6th Street in Downtown. Both the new location and Usr/Lib in Emergency Arts host mixers for techies, though many people still don’t know about them.
Based on his time in Las Vegas, Romotive cofounder Phu Nguyen says the city is growing into a tech destination, but that there is an abundance of ideas and a lack of success stories. Before moving to Downtown, Romotive was based in Seattle, where established mentors were able to use their experience of what worked and what didn’t to help guide young entrepreneurs with big ideas.
“[Vegas] could use more people who don’t think outside of the box,” he says.
That said, Nguyen also believes that Las Vegas is on the right track. “I can see a very special brand of startups that are particular to Vegas prospering,” he says.