Big Tech Comes to Town

What the expansion of three companies could mean for Las Vegas’ startup future 


Turning Las Vegas into a thriving tech hub has been one of the main objectives of the Downtown Project since its inception in 2012. However, it has struggled to change outsiders’ perceptions of a city forged on gaming, hospitality and entertainment. Whether a local startup gains traction or collapses, a common fear is that its founders could flee to Austin, Texas, or Silicon Valley instead of staying in Las Vegas, where many complain that the talent pool is limited. This fate befell robotics startup Romotive and the Rumgr app team.

But eBay, Tesla and Switch could signal a turning of the tide.

In January, Switch announced that it will be spending $2 billion on expansions in Las Vegas and Reno, building an additional 4 million square feet of computing power combined, according to the Las Vegas Review-Journal. In spring, just months after Tesla Motors CEO Elon Musk and Governor Brian Sandoval officially announced the lithium-ion battery factory in Reno, known as the gigafactory, the electric car company bought the land adjacent to the site—nearly 1,900 acres for “future growth,” the Reno-Gazette Journal reports. Now, thanks to more than $30 million in tax incentives, eBay will soon be putting its bid on the Silver State.

In his 2012 book Startup Communities: Building an Entrepreneurial Ecosystem in Your City— regarded almost as a how-to manual by many local techies—venture capitalist and entrepreneur Brad Feld uses Boulder, Colorado, as a case study for how to make a burgeoning tech center blossom into much more. Of the many ingredients required, Feld writes that large companies—the Intels and Hewlett-Packards—can be powerful tools for two reasons: 1) They can provide meeting places for entrepreneurs and 2) they can create programs where startups end up strengthening the larger companies’ ecosystem.

For example, eBay started a program called Friends of eBay, where early-stage startups get six months of free office space and resources at its Manhattan location. Zappos and the Downtown Project used to have the business incubator Progression Labs, where fledgling companies received $25,000 of working capital, rent for office space and mentoring. From 2013 to 2014, nine companies went through the program until it shut down.

Zappos and Switch comprise Las Vegas’ largest tech companies, and both have already done their fair share of investing in the local tech scene, as George Moncrief will tell you. Moncrief, VegasTechFund’s entrepreneur in residence, serves as an adviser for the co-working space Work in Progress in Downtown.

“Downtown Project hosts so many events, and [business people and investors] are coming through all the time,” Moncrief says. “All our tech meetups are very well attended, and we have more than 100 new members at Work in Progress.” Switch also has a co-working space called Innevation Center, and the Mill, a branch of the VegasTechFund, launched a business accelerator program that filled the gap left by Progression Labs.

But just the work of two companies is not enough to nurture a tech scene so it can grow into the next Austin or Boulder, which is why this threesome of expansions is promising. The Tesla factory is expected to bring 22,000 jobs and have an economic impact of $40 billion over the next 20 years, according to the Governor’s Office of Economic Development. For the next decade, Switch will be building a 500-mile “superloop” of fiber cable that will connect Reno and Las Vegas. And eBay will be investing $413 million in Nevada, with $182 million going to Clark County. Not only will these businesses provide further “large company” support to the state’s startup scene, it will turn a national gaze toward recruiting.

“As housing prices rise, places like Las Vegas are becoming much more active [for startups because of the low] cost of living,” Moncrief says. “Switch has put Nevada on the map.”

And with eBay and Tesla’s investments, it will turn our state into a tech destination.

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