Persuading tech companies to move to Las Vegas can be a tough sell.
The valley has a budding geek scene but sorely lacks educated workers, investment cash and job growth. UNLV is a research lightweight, and the few technical students it does produce often bolt town.
Moreover, Las Vegas faces increasing competition from other cities that also want to make names for themselves as tech hubs.
Despite the hurdles, local government and business leaders are trying to boost the industry and make Las Vegas a city of innovation, not just a gambling getaway.
Their efforts likely won’t catapult the valley into the top tier of tech hubs anytime soon, but if all goes well, they hope more companies and financiers will set up shop and invest here.
They have their work cut out for them.
These days, it seems everyone wants to be the next Silicon Valley.
Chicago Mayor Rahm Emanuel aims to double his city’s tech sector to 80,000 workers over the next decade by expanding his student-recruiting efforts. In Milwaukee, business leaders recently opened a $22 million, 100,000-square-foot water research and technology center. And in Chattanooga, Tenn., which reportedly has some of the fastest Internet speeds in the country, the mayor appointed the city’s first innovation officer this year.
Las Vegas has similar lofty goals but falls short on tech talent and money, both key ingredients for growth. And while the valley scores points for its low cost of living, it lacks amenities that large tech companies and their employees typically want for themselves and their families — good health care, a strong educational system and convenient mass transit.
Over the past year, only one tech company announced plans to bring large-scale operations to Las Vegas.
Take-Two Interactive Software, a video-game maker whose titles include “Grand Theft Auto,” moved a testing facility downtown from Southern California. The Governor’s Office of Economic Development approved spending up to $600,000 over five years to help with the move and other costs and an additional $204,000 for employee training. Officials said the company will have 150 local workers.
To lure more companies here, Las Vegas needs better research capabilities at UNLV, more investor capital and amenities that tech workers want, said Jonas Peterson, chief operating officer of the Las Vegas Global Economic Alliance, a business development group. In the meantime, local officials should woo industries that already have a strong presence in Southern Nevada, such as logistics, aerospace and tourism, he said.
Public officials tout low taxes, cheap housing, easy commutes and McCarran International Airport, one of the busiest in the country, as incentives for bringing businesses to the valley.
But the promise of low taxes, Nevada’s most commonly cited perk, isn’t enough to boost the tech scene, said Robert Lang, UNLV director of Brookings Mountain West, a public-policy research group.
“We have that regime, (and) we don’t have those jobs,” he said.
Like Las Vegas, Phoenix had a roaring economy that got wiped out by the recession. But unlike Las Vegas, Phoenix has bounced back strong.
The reason? A diverse economy, including a healthy tech sector.
As of August, Phoenix’s unemployment rate was 7.4 percent, slightly higher than the national average of 7.3 percent but much lower than Las Vegas’ 9.6 percent. Leaders of Phoenix, ranked by Forbes magazine as the 64th-best city for business and careers, put heavy emphasis on tech recruitment and growth.
Arizona has the fourth-highest number of semiconductor jobs in the nation, buoyed by Intel Corp.’s manufacturing facilities in Chandler, a Phoenix suburb.
The region also is helped by the Science Foundation Arizona. The group, formed in 2006 with $50 million in state money, works to boost biomedical, environmental, energy and communications-technology research. The nonprofit has helped develop 24 companies, 23 technology licenses, almost 1,900 jobs and $600 million in economic impact.
One startup it backed is Heliae, an Arizona State University spinout that aims to use algae for personal care, nutrition, therapeutics and agrosciences. The company has raised more than $50 million in funding since its inception in 2008 and recently launched its first commercial facility.
Las Vegas rarely is mentioned as a hot spot for private industry, other than gaming and tourism. Tech talent here is in low supply.
Out of 200 metro areas, Forbes ranked Las Vegas the 159th-best place for business and careers, 164th for education and 197th for job growth.
In 2011, just 13 percent of the valley’s workforce had jobs that require science, technology, engineering or math skills, the Brookings Metropolitan Policy Program found. Las Vegas ranked 99th out of 100 metro areas for STEM jobs.
And in 2010, only 22 percent of residents had college degrees, placing Las Vegas 91st out of 100 metropolitan areas, according to Brookings.
Nevada’s college students aren’t helping the situation. For the most part, they show little interest in technology, and those who do often leave the state.
Each year, state-run community colleges and universities produce just 300 to 350 graduates with tech-related degrees, said Justin McVay, the director of UNLV’s Business Startup Center and a former tech industry specialist for the Governor’s Office of Economic Development. Roughly half of them flee Nevada because they think it’s the only way to get a job.
“It’s a huge brain drain,” McVay said.
More investment cash could boost the talent pool by enabling startups and other tech companies to hire workers and expand their businesses. But funding is relatively scarce.
As part of the Downtown Project, Zappos CEO Tony Hsieh and his partners set aside $50 million last year to invest in startups. It’s the largest local pot of tech-focused investment cash but is pennies compared with what financiers spend elsewhere.
In the San Francisco Bay area, Silicon Valley owes much of its success to Stanford University, seen as the gold standard for tech research and commercialization.
The private school’s research budget this year alone is $1.35 billion. Roughly 40,000 active companies, including Google, Yahoo and Hewlett-Packard, trace their roots to the school, which has licensed thousands of inventions and generated about $1.5 billion in royalties since 1970.
UNLV is light-years behind, spending just $28 million on research last year, down from $47 million in 2008. The school generates less than $1 million a year from licensing patents, said Tom Piechota, vice president for research and economic development. And professors are submitting fewer research proposals amid budget cuts that have reduced faculty and increased workload.
Officials want to turn things around. In September, UNLV President Neal Smatresk laid out an ambitious plan to boost research capabilities. He hopes to add 300 faculty members, $30 million in state funding, 2 million square feet of research space, $300 million in endowment funding and $60 million in annual donations.
The university also has put more emphasis on making money from tech research. In May 2012, it established the Office of Economic Development to help faculty and students commercialize discoveries. UNLV received 18 research disclosures last year, up from nine in 2012 and just three in 2010.
The school also launched a gambling innovation course this year to help students design advanced games for casinos and the Internet. Mark Yoseloff, former CEO of the casino supplier currently known as Shfl Entertainment, funded the class with a $250,000 gift from his family foundation.
Meanwhile, the state has launched a $10 million “Knowledge Fund,” which aims to spur research innovation at UNLV, UNR and the Desert Research Institute. Nevada’s Legislature created the fund in 2011 but didn’t provide money until this year.
UNLV also announced in September that it applied for funding in three areas — health sciences, gambling innovation and unmanned aerial systems, or drones.
“There are things (Las Vegas is) doing well,” said Wesley Harper, manager of technology commercialization for the Governor’s Office of Economic Development. “We want to take advantage of them.”
Many STEM jobs don’t require a bachelor’s degree and can be created through community colleges. But Las Vegas’ two-year schools are controlled by bureaucrats in Northern Nevada and can’t easily strike partnerships with industry partners, Lang said.
And while downtown’s Zappos-led revival is bringing a surge of economic and cultural benefits to Las Vegas, the valley still lacks several ingredients needed to build a large, healthy tech sector.
Arizona, for instance, spends more money on its community colleges than Nevada does on its entire higher-education system. Phoenix, Salt Lake City and Denver also all have light-rail systems, a big draw for young adults who want to zip around town on public transit.
“Things are starting to go positive, but we’re a late adapter to it and we’re behind every regional competitor,” Lang said.
With the exception of large, tech-savvy casino suppliers, such as International Game Technology and Bally Technologies, Las Vegas’ tech industry is young and small.
But it’s coming along. Products and ideas are better developed than they were a year ago, and dozens of small companies have moved here. Las Vegas now is home to numerous startups, several data centers and tech-focused office buildings that cater to entrepreneurs.
But the valley’s tech scene still has two major areas of need, said George Moncrief, co-founder and chief technologist of Raster Media, a local contract software developer.
“We need the talent, and we need the money,” he said.