VEGAS INC Magazine - Latest Las Vegas business news, features and commentaries about gaming, tourism, real estate and more
Issue link: https://www.ifoldsflip.com/i/203574
VEGAS INC C OV E R STO RY Steve marcus WEB GURU: Ben Jones, vice president and co-owner of Jennifer Web Design, pauses in a room at the inNEVation Center. Jones' wife, Jennifer Markewich-Jones, founded the company 13 years ago and now employs 13 people. In another setback, one of Las Vegas' most promising startups left for greener pastures. Romotive, which makes smartphonecontrolled robots, came to Las Vegas in 2011 as a three-person startup and set up shop in the Ogden, a downtown high-rise, with a reported $500,000 in funding from Hsieh's group. Within a few years, Romotive had raised at least $5 million in capital, had grown to 20 employees and was filling orders for thousands of robots. In March, however, CEO Keller Rinaudo announced the company was moving to the Bay Area. He cited the need to hire "brilliant talent" and said he wanted to be where the company would be most likely to achieve its goal of building affordable personal robots. Local executives say they understand Rinaudo's decision and don't hold it against him. But the company's move underscores Las Vegas' shortcomings. "We don't want to lose companies because they have a resources problem," | 4 NOVEMBER 2013 20131104_VI01_F.indd 15 | Chamber of Commerce spokeswoman Cara Clarke said. ••• For the sector to really take off, Las Vegas needs more small and mediumsized tech companies that could attract programmers and engineers to the valley, talented people who can help grow companies and maybe start businesses of their own one day. Local talent these days tend to leave town and flock to larger companies that offer high salaries and good benefits. Software developers nationally earned a median salary of $90,530 in 2010, according to the Bureau of Labor Statistics. Employment in the sector is expected to grow 30 percent by 2020. Many startups, however, are so low on cash they pay people with ownership stakes in the company, which are worthless unless the company grows, gets bought or goes public. And the odds of that happening are slim given startups' high failure rate. A Stanford University graduate would be hard-pressed to pass up a six-figure position at Apple to work for free at an untested Las Vegas startup. Convincing people to leave tech-rich California also can be tough. "Just to tell them, 'You're getting a tax break,' it's usually not enough," said Russ Logan, vice president of operations at Originate, a San Francisco company with a dozen employees at the inNEVation Center. And Las Vegas remains short on a key ingredient: investor capital. The largest local source of techfocused investment cash is the $50 million VegasTechFund. Relatively speaking, it's a small pot of money. In California alone, venture capitalists spent $4.3 billion in three months funding startups. Nevada companies received $8 million during the same period. Commercial banks also tend to shy away from lending to tech startups, which have a high chance of default. Entrepreneurs often look beyond their home cities for funding, but if there were more local investors in Las Vegas, the valley's tech scene could grow that much faster. "The money is not yet here," said Ben Jones, vice president and co-owner of Jennifer Web Design. Jones' wife, Jennifer MarkewichJones, founded Jennifer Web Design 13 years ago. The couple now have 13 workers and expects to hire another three or four in the next year. Despite steady growth, getting financing to grow the company has been difficult, Jones said. He tried to get a credit line from a bank to hire more people to take on more projects but was denied. So instead, he hires people only when he has enough cash to pay them. Overall, the valley's startup scene remains in its early adolescence. But if things continue to progress as they have been, in three or four years, techies will have a good shot at success. "The risk is going to be relatively low for a company to build itself in Vegas," Ware said. 15 10/31/13 1:52:25 PM