Tech Companies Bet on Las Vegas

LAS VEGAS -- For Internet retailer Zappos.com, moving to Las Vegas in 2004 was good for business.

Yet Nick Swinmurn, a founder of the online shoe store, sometimes runs into trouble hiring employees from other cities.

Swinmurn recently hosted two high-level tech workers from outside Nevada. They were interested in the business opportunities here, but their spouses weren't warm to the idea of relocating to Sin City.

"Their wives' only perception of Las Vegas is that it's where their husbands go for bachelor parties," Swinmurn said.

But a weekend driving the couples around the suburbs and showing them life off the Strip helped Swinmurn seal the deal. The two prospects are moving to Las Vegas in March to join Zappos.com.

Swinmurn's remarks were part of Technology Summit 2006, a Technology Business Alliance of Nevada event designed to explore the state of economic diversification into high-tech fields. Six speakers from the worlds of government, technology and economic development shared their experiences with a crowd of about 300 at the Four Seasons Hotel on Wednesday. Their overall message: Nevada has much to offer companies in the technology sector, but a few improvements could bolster the state's reputation in tech-related fields.

Though Swinmurn said selling Las Vegas to outsiders remains an obstacle for his company, he mostly praised the area's business climate.

Zappos.com moved its corporate headquarters and call center from San Francisco to Las Vegas in 2004 for a multitude of reasons, including lower taxes, more affordable workman's comp insurance and easier commutes. Plus, Las Vegas has a pool of "career" call-center workers -- employees who see customer service as a long-term pursuit rather than a stepping stone to a higher position, Swinmurn said. More affordable housing and more available office space near McCarran International Airport helped seal the deal.

But Swinmurn, who said his company will do $600 million in gross sales this year, advised local officials and businesspeople to concentrate more on promoting Las Vegas as a suitable place for businesspeople to live.

"Any business move is also a personal move," Swinmurn said. "It's a tough sell for out-of-state people. All they hear about is the Strip. We need to spread the word that Las Vegas is like any other city. It has neighborhoods and things to do off the Strip."

Swinmurn said a citywide shortage of qualified senior managers and engineers has also affected his company, though he said that problem could solve itself as Las Vegas grows and more businesses move to the area.

Executives of Mobile Productivity also settled on Southern Nevada after considering other locations for the company's corporate headquarters. In 2003, entrepreneurs from Southern California established Mobile Productivity, an auto-repair software and database developer, in Orem, Utah.

Cities in both California and Utah were on the headquarters' short list, along with Las Vegas. Las Vegas won out, and in 2004, the company's 95-employee headquarters and customer-service center opened on Sunset Road near McCarran.

"The truth is, Southern California is a horrible place to do business," said Bob Pringle, executive vice president and chief financial officer of Mobile Productivity, which venture-capital giant Warburg Pincus has funded. "It's a lovely place to live, but it's very hard to navigate business issues there."

And Las Vegas has attributes neither California nor Utah could claim: The city welcomes a large number of auto-industry trade shows, so Mobile Productivity's clients visit often. It's also easier to convince trainees using the company's products to come to Las Vegas for educational sessions. McCarran's schedule of frequent, affordable flights makes traveling to pitch clients a breeze, and solid work-force availability also appealed to Mobile Productivity's managers, Pringle said.

A state official speaking at the summit lauded Nevada's business-friendly advantages.

Secretary of State Dean Heller said the Silver State's ability to attract new businesses relies in part on the state's lack of red tape. Heller said his agency is the only secretary of state's office in the nation that is experiencing double-digit percentage growth in the number of filings each year.

The reason? Nevada offers instant incorporation via the Internet. By contrast, applicants in Arizona must wait a minimum of 90 days to open their business, Heller said. And California's bureaucracy isn't customer-friendly for entrepreneurs, he added.

"Call the California secretary of state and see if you can talk to a human being within 24 hours," he said. "The way we do business in this state is second to none."

Other speakers echoed that theme in various measures, with those in economic development discussing how they intend to draw new business.

This year, recruiters at the Nevada Development Authority are targeting four key industries: technology, life sciences, transportation and renewable energy. The authority is focusing its marketing efforts on companies performing research and development in areas including homeland security, aerospace and defense, hydrogen fuel-cell cars and pharmaceuticals. Somer Hollingsworth, president and chief executive officer of the authority, said the group is also concentrating on bringing in biotech companies. He focused on the 4-month-old Nevada Cancer Institute as a potential biotech magnet.

David Ward, deputy director of the Nevada Cancer Institute, said executives of the research center are working with the Nevada Development Authority to fill out the research center's 60-acre campus in Summerlin. Ward said the institute could spin off biotech companies based on its research, and recruit existing biotech businesses that the clinic's representatives come across in their travels around the country.

In addition, the institute's research is already raising the interest of major pharmaceutical companies. Roche and Abbott Laboratories are among the drug makers vying for the rights to develop a test based on a method the institute helped discover for the early detection of ovarian cancer.

But efforts to bring biotech and other high-skilled jobs to Nevada will be difficult without significant educational reform, said the summit's final speaker.

Jim Rogers, chancellor of the University and Community College System of Nevada, said grade inflation in Nevada's high schools is causing problems for higher education, as more students who need remedial math and language training filter through to colleges in the state. He suggested creating "seamless" continuity in education from kindergarten through college.

"We need to integrate K-12 and college," Rogers said. "We can't finish off the product K-12 sends us unless they send us a good product.

"We are a world-class economy and a third-class culture. We have to create a world-class culture, and part of that culture is education. If we don't build an educational system, we simply won't have a future. If we can't provide businesses with people who can do the work, they don't have any future."