It’s long been known that Central Oregon needs to diversify its economic base to sustain growth and employment opportunities. While the employment picture and economy are trending up, Central Oregon still lags behind state and national trends. Two venture capitalists — one who moved here recently and one who is currently buying a home in Bend — are beating the drum for economic diversification, transforming a service-oriented economy to a thriving regional hub for high tech.
But they are doing more than just drum-beating. They are recruiting high-tech start-ups from the Silicon Valley, Portland and Seattle. While university athletic programs search for four and five star athletes, Dino Vendetti and Bruce Cleveland are rolling out Bend’s red carpet for four and five star high-tech upstarts and hoping they sign letters of intent to play ball here.
Cleveland, whose family is originally from Oregon, is a general partner in Silicon Valley-based InterWest Partners which invests in both health care and internet technology with a $650 million dollar fund. As a fan of the TV sitcom The Big Bang Theory, he dreamed up a contest for high-tech start-ups and called it The Big Bend Theory.
Thirty companies entered the contest, and Cleveland and Vendetti awarded five start-ups a weekend in Bend to sell them on the upside of locating their businesses here. The five entrepreneurs profiled their companies at a day-long event attended by current start-ups and community leaders at Vendetti’s Seven Peaks Ventures headquarters in Bend before getting the red carpet tour of Central Oregon’s diverse offerings.
Both Cleveland and Vendetti are thinking big in their recruitment strategies. They want companies that have a billion dollar potential. “It’s those kinds of companies that allow us to generate the kind of return for our limited partners that give us the ability to deliver the outsized returns they need,” said Cleveland. “We have to have companies that want to become very large companies.”
Vendetti, who discovered Central Oregon while vacationing, said the area has traditionally been entrepreneurial of necessity. “There is a demographic change and a different mindset among tech professionals that is helping create strong regional technology hubs. For me, living in Bend was never an option in my early career. Today, there are highly successful tech professionals who say they are going to live in Portland, Bend, or Boulder. Their careers are far more portable,” he said. Advances in technological platforms such as the cloud have also led to capital efficiencies, allowing companies and tech professionals more options in where they choose to live.
It’s also expensive for many high-tech companies to do business in major metro hubs like San Francisco. According to Aria Systems CEO Tom Dibble, “Our single biggest challenge as a company is capacity. We can’t meet the growing demand.” Aria Systems serves companies worldwide using its cloud-based, enterprise-class platform for subscription and usage-based billing. Bruce Cleveland’s InterWest Partners is an investor in Aria.
Dibble continued, “In the last six to nine months we’ve added about three new people a week to our staff, and we would gladly double that if we could, but doing so in the Bay area is a real bitch. We’re looking at some outlets outside of the Bay area. We’ve got offices outside of Philadelphia. We have offices in the UK, Germany, the Netherlands, and India… so a place that is ideally no more than a 90-minute flight from the Bay area where we find this extra capacity at a discount from what we’d be paying for in the Bay area… if we can find a place to set up shop, hire good talent that will alleviate our capacity problem and allow us to scale as quickly as the demand grows, then it’s a no brainer for us.”
Dibble said his biggest challenge in hiring qualified workers is in the development area where he needs people with applied mathematical and implementation skills. When he finds those qualified workers, the employment churn rate is low because employees find the company a great place to work and are rewarded intellectually and financially.
Dibble was also asked if he would hire employees from outside the area or locally. “We would want to set up shop somewhere and hire locally, but also give people the option… whether you have a cubicle in San Francisco, Bend, or Salt Lake, we would make that a benefit of working for our company. You don’t have to be captive in San Francisco and get the $2 million 900 square foot home.”
Sahil Jain, CEO of another Bay Area start-up, Ad Stage, echoes the same theme. Ad Stage provides an all-in-one advertising platform for Facebook, Google, Bing and LinkedIn. “I’ve been told how wonderful Bend is [and]we’re always looking to expand. You all know how hard it is to hire in the Bay area. But not only that, you know how expensive it is. So, if there is a really good source of developers here, it would be very interesting for us to open a satellite office.”
The ability to produce qualified workers has been the roadblock for high tech development in Central Oregon for years, but Becky Johnson, vice president for OSU-Cascades, reminded the group that their goal is to have 5,000 full-time students by 2025. Last summer the state legislature gave the University the go-ahead to begin development of a four-year institution that will include curriculum parameters to help fuel the growing high tech need. Campus expansion will attract the first freshmen enrollment beginning in 2015.
According to Big Bend Theory organizer Bruce Cleveland, “We’ve talked about building an educational brand around data sciences which is an enormous area across every industry. It requires math, statistical, and computer science skills. If you could design some very specific programs addressing these verticals, then you could create a name brand for the university. That would differentiate the university.” Vendetti adds, “You need to develop talent, and a university attracts talent. The gap is finally being filled by OSU.”
The two venture leaders are optimistic about attracting more high tech to Central Oregon. Both expect to look back ten years from now and see success. Cleveland knows there will be no single thing that will be the ‘killer piece’ to drive that success. “But,” he adds, “I do believe it is getting a company that is currently scaling to locate a division here that will be the wedge.
It doesn’t have to be a Google or a Facebook. I think it could be a company like Aria Systems, which is growing phenomenally fast and needs to attract talent. If we can get one of those… and I have a little extra influence with them… if we can do that… that will be the anchor tenant, and from there we can build.” Vendetti adds, “If it is a company that is growing and scaling like Aria because they will likely go public, we will elevate the high tech awareness in Bend and attract the talent we need.” The Big Bend Theory has taken initial steps to do just that.
