How Nevada is trying to grow its tech sector — and succeeding slowly

Downturns prove time and again how important it is for Nevada to diversify its economy. The state must protect itself from the effects of relying too much on one industry.

But economic diversification has been an unattainable goal for decades. The Great Recession hammered the point home again.

When Brian Sandoval ran for governor in 2010 and took office in 2011, he made diversification a key piece of his platform. The cornerstone of his effort is broadening technology.

Consider:

• Nevada wants to expand its aerospace defense industry and has thousands of acres of open space for testing facilities at the Nevada National Security Site, formerly known as the Nevada Test Site. The state is looking to be a key player in the development of unmanned aerial vehicles — drones — for civilian purposes.

• The state has embraced clean energy and has several initiatives in place to take advantage of local solar, wind and geothermal resources.

• Nevada is relatively free of earthquakes and catastrophic storms, making it a good candidate for electronic data and records storage. Several companies have recognized that and have built or are building facilities to protect servers.

• Technology is rapidly changing the gaming industry. Technological visionaries are finding new ways to entertain people and deliver better experiences. And Nevada is one of the nation’s leaders in the development of Internet gambling.

The push to expand the state’s tech sector already has begun. Las Vegas companies such as Switch, a data center for Fortune 1000 companies, and IT Strategies, a technology consultant, not only settled here but are helping to market the state to colleagues.

“We’ve been a secret for a long time,” said Kristi Overgaard, who leads Switch’s brand development efforts. “But it’s time for us to make a difference.”

Switch founder and CEO Rob Roy has shunned publicity through most of his career but has shifted his philosophy — a good thing both for Switch and the state. He accepted Sandoval’s appointment to the governor’s economic development commission and even hosted commission meetings at his high-security Switch SuperNAP facility.

Such partnerships are key, according to Steve Hill, director of the state Economic Development Office. Selling Nevada as a technology hub requires endorsements from tech companies that already are here.

“It’s critical that this be a private sector-led initiative,” Hill said.

Successful Nevadans must sell both the state’s business-friendly climate and its quality of life, those leading the effort said.

“One of the things I think we need to emphasize is that Las Vegas is one city that has the undercurrent of ‘anything is possible,’” Overgaard said. “Here we are in the middle of the desert, yet we have New York City on one corner and Paris on another. There’s energy night and day. And for the most part, our leaders say, ‘You want to do that? OK.’

“I think years ago, quality of life was a more difficult conversation because the Las Vegas brand is so embedded in casino life,” she continued. “But that’s changed. We’re now a better balanced community.”

Overgaard pointed to the ongoing transition downtown as an example of how the city is moving beyond just the casino industry. Still, negative perceptions about Las Vegas remain one of the challenges in efforts to recruit tech companies to Southern Nevada,

“We’re really not known as a tech hub,” said Mike Yoder, chief technology officer for WinTech, a Las Vegas company that developed virtual office receptionist technology. “When you think of Las Vegas, you think of Elvis and showgirls, not technology.”

While Las Vegas’ image in some ways hurts recruiting efforts, Nevada’s low tax rate helps balance that out.

“The draw for Nevada has always been the attractive tax structure and its friendly business laws,” Yoder said. “Especially when you compare it to California.”

Cheap housing also is a draw.

“Housing has always been pretty attractive, even though we’ve had a lot of negative stuff with the foreclosure crisis,” Yoder said. “But the flip side of that is that we do have some very affordable housing here now.”

Tech companies are working together and becoming better connected through the effort. Those partnerships also must continue for the state’s tech sector to grow, Yoder said.

Efforts by the Las Vegas Chamber of Commerce, the Nevada Development Authority and the Technology Business Alliance of Nevada are helping the cause.

The alliance is a growing organization that aims to foster high-tech growth in Nevada. It is dedicated to helping startups find employees, customers and financing.

Most everyone associated with TBAN has business associations from out of state, so it’s a matter of coordinating efforts to find companies to entice to move or expand here.

It isn’t easy to recruit companies that are well-established elsewhere, but Southern Nevada can — and must — market its business-friendly and tech-hungry environment, said Tori Abajian, director of business development for IT Strategies, which addresses strategic planning, project management, system analysis and programming.

“The infrastructure is excellent,” Abajian said. “We have data centers and connectivity to the Internet. We have good people in town that are very skilled. We have the ability to fly in and out of nearly every place in the world. And there’s no state income tax.”

Of course, there are challenges too. Nevada is continuously criticized for its shortcomings in education.

“There’s definitely still a stigma over schools,” Abajian said. “But I think you’re going to find some good and bad on this like you’d find good and bad anywhere.”

As for higher education, Hill said IT companies looking at Nevada aren’t necessarily seeking massive changes to the university system, a fix that would take millions of dollars the state has little hope of raising. Instead, they’re interested in seeing computer industry certification programs developed by private colleges or even high schools.

Other companies want to partner with universities on research programs and have met with department heads at UNLV and UNR to develop programs to meet their needs.

The state hopes to help that effort by bringing together investors and people in the local tech sector. The Nevada Institute for Renewable Energy Commercialization, for example, recently assembled about 150 people for the first-ever SciTech Hookup, a fundraising showcase for entrepreneurs, investors, business people and community leaders. The event included speakers and panelists who discussed the challenge of building a tech economy in Southern Nevada’s gaming-dominated landscape.

Among the challenges they mentioned is persuading many of the city’s wealthy retirees to contribute to tech research programs at local schools. Many of the residents are transplants with ties to other institutions and are more inclined to give gifts to them than to UNLV or UNR.

State officials also announced at the SciTech event the launch of Project Vesto, a contest that offers a $100,000 prize to a startup with less than $1 million in revenue and $100,000 in external equity. A panel will judge five-minute pitches by entrepreneurial contestants, then Nevadans will choose a winner by voting online.

Organizers hope to host more networking events with the ultimate goal of creating a Permanent School Fund to support public education through profits generated by investments in science and technology.