Reno's gamble on tech startups is paying off
For most of America, Reno stirs images of worn-out casinos, strip clubs and quick divorces. But it is trying to change that reputation and reduce its reliance on gambling by taking advantage of its location and low taxes to gain a solid footing in the new economy.
The New York Times
RENO, Nev. — A street newly nicknamed Startup Row intersects this city’s old strip of casinos touting Money Maker Jackpots and Crazy Cash Slot Tournaments.
While old-fashioned slot machines are whirring nearby, this stretch of road has become a home for smartphone-app makers, cloud-computing developers and companies like one that builds tiny sensors that allow devices to connect to the Internet.
For most of America, Reno stirs images of worn-out casinos, strip clubs and quick divorces.
But it is trying to change that reputation and reduce its reliance on gambling by taking advantage of its location and low taxes to gain a solid footing in the new economy.
Instead of poker payouts, Reno now boasts of e-commerce ventures, an Apple data center and a testing ground for drones. It also hopes to attract a large factory to build batteries for Tesla’s electric vehicles.
“People believe in this town, and they’re tired of being presented as this joke,” said Abbi Whitaker, a local business owner. “When you’re at rock bottom, there’s a good chance to reinvent how you go up.”
Reno exemplifies how cities not far from California, including Boise and Tucson, Ariz., are trying to poach California’s technology culture to diversify their economies, marketing themselves as places where taxes are lower and environmental regulations are less onerous.
Reno is among the best situated, less than a four-hour drive from San Francisco and in a state with no corporate or inventory taxes.
It gained appeal nearly a decade ago after a licensing unit for Microsoft and a distribution warehouse for Amazon.com moved in.
California refugees were buying homes, lured by the relatively low cost of living and the 30-minute drive to Lake Tahoe.
Then came the Great Recession, walloping Reno’s gambling industry. At the end of the recession in 2009, homes had lost nearly half their value in 2006.
At its depths in September 2010, Reno’s unemployment rate was 13.4 percent compared with the national average, 9.5 percent, according to Moody’s Analytics.
But after several years scraping along the bottom in almost every measure of economic health, Reno appears poised to turn the corner, according to economists. Housing prices are starting to rise. The unemployment rate has declined to 7.1 percent.
New technology companies are arriving, and older ones are expanding. Zulily, a Seattle e-commerce company for women and children’s clothing and home décor, announced plans in May to double its warehouse and hire 600 people.
Most of all, civic boosters are on edge waiting for Tesla, Elon Musk’s electric-vehicle company, to announce the location of its new battery factory that is expected to employ more than 6,000 people.
Tesla has said it is considering Nevada, Texas, California, Arizona and New Mexico.
Reno competes for new businesses with Salt Lake City and Arizona, all of which are convenient for online retailers to set up shipping locations for customers in the West.
In Reno, where many workers have been employed in some aspect of the gambling industry, the workforce is less educated than in more populous cities, economists said.
Tesla, for instance, might have to recruit from elsewhere to find enough trained workers.
“We’re not going to wait for the gaming industry to come back,” said Mike Kazmierski, president of the Economic Development Authority of Western Nevada. “It’s not going to. So what are our strengths, and how do we capitalize on them?”
Kazmierski is encouraging Reno to prepare for the new kinds of companies his team is wooing.
A major part of his strategy is just up the hill from Reno’s casino strip: the University of Nevada, Reno.
The campus of 18,000 students has not played a major role in the city’s economy and is separated from the rest of town by Interstate 80. Students often earn their degrees and leave.
But it is starting to work with Kazmierski’s team to make sure students are trained in specific skills or even the languages needed by companies looking to settle in Reno.
The university created an on-campus office space for an Australian drone company that decided to open a research outlet in Reno, one of a handful of locations the federal government has selected for testing unoccupied aerial vehicles.
Separately, the university announced plans to take over an empty downtown building that will house a center for drone research.
Three years ago, Reno and the neighboring town of Sparks averaged four tours a month for prospective companies. Kazmierski said that had increased to 10, with scouts from 14 companies visiting in May.
“The most challenging obstacle to get over is our image,” he said. “That image of a second-tier kind of Vegas is embedded in their heads.”
Visiting executives are surprised to learn that the Truckee River cuts through downtown, where a restaurant scene is emerging.
Bike paths wind through the city and beyond, and urban gardeners raise chickens in their backyards. A new downtown boutique hotel has no casino. Instead, its main feature is its 164-foot climbing wall.
The Reno Collective, along Startup Row, offers a shared work space to foster entrepreneurialism.
In the same building, Eric Jennings set up his company, Pinoccio, two years ago, making tiny radio sensors for enabling Internet connectivity.
“There’s such a low barrier to entry here,” Jennings said. “If you’re passionate about something, you can just take it on.”