What Sin City Needs to Become Start-up City
Robert Nielsen likes to say that the University of Nevada Las Vegas campus is situated at the center of the city's tech start-up scene.
Geographically speaking, Nielsen, who's the director of the school's Business Startup Center, has a point: Ten minutes to the north of campus is the much-buzzed about Downtown Project, an effort into which Zappos CEO Tony Hsieh has poured $350 million of his own money to turn Vegas into a start-up oasis.
About 20 minutes to the south of the UNLV campus is the Switch InNEVation Center, a 40,000 square-foot tech coworking facility that opened in April 2013. Several start-ups have leased space already, including Tracky, Zoomfile, Tabeso, Ticketcake, Originate, AlertID, and ANI.
Still, UNLV is not exactly the Stanford of the desert--not yet, anyway.
But if all goes according to plan, UNLV will become a major part of the plans to reinvent the city as a start-up destination. Las Vegas, like many U.S. cities--including Detroit, Kansas City, and Omaha--is eager to fashion itself into a place where government is friendly to entrepreneurs, real estate is cheap, capital is waiting to be deployed, and talent is plentiful. The university is doing its best to help with that last item.
"Startups are now mainstream--they're the new Hollywood," says Steve Blank, the Silicon Valley serial entrepreneur, author, and Stanford lecturer. "People now understand high-growth start-ups are a really important part of the economy. They want to emulate what we're doing here."
But as is seen in Las Vegas, making all of the right forces align to build a thriving start-up culture is more difficult than it at first seems.
The Makings of a Start-up Cluster
Start-up ecosystems--or "clusters," a term Harvard Business School professor Michael Porter introduced into the vernacular in the early 1990s--don't tend to materialize spontaneously. They require certain ingredients to take shape.
Brad Feld, a Boulder-based investor and author of Startup Communities: Building an Entrepreneurial Ecosystem in Your City, says clusters need "feeders" and "leaders." Feeders include universities, investors, corporations, and mentors, while leaders are the entrepreneurs themselves.
For a start-up cluster to exist, Feld says the entrepreneurs need to lead the way. "It's important to realize that being a feeder is not a bad thing," he says. "However, the absence of entrepreneurs as leaders, or the overwhelming leadership by feeders, will doom a start-up community."
Nielsen, for one, is bullish on the idea that those entrepreneurial leaders will come straight from UNLV. "This past January I had a chance to talk with incoming graduate students," he says. "I asked the audience, 'How many of you have thought about starting a business?' Probably 70 to 80 percent raised their hands."
Perhaps Tony Hsieh is Las Vegas' leader. He certainly has the will and the means to nurture a start-up community. The question becomes: Is one man's work enough?
Duncan Logan is one person who's watching what's happening in Vegas very closely. He's the founder and CEO of RocketSpace, one of San Francisco's elite accelerators (he calls it an "innovation campus") for high-growth, seed-funded tech start-ups.
Since its founding in January 2011, RocketSpace has become remarkably successful at attracting top-tier tech firms. It currently attracts 30-35 applications every week, and has been home to a few high-profile alums including Uber, Zaarly, and Leap Motion.
Now Logan is looking to take the RocketSpace model elsewhere--specifically to cities with a high concentration of tech talent, plenty of venture capital, and a strong political will. New York and London are in the works for later this year, but Logan has his eye on Las Vegas.
"Las Vegas is super interesting to us," he says. "Tony [Hsieh] set up a fund, and they've definitely got the political will. But it's really one man's effort. It'll be interesting to see if it really happens."
While Duncan is optimistic about the city's long-term prospects of growing local entrepreneurship, some concerns remain. Chief among those is the lack of a top-tier university. Compared to cities like San Francisco, New York, and London--where each has several universities within a 60-mile radius--Las Vegas has a relatively small number of college students. UNLV, which currently has about 25,000 enrolled students, is by far the largest four-year college in the area.
"Where is the talent going to come from?" Duncan says.
Feeding the Feeder
To his credit, Nielsen is doing his best to grow the Startup Center at UNLV to give the program more visibility. Last year, Nielsen applied for--and received--a $200,000 SBA grant to do just that. Now, it has a three full-time employees who provide assistance to student entrepreneurs and help grow the roster of Las Vegas-based entrepreneurs who serve as mentors to the students. They're increasingly inserting themselves into familiar start-up nodes: In March, Nielsen and a colleague traveled to South By Southwest, the first-ever official delegates from UNLV.
Besides the Startup Center, the school has a Center for Entrepreneurship, which is an MBA program with courses that guide students from the "idea stage" to creating a business plan, and, in some cases, an actual business. At the end of each semester, students compete in design competitions to win $15,000 grants to develop their projects. The school also has an operating VC firm, Rebel Venture Fund, that makes small investments (typically between $10,000 and $25,000) in Nevada companies.
Nielsen recognizes that the university feeder system is just one element of many that will ultimately contribute to the viability of Vegas as a start-up cluster--a process that may take decades to achieve. But, in true Vegas fashion, he believes the city holds a wild-card.
"You have risk takers in this town that just start doing something," he says.
PRINT THIS ARTICLE