Banking & Finance  August 23, 2016

Tech CEOs: Boulder’s innovation economy must overcome hurdles to sustainability

BOULDER — Jim Moscou is bullish on Boulder and the city’s innovation economy. Formerly a journalist for publications such as Newsweek and U.S. News & World Report and now a tech startup founder in the natural and organic industry, he’s been calling Boulder home off and on for the past two decades. Before founding Spiffly last year, he served as CEO of Sir Richard’s Condom Co. and as a managing director and strategist for advertising giant Crispin Porter + Bogusky. “I always tell people the American West is alive and well,” Moscou said Tuesday. “This has been a place for hundreds of years where people come to reinvent themselves.”

That doesn’t mean Boulder’s innovation economy isn’t facing some real challenges at a time when it seems the city’s brand has never been more amplified. In particular, Moscou points out the difficulty for startups to land funding in Boulder compared with larger innovation hubs such as Silicon Valley, as well as the competition for talent as the price of housing soars and nearby Denver gains its own reputation as a tech hub.

“It’s definitely at a peak,” Moscou said. “Whether it’s sustainable is a little to be determined on the tech side. … It’s really competitive to get great talent.”

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Moscou was among several local tech leaders gathered Tuesday morning for BizWest’s CEO Roundtable on innovation at accounting firm EKS&H’s downtown Boulder office. Moscou’s observations were echoed by many around the table who acknowledged Boulder’s strengths but also gave the sense that the city can’t get complacent with its current status if it is to maintain the strong state of the local innovation economy.

To be sure, Google’s expansion in Boulder helps bolster the city’s tech economy as a cornerstone employer. But there are also examples of homegrown companies such as SendGrid moving their headquarters to Denver to accommodate growth that highlight the limitations of city of 100,000 or so people.

John Tayer, CEO of the Boulder Chamber, said the migration of growing companies to Denver — or at least opening new offices there rather than locally — isn’t an unusual trend. He said his organization constantly monitors factors that contribute to that such as transportation, housing affordability and workforce availability. But imperative, he said, is the need to continually try and draw visibility to Boulder and cultivate the entrepreneurial environment that is here.

“That’s how investors know this is a place to look for businesses they can invest in,” Tayer said.

Attracting more outside investment might be key. Multiple people Tuesday expressed the notion that the high number of startups launching in Boulder — thanks in part to the proliferation of accelerators in recent years — might be starting to fatigue the limited pool of local investors.

“I think they’re getting almost bombarded now with so many startup opportunities that it’s hard for them to make decisions with so many requests,” said Simon Knapp, cofounder and CEO of Pixmoto.

On the talent side, Knapp said Boulder has no shortage of tech talent, but noted that the price companies have to pay here to land that talent compared with Denver is 10 to 20 percent more because of the cost of living.

Of course, proximity to Denver is seen by many as an advantage for Boulder as well, even if there is some leakage of jobs.

Anke Corbin, founder and CEO of Globig.co, said many small cities can only wish they had a “graduation city” such as Denver nearby as they try to attract new businesses and startups.

“Having that place you can go as your company matures … I think that’s as big an opportunity as it is a challenge,” Corbin said.

THE GOOGLE FACTOR 

Both Moscou and Krista Marks, CEO and cofounder of Woot Math, expressed their excitement about Google building a new campus in Boulder, where it plans to eventually employ up to 1,500 people. Marks likened the impact to other large firms that have located in Boulder County such as IBM and Xilinx. While new college grads aren’t always ready to take the plunge into the startup scene, they are attracted to the Googles of the world, companies where they can “ripen.” Xilinx senior director of FPGA Architecture in Longmont Trevor Bauer said Google’s expansion creates a win-win scenario for larger local employers as well.

“I think that’s actually an opportunity for a bigger talent pool (for startups to mine),” Marks said.

Scott Green, engineering site director for Google’s Boulder operations, said Denver, by virtue of its size, certainly provides a clearer path than Boulder for picking a spot to start a company and then growing in that same location. But he said Boulder still has advantages in lifestyle that have helped the tech giant successfully attract talent, some of which would likely be lost if the company had chosen to move to Denver to grow its Colorado presence.

“We’ve grown organically in Boulder,” Green said. “We have 500 people now. To move to Denver wouldn’t be the same 500 people, more than likely.”

FINDING MONEY 

Moscou, Knapp and Sean Kelly, cofounder and CEO of Boulder startup Wuf, said they’ve all found the vast majority of their investment capital outside of Boulder.

“It’s really about the virtual investment,” Knapp said. “It’s finding the right person that doesn’t have to be in the city that you’re in.”

Part of the difficulty in landing funding, some said Tuesday, is that there’s been a bit of a shift toward angel investors taking a venture capitalist’s critical look at startups. Knapp said the term angel investor used to more aptly imply that those would be the investors who would believe in an idea first but maybe not have so much of a hands-on roll in the company’s growth.

That’s one argument for local startups expanding their searches for early capital beyond just Boulder, Kelly said.

“There’s tons of investors still out there who don’t need to see every metric about what your company is,” Kelly said. “They just need to believe in the product, the market, the founder, the team, and then be ready to go.”

Kelly said sophisticated investors are a good thing, but that some get too tied up in comparing every startup’s metrics to those of big-name examples.

“That’s not how innovation happens,” Kelly said. “Innovation happens sporadically, through passion, happenstance.”

LONGMONT RISE? 

Stephen Heston, cofounder of Longmont-based Diabase Engineering, which makes components for 3-D printers, said the issue for him hasn’t been a lack of funding sources but rather turning away potential investors because the company is trying primarily to self-fund.

“What we’ve found is people (in Longmont) are hungry to invest in local startups, especially hard goods,” Heston said.

Just in the few years he’s lived in Longmont, Heston said he’s seen the makeup of the community shift to a younger crowd interested in entrepreneurialism.

“I think the cost-of-living situation is definitely benefiting Longmont,” Heston said. “I don’t know how many of those people are coming from Boulder.”

Tayer noted his own obligations toward the Boulder Chamber’s constituents but said it’s also important to note that Boulder’s ecosystem is supported by surrounding Boulder County communities like Longmont and Louisville.

“We need to think more holistically,” Tayer said. “Parochial is good for me, but for the health of this whole ecosystem we need to think county-wide and maybe even regionally.”

FRIENDLY BOULDER

Much is often said about the friendly culture that Boulder’s startup scene is known for, where startups help each other out to foster innovation rather than innovating to stomp each other into the ground. It’s a “give first” mentality preached years ago by people like Techstars cofounders Brad Feld and David Cohen.

Corbin and Kelly said building that culture doesn’t happen by chance. It’s something that’s explicitly passed along by entrepreneurs who are already here to those who are new to town. Kelly said he heard the message soon when he first moved to Boulder.

“I said, ‘I definitely want to do that, too, and be part of that,'” Kelly said.

Participants in Tuesday’s CEO Roundtable included Trevor Bauer, senior director of FPGA Architecture, Xilinx Inc.; Anke Corbin, founder/CEO, Globig.co; Scott Green, engineering site director, Google Inc.; Stephen Heston, cofounder, Diabase Engineering; Sean Kelly, cofounder/CEO, Wuf; Simon Knapp, founder/CEO, Pixmoto; Krista Marks, cofounder/CEO, Woot Math; Jim Moscou, cofounder, Spiffly; John Tayer, president/CEO, Boulder Chamber. Sponsors: Jim Cowgill, EKS&H; Jeremy Wilson, EKS&H; Jared Crain, Berg Hill Greenleaf Ruscitti. Moderator: Christopher Wood, editor/co-publisher, BizWest.

BOULDER — Jim Moscou is bullish on Boulder and the city’s innovation economy. Formerly a journalist for publications such as Newsweek and U.S. News & World Report and now a tech startup founder in the natural and organic industry, he’s been calling Boulder home off and on for the past two decades. Before founding Spiffly last year, he served as CEO of Sir Richard’s Condom Co. and as a managing director and strategist for advertising giant Crispin Porter + Bogusky. “I always tell people the American West is alive and well,” Moscou said Tuesday. “This has been a place for…

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