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Approaching Critical Mass

news kidcompIs 2014 the year Santa Cruz lands on the tech map?

Just as the modern computer evolved from the massive, lone calculating machines of days past into a network of sleek, interconnected devices, so too has the tech sector of Santa Cruz County developed from a few large companies (think: Borland, Plantronics, and Santa Cruz Operation) into a sprawling web of freelancers, startups, and beyond.

“It seemed like it shifted suddenly,” says Sara Isenberg, publisher of the online tech digest SantaCruzTechBeat.com. “It seemed to me like there was a big bang of tech that wasn’t just based on big companies.”

Isenberg points to 2008 as a turning point thanks to the foundation of shared coworking offices like NextSpace and, later, Cruzioworks, and the emergence of groups and events that served as binding agents for techies in the county, including Santa Cruz Geeks (which is now mostly inactive), Santa Cruz New Tech Meetup, and TechRaising.

Isenberg launched her tech news site last July as a source of information for local techies, as well as the general public. She feels that Tech Beat, Santa Cruz New Tech Meetup, and TechRaising form the pillars of the current tech community.

“These are organizations run by volunteers that are like glue that help the community be a community,” says Isenberg.  

From this environment, nascent Santa Cruz-based companies like Five3 Genomics, Looker, and MakersFactory have sprung up in recent years and have begun to attract national attention. With the eyes of the larger tech world examining the burgeoning success of local startups, it begs the question: is the county on the verge of a tech boom?

For some, such as David Britton, founder and president of MakersFactory, the answer is simple.

“We’re definitely at a tipping point,” says Britton, whose company specializes in 3-D printing out of its office at Cruzioworks in Downtown Santa Cruz. “I’ve been working for about five years on an ecosystem change in town from one that is tourist oriented [to one] that is [also] tech oriented.”

Looker is another Cruzioworks-based company that is attracting interest. It specializes in analyzing large quantities of data in order to assist customers in locating valuable trends within a mass of information.

“There’s a big play in growing companies of how they actually get value out of data,” says CEO Frank Bien. In August 2013, Looker secured $16 million in venture funding to expand its business, and currently employs a staff of 40.

Five3 Genomics, which is located at Nextspace, also deals with big data, but in the form of DNA and RNA sequences. Using two algorithms patented by the founders—UC Santa Cruz graduates Steve Benz, Zachary Sanborn, and Charles Vaske—the Five3 Genomics team compares rogue tumor cells to normal cells in the body to be able identify which treatments will be most effective in fighting and stopping cancerous growth.

“Above all of our technology, what we are really trying to do is help individual patients get the best treatment and help them live the healthiest lives that they are capable of living,” says Benz. “In order to do that we need to have talented employees, have a healthy environment for our employees to live in, and be able to utilize other companies in the city for services. If the tech scene is healthy it makes our job easier and makes us more successful.”

All of these companies have one unifying thread—coworking environments, be it NextSpace or its cousin, Cruzioworks.

“If you look at all the studies on innovation, it requires collaboration and a lot of different ideas bumping into each other on a daily basis,” says NextSpace cofounder Ryan Coonerty.

Taking this concept into a new arena is Jacob Martinez, program coordinator for the nonprofit ETR Associates. Martinez is in the process of forming Digital NEST, a communal workspace designed primarily for youth and young professionals between the ages of 12 and 24 who have an inclination toward tech, but lack the resources to pursue their passion. 

Set to open in Watsonville in November, Digital NEST (which stands for “Nurturing Entrepreneurial Skills with Technology”) will provide young people with computers preloaded with software like Adobe Photoshop and Microsoft Office in a communal space where they can choose to work together or alone. Martinez envisions that Digital NEST will serve as an incubator for the tech professionals of the future.

“With Santa Cruz’s rising technology culture, there needs to be a workforce and, more importantly, a diverse workforce,” says Martinez. “That’s what we are creating here in Watsonville. We are trying to engage more young women and girls in technology and by doing that we can feed the emerging tech industry.”

Although it has been historically more difficult for tech startups in Santa Cruz County to attain investors, groups like the recently formed Central Coast Angels, which plans to invest around $2 million annually, is making that process easier.

“Equally important to money will be the guidance and mentorship that experienced executives and investors can provide to Central Coast start-ups,” says Bud Colligan, founder of Central Coast Angels, in an email to GT.

Having local venture capitalists with a stake in Santa Cruz County is vital, but according to Benz at Five3 Genomics, intelligent investors will fund a company based on its potential merit, not its location.

When asked why they decided to build their companies in Santa Cruz and not “over the hill” in the already established tech havens of Silicon Valley or the Bay Area, Bien and Benz both point to the natural beauty and relaxed atmosphere locally, which they feel serves as a draw for new talent.

“What we really felt when we came down here is that we could leverage the natural benefits of Santa Cruz to attract top talent, and that is what we have been able to do,” says Bien.

According to a survey released by Civinomics on March 20, of the local tech workers who commute to Silicon Valley from Santa Cruz by car, 78 percent stated that they would be willing to work for less money at a Santa Cruz-based tech company. This is in comparison to company-owned bus commuters, 46 percent of whom stated they would take a pay cut to work locally.

“We have people who would rather work here versus going over the hill,” says Robert Singleton, cofounder of Civinomics.

UCSC is another boon in terms of providing a talent pool for tech companies. With programs like the Project for Innovation and Entrepreneurship, which focuses on pairing graduates with companies in the area, and events such as the Hackathon on April 5 and 6 hosted by UCSC’s Center for Entrepreneurship, the university is taking an active role in growing the local tech sector.

Santa Cruz Mayor Lynn Robinson predicts a flourishing tech industry, but points out that the area’s broadband capabilities could be improved to help foster this growth.

“But there are enough of the right people at the table right now to charge ahead and make those things happen,” says Robinson.

Access to broadband is essential for technology companies in the area to thrive and grow. Fortunately for the local tech industry, city and county governments have been working to align with the private sector to expand the broadband infrastructure with the drafting of the City of Santa Cruz’s Broadband Master Plan, and county policies like Dig Once, which alerts local broadband providers when construction projects will be conducted so that fiber optic conduit cables can be installed.

Only time will tell if the local tech industry will experience a boom, but according to James Hackett, business development manager at Cruzio, all the elements are in place.

“The broadband initiatives on the county side,” he says, “the phenomenal success of Nextspace and Cruzioworks, the companies growing out of these spaces like Looker and MakersFactory, startups coming out of NextSpace like Five3  Genomics, a forward-thinking local government, UCSC and the other scientific facilities in the region that are bringing national attention, dollars, and brainpower to the area—all coupled with our geographical location—make it an almost perfect storm, ready for an explosion of tech growth.”


Comments (1)Add Comment
Associate Director of the Everett Program
written by Thomas Gelder, March 27, 2014
Great article! We're big fans of Jacob Martinez from ETR and have partnered with him on many projects. Most recently he recruited 12 WHS kids to participate in our summer tech camp. They made "College Mentor App" that got them national press http://on.nbclatino.co/1bA9Hvu . We're looking forward to the opening of the Digital NEST!

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