Idaho’s mountain vistas may be a far cry from Silicon Valley’s bustling streets, but the Gem State is a growing tech hub, boasting startups such as Cradlepoint and Vynyl as well as stalwarts such as HP and Micron.
According to the Idaho Department of Commerce, technology and science are major economic drivers in the state – adding up to 2,100 establishments and 20,000 jobs. During the past decade, the sector grew by 61% to add up to over $6 billion for Idaho’s economy. And the Idaho Department of Commerce projects a 20% growth rate in tech/science during the decade to come.
Yet there are challenges in Idaho’s tech landscape, particularly when it comes to talent acquisition. How can the state attract top engineers, computer scientists and entrepreneurs – and prevent home-grown talent from heading out for larger markets?
At the Idaho Business Review’s Oct. 1 Breakfast Series, four expert panelists addressed issues of retention and recruitment in technology. The transcript has been edited for length and clarity.
Rhea Allen, president/CEO of Peppershock Media and an experienced mentor of women-led startups
Nick Crabbs, co-chair of Boise Startup Week and partner and founding member at Vynyl
Amit Jain, chair of the Boise State University Department of Computer Science
George Mulhern, CEO and chairman of the board at Cradlepoint
Moderator: Bradlee Frazer, partner at Hawley Troxell and chair of the firm’s internet and intellectual property group
The need for quality K-6 schools
Things are really moving in the right direction; some things we bump into occasionally. It’s easy to say we need more computer science majors and engineers. I would say Boise State is doing an amazing job in stepping up in the output in terms of — I don’t know what you were graduating five, 10 years agom but today it’s significantly higher and really high quality.
So I think that is really been improving. The place where actually we bumped into a couple of issues is a lot of folks who want to come to Idaho are, maybe they were born here and left for jobs. They want to come back and raise a family; it’s a great place to raise a family, great quality of life.
A few of them had said, “I don’t see any kind of technology influence in the K-6 (schools).” So we’ve actually had a few people turn down jobs because they couldn’t find the right schools for their kids.
So that’s a challenge, to find the teachers for those, but I think that’s an area where the state could probably do a better job or help in some way.
Idaho quality of life a draw
I was interviewing someone, and I was sitting at a sidewalk cafe in Downtown Boise on 8th Street. This guy looks at me and goes, “God, this is like Disneyland. It’s so clean. The people are so friendly.” I mean, he was just blown away.
And we bring all of our company recruits up to Boise even if they’re not being located in Boise. The culture of our company kind of maps to the culture of the city. It’s a fantastic culture that people want to be a part of.
I just wanted to make a quick comment, to follow George, because I’m going to defend a statement. It’s not popular.
In high schools, kids are taking computer science classes. What, about 40 of them in 2014? This year, there’s 1200 just in the Treasure Valley. It’s also spreading across the state.
Exposing students to the idea that, “hey, you can start your own company,” — even if they’re not successful, those types of students will make better employees for other companies because they understand how businesses work.
We have started an entrepreneurship emphasis in computer science. Each of those students will have a startup company by the time they finish. I think we need to just expose them to more all the way through K-12.
Startups need three basic ingredients to be successful: Access to talent, access to markets and access to funding. I think access to talent has been improving. I know that my company, for about 16 open positions this year, we assessed close to 3,000 applicants, most of which were in Idaho. So, I feel like that that’s getting better and better and better.
Access to funding, I think that’s still a struggle as George mentioned, but every time I see an early-stage company, if they have a real customer, if they’ve built some traction, the money’s the easy part. They can go out and find some money, even if they have to leave.
I look at the company Lumineye, who joined Boise State’s Startup Week pitch competition last year. They build a radar sensor for first responders and soldiers that you slap to the wall, and it connects to your phone and you can see through the wall.
All I had was the prototype the last time I ran it. They left Boise, they went to Y Combinator, they got quite a bit of funding. They got another grant from DOD and low and behold, they moved back in Boise and are now opening that company here.
That’s the kind of behavior that we want to see more of, more and more of these folks leaving and coming back as opposed to leaving and staying. Boise’s not a large enough market to sell into exclusively, so you have to have a plan as a startup here of how you’re going to take your product outside of the place you live.
It’s a lot easier to be in Silicon Valley and kind of knock on doors, so to speak, and get your product some early traction, early customers. But you have to have a plan for it, you’re not going to get the funding if you don’t, and as long as you can figure out those three things, you’re probably going to have a better shot at success.
Reasons why they fail specifically, these are the typical reasons, right? You don’t have the right team in place. That’s probably number one: you have an idea, but you don’t put the right team in place and you can’t actually execute any of your plans.
Beyond that, you don’t get plugged into the ecosystem. Places like Boulder and Silicon Valley and Seattle, why they have success is because there’s a concentration and they help each other. Startup founders are some of the most generous people I know when it comes to making someone else successful.
Attracting more women and minorities to tech
I think it all starts with your culture and thinking about how you want to include minorities and women in your culture and the workplace. Be able to express those values to other people to then attract the right kinds of people that are in alignment with your company culture, your values and do value based hiring.
Utilize unbiased words in your descriptions to help attract those types of people that would want to work there, so you can create an inclusive work environment. I mean especially for women, if they’re entering into a workforce that is predominantly male, invite them, welcome them, get them into the mindset that your workplace is inclusive.
I think it kind of goes back to understanding what a woman goes through when they are in a predominantly male field, and so empathizing with them and understanding what they need in the workplace, especially if they have children or if they have family to take care of.
Being understanding of that and then working on your employee and employer branding so you can attract other people by utilizing your employees and by having them have that sense of pride to work there and tell other people about it.
Idaho salaries vs other states
It depends on the function you’re hiring for. Housing’s getting more expensive here for sure; it’s definitely increased. But with the cost of living difference, the hassle difference, we have folks moving. Boise’s getting more and more attractive. We have to compete, but we don’t have to match.
I will say, there is a wide variation of salary students are getting here. It ranges anywhere from $60,000 to $65,000 to $100,000. The average for our students is around $80,000 at this point. That is the average salary that they can get in terms of cost of living in Seattle and Portland. It’s comparable.
We get a lot of kids from Seattle and Portland, especially UW. If you can get in, it’s extremely competitive. We get a lot of people transferring from there; not a single one wants to go back.
They want to get a job here, and that’s what they do — 93% of students accept jobs here. The cost of living is competitive, that they don’t want to go back and look for a job.
I had a student go to Wall Street. She wanted to go to work there, and then she compared the money she had left over for the month with students who stayed back here, and she was worse off than her peers.
About half of our employees are here and the other half are kind of split between the Bay Area, Los Angeles and Phoenix. Those are relatively small teams in those areas comparatively, since our biggest office is here.
So, the tell for me is that we offer to relo any of our employees to Boise if they want to go. And we usually sponsor Treefort, so every year during Treefort we have wristbands for all our staff, and we invite them to come up, on us, and do Treefort with us.We hand them a wristband when they get here and dare I say, party a little bit. But you know, the point is to show them something that’s really exciting that goes on in Boise, to show them the culture that’s here, show them our office that’s here. That’s been our little strategy to relo folks here; it’s worked very well, it’s pretty potent.
I also want to talk a little bit to the diversity and inclusion question that came a little bit earlier. Be intentional with how you’re recruiting, and the reason I say that is when Vynyl was first starting out seven years ago, we didn’t have the ability to pay salaries at a national level. We didn’t have the same traction we did; we were really, really early. So we had to get really strategic with how we recruited; nobody had heard of us.
We started going to LGBT groups and Pride and advertising in those areas and recruiting in groups that historically have not been recruited very hard in. And so now, seven years later, what have we learned from that experience? What we learned was that we had very loyal employees that worked for significantly longer than the average in the state at our company. And I think we did the same thing with the Women and Leaders group here now.
So if you’re very intentional about where you’re spending your dollars for recruiting in terms of branding and what you’re doing can have quite a big effect in your company’s diversity.
At one point in time, our company was about 30% LGBT. That’s a lot, and so I challenge everybody here to think about how they can be intentional when they’re doing that.
I did a panel about including women on boards, and if you have a woman on your board, it’s proven that you’re going to be more profitable. Simple put.
Angel investing options
Go to Utah. Last year, I was leading the Women Entrepreneur’s panel. It was hosted in Utah, and it just astounded me how many angels and VCs there were. So sometimes you have to go outside and bring it back, and now there’s partnerships between Utah and Boise.
Go where the money is and then bring it back. That’s happening. A lot of people are investing that are from outside of Boise, are investing in Boise.
Self-serving answer, go to Boise Startup Week. So we’re much lazier at Startup Week. Going to Utah, it’s a five hour drive, one-hour flight — it’s just way too much effort. We invite them to come to Boise.
Last year, we had about 12 venture capital firms that we invited who came. This year, something close to that. They’re participating in our pitch competitions; they’re participating in a lot of early stage stuff.
And so I think that you just need to have gravitas around what you’re doing as a community and being intentional. That’s the great thing about Startup Week. With basically every organization, we’re able to be very loud, we’re able to be very intentional, we’re able to show the story that these startups are worth investing in.
For the investor, it’s a lot easier to spend five days in Boise looking at the whole array of companies than to see them one at a time as they take the drive to Utah.
I talked to a very well known investor in Boulder. We were talking about investing, and he said, “I invest in 60 companies a year and maybe 5% get a follow-up investment.”
When you’re in that early stage, so many things that can go wrong. You never know, and one or two are going to hit. But no amount of due diligence actually, I think, in that very, very early stage is going to tell you whether you’ve got a winner or a loser.
So much just depends too on perfect timing.
‘Hundreds of pitch meetings’
It was not easy to raise money for a couple reasons. One, in the early days nobody wants to invest in hardware, they want to invest in software. But we didn’t have a real track record.
I spent a lot of time in the Bay Area trying to fundraise, and typically what I heard from an investor was, “why would I invest in Boise, Idaho?” I’ve got a hundred other companies I could take a look at here in Silicon Valley.
So it took quite a bit of time to get folks on board. I think the later stage investors now though are much more willing to move outside of the Bay Area and New York because they see their values frankly.
Companies in Silicon Valley are so overvalued. We just had a company that approached us to buy them. They had revenue of a million and a half dollars and their valuation, $80 million. There was just no way.
I travel around quite a bit, kind of looking at other ecosystems in Seattle, Portland, the Bay Area, Chicago, Philadelphia. I had this conversation where they’re interested in Boise and want to talk to me about Boise. And low and behold, they all happened to know about some of the big deals that happened here in the last few years. They asked me about TSheets; they asked me about Cradlepoint; they asked me about Kount.
When you go to these places, you can rattle off five to 10 companies that have had successful exits that have done well with that funding the last five or seven years. That’s helping the case a lot.
I think there’s a lot of good stuff here. It is getting easier and easier, and getting better and better and better.
It’s getting easier. (Seattle investment company) StageDotO, they just bought a house on Main Street. They just invested in a startup; one of my students is a part of that. I think it’s starting to happen.
I think Boise State Venture College, they help a lot of startups. A lot of the business colleges will be happy to. I know, personally, a lot of people that have exited and are looking for good ideas to invest in.
Just reach out to the business college or the Venture College and just say, “hey.” I know the Venture College invites 40 different investors to come and connect with the students. So they obviously have connections.
BSU tech graduates staying in Idaho
For the Boise State CS program, typically about 90 to 95% stay. Is anyone here working for Amazon? My student, he got a job in Seattle. He accepted it in January, graduated in May, and then three months later he got an offer from a Boise company.
He backed out from his offer at Amazon. Amazon was livid. They called us and they said, “how are you going to punish this student? It’s absolutely unacceptable.”
I said, “look, I can’t do anything. At the student seminar, we’ll talk about how to accept jobs and what does it mean, but you can’t prevent it.” I said, “if you’re so desperate, you can open an office here.” The guy was screaming. They stopped looking and they had everything lined up for the student, and then he dropped out, which is bad and very unprofessional, but end of the story is that students don’t want to go there (Seattle).
Gender-based funding disparities
One of the things that happens, there’s kind of a disparity that happens where a lot of the funding that does get funded goes to companies run by men. It’s not just because men get all the money because sometimes women are afraid to ask for it and don’t know what alternative funding means.
When we put on these educational events, often times, there’ll be women in the audience who will look at the panel and then they’ll rise to the occasion and say, “well, if they’ve done it, so can I.”
Some of it’s just educating people that there are ways to get alternative funding, that there are venture capitals and angel investors out there that can support them, and it’s just encouraging them to take a step forward.
And not just women. Sometimes people don’t go after it because they fear the failure part of it. I think that sometimes there might be opportunities that go unnoticed or undone.
Well, first I’d ask for my dad’s Visa, right? To get started, get something going. But I think you have to start to build a network. You’ve got to get out, you’ve got to knock on doors, you have to talk to people. VCs get a hundred pitches a day. I mean, they’re always coming in, and it’s really it’s the folks that know someone, and they introduce you or that type of thing. They get a little more attention, I think. So there is no website. It’s really door-to-door sales and building a network.
Funding isn’t the silver bullet, and again, go out and find your first customer and an idea. The execution is the hard part, actually being able to figure out what your product is going to do, how it’s going to enter the marketplace with your competitors. An investor won’t even sniff you if you haven’t looked at that.
You can imagine the emails I get of “I have this idea.” I’m the chair of Boise Startup Week, so I get these emails like crazy, and I tell everybody the same thing: You need to go and look at how to build a company around your idea long before connecting up with an investor.
And George is right. I’ve raised money a few different times. The first check I’ve always gotten really early, it is friends and family, every single time.
There are different types of associations. Venture Capital.org is a mentoring organization that teaches startups how to pitch and how to ask for money.
Then there’s the Keiretsu Forum and other types of organizations that will do the due diligence and have investors that work together to do that.
Learn before you go and just ask for money to know how to do it right and what to look for and what kind of charts and graphs they are interested in seeing and understanding what kinds of things that they’re interested in.
If you’re going to go ask somebody for money, make sure you’re in alignment with the types of things that they will fund. If there’s social, if they’re giving money because it’s a social cause or if they look at different things, like if it’s a tech company, they might fund or, what’s in alignment with the types of funds that they’re given in the past.
That way you’re asking the right people and you’re not just randomly asking somebody that’s not going to be interested in what you’re doing.
Early exposure to tech/science careers
I think that’s important, and a big part of that is having teachers trained. Teachers don’t have a lot of time; they’re working 60 hours a week. But anything we can do to get more kids exposed in K-12, that would be a big part of having the pipeline coming up, people that are interested.
At the college level, it’s more complex. Boise State does great at computer science, but I think there’s really a lot of factors coming together. They’ve got big funding, and fortunately, the Boise State president at that point focused on that, made it grow faster.
We definitely need to scale our education a lot more. There’s a book that came out five, six years ago, “The New Geography of Jobs.” The whole things is, there’s certain kinds of jobs that enhance all of the fields. Some jobs, there’s a factor of two to three; some jobs, it’s a factor of five to seven. It’s a fascinating book about how different communities have changed over time
From STEM to STEAM
I believe that the pairing of arts and sciences is what really helps bring it together. So if you have the design and the user experience, you have to have the arts aspect of that too. You can make something work, but if it isn’t aesthetically pleasing or something that people can do, then it’s not as good as it could be.
I do want to pile on Rhea’s comment of adding the A. Probably the toughest position for us to recruit for is a front end engineer, When you think about the world moving to software, which it is, everything is being done in software now for lots of different reasons.
Graphic designers are really hard to come by right now. It took be six months to find somebody and he’s from Washington.
Educational system recommendations
During the recession, people weren’t having as many kids, and college students are going to go on the decline because there’s not going to be as many kids to go to college.
We were kind of talking about the differences of how things are changing in just the educational world all together, and what kinds of things people are going to want to focus on more and being able to be more flexible with students.
There’s also the sub economy, the subcontractors economy. They’re going to work here, they’re going to work there. And it’s going to be very different with how it’s going to be in the next couple of years just from this.
One thing the computer science task force is trying to get done is to make intro to computer science a required class for high school graduation. A very, very intro class. It’s not trying to train an engineer; it’s trying to maybe spark the interest that may or may not be there already. If that happens, there’s not a great foundation of teachers to take over the reigns. So one thing that is being debated right now is having industry folks essentially come and adjunct in a high school. Why not?
If that happens and you own a company here, you should get involved in that. I think that’s a great way to try to solve that problem. It might honestly be a better way.
The second one is our greatest asset in Idaho for solving talent pipeline as it relates to education is our public universities. Making sure that when you do release funds, you can be intentional with what you’re trying to do, and BSU did a great job of that, again.
The companies, on the other hand, need to be really aggressive about recruiting.
The original intention of Startup Week was not to find more funding for startups. It was not to encourage the ecosystem growth in that regard, it was trying to solve the talent pipeline problem. That was the main purpose of the first years of Boise Startup Week. We bus students from every university in the state of Idaho, mostly computer science students to Boise.
If you want to solve the braindrain problem, where our tax dollars go and pay for these great educations and they go somewhere else, be very intentional. Go recruit them aggressively, both here when they get bussed down and at their universities.
It’s actually kind of our fault that they do leave. People will go where they’re wanted. If you show a candidate that you want to appreciate them, that you’re going to pay them the right amount, etcetera, etcetera, they’ll come.
I’ve seen a lot of companies here kind of grumble about talent, but what they’re really saying is, “I can’t find enough seasoned 10-year veterans.” There is a shortage there, but you have to build that talent pipeline.
The last thing, just briefly, start earlier. I mean, we need to have more very introductory stuff kind of the K-6 level, the K-3 level, just getting the introduction. We send engineers out to a couple different elementary schools, and I don’t know why stuff like that isn’t going on every single week.
Universities as an economic driver
There’s a bigger onus on universities here to build a tech center, the tech environment, than in a lot of cities. Partly that’s because our big tech anchor companies are both hardware companies. If you look at HP and Micron, those are really companies that grew up in the hardware business, and so Amit graduating 100 CS engineers every year, moving to 200 or whatever, is really a critical piece of us being able to keep building this.
I will say now something that might be controversial for Amit. Another thing we can do is public-private partnerships with the universities, and what tends to get in the way of that is intellectual property. At Cradlepoint, we’ve had hard time partnering with the universities because the universities want to keep that intellectual property for themselves, which I get. Their students are developing it. But it makes it very difficult for a company like Cradlepoint, who eventually is going to have some kind of a exit right because we’re venture-backed. If we don’t own that intellectual property, that makes it very difficult sometimes to even raise capital.
There may be some models, and I haven’t looked into this for a couple years. You may have totally solved this, Amit.
Yes, that’s a really good point. It’s better for the university to get these things through than to hold onto some IP.
Owning IP in public institutions is a pretty interesting one because for a good portion of our history, those public institutions are really creating IP that sits on shelves and goes nowhere. A whole lot of it. So NASA’s going to come and talk about this at Boise Startup week and specifically about NASA and also some of Boise State’s IP.
The drive for talent
I’m actually not sure if tax incentives play that big a role in a software company’s coming. For me, when companies call, they’re always asking for talent. How many students are graduating? How many kids in high school are graduating? They want to know what the long-term plan is here.