October 7, 2022

Las Vegas Gets Ready for Its Next Act

At a summit for California tech executives and entrepreneurs, Vegas officials and evangelists pitched the dream of transforming the desert city into a tech hub. 

The dusty drive out to the base of Nevada’s Red Rock Canyon was once dubbed the road to nowhere. About 12 miles from the glitz of the Las Vegas Strip, this was an undeveloped patch of sun-parched desert through the 1980s; now, mansions of the city’s richest residents — Celine Dion and Marc Andreessen reportedly among them — are threaded among the suburban streets and cul-de-sacs of a 22,500-acre master-planned community called Summerlin.

Home to about 100,000 people, Summerlin projects a somewhat more wholesome image than Las Vegas itself: There’s a public library and performing arts center, more than 300 parks, and 26 schools, 10 of them private. There’s also the only-in-Vegas stuff, like 10 golf courses and a billion-dollar casino a few doors down from the Costco. It was in Summerlin that a group of about 124 venture capitalists, tech founders and startup CEOs gathered in mid-September for a multi-day summit designed to position Las Vegas as an up-and-coming technology hub.

Some, like State Treasurer Zach Conine, were pitching the city to wealthy prospects; others, like Olympic medalist turned venture capitalist Apolo Ohno and Randy Lee, a former head of investments at Tencent, were being wooed.

The sell was simple: Forget California. Bring your family, and more importantly, your business, to Sin City.

Teddy Liaw, an entrepreneur who conceived and co-hosted the summit, kicked things off by sharing his own “why I left San Francisco” story. Liaw lived in the Potrero Hill neighborhood until January of last year, after his baby stroller was stolen out of his garage. (He told responding police officers that he had left the garage door open overnight, according to a SFPD spokesperson; Liaw remembers differently.) “It was very emotional. I didn’t want to be in a position where safety was an issue,” he said.

Liaw “looked at Austin, looked at Florida, looked at all the tax-free states,” and settled on the Vegas area, taking his family and CEO responsibilities with him. His was one of about 128,000 households that left the Bay Area in 2021, according to the US Census Bureau. The call center company he runs, NexRep, is still based in Portland, Maine, with 100 employees stationed in Nevada, but everyone there has long worked remotely.

“This is not a pooh-pooh fest on California,” he said. “It’s more [about] how great Vegas is.”

To make his case, Liaw convened his crowd of executives far from the touristy Strip — some talks were hosted at retired casino magnate Marc Schorr’s $20 million home in a gated Summerlin community called The Summit; others over lobster and burrata at a steakhouse nearby. The glitzy surroundings made an appropriate venue for this conversation, suggesting that the fortunes of Las Vegas were again on the upswing.

Las Vegas faced an uphill recovery after the 2008 recession and then another after a global pandemic that rattled the visitor-dependent economy. Now, with gambling revenue bouncing back, the arrival of two major pro sports franchises, and a pandemic-era bump in inbound migration, city officials say Vegas is looking for its next act. Like Tulsa, which started paying cohorts of remote workers $10,000 to move there, and Miami, whose mayor has made poaching crypto investors a priority, the city is going all in on promoting itself as a tech hotbed.

“We’re not trying to be Silicon Valley, but we are trying to create an environment where people have the opportunity to be successful in innovation and technology,” said Shani Coleman, director of community and economic development in Vegas’ Clark County. Coleman, who wasn’t at the summit, started her job at the end of 2019, and introduced a new economic development strategy. At its center is a push to diversify an economy traditionally dominated by the hospitality and service industries.

That has long been the region’s goal, Coleman admits. In the early 2010s, the late Zappos CEO Tony Hsieh famously routed party buses full of startup founders to a stretch of Vegas’ downtown as he spent millions to revive the disinvested district. By 2017, his Downtown Project initiative was credited with creating 1,500 jobs and generating $210 million in economic output — and also blamed for pricing out some longtime tenants. Hsieh moved to Park City, Utah, and died in 2020, his plans for an off-strip tech mecca half-realized. But Coleman says the pandemic has given the county another needed nudge to follow through.

“We had this conversation during the recession, and then the casinos got hot again, and everything was going good, and people weren’t as focused on diversifying,” she said. “This time, people are like — ‘No, we have the tools, we have the infrastructure in place to really make this happen.”

Esports has found early success here: Nevada’s new Esports Technical Advisory Committee is creating rules around betting on online games that could create an even bigger industry. To become a true tech hub, though, Vegas has to be able to compete with the likes of San Francisco, Silicon Valley, New York and increasingly Austin and Miami, for talent and venture capital.

 

“We’ve always known that California, just because of their regulatory climate, has been ripe for the picking.”

 

On those fronts, it’s still well behind. Pitchbook data shows that VC spending in Vegas grew 59% between 2020 and 2021, to reach $423.86 million, and it’s on pace to beat that this year. That’s still a fraction of the $94 billion spent in 2021 by VCs in San Francisco, or even the $4.9 billion spent in Miami. Tech jobs represent about 3% of the overall workforce, according to the Computing Technology Industry Association. In 2019, urbanist Richard Florida ranked Las Vegas among the bottom five large US cities for its share of “creative class” jobs, including tech, though its creative workforce was also among the fastest growing in the country.

Vegas boosters believe that its quirks can become strengths. Maybe other cities have more established tech networks, but the small-town feel in Nevada means you’ll get an audience with state officials who may offer tailored incentives, or be willing to create a “shift in the way that legislation happens,” as State Treasurer Conine put it in an interview. (Nevada’s financial technology sandbox laws, for example, let certain companies experiment regulation-free.) Maybe the workforce doesn’t yet fully exist, but they’ll create it, by graduating more engineers from the University of Nevada, Las Vegas, and luring more newly footloose remote workers. Californians, especially, could be attracted by the state’s famously low taxes, relatively affordable housing, whisper-thin regulations and purple politics.

Like Hsieh before him, Liaw has become a face of the movement, this time focused on bringing people to the sprawling off-strip suburbs. Possessing the enthusiasm for networking befitting a former University of California, Berkeley student body president, Liaw once put his energy to use as a California booster. He served on Governor Gavin Newsom’s Entrepreneur Task Force before switching teams; now he collaborates closely with Ryan Smith, Las Vegas’ director of economic and urban development, whose office provided $25,000 in seed sponsorship for the tech summit.

“What I’m trying to do here in Vegas is not just singular to crypto, or not just similar to sports tech, or sports. What we want are good tech companies,” said Liaw. “We’re in the backyard of California. We’re still accessible to all the money and the VCs of Palo Alto and Sand Hill. But people and their workers will have access to a higher quality of life.”

The median home price in Las Vegas was $450,000 as of August 2022, according to Realtor.com, up 18% from last year; that’s less than half San Francisco’s median of $1.3 million.

Liaw says he’s already convinced about a dozen friends and founders to move out here. Among them are Jason Lin, a managing partner at the venture fund Super Capital Group and a co-host of the summit, and Nan Wang, the CEO of social gaming platform Sleeper.

For Wang, relocating to Vegas was necessary as the company got deeper into the esports space. “It was like pulling teeth to get people back in the office,” at Sleeper’s LA and San Francisco locations, which have since been closed. “The moment we relocated our headquarters to Nevada,” he said, “I didn’t have to push any more. People were pulled here.” Many of his employees from across the country fly in for meetings two or three times a year.

Lin, who was an early investor in Sleeper, sees the next few years as crucial to creating a broader tech workforce in the region. “We are still building out the technical base — the engineers, developers, programmers,” he says. “That’s probably the next wave.”

Over the course of the event, attendees heard from a dozen Vegas evangelists, including Lawrence Epstein, the chief operating officer of the Ultimate Fighting Championship, which is headquartered in town; Clark County Commissioner Justin Jones; and Tanja Anguay-Brennan, vice president of business development at the developer Blue Heron (and the lone woman to officially speak at the event). Though luring residents and companies from California was the summit’s goal, the Golden State itself was invoked only briefly, cast as a past-its-prime economic powerhouse.

California cities like San Francisco and LA are still losing residents, albeit more slowly than they were during the pandemic, as Southern Nevada continues to swell with new arrivals. About 19,000 new people moved to Las Vegas between July 2020 and 2021, and in Summerlin, about 5,000 acres are still left to develop. The rate of that growth has sounded sustainability alarms: Las Vegas is facing a dwindling water supply and a growing number of dangerously hot days as climate change reshapes the Southwest. But as they baked next to Schorr’s infinity pool, attendees were urged not to stress over such issues.

“Water will not be your problem,” Conine told the summit attendees, referencing the tech-enabled water conservation efforts that have allowed the region to cut water use by 26% since 2002 even as it added 750,000 residents. In a later interview, he spoke further on the topic. “There is not enough water as we would like there to be, period,” he said. “How we react to that is the same way that Nevada reacts to every problem we have, which is being real honest about it, finding solutions, working with other states to get those solutions, and sometimes dragging the other states across the line when we have to.”

For some who are drawn to Vegas, the challenges that this improbable place faces — and how it vows to solve them — are part of what ultimately attracts them to the city.

“No one wants to be the blockbuster of yesterday,” said Ohno, the investor/ex-speed-skater, as he prepared to board a bus to lunch. This is familiar territory for him: A recent Miami transplant by way of California, Ohno is used to getting city sales pitches on giga-yachts and “$75 million triplex penthouses overlooking the water,” he said.

He didn’t say he was considering moving to Vegas, too — but he was curious to find out why so many of his friends had. “I’m very fascinated by who’s coming to town, why are they coming to town,” said the former Olympian. “How do you thrive in the desert?”

By Sarah Holder
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