San Francisco tech companies head east to Denver – Denver Business Journal

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San Francisco tech companies head east to Denver – Denver Business Journal

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Lia Siebert hadn’t planned to leave San Francisco, and she’d never heard of the technology company that was recruiting her in 2015 to move east to Denver and lead a new software product development team.

The work was a good professional move. The company, Craftsy, had millions of passionate customers and a culture Siebert found appealing, she said.

The northern California native worked for a women’s clothing e-commerce startup called ModCloth. She started looking at Denver, and the more she did, the more moving to Denver and taking the job at Craftsy made sense.

The cost of an apartment in San Francisco’s Mission district for Siebert, the mother of a 2-year-old and 3-month-old, was already expensive.

It was going to jump considerably to get an apartment big enough for her growing family. More than the cost of a single family home with a yard in Denver.

Siebert, as she hoped, found that working in tech here was just as rewarding as in San Francisco.

“When you were in the building, it felt just the same,” she said. “The talent, the energy and commitment that people showed up with was just the same.”

Outside the office, she found connecting to a broader tech community took more effort than in San Francisco.

In Denver, the accessibility of mountains, without having to spend six hours driving, gives her family realistic chances for weekend getaways. Siebert likes the idea that her daughters can grow up around kids who know more than just apps and startups but also about skiing and hiking and being outdoors.

“It meaningfully changed our lives.” she said of moving to Denver.

In the nearly three years since Siebert moved, San Francisco-area tech companies are making similar choices and coming to Denver, too, attracted by the city’s amenities, relative affordability and for the ability to hire and retain talented tech workers.

One recent company making the move is Strava, maker of an exercise-tracking software and social network used by tens of millions people.

Strava announced the opening of a Denver office in January that would start by hiring 20 people and then be where most of Strava’s hiring would occur for the foreseeable future, potentially dozens of jobs.

Siebert became Strava’s first major Denver hire, the lead of its software team developing its business products.

In that role, she’s talked to a lot of tech workers for whom Denver represents the chance to have things they lack in the San Francisco Bay area — a place where they could buy a house, raise a family, send their children to good public schools

“I heard the same story, different flavors of it again and again,” she said.

More than a dozen companies have recently moved headquarters to Denver or opened an office here that’s meant to be the focus of their company’s growth.

San Francisco Bay-area companies relocating or branching out include Xero, Marketo, Gusto, Thanx, Granicus, SwitchFly, Accelo and OpenTable.

The medium-sized companies employ hundreds of people in downtown Denver now and have collectively leased enough office space to hire a couple thousand more people within a year or two.

Big names from Silicon Valley have landed in Denver recently, too.

Social network giant Facebook has started hiring for a Denver office a block from Union Station. Apple is hiring a handful of positions in downtown, too.

The smaller companies said they looked at other U.S. tech hubs such as Austin, Atlanta, Boston, Seattle, Portland, Oregon, Los Angeles and emerging tech hub Salt Lake City.

They found Denver to be the place that tech workers around the U.S. were most willing to move to for a job, they say. The city has an abundance of nearby housing at prices, that while rising rapidly, are considered relatively affordable to workers in the tech industry.

For the companies, Denver’s downtown has amenities such as mass transit and cultural attractions within walking distance of offices in the central business district.

The influx of new companies has helped accelerate tech’s growing profile in Denver.

Technology as an industry isn’t measured in federal data at the city level.

The Colorado Department of Labor’s occupational data shows a broad rise in tech-related jobs, though the data includes workers developing software for banks, health care companies and other industries not considered tech.

Between 2009 and 2016, which encompasses the recovery from the Great Recession, computer-related technical occupations grew by 24 percent in the Denver-Aurora area. The number of workers in database administration, web development and software development jobs, which tend to cluster in Denver, grew by more than 9,550 positions during those eight years, or nearly 29 percent.

Projections for 2026 by the Metro Denver Economic Development Corp. show the number of computer-related occupations in Denver continuing to expand nearly that fast, outgrowing most other professions and being rivaled only by health care, social services and construction over the next eight years.

Despite all the jobs and Denver’s appeal, it can still be hard to persuade people in the most sought-after technical positions to leave San Francisco or Silicon Valley, local executives say.

Moving away from the global epicenter of technology to a smaller market like Denver doesn’t strike everyone as a smart career move.

But a number of mid-career technology workers have been willing to leave the San Francisco Bay area, pushed by the area’s expense and the long commutes many are forced to take on to find affordable housing.

A recent survey by PR firm Edleman of 500 Californians found nearly half are considering moving from the Bay area because of costs, and 65 percent of people with children are considering it.

Adding a Denver office gives such companies an option for retaining workers looking to leave.

It also makes an attractive alternative location when tech companies hire workers from other regions of the country. While Denver is more expansive than many parts of the U.S, housing costs here don’t have the sticker shock of San Francisco and Silicon Valley.

The median cost of a home in San Jose, California, in early 2018 was double the $500,000 median price in Denver. Housing prices are higher still in the region’s tonier cities and in San Francisco itself, where the median home price has topped $1.7 million.

Contrast that with Denver, where, even with rising housing prices, the cost of living puts Denver at or near the top of technology industry salary rankings when adjusted for the area’s cost of living.

Steve Lucas, a longtime Denver resident, became the new CEO of San Mateo, California-based Marketo last year. He quickly started turning its new Denver office into the company’s second major U.S. location and its fastest-growing site, as it aims to be a $500 million annual revenue business.

It has about 200 workers in Denver now and expects that to grow to 500 people in downtown if it reaches its growth goals through 2019.

Lucas focuses so much growth in Denver because the company can attract a broad cross section of skill types to work at the company, he said.

The Bay area is so full of fast-growing companies in tech that the job market makes it hard to grow at significant scale, he said, and it’s harder to keep talented workers, too.

Expanding in a place like Denver helps Marketo scale quickly to match its business opportunity, Lucas said.

Marketo does business with thousands of other companies and is trying to grow rapidly to become one of the dominant players in its niche. Being geographically confined may crimp a company’s ability to hire and grow, and it risks lacking the geographic diversity needed to create technology that customers around the country and world will use, he said.

That’s a big part of the reason so many of San Francisco and Silicon Valley’s maturing tech startups are establishing significant offices in other cities, Lucas said.

“It’s the ones that are HQ-centric that are limiting themselves,” he said.

Lucas has lived in Denver throughout his career and argues it’s still an underrecognized tech market.

“Colorado has incredible tech resources, but it has done a terrible job marketing that,” he said. “The state has been exporting too much of its talent.”

The growth of San Francisco Bay-area companies here could help reverse that, he said.

When James Quarles looked at where to locate Strava’s second office, he wanted it to be in or near the same time zone as its San Francisco headquarters so teams in both locations could easily collborate.

The company narrowed its choices to Salt Lake City, Austin, Los Angeles and Denver, based on the technology industry talent it could hire, then studied statistics about housing, education and investment in mass transit and pedestrian infrastructure.

In every metric, Strava emphasized, Denver came out a clear leader, Quarles said.

Few other cities of comparable cost to Denver have attractions like sports venues, entertainment, arts and cultural centers, and transit located close to the core business district the way Denver does, he said.

Another main factor tech executives cite in picking Denver is convenient travel to the San Francisco Bay area from Denver International Airport, which boasts 29 direct flights daily.

All this isn’t an accident — Denver is reaping rewards of planning decisions the community made over decades, said Tami Door, head of the Downtown Denver Partnership, which promotes the city’s core business district.

“You’re going to get the right workforce because you built the right environment for it,” she said.

That environment includes: putting sports stadiums in downtown, restoring Union Station as the region’s transit hub, building Denver International Airport, then extending the metro area’s growing commuter rail network to DIA from downtown. Building networks of bike lanes and paths that connect to transit also contribute.

The investments in transit and ubran infrastructure stood out to Strava, Quarles said.

“Denver’s demonstrated a longer-term perspective, looking out 10, 15 years,” he said. “That’s not something you find in other cities.”

That foresight gave Strava executives confidence that some of the workforce issues employers struggle with in San Francisco are less likely to arise in Denver, he said.

As a result, Strava is more able to hire people from other parts of the country to relocate to Denver than to San Francisco or if it had chosen another city for its growing office, Quarles said.

“It’s an easy conversation to have with someone,” he said.

One of the people Quarles talked to about Denver during his research was Joshua Reeves, founder and CEO of Gusto, a 530-employee payroll and benefits software company that’s a neighbor of Strava’s in San Francisco.

Gusto was one of the early arrivals in the recent influx to Denver. It opened its Denver office in downtown in 2015, growing it quickly to rival its San Francisco home. Today, Gusto’s Denver office is slightly larger.

At 275 Denver employees and hiring steadily, Gusto is outgrowing its 40,000 square feet in the Tabor Center and looking to lease more space, Reeves said.

He’s convinced Denver was a great choice as Gusto’s second home.

“We’ve had a number of our team based in California decide to move to Denver, buy homes and settle there,” he said.

But the vast majority of Gusto’s Denver office has been recruited from outside the company, not relocated.

The city’s rising profile in tech and the growing tech companies here are bolstering each other.

“That’s a rising tide lifting all boats,” he said. “Whether its someone like SendGrid going public and becoming better known, or someone like Facebook opening an office locally, it raises Denver’s profile and enourages more people to understand that it’s a great place to work.”

Reeves knows that the rising housing costs driven by Denver’s jobs growth — particularly with Amazon.com considering the city a finalist for its large second headquarters — is causing concern in Denver.

He understands that, he says.

Reeve’s parents were public school teachers, and his family avoided being priced out of California’s Marin County when he was a child with the help of a local affordable housing program, he said.

Desirable cities go through some version of what Denver is experiencing. Denver has affordable housing programs in place and is trying to improve them, which puts Denver ahead of where most other cities are, Reeves said.

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