Reno’s tech gamble is paying off

By Dionne Searcey / New York Times News Service

Published Jul 11, 2014 at 12:01AM

RENO, Nev. — A street newly nicknamed Startup Row intersects this city’s old strip of casinos touting Money Maker Jackpots and Crazy Cash Slot Tournaments.

While old-fashioned slot machines are whirring nearby, this stretch of road has become a home for smartphone app makers, cloud computing developers and companies like one that set up shop here recently to build tiny sensors that allow devices to connect to the Internet.

For most of America, Reno stirs images of worn-out casinos, strip clubs and quick divorces. But it is trying to change that reputation and reduce its reliance on gambling by taking advantage of its location and low taxes to gain a solid footing in the new economy. Instead of poker payouts, Reno now boasts of e-commerce ventures, an Apple data center and a testing ground for drones. It also hopes to attract a large factory to build batteries for Tesla’s electric vehicles.

“People believe in this town, and they’re tired of being presented as this joke,” said Abbi Whitaker, a local business owner who helped create a marketing campaign to reshape Reno’s image. “When you’re at rock bottom, there’s a good chance to reinvent how you go up.”

Reno exemplifies how cities not far from California, including Boise, Idaho, and Tucson, Arizona, are trying to poach California’s technology culture to help diversify their economies, marketing themselves as places where taxes are lower and environmental regulations are less onerous. They hope that when the next recession strikes, they will not sink to the same depths as they did in the last one.

Reno is among the best situated, less than a four-hour drive from San Francisco and in a state with no corporate or inventory taxes. It gained appeal as an outpost of Silicon Valley nearly a decade ago after a Microsoft licensing unit and an Amazon distribution warehouse moved in. California refugees were buying homes, lured by the relatively low cost of living and the 30-minute drive to Lake Tahoe.

Then came the Great Recession, walloping Reno’s gambling industry and its housing and job markets. At the end of the recession in 2009, homes had lost nearly half the value they had in the beginning of 2006, and median prices continued to fall. At its depths in September 2010, Reno’s unemployment rate was 13.4 percent compared with the national average of 9.5 percent, according to Moody’s Analytics.

But now, after several years scraping along the bottom in almost every measure of economic health, Reno appears poised to turn the corner, according to economists who study the region. Housing prices are slowly starting to rise. The unemployment rate has declined to 7.1 percent.

New technology companies are arriving, and older ones are expanding, including Zulily, an e-commerce company for women and children’s clothing and home décor, which announced plans in May to double its warehouse and hire 600 people.

In Reno, where many workers traditionally have been employed in some aspect of the gambling industry, the workforce is less educated than in more populous cities, economists said. Tesla, for instance, might have to recruit from elsewhere to find enough trained workers for its battery plant, should it decide to build here.

“We’re not going to wait for the gaming industry to come back,” said Mike Kazmierski, president of the Economic Development Authority of western Nevada. “It’s not going to. So what are our strengths, and how do we capitalize on them?”

Three years ago, Reno and the neighboring town Sparks averaged four tours a month for prospective companies. Kazmierski said that had increased to 10, with scouts from 14 companies visiting in May.

“The most challenging obstacle to get over is our image,” he said. “That image of a second-tier kind of (Las) Vegas is embedded in their heads.”

Visiting executives are surprised to learn that the Truckee River cuts through downtown, where a restaurant scene is emerging. Bike paths wind through the city and beyond, and urban gardeners raise chickens in their backyards. A new downtown boutique hotel has no casino. Instead, its main feature is its 164-foot climbing wall.

The Reno Collective, along Startup Row, offers a shared work space to foster entrepreneurialism. On a recent day, the office was filled by young people tapping on laptops, some sitting on exercise balls and one with a dog curled around her feet.

In the same building, Eric Jennings set up his company, Pinoccio, two years ago, making tiny radio sensors for enabling Internet connectivity.

“There’s such a low barrier to entry here,” Jennings said. “If you’re passionate about something, you can just take it on.”