City aims to find niche, capitalize on upcoming Medical School
Austin's technology industry no longer hides in the shadow of Silicon Valley.
"I think Austin stopped comparing itself to Silicon Valley years ago," said Julie Huls, president/CEO of advocacy group Austin Technology Council.
The city of Austin and ATC in October established the Austin Technology Partnership, the first such agreement of its kind nationally that results in a combined $775,000 public-private annual investment into tech initiatives, Huls said.
"Before there wasn't any connection between the city and tech industry," she said. "It's really about making our region more competitive."
The partnership emphasizes supporting new regional workforce development initiatives. ATC also gains access to city data and new public and private partners—resources that can help inform ATC how to better train prospective tech employees, Huls said.
Austin's tech industry includes 16 sectors. But what is Austin's tech niche?
"That hasn't been carved out yet," Huls said. "We should really be focused on that, and I want ATC to take the lead in shaping the Central Texas technology brand."
Since being hired as the Greater Austin Chamber of Commerce senior vice president of global technology and innovation 18 months ago, Michele Skelding started the twice-yearly A-List awards, which honors growing Austin tech companies for reaching fundraising milestones. That event also gains interest from venture capitalists who invest in tech companies, she said.
"The biggest challenge is selling the portfolio of Austin to investors," she said.
Austin's startup community is anchored in part by Capital Factory, a startup incubator that in May joined the Google for Entrepreneurs eight-city North American network. There is also Tech Stars, an annual accelerator program that accepts 10 companies each spring, offering money, mentors and working space.
Jacqueline Hughes, who works with Tech Stars, also co-founded and operates Austin Startup Week, which concluded its fourth year in October. The event includes more than 60 informational sessions for entrepreneurs interested in potentially establishing their new business in Austin.
"[Austin Startup Week] gets bigger every year, which is fun and scary," Hughes said. She said registrations increased from 1,500 the first year to 5,000-plus attendees in 2014.
More startup companies could soon find a home in Austin's planned Innovation Zone in the northeast corner of downtown near the new University of Texas Dell Medical School, which, once complete, could help open up new tech opportunities in the health care industry by clustering the two industries together, Skelding said. The chamber will host an event Dec. 4 that addresses that possibility.
"There is a blueprint being built, and right now we're looking for a catalyst," Skelding said. "[The innovation zone] would be a huge game-changer for us."
The UT project could ultimately draw more investor interest to the city, new Dell Medical School Dean Clay Johnston said during the late-October ATC Life Sciences Summit.
"We have a very good opportunity to build something that creates a new role for academic medicine," Johnston said.
Part of keeping Austin weird is testing ideas not seen anywhere else, said state Sen. Kirk Watson, D-Austin, who ultimately helped gain voter approval on a 2013 bond that funded the medical school.
"The Dell Medical School is a hub from which everything will grow," Watson said. "Even things we already have in Austin will, I think, be enhanced."
Downtown or not to downtown?
Although downtown offers numerous opportunities, the area is not best-suited for all tech companies. Less than half of ATC's 270 members are based downtown, Huls said.
"I think downtown is a nice, modern urban brand, but we have hundreds of tech employees who don't want to come downtown," she said.
Many big companies cannot afford to locate downtown, Skelding said. Some companies, such as online vacation rental marketplace HomeAway, operate multiple Austin offices but only one downtown location, she said.
But with more than 100 tech companies located downtown, many industry resources are located in the city's central core. The Brazos Tech District, formed by Brazos Street tech companies at first out of necessity, has embraced downtown as its home. Matthew Hall, the group's communication director, said his district represents the generational shift of employees who want to work in downtown Austin. The location also bodes well for business, he said.
"I can tell you firsthand just coming to downtown Austin for a pitch was a significant incentive for a lot of our clients," Hall said.
The high tide of tech
26% of all regional jobs
Estimated 35% local industry growth the next decade—compared with 22% for all other Austin jobs
Technology and Life Sciences industries contribute $21.5 billion to regional economy annually
$775,000 public-private investment in 2015 thanks to new partnership
Sources: ATC, Greater Austin Chamber of Commerce
Thank you, SXSW
The 2015 South by Southwest Interactive Festival has scheduled more than 800 sessions picked from approximately 3,200 proposals, said Hugh Forrest, the event's director. SXSW last year contributed at least $315 million to the Central Texas economy, according to an internal SXSW analysis, but most industry leaders agree the real benefit comes in the reputation Austin gains as a tech hub.
SXSW spotlights the creativity and innovation that happens year-round, the longtime SXSW organizer said. The event also benefits from Austin's thriving startup culture, he said. That can be seen during the annual SXSW accelerator pitch competition, which has served as the starting point for companies that have raised a combined $1.75 billion in capital investment money since the competition started.
Growing local tech companies
Springbox, an Austin-based digital development company that celebrated its 10-year anniversary this year, created a product for internal use that allowed its developers to test their websites on mobile devices. For more than two years, Springbox offered the software to any user for free but soon gained copycats and opportunists who used the product for their own financial gain. Springbox reacted by starting Springbox Labs, a five-employee spinoff company now known as Ivity Labs. Housed in the same office as Springbox, Ivity created a product called Mobilizer 2.0 that tests websites in as fast as 15 seconds on 28 different mobile devices, which are located remotely in a nearby data center. Testing on real devices ensures websites are indeed compatible, co-founder Todd Berry said, as opposed to competitors that use device emulators.
"It's very rare we find a website that is compatible across all [mobile] devices," Berry said.
The product hit the market Oct. 31 after a soft launch in mid-September.
Joe Ross, president and co-founder of local identity protection company CSID, said he has watched tech evolve in Austin since starting Grande Communications in 2000. The area market is poised for more late-stage investor funding, he said, but more seasoned tech talent is needed to put Austin over the edge.
"That would help us take some of those younger companies and really make that push to creating more $100 million companies," Ross said.
Kevin Callahan, vice president and co-founder of Austin-based smartphone app company MapMyFitness, will move his 120 employees into the new Seaholm development early next year. MapMyFitness already benefits from its late 2013 acquisition by Under Armour, a sports performance apparel company that wanted to expand its digital footprint.
"[Under Armour] really knew that for them to continue to grow and succeed in the wearable devices market, they have to start building that capability in-house," Callahan said. "At the same time, we were looking for the right partner to cozy up with to accelerate our growth."