Don't Let Arizona Become the Silicon Wasteland

July 31, 2015 | Justin Gray | No Comments |

At Arizona Tech Council’s most recent Council Connect event, a thought occurred to me as the discussion began to center around the quickly growing tech sector and the ever-popular “Silicon Desert” label.

Here in Arizona, “Silicon Desert” has become a buzzword to describe the influx of tech companies and startups into the state that’s occurred over the past five or so years. But, to me, this concept and labeling immediately renders us a secondary place to do business, rather than a primary destination.

It’s the stuff of legend now, but back in the late 70s and early 80s Silicon Valley sprang up as a cheap alternative to doing business in the economic strongholds of New York City and Los Angeles. Silicon Valley got its start because while it was close to the hub of San Francisco, it didn’t have the high costs associated with doing business there.

Fast forward to present day, where Arizona is being looked upon in similar ways. But the key to Arizona’s continued success with the tech industry lies in whether or not we can move beyond being seen as a place where “cheap labor” is plentiful, where people jump to jobs that require same skillet but offer much lower pay than in other major cities.

Arizona has seen a steady stream of big-name tech companies hitting the scene. Some of the hottest companies out there – Yelp, PayPal, Apple, Zenefits, Weebly, just to name a few – have set up offices, and this is being heralded as the ushering in of a new era by local press. But what these companies are really just setting up glorified call centers. None of the real moving-and-shaking is planned for Arizona. Arizona deserves to be considered much more than the next Bombay Call Center.

We need to move past this, but the only way to grow a true tech community is with an abundance of smart people, period.

At LeadMD we’ve lost key talent to companies like Amazon and Google, as well as other Bay Area startups, simply because Arizona is not viewed as the “IT” culture that people see on TV shows like HBO’s popular Silicon Valley.

Fact is, in today’s environment, talent can work from anywhere. It’s the local “ecosystem” that keeps people in a certain area. And in Arizona, there are major shortcomings on this front. There’s simply not enough talent, money and resources to keep and grow great people.

But there is good news: All of this is in our power, as members of the tech community in Arizona, to change.

As someone who has lived in both Arizona and San Francisco, I can add some personal experience here.

At LeadMD, we pay Bay Area salaries to our employees, with a standard deviation of 5-10k. But, in Arizona, the cost of living is about half of that in San Francisco when you account for things like the cost of rent and mortgage.

While this calculation shows that the cost of living in Arizona is about three quarters that of in San Francisco, I can tell you with the time spent in traffic, the cost of parking, and the unavailability of real estate, it’s at least one-half in real terms. Also, in my experience, the cost of 1,000 square feet of living space in San Francisco is equal to about 4,500 here in Arizona.

With the combination of a low cost of living and a poor talent pool, Arizona becomes a tech wasteland. We must work to avoid this at all costs, and the way forward is through education.

Another important takeaway that occurred to me from the Council Connect discussion is the number of questions that I answered about marketing automation, and what it entails. In San Francisco, it would be a working part of most everyone’s knowledge base. This signals to me that there is some disconnect in the understanding of current technologies and methodologies. We need to create the environment that we want to be.

Modern-day Arizona still has strong ties to its legacy as the center of the Wild West. This mentality lends itself perfectly to the tech sector and its unique way of thinking. But to truly succeed, we need to get past the boom-bust real estate cycle and middle man industry way of thinking. On the current path, these industries will be replaced by tech ventures in the next 10 years, and it’s up to us to make sure we’re bringing in the right businesses, ideas and people to the mix.

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