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Doubling Down on Start-Up Las Vegas

Tony Hsieh of Zappos is hoping jobs will follow people out to Las Vegas, but does Sin City have enough to offer?
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Astronaut photograph of Las Vegas at night. (PHOTO: PUBLIC DOMAIN)

Astronaut photograph of Las Vegas at night. (PHOTO: PUBLIC DOMAIN)

Will jobs follow people to Las Vegas? As I mentioned on Saturday, Tony Hsieh of Zappos is all in on the strategy. With a big pile of chips, Hsieh's efforts already bear fruit for the tech start-up scene. The lay of the land:

Despite the progress, Las Vegas remains far from being a leading tech hub.

In 2011, only 13 percent of the valley’s workforce had jobs requiring science, technology, engineering or math skills, according to a report from the Brookings Metropolitan Policy Program. Las Vegas ranked 99th out of 100 metropolitan areas for STEM jobs. ...

... For the sector to really take off, Las Vegas needs more small and medium-sized tech companies that could attract programmers and engineers to the valley, talented people who can help grow companies and maybe start businesses of their own one day.

Local talent these days tend to leave town and flock to larger companies that offer high salaries and good benefits.

Software developers nationally earned a median salary of $90,530 in 2010, according to the Bureau of Labor Statistics. Employment in the sector is expected to grow 30 percent by 2020.

Many startups, however, are so low on cash they pay people with ownership stakes in the company, which are worthless unless the company grows, gets bought or goes public. And the odds of that happening are slim, given startups’ high failure rate. A Stanford University graduate would be hard-pressed to pass up a six-figure position at Apple to work for free at an untested Las Vegas startup.

Persuading people to leave tech-rich California also can be tough.

“Just to tell them, ‘You’re getting a tax break,’ it’s usually not enough,” said Russ Logan, vice president of operations at Originate, a San Francisco company with a dozen employees at the inNEVation Center.

People follow jobs, explaining why a Stanford graduate would pick a six-figure position at Apple over a Las Vegas start-up. The downtown revitalization project is at odds with the relocation rationale of talent. Lady Luck blesses Omaha, Nebraska:

Ten months ago, Amanda Rucker, 30, was toiling at an uninspiring job at a public relations firm in San Francisco. Her rent was $1,200 for the "tiny hole in the wall" she shared with a roommate.

She’d arrived in the Bay Area after a long period of unemployment and job-searching in Nebraska—first in Lincoln, where she’d been laid off at the height of the recession, and then in her parents’ house in the western part of the state.

As much as she appreciated San Francisco’s energy, she didn’t quite belong. "I would equate it to a pair of trendy pants," she says. "I wanted it really badly to work out, but at the end of the day I just felt really, really uncomfortable."

She applied for a marketing job at the University of Nebraska's tech campus in Omaha, and got it. By the time I met up with her in May, her life had transformed. She was living in a huge loft with high ceilings in a converted factory building, for $600 a month. Despite the fact that she’d taken a $9,000 salary cut, she was paying off debt and contributing to her 401k. "Omaha is a much cheaper city to live in, and that’s been a huge weight off my shoulders," she says.

Jobs follow people to Omaha? Leaving San Francisco to take a pay cut in Nebraska sounds like good news for Las Vegas. The sharp is always hunting for arbitrage opportunities. Any tech company would love to pay less for talent. Apparently, Omaha has a glut of prospects. Unfortunately, so do a bunch of other cities.

Cheaper than San Francisco won't do much to distinguish Las Vegas from the rest of the pack. A real estate refugee can find that in Portland or Austin. I understand why Hsieh would bank on jobs following people. That's the best hope Vegas has.