Why Silicon Valley companies are coming to Colorado to fuel growth

by Brian Nordli
May 7, 2019
Denver
Image via shutterstock

A little more than a year ago, Ben Hamlin had a critical decision to make. His startup, a job board platform called Localwise, was poised to grow after a quarter of positive cash flow — but he wasn’t certain Oakland, CA, where they were founded, was the right fit.

Silicon Valley had been a great place to launch a company and connect with engineers, but the exorbitant cost of living, interminable commute times and West Coast time zone made it impossible to grow. He needed to find a city closer to the middle of the country, with a deep talent pool for recruiting and a vibrant culture to build out a sales and operations team.

Chicago and Austin made the shortlist, but after visiting Denver, Hamlin said, the choice was easy.

“It just felt good as we were testing the waters,” he said.

Localwise completed the move, opening its headquarters there in October 2018, and they’re hardly the first Silicon Valley company to think of Colorado as a new landing spot. Tech giants like Facebook, Netflix, Amazon and Apple have all recently opened second headquarters or offices in the region.

[When] you think about creating a sustainable lifestyle for your company, then I think Denver is at the top of that list.”

Dozens of smaller to mid-size tech companies have followed suit, too, including companies like StravaThanx and Mindflash. And where it once seemed that the only way to make it in the tech world was to be in Silicon Valley, for many companies it now seems like the only way to grow is to move out.

“[The Bay Area] has so much VC money and a great talent pool that it’s still a great place to launch an idea and get that seed fund,” Hamlin said. “But when you’re in growth mode, and you need to add a lot of headcount, and you think about creating a sustainable lifestyle for your company, then I think Denver is at the top of that list.”

The injection of silicon into the Rockies has brought a windfall of attention and economic growth to Colorado, but Denver, Boulder and Colorado Springs have a lot more than cold brew, amazing hiking and frothy beers to offer Silicon Valley companies.

 

interview
PHoto via natty zola

Rocky Mountain vibes

During Hamlin’s exploratory trips to Denver, he met with realtors, city officials, people he knew from business school and investors in the community. Each meeting checked off a box. The city was affordable, it had a robust network of universities and colleges to recruit from, and a bevy of programs like Denver Startup Week to help startups thrive. Meanwhile, the snow-capped peaks, copious brewpubs and vibrant culture made the city an easy sell to his team.

Denver has done a nice job toeing that line of balancing rapid growth with keeping the culture.”

But ultimately, it came down to the feel. Denver, he said, had an unmistakable vibe.

“There was just a very consistent theme of being welcoming,” Hamlin said. “For cities that are going through rapid change, which it seems like Denver is, you can sometimes have a vibe of keeping people out. Denver has done a nice job toeing that line of balancing rapid growth with keeping the culture.”

That vibe Hamlin felt is what makes Colorado special, said Natty Zola, who’s been a fixture in the region’s tech scene since 2008 — first as a founder of the travel blog platform Everlater, then as the managing director with Techstars Boulder Accelerator and a partner at Matchstick Ventures.

 

Natty Zola
Photo via Natty Zola

While other markets like Chicago and Austin are similarly affordable, Colorado has become known as a collaborative and friendly tech hub. That give-first ethos is baked into Colorado’s DNA, thanks to accelerators like Techstars, investors at Foundry Group and events like Boulder and Denver Startup Week, Zola said.  

“We were able to create the ecosystem we wanted,” Zola said. “We realized we wouldn’t be able to do it on our own if we were competing against each other or putting each other down. It was intentional.”

But Colorado is more than just a friendly face. In fact, nearly all economic indicators are pointing up. The state has the sixth-greatest population growth in the country since 2010, Denver has more affordable rent than 21 major U.S. markets and the state has the second-most residents with a bachelor’s degree, according to CBRE’s 2018 Colorado tech report.

Meanwhile, office rent comes at about a third the cost in Denver compared to San Francisco, and the corporate tax rate in Denver is nearly half.

There are a lot of reasons [to come to Denver], but I think it just comes down to scale.”

Money is like oxygen for tech companies, said Matt Harbert, who works at CBRE as vice president of advisory and transaction services in Denver. And in Colorado, the air is purer.  

“There are a lot of reasons [to come to Denver], but I think it just comes down to scale,” Harbert said. “It’s a lot less expensive to scale here and there’s a lot of talent to do so.”

 

Techstars week
Photo via natty zola

A new chapter

As major tech companies continue to flock to Colorado, it’s placed the region’s tech scene on the national radar. Amazon alone is slated to bring 400 new jobs to Colorado, while Zola said outside venture funds seem to be looking to invest more in Colorado.

They’re also bringing more experienced tech workers and opening up new opportunities for smaller startups in the area to partner with the giants. And while rent and cost of living have increased slightly with the rise in tech companies moving to Colorado, it’s also boosted commercial tax revenue and brought more people to the region, Harbert said.

“You would not see nearly as many planes in the air if it weren’t for some of the companies moving from Silicon Valley,” Harbert said.

But the biggest impact on Colorado may be that it’s proved itself to be a necessary part of the national tech ecosystem. It’s common for Zola to hear stories of companies new to Colorado shocked that a local company was willing to connect them with an investor or help them build a talent pipeline.

That shock soon wears off and becomes enthusiasm to do the same, he said.

There’s just a lot of momentum for Denver, and I don’t think it’s going to stop.”

Colorado’s influence is also in the small things, like what benefits and outings a company organizes. Since moving to Colorado, Hamlin’s team has grown from two employees to 10, with designs to reach 30 soon. From their location in the office structure Taxi in the thriving RiNo district, they have a view of the mountains, a gym on site and pets in the office — you can’t get more Colorado than that.

“It’s pushed us to have more cultural elements that are good for a sustainable lifestyle for employees,” Hamlin said. “That’s influenced by the greater Denver culture. We didn’t feel those pressures in the Bay Area.”

Silicon Valley may still draw the attention, but Harbert believes Colorado’s tech scene is just getting started. Pretty soon, he sees Colorado as one of the top tech hubs in the country.

“There’s just a lot of excitement about what’s going on,” Harbert said. “People have always believed in what we had and in the potential we had, and now we’re starting to see that come to fruition. There’s just a lot of momentum for Denver, and I don’t think it’s going to stop.”

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