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6:00 am
Tue March 18, 2014

Stretching Silicon Valley to the Beach

Members of the Santa Cruz co-working space, Nextspace, popular with local techies.
Members of the Santa Cruz co-working space, Nextspace, popular with local techies.
Credit Rowan Moore Gerety
Bud Colligan fields questions at a tech meet-up held at a Santa Cruz startup where he is also an investor.
Bud Colligan fields questions at a tech meet-up held at a Santa Cruz startup where he is also an investor.
Credit Rowan Moore Gerety

Every morning, more than 20,000 people leave Santa Cruz county and commute to work in Silicon Valley. Even with a large research university and seaside real estate, it’s hard for Santa Cruz to compete with the Valley’s pull on engineers and entrepreneurs. But with a $700 billion industry headquartered over the hill, there’s a lot to be gained from local efforts to stretch Silicon Valley to the beach.

It’s a rare morning when Allison Holmlund is home to help her husband  Mike get their kids ready for school. Packing a lunch for her son James Dean, she explains the ins and outs of her commute. “If I leave before six,” she says, “I can make it in about an hour. If I leave after six, it’s at least an hour and a half.”

Holmlund commutes 48 miles to Redwood City to work for a software startup called Host Analytics. “Having those, call it, three hours of my day, back, would be huge,” she says. “But I’m not at the point where I would sacrifice a phenomenal opportunity at a hot startup, which is where I’m at today.”

By phenomenal opportunity, she means equity — the chance to own a piece of a company that might pay off like Instagram or Whatsapp. Santa Cruz’s tech industry can’t match Silicon Valley’s salaries or its intense workplace culture.

”The diversity. The work ethic. If I drive by a company in Santa Cruz at 7 at night, nobody’s working, nobody’s having pizza brought in,” she says.

Holmlund says those differences are key to attracting so ambitious entrepreneurs. That includes companies like Netflix and Seagate, which started in Santa Cruz county, then migrated to Silicon Valley to expand.

But the Santa Cruz tech ecosystem is growing. Close to 100 people showed up to a recent weeknight tech meet-up downtown, sponsored by the city’s Office of Economic Development. “Five years ago, we really had to beg to get people here,” says Doug Erickson,* a regular on the local tech scene.

Afterwards,  commuters fill out a survey designed to find out what it would take to make them stay in Santa Cruz. “What percentage of your current compensation would a Santa cruz opportunity have to come up with to get you to forgo your commute?” one question asks.

The man behind the survey is venture capitalist Bud Colligan. He’s lived in Santa Cruz for 18 years, but he didn’t always invest here. Recently, Colligan shifted his focus to building companies based in the Monterey Bay. As it stands, he says, Santa Cruz county loses out on potential tax revenue from the tech industry.

In December, Colligan started a group called the Central Coast Angels with 20 Silicon Valley veterans who live in Santa Cruz. “It’s people from Google, Symantec, Apple, Palm,” Colligan says.

“At our first meeting, we had a discussion, of, well, ‘should we also do angel investments over the hill. And my response was, you know, there’s a 1000 angels over the hill. That’s not somewhere where we’re gonna have a dramatic impact. Here, we could have a dramatic impact.”

At the same time, some of the angels over the hill are paying attention to Santa Cruz startups. Data analytics company Looker received funding from  investors in Menlo Park.

CEO Frank Bien walks me through an office of big mac monitors with Vanilla Ice playing in the background.: “Back in here is your standard Silicon Valley kitchen with free food.”

Bien says Looker has been able to woo commuters to stay in Santa Cruz, and attract talent from Silicon Valley too. “Whether it’s a work life balance, the ocean, surfing, or whatever it is, right? There’s enough attraction to get people to come down here.”

Santa Cruz is unique. And in a competitive hiring environment, Bien says Silicon Valley’s density can be a disadvantage. When he worked in Sunnyvale, he says, “You’d have better  candidate flow, maybe, but you wouldn’t get any of em. Everybody had an offer from Facebook or google, or wherever it was they were going.”

But he still sees Looker as a Silicon Valley tech company: Looker’s employees have equity, and Bien says they earn as much as they would in Cupertino or San Jose.

Mike Holmlund rushes his kids out the door on their way to school. Since Allison’s startup job is so demanding, he says, he came back to Santa Cruz to have a more flexible schedule. Sometimes, he still misses being at the epicenter of the tech industry.

“You’d find yourself at work at a sporting event, you’d find yourself at work at dinner. You know,  that network effect has dramatically changed for me coming back to this side of the hill.”

In Santa Cruz,  public officials are working to create that network effect, expanding an internship program at UC Santa Cruz, and sponsoring events around town. In the fall, the City’s Economic Development Office teamed up with UCSC to put out an advertising supplement in the Silicon Valley Business Journal, promoting Santa Cruz as a “vibrant hub for tech innovation.” 

*Correction: A previous version of this story referred to Doug Erickson as the founder of the Techraising series; he is a founder of the Santa Cruz New Tech Meetup.