Go West Young Firm…Tech Start-up Finds Home in RenoOctober 17, 2016
Episode 3 of “The Project: Inside Corporate Location Decisions”
CAEK was named with the first initials of the four woman – Catherine, Anna, Elizabeth and Katie – who started a software development company in Fayetteville, Arkansas.
Their growth plans will take them from nine employees today to a staff of 150 people in five years. So the need for talent and venture capital took them to the West. They looked at tech hotspots of Silicon Valley, Salt Lake City, Seattle and Austin but ultimately they decided to relocate their growing company to Reno, Nevada. We talked to CAEK Founder Katie Lay and Stan Thomas, Executive Vice President of the Economic Development Authority of Western Nevada (or EDAWN for short).
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Andy Levine (DCI): The name of the company is CAEK. That’s C-A-E-K. Catherine, Anna, Elizabeth and Katie. These are four women from Fayetteville, Arkansas who started their own software development company. They have big plans for growth, they’re currently at 9 people, but they’re projected to grow to 150 people in the next 5 years. They decided they had to leave Arkansas, and their search took them out west. It took them to Reno, Nevada.
Welcome to episode 3 of The Project: Inside Corporate Location Decisions. I’m Andy Levine, President of Development Counsellors International.
Patience Fairbrother (DCI): And I’m Patience Fairbrother, also at DCI, and Andy’s co-host of The Project. Every two weeks, we bring you a new story of a recent corporate location decision. We’ll share an inside look from company execs, economic developers, real estate professionals and site selection consultants.
Andy: Today’s story about CAEK is a surprising one on a couple of different counts. First of all, of all the technology companies in America, only about 3 percent are started by women.
Patience: So CAEK is obviously a distinct minority. On top of that, when tech startups relocate, they usually go to places like Silicon Valley, Austin, Seattle, places that have access to venture capital and an established startup scene. CAEK looked at all of these places, but then chose Reno, Nevada.
Andy: So to give you a little bit of background, we probably should tell you about CAEK’s product and what they provide. Basically, they’re a software company that works within the healthcare industry. So every single healthcare provider in America, whether it’s the Cleveland Clinic or your local family doctor, they have to comply with an act called HIPAA, which stands for the Health Insurance Portability and Accountability Act. CAEK helps the little guy. A doctor, a dentist, someone who has to comply with HIPAA but doesn’t want to spend $50,000 or more doing that. And that’s what their software provides.
Patience: So our story starts with Katie Lay, who’s one of CAEK’s founders, and their decision to leave Arkansas.
Andy: So tell us about, you know, what prompted the decision to look at other locations and essentially decide to leave Arkansas.
Katie Lay (CAEK): Right. So I am a native Arkansan by birth and raising. And I actually was the first one to leave the state for some growth reasons for the company. But, you know, if you are a consumer packaged goods in Arkansas, there’s really nowhere better in the country for you to be. There’s one contract that you want, and once you get that contract, you’re done. You’re a very happy camper at that point. But when you’re a female-owned, software technology company in Arkansas, you really are limited in your growth. You’re limited in your capital needs for future growth and you’re limited in your talent pool.
Patience: So the team started looking at many of the usual suspects in tech communities, until a friend of a friend talked with CAEK CEO, Anna Green, about Reno, Nevada. She texted her fellow partner Katie Lay who had actually already moved to Austin.
Katie: It was around November of 2015. I remember driving back home to Austin from Arkansas, and I was headed through Dallas, and I get a text message from Anna that says, “What do you think about Reno?” No context. And I literally said, “I have no thoughts on Reno, positive or negative. I know nothing of Reno.”
Andy: So CAEK decided to take a closer look at Reno, Nevada, and that’s where they connected with EDAWN, the Economic Development Authority of Western Nevada. And here’s what we hear from Stan Thomas, an Executive Vice President with EDAWN.
Stan Thomas (EDAWN): Now, when they had called us, they said, “We’re looking at Austin, Texas, we’re looking at Silicon Valley, Seattle.” I think Utah was in the mix, and Reno. And so after that phone call, my sole purpose and what I try to accomplish every time I talk with somebody is, “When are you going to come and visit us? If I can get you here for a site visit, I have a really good chance of helping you move your company here.”
Patience: Reno has won some pretty big projects in the last two years. They won Tesla’s Gigafactory, which came with 6,500 jobs. Switch decided to build a billion-dollar datacenter in Reno.
Andy: And they really went to great lengths to woo this company. From our perspective, they seemed to care as much about landing a nine-person software company as they did about a 6,500-person battery factory.
Patience: Exactly. They were setting up meetings with bankers, real estate brokers, local universities. A group of local business leaders even hosted them for dinner. They took them on tours of neighborhoods and looked at houses in the area. They were really sending this message that, “We really want you here.”
Andy: It was a great example of a true VIP treatment, and CAEK responded well to them.
Katie: Reno quickly emerged as a lead candidate. Anna did meet with some individuals in Salt Lake City and we looked at kind of the ecosystem of Seattle and Austin and Southern California. But as far as jumping out in front of us and rolling out the red carpet and saying, “How can we help you further your business? How can we make this a positive move for everyone?” Reno was above and beyond what anyone else was doing for us.
Stan: If they would have gone to Silicon Valley, they’d be a small fish in a large pond. And by coming to Reno, they knew that they would be a big fish in a small pond. And I really believe that. I also believe that they met incredible people that were willing to help them along the way. And there was nothing in it for a lot of these people. And I think they saw that was the true spirit of Northern Nevada.
Patience: So the company didn’t go to Silicon Valley, but they ended up just a three-hour drive from the area. This allowed them to be close to Silicon Valley’s venture capital networks as well as their talent. Let’s go back to Katie Lay.
Katie: A lot of folks from the Bay Area spend or have homes and spend majority of their year for tax reasons in the Lake Tahoe area. And so we are seeing a big trend now in capital companies out of the Bay Area having satellite offices in the Tahoe-Reno area. So they are recognizing the talent that’s coming to the area and the major reasons behind that.
Andy: So to sum up this episode, we wanted to ask Stan Thomas one final question. Was it different working with a group of female entrepreneurs?
Patience: And according to Stan, it might have been. Here’s what he had to say.
Stan: This is the first time I’ve ever worked with a woman-owned business, four partners like that. And it’s different because what’s important to them maybe wouldn’t be important to men, sometimes. The quality of life, the community, meeting other people, that was extremely important to them. Extremely. Where some of the other companies that we deal with, it’s not as important. It’s not that high on the list. They spent a lot of time in the downtown market, restaurants, at the university, just getting the pulse of the community, which I don’t think I’ve seen a company like that spend that much time doing that. I don’t know if that’s because they’re women, I have no idea. But they kind of focused on the downtown area and spent a lot of time down there. You know, that’s where they ended up being and that’s where they want to grow their business. And hopefully, they’ll be in downtown Reno for many years to come.
Andy: I love that one line by Stan Thomas.
Stan: I don’t know if that’s because they’re women. I have no idea.
Andy: So, Patience, let’s talk about some of the takeaways of this project. I’ll start out. I think Reno and EDAWN, they really wooed and wowed CAEK with their message, and also their customer care. They sent the message, “We’ve got talent here, we’ve got lower operating cost, we’ve got a strong incentive package for you.” All those things were really important to CAEK. But I think the primary message they sent was, “Look, here in Reno, Nevada, you’re gonna be a big fish in a small pond. You’re not gonna be that in the other places you’re looking at.”
Patience: They also, I think, did a really good job of addressing some of the quality of life concerns that CAEK had. You know, they recognized, it’s a big change to move 2,000 miles away from your home in Arkansas, and they sent a clear message that, you know, “You’re going to be welcomed here in Nevada.”
I think the other thing that struck me in this story is how CAEK found a way to be close to Silicon Valley without kind of dealing with the cost associated with operating there. So they still have this access to venture capital and access to the talent, but they’re not actually there in Silicon Valley.
Andy: They’re really just a three-hour drive away from Silicon Valley.
Andy: So that’s a wrap on episode number 3 of The Project: Inside Corporate Location Decisions.
Patience: We’d like to thank Catherine, Anna, Elizabeth and especially Katie of CAEK for telling their relocation story. We’d also like to thank EDAWN and Stan Thomas for their perspective.
Andy: The Project theme song comes courtesy of my son, Evan Levine, and his jazz trio. Yes, I am a proud father. The Project is sponsored by DCI. We’re the leader in marketing places and have served over 450 different cities, states, regions and countries. You can learn more about us at aboutdci.com
Patience: We’re currently hard at work on new episodes featuring Charles Schwab, Gerhardi, Alorica and other companies. We hope you’ll keep listening. There are many more projects to come.