POSTCARD FROM AMERICA: MOUNTAIN TECH TOWN INSIGHTS

Everyone loves a good road trip! In an epic 3,000km trek across the Pacific Northwest and Rockies regions of the USA, I recently drove through more than a dozen mountain towns that are diversifying their economies through building Tech ecosystems. We met with a wide range of people including Tech entrepreneurs, scientists, academics and city officials, to understand how they’ve transformed their economies from lumber and tourism origins into vibrant Tech hubs.

The journey took us from Portland to Vancouver WA to Hillsborough to Bend to Spokane to Coeur d’Alene to Boseman to Denver to Boulder to Durango to Ridgway to Telluride then to Grand Junction. We finished in Aspen to attend the Aspen Institute’s Ideas Festival (which was awesome!), before flying out to Los Angeles.

This article is #20 in a series of blog posts summarising the insights from more than 50 meetings in diverse mountain towns over three weeks during July 2022.

Why did we go?

The Covid-19 pandemic has exposed how vulnerable the Queenstown Lakes region's economy is, and the susceptibility of its peoples' livelihoods and their mental wellbeing to external shocks.

We’re a one-trick pony! Our economy is highly reliant on tourism and hospitality, which generate around 60% of local GDP. As a result, we aren’t as resilient as we need to be. Moreover, we are starting to realise that there’ll be more pandemics in future (and that this one certainly isn’t over yet).

The upshot is that we need to diversify our economy, and we need to do so urgently. Tech is an obvious candidate, with low environmental impact, high wages and productive benefits for other sectors. But at 1.8% of GDP versus a 7.2% national average, our local Tech sector is under-indexing. By contrast, in the USA, Tech sits at around 11%, in California it’s 19%, and in San Francisco, it’s 28% of GDP (I acknowledge there are differences in how ‘Tech’ is defined but the relativity between these numbers surely tells us something).

Queenstown Lakes will never be, or perhaps shouldn’t try to be, Silicon Valley - but Tech can surely deliver more than just 1.8% of local GDP. It generated $58.6m in economic activity in 2021 - so at a simplistic level if we could just get it to the national average, GDP should rise by ~$175m per year. Tech tends to grow faster than the rest of the economy, so the compounding effect would generate significant benefit for the community. And if we get ambitious – achieving the national average is really just the start…

Could this work?

Mountain towns the world over were transformed during the pandemic, as Tech workers moved there in search of fresh air, better lifestyles and remote working.

Tech-focused economic development programmes are underway throughout the world’s mountain communities, with some delivering impressive outcomes.?Having said that, there are clear pros and cons - as economic activity in mountain towns increased, so did the cost of living and inequality.

Some towns I visited have fledgling Tech ecosystems, whereas others like Boulder and Bend are highly developed, with fully functional flywheels. Their ecosystems are enabled by tertiary education and research institutions and feature numbers of vibrant start-ups, scale-ups, large Tech companies and remote worker communities, all feeding off each other. Its worth remembering that the more established mountain Tech towns have been at this for decades, but through the pandemic have tackled new challenges and embraced emerging opportunities.

What are we doing about it?

We are in a huddle, working on a ten-year strategy to build a robust and sustainable Tech sector in Queenstown Lakes District. We’re working out what needs to be true for Tech to make a meaningful and sustainable contribution to the local economy - while our friends in the tourism sector recover from the pandemic and build a more sustainable future.

Isn’t there a vibrant Tech sector in Queenstown Lakes already?

Absolutely, there is. There’s a nascent Tech community driven by super smart people across local start-ups, new research and education organisations, development agencies and the remote working community. There’s infrastructure being built, and capital is being invested.

We’re talking about harnessing all that energy, building a long-term strategy, plugging some big gaps, and accelerating the journey.

Who are we?

We’re an international team, comprising policy experts, university professors, Iwi, economists, local and central Government, experienced private sector techies and branding and communications professionals.

We’re approaching the task through a combination of bottom-up and top down analysis. The road trip I’ve just completed was undertaken to reveal the secret sauce from successful mountain/Tech communities in the USA, and to see whether we could bring lessons home to Aotearoa.

How long will this take?

It’ll take at least a decade, and probably twenty years, to see material change. As one university professor said to us in Bend: ‘you’re planting trees for a shade you may never sit in'. So be it.

Having said that, we are already celebrating early successes. For example, QRC’s move to train basic Machine Learning coding skills in Queenstown is a major win.

What’s in a name?

Our not-for-profit trust is called Whakatipu Hangarau, which translated from te Reo means ‘Queenstown Tech.’

We know from our travels that Queenstown Lakes is a globally recognised brand. American techies and local Governments have all heard of Queenstown. It’s an iconic destination and brand, with a gateway international airport. So we are using it internationally to good effect.

But our intent goes much further than Queenstown. We reckon that to build a successful Tech sector the whole region needs to rally around the concept. We can collectively build economic diversification, sustainable jobs and career pathways for ourselves and our kids across towns within a wide radius of the airport.

These days, you can be a successful techie from anywhere at any age - from Alexandra to Glenorchy to Wanaka, opportunity abounds. So, we may be using the word 'Queenstown' in our name, but the vision is to grow the Tech sector and deliver opportunity to everyone across the region.

What did we learn in the US?

The mountain folk we met with were generous with their time and insights. We’ll be incorporating their thoughts in preparing Whakatipu Hangarau’s initial ten-year strategy for the region. Here are our top ten insights from the trip:

1.??????Despite our similarities, the USA ?is really quite different

Americans are fascinated by our innovative little country at the edge of the world. By and large, people in the Tech community there want to visit. Some want to stay as they’re disgruntled with domestic politics.

The language may be the same, but with 330m people, 7m Tech workers, open interstate borders, a free-flowing populace, countless universities and research institutes and towns that tax locally, the US is very different from New Zealand.

By contrast, we have 5m people, 115k Tech workers, fewer campuses and institutes - and a notoriously difficult national border.

At a simplistic level it’s easy to say ‘if the US can build mountain Tech communities, so can we’ - but the reality is we have a lot less in our tool kit, and we need to work with what we’ve got.

Parallels are interesting, but they can also be misleading.

2.??????A complete package of hard and soft infrastructure is needed

In Bend, Spokane, Boseman and Boulder we discussed the importance of soft and hard infrastructure.

Hard infrastructure like housing, airports, roads, broadband and power enables cities to attract Tech companies and workers.

But there’s an equally important layer of ‘soft’ infrastructure that’s vital to engaging and retaining them. Quality primary and high school education, universities and healthcare are hygiene factors (excuse the pun). Arts, culture and sport are also important for engaging newcomers and binding them into the community.

Queenstown Lakes has a number of enablers in place - but we also have gaps. We’ll identify these in our?strategy White Paper.

3.??????Think about the future before you build it

Many people we spoke with in Bend had thought deeply about their region’s future, and encouraged us to define our community’s values up front. Think about what you want your town to be 10 or 20 years hence. How would the Tech sector influence it?

?In Bend and Telluride there was a real emphasis on creating career pathways for kids so they wouldn’t need to leave town to get good jobs – or at least so they could come back to good jobs after leaving town.

?In Bozeman and Telluride, I was reminded in the clearest of terms – that towns die if they don’t grow. So as you think about the future, don’t be too misty-eyed.

?4.??????The importance of building talent

Building Tech ecosystems requires talent in spades - to write code, design products, sift through data, lead teams, be entrepreneurial and so on.

?In Bend, Spokane, Boseman, Boulder and Durango, people talked about the vital role that universities and tertiary training institutions play in developing and sustaining Tech ecosystems.

?In the West Slope of Colorado, there was much discussion about the importance that remote workers play in mountain communities, and of the need to engage them and leverage their skills. With more than 70 American towns and cities currently offering incentives to attract remote workers, there’s plenty of competition.?If you’re successful in drawing them into your community, you need to engage them, or they’ll go somewhere else.

Finally, it was noticeable that like Queenstown Lakes, these mountain towns had an abundance of vastly experienced Tech entrepreneurs and professionals living in the mountains around them. The difference is that the American mountain towns have developed programmes to engage their most experienced residents to help drive their Tech-focused diversification programmes. We haven’t done this yet, and we need to.

?5.??????Work patterns have changed

In Telluride, Ridgway and Grand Junction we were encouraged to think about how working habits have changed - perhaps irrevocably – since the pandemic.

Most Tech workers work from home these days. Wherever we went, we toured empty accelerators and empty offices.

Our American friends advised us to think about what that means for our community going forward, and for our infrastructure needs - and to take advantage of it.

6.??????Developing a housing strategy

Housing availability and cost were common thorns in the side of all mountain communities we visited. Everywhere we went, rentals and house prices had gone up as well-paid techies had moved into the mountains, causing inequality and social problems. The problem is being tackled in different ways in different communities. ?

The people we spoke to in Vancouver WA, Bend, Bozeman, Boulder and Telluride recommended that we focus on solving our affordable housing problem. If we don’t, we will either fail to attract Tech workers (leaving Tech stuck at 1.8% of GDP), or we will experience random, explosive growth. If the latter occurs, make no mistake - the Tech sector will shoulder the blame.

It is going to take Queenstown Lakes many years to sort out its affordable housing issue. The West Slopes of Colorado has dealt with the same problem through taking a regional approach - some towns provide capital and knowledge, while others provide affordable housing. This distributed system, where everyone works together remotely, seems to currently work well in the current environment (where Tech workers don’t commute to the office every day).

7.??????Launching start-ups at scale

Most mountain towns we visited ran well-tuned accelerator programmes that seek out, curate and mentor start-ups in volume. Bend, Spokane, Boulder, Durango, Telluride and Grand Junction operate accelerators of different flavours, with TechStars in Boulder operating at industrial scale. It has 52 active programmes in 40 countries.

?At the heart of all these programmes is the concept of mentoring, which has become a means of shepherding companies through their early phases, and provides a key source of disciplined seed capital. I left the Rockies pondering how we could build velocity and industrial scale in our start-up community, and cultivate a network of experienced and effective mentors.?

8.??????Building a flywheel

Bend and Boulder (and increasingly Spokane and Bozeman) have built robust Tech ecosystems. Their flywheels are spinning fast, with strong interplay evident between tertiary education, start-ups and scale-ups, multinational Tech companies and remote workers. These communities understand that it in the years it takes for the start-up community to generate a positive impact on GDP, the other parts of the flywheel can generate significant activity. However - most importantly - things work best when they’re all growing in unison.?

9.??????Measure everything

The successful communities keep tabs on Tech’s contribution. In Bend and Boulder, measurement has been second nature.?

The big takeaway for me was that if we can analyse what’s in place today, we can work out the gap between the current state and our target future state. Key metrics to measure include how many new companies are being produced per year, how many are achieving Series A funding rounds, how many scale-ups there are in town, how many exits are being achieved, how many Tech multinationals operate in town, how many remote workers there are - and are they building local companies, or are they salaried employees working for out-of-town companies? Do they engage in skills development and research collaborations with other firms and institutions? These are important nuances and indicators of important economic activity. ??

10.???Collaboration rocks!

Wherever we went, we saw a buzz of collaboration. We saw a sense of respect and collaboration. People seemed to understand they can create something bigger and better if they bring together different skills and experiences. This was particularly apparent in Bend, Boulder and the West Slopes of Colorado.?

The Wrap

Whakatipu Hangarau’s Strategy White Paper is underway. We’re fortunate to have a highly-experienced, multi-disciplined team working on this initiative, led by our Executive Director Ron Clink and Professor Stephen MacDonell from the University of Otago. Michaela Blacklock is leading the day-to-day charge, with additional university input coming from Professors Nathan Berg and Conor O’Kane, and from a panel of more than 30 experienced Tech sector professionals. The Economic Development team at QLDC, led by Peter Harris, is a key partner in this initiative, with our strategy dovetailing into QLDC’s economic diversification plan.

When complete, Whakatipu Hangarau’s plan will put forward some initial 10-year targets for the Tech sector in the region. We will then start to build a roadmap for implementation.

There are many obstacles ahead, but it’s a worthwhile and necessary mission. We can do this!

Acknowledgments

Before, during and since this road trip I’ve been helped, counselled, advised, informed, supported and even fed by some amazing folk. Some of you made time to tell your stories and offered insights, some of you made countless introductions, some of you bought meals and drinks, some of you designed the Merch (the Queenstown Techtown hats and t-shirts we gave out along the way), and some stayed behind and did the real work Ron Clink Michaela Blacklock , Stephen MacDonell Peter Harris while I swanned around America. A huge vote of thanks to everyone but in particular to? Dino Vendetti , who made all of this happen, to Roger Lee who organised my Big Day Out in Bend and to John Tayer and Ryan McIntyre , who mobilised Boulder. ?Muchas gracias, amigos!