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Why all these Silicon Valley startups are moving to Phoenix

Historically a hardware town, software is now dominating Phoenix's tech sector and Silicon Valley startups are taking note.

Phoenix's tech scene is rising. (Phoenix, Arizona, with its downtown lit by the last rays of sun at the dusk by Dreamframer via Shutterstock)
This is a guest post by Chris Camacho, CEO of the Greater Phoenix Economic Council.
When DoubleDutch, a San Francisco-based app developer, announced in February that it was locating its first branch office in Greater Phoenix, it was no surprise to those who have paid attention to the region’s tech sector in recent years.

After all, Greater Phoenix’s tech sector is experiencing rapid growth, with more and more tech companies locating to the Valley like never before and others being launched here seemingly every week.

Historically, Greater Phoenix has been home to a strong technology sector, but the tech jobs of the past were largely found in the hardware industry. A statewide focus on increasing the number of incubators, accelerators and coworking spaces has created an environment where new kinds of tech jobs — those in software, web development and cybersecurity — are emerging. Since 2000, tech employment in the region has grown by nearly 80 percent, with software employment jumping by nearly 30 percent since 2010.

The economic development organization I run, the Greater Phoenix Economic Council (GPEC), published a 2015 report on the region’s software industry that found that approximately 70,000 people in the region were employed in the information and communication technology (ICT) sector, which includes careers in computer systems design services, for example. Employment in the software industry alone is projected to grow 14 percent by 2019, outpacing Denver and Austin.

Greater Phoenix’s tech boom is being fueled by an influx of companies from other cities — notably, Silicon Valley — that are choosing Greater Phoenix to go to scale. In addition to DoubleDutch, other California-based companies that have expanded to Greater Phoenix in recent years include Uber, Yelp, Shutterfly, Zenefits, Weebly, Gainsight and BoomTown, among others. These companies enjoy a supportive business climate, low operating costs and access to a large, talented workforce.

At the same time, the region’s entrepreneurial ecosystem is thriving, and many new startups born in Greater Phoenix are in the tech sector. One major influencer in the market is WebPT, a web-based physical therapy software company that has experienced tremendous growth since launching in 2008. The company has been named to the Inc. 5000 list every year since 2013 and has experienced a reported growth rate of 622 percent over three years. WebPT is part of a wave of companies anchoring Greater Phoenix’s tech sector and creating new economic opportunities for the region.

The current tech boom isn’t just changing the makeup of Greater Phoenix’s economy — it’s also changing the region’s physical infrastructure. WebPT and other tech and creative companies are helping to revive the Downtown Phoenix Warehouse District. Formerly an economic hub where the region’s produce was warehoused, the historic neighborhood is undergoing a revitalization as tech and creative companies are drawn to the area for its large, available spaces, urban feel and unique architecture.

Critical to attracting and growing tech companies in the Valley is ensuring a robust and skilled workforce. Local leaders, educators and businesses recognize the importance of developing a talented workforce and a number of tech education initiatives are underway to help prepare workers at all education levels for careers in tech.

This fall, the Phoenix Coding Academy will open its doors. This public school in the Phoenix Union High School District will educate students on coding, cyber security and software and web development, among other topics.

Arizona State University and Grand Canyon University feature robust tech programs for undergraduates, and Galvanize, a Denver-based technology education company that bridges the gap between industry and education, will join WebPT in the Downtown Phoenix Warehouse District.

Entrepreneurs are spreading the gospel, too. Last month, the cofounders of mattress startup Tuft & Needle shared their story on how their company has grown as a result of operating their startup in Greater Phoenix rather than Silicon Valley. Citing more than the lower cost of doing business, cofounders JT Marino and Daehee Park shared stories of finding a strong network of fellow entrepreneurs and innovators, a thriving dining scene and diversity.

“It’s not often that you get to step outside of yourself and ask whether you’re doing things the way you want to do them,” they wrote. “But we were fortunate to have that chance  — and to take it. To anyone else aching for the same thing, we have one big piece of advice: come to Phoenix.”


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