Growth

Jul. 9, 2020 9:24 pm

Big tech companies are flocking to Pittsburgh. The foundation was laid over decades

Zoom's expansion into Pittsburgh offers fresh evidence that the city can attract name brands in tech. But don't sleep on the unsung heroes who have been working for years.
Bakery Square: 2007 v. 2018.

Bakery Square: 2007 v. 2018.

(Photo via Flickr users pittsburghmetblogpics and PunkToad, used under Creative Commons license)

Correction: University of Pittsburgh's Department of Rehabilitation Sciences and Technology is based at Bakery Square, not its Swanson School of Engineering. (7/17/20, 9:47 a.m.)
A technology community’s resources and homegrown talent define its identity, but to reach a bigger stage it will ultimately need to attract others to its cause.

So, in Pittsburgh, it was viewed as a turning point when Google came to the city. Opening an office within Carnegie Mellon University in 2006 that was helmed by a professor it hired from the institution, the big tech company grew the office to 150 employees that led it to open a new office in Bakery Square in 2011.

It was a landmark of economic transformation, anchoring the redevelopment of a former Nabisco factory that now also houses University of Pittsburgh’s Department of Rehabilitation Sciences and Technology. And UPMC Enterprises, the university’s venture arm that is committing $1 billion to new life sciences investments, is there, too.

“Google was committed because they saw the kind of talent that was coming out of CMU,” Audrey Russo, president and CEO of the Pittsburgh Tech Council, told Technical.ly. It set up a playbook: “You get as close as you can to people doing the research and graduating from the best schools. … It’s something that turned the corner for the region.”

The move was also the beginning of a wave of tech companies putting down roots in the city. Facebook moved a team focused on virtual reality, and just opened new offices in the Strip District. In the same area, Uber launched its Advanced Technologies Group in 2015, adding a prominent name to the list of five companies testing self-driving cars on the city’s streets in the ensuing years. In fact, the Big 5 are all there: Apple and Microsoft and Amazon, too, each having grown since planting a flag. Self-driving startup Argo AI brought its own big players to town in a way, as well, recently landing $7 billion from automakers Ford Motor Company and Volkswagen. The company is planning to take more space in the Strip District with an additional 65,000 square feet.

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Autonomous vehicle company Aptiv also rolled in, announcing recently that it would move its offices to Hazelwood Green, a development on a former steel mill site along the along the Monongahela River.

It hasn’t slowed down even with the COVID-19 pandemic closing offices. Zoom, which has become a household name for videoconferencing in a time of remote work, announced in May that it it will set up a research and development center in Pittsburgh, with plans to split 500 employees between here and Phoenix. In this case, there doesn’t even need to be a splashy office opening: The company planned to begin recruiting software engineers who will initially work from home until at least fall of 2020.

As July arrived, software company Mindera said it would expand in the U.S. with a second office in Pittsburgh, with plans to add to an employee base of 500 people in locations like San Diego as well as the U.K., Portugal and India. It’ll be based in the Pittsburgh Innovation District, a neighborhood-level tech hub in Oakland where companies are moving in around the knowledge centers of CMU and Pitt.

With each of these moves, talent has been a central part of the equation. While HQs remain elsewhere, these Pittsburgh offices are heavily engineering offices, drawing from a unique cluster of talent that’s centered around CMU’s expertise in artificial intelligence and robotics. It even showed up in Zoom’s press release:

“With our visionary faculty and exceptionally talented students, Carnegie Mellon is catalyzing revolutionary work to accelerate digital transformation across markets and industries, and we look forward to partnering with Zoom to enhance their remarkable momentum in defining the future of virtual interactions,” said CMU President Farnam Jahanian.

And again in Mindera: Mary Lockwood, managing director for the U.S., cited “the level of technical talent in the city as well as its welcoming environment and emphasis on partnership” as the reasons the company is expanding here.

And again as Facebook CEO Mark Zuckerberg said the company would choose Pittsburgh as one of the markets to expand on a wave of remote work hires.

As ambitious projects like Bakery Square and Hazelwood Green show, tech expansion is part of a wave of redevelopment taking place across the city. The tech offices, the self-driving cars and, yes, the kind of walkable, foodie-inclined environments that are attractive to people from all over, are multiplying through neighborhoods like Lawrenceville, Oakland and East End.

Even the terrain is fitting, as the compact, hilly, all-weather nature of the city makes it a good place to figure out if a robot can survive on real streets.

“If you can get an autonomous vehicle to work here, it should pretty much be able to work anywhere,” said Lou Camerlengo, who started custom design and dev shop fivestar in 1997 and serves corporate clients as well as community clients and economic development groups.

It’s not new.

It can be tempting to read this change, coming decades after the city lost one-third of its population when the steel industry collapsed, as a recent phenomenon. After all, it brings together the post-Recession push toward cities and new economies.

Yet it’s worth remembering that the innovation ecosystem didn’t just arrive with Google. After all, the company sought out CMU for its expertise in AI that took decades to develop. The groundwork for Carnegie Mellon and Pitt’s expertise and resulting talent pool in artificial intelligence and robotics dates back to the 1950s, when then-professor Herbert Simon and Allen Newell are credited with pioneering the field. Even Zoom can trace its legacy to CMU, as the first video call took place 50 years before the company launched.

When it comes to robots, the now-prevalent “Roboburgh” nickname dates to a 1999 Wall Street Journal article. By turn, the research itself can be traced at least to 1979, when CMU’s Robotics Institute was launched. It gained national attention when William “Red” Whittaker, who is now CTO of moonbound autonomy company Astrobotic, led development of robots to inspect the accident site at Three Mile Island Nuclear Power Plant near Harrisburg.

Now the Pittsburgh Robotics Network has more than 50 companies. Many of the robotics researchers are developing technology more quietly than commercial startups otherwise would — in fact, they’re not seeking any attention. They’ve got funding via government contracts, and are racing to develop technology that will have generational impact.

“We call them the unsung heroes of Pittsburgh tech,” said Jennifer Apicella, president and CEO of Build412 Tech, which connects technology professionals in Pittsburgh through events and membership. “Not only are they providing amazing jobs but amazing experience for our technology professional population doing cutting-edge technological development. Who doesn’t want to be a part of that?”

It’s not only CMU.

Through its schools of medicine and engineering school, the University of Pittsburgh leads a research sector that’s one of the top recipients of NIH grant funding to advance discoveries at centers like the McGowan Institute for Regenerative Medicine.

Like many cities, Pittsburgh also has a base of startup activity, as a group of accelerators and incubators like Alphalab, Idea Foundry and Ascender seek to provide resources that can help new businesses grow. It’s in line with the growth of entrepreneurship that came on the heels of the Great Recession in many cities, but didn’t start in 2008. Here’s a few examples of companies that were founded in Pittsburgh and grew big workforces:

  • FORE Systems, a networking switching company founded by former CMU professors, was acquired by Marconi in a 1999 deal that came just before the dot-com bubble burst. The business unit went on to become part of Ericcson, and maintains a presence in the city.
  • After an IPO in 1999, procurement tech company Freemarkets was acquired by Ariba in a deal worth $493 million, making it the largest satellite office of Sunnyvale, California-based Ariba at the time.
  • Resprionics, a medical supply company headquartered in the suburb of Oakland, was acquired by Phillips in a $5.1 billion deal in 2008, and in 2017 Phillips opened an innovation center in the city’s Oakland neighborhood.
  • Language-learning company Duolingo, founded in 2009 by CMU professor-turned-entrepreneur Luis von Ahn and Severin Hacker, recently became the city’s first tech company to reach unicorn status (more than $1 billion valuation) after a new investment from the parent company of Google.

Still, the sector of the economy that include organizations with a specific tech focus doesn’t tell the full story of local employment in technology as a whole. For one, the tech growth isn’t driving the same employment numbers as the steel industry once did, said Christopher Briem, a regional economist at Pitt’s Center for Social and Urban Research. There’s been signs of growth in education and healthcare, as well as financial services. And with proximity to the Marcellus Shale, hydraulic fracturing continues to drive big job gains.

“It’s a much more difficult challenge for a region to maintain competitiveness in any one industry than it was for steel because there was coal in the ground that made it an optimal place to make steel for over a century,” he said.

Yet the city’s place as an industrial center continues to have a long reach, and some of those big firms that helped build the city’s blue collar reputation are also the ones driving innovation. PPG, Westinghouse Nuclear, Alcoa, ANSYS, UPMC and Highmark have long been in the region. It’s not necessarily the sexiest, but is firmly rooted in an ethos of creating technology that can help advance industries and infrastructure.

“It’s not just doing things for the pure science of it,” said Kevin Stolarick, the “Official Statistician of the Creative Class” who got his Ph.D. at CMU and long called the city home before moving to Toronto. “It’s doing things because there’s a problem that we need to solve.”

Those problems take time to work out, and they don’t always draw the big praise. But they’ve created a base of jobs and a foundation to keep pushing technology forward.

“I always love the the 15 years it takes to be an overnight success,” Stolarick said. “That’s a large part of this.”

At the same time, some of the largest employers with headquarters in Pittsburgh are also now the largest tech employers. Take PNC. The company doubled in size following the acquisition of Cleveland-based National City Corp. in the wake of the 2008 recession. Now it is positioning itself as a tech company that delivers financial services, rather than the other way around.

And it’s true of some of the biggest companies across the region: BNY Mellon, Dick’s Sporting Goods, Dollar Bank, Federated, Covestro, Lanxess. These jobs often come with stable benefits and the chance to get the experience that comes from working at a large company.

It’s creating pathways for talent.

For one, there are places to go from a smaller firm.

“When our developers leave here it’s not uncommon for them to go to a corporate setting,” Camerlengo said of fivestar. “They are a big actor because everyone really needs that tech talent.”

Julia Poepping started her path in Pittsburgh’s tech industry working in information systems at PPG in the 1980s. It was reflective of that steady, process-driven employment that the city has always been known for.

“One of the things that I found when I worked at a large, 120-year-old manufacturing company is they had really good processes. For a long time they were run by engineers, and it was a great place to really learn how to run a business and how to do things responsibly,” she said.

“All you have to do is ask and somebody is going to figure out how to help you,” said Poepping, who chairs RedChairPGH, a nonprofit for gender balance in tech.

The hiring that has taken place on all of these levels has created a dynamic that sees Pittsburgh seeking to fill technology jobs.

Universities like CMU, Pitt and Duquesne are producing talent, yet at some level it becomes a matter of numbers — supply and demand. The boom in jobs is creating more openings than an annual graduating computer science program can fill. Justin Driscoll, Pittsburgh campus director for coding bootcamp Tech Elevator, has seen lots of change over a couple of decades in the tech ecosystem. For one, he points to the growth of the neighborhoods where tech companies are based as a destination.

There’s also been a change in jobs. He cited data that shows more than 7,000 tech roles were posted on BurningGlass in 2018. That same year, local computer science schools graduated 650, students, he said. For its part, Tech Elevator is training about 150 new developers a year who weren’t previously technologists. In an economy where software developers have options from working on a bank’s customer experience to building robots, there’s a need for people to grow the workforce.

“The transferability of these skills is really what’s fueling this economy and more and more need in the region,” Driscoll said.

It’s attracting folks to move in from elsewhere.

Along with the proximity to talent, they are attracted by affordability and general quality of life that comes from living in a city of 300,000 people where dollars go further. The restaurant scene is getting national accolades. Plus, the museums, libraries and parks that still bear the names of the giants of industry offer plenty to do.

And, again, there’s the ethos that indicates one can get involved: “Come to Pittsburgh if you want to build something,” Russo told Technical.ly.

Though not all grads will stay, the base of companies creates a place for folks who are graduating to find a job, and a base of talent to attract folks who might be seeking out a new city, or left town and want to return in another stage of life. Build412 Tech’s Apicella has been taking note of this “boomeranging” effect, and sees it as a source of attracting talent.

“They left for a few years and went to go try something new, and now they come back and bring that experience with them,” she said.

Yet it’s not only those who come from outside that will shape the city’s future. A big economic shift means that technology as a profession will shape the city as a whole. That means folks who already live in town have a place, too. Similarly, the path is still being shaped.

It will mean specific roles for people at different levels. Tech Elevator offers training that prepares junior developers. It’s a pathway into a well-paying tech job that has good benefits, without requiring a college degree, which presents a new kind of opportunity. But at the same time, it’s not necessarily the kind of talent that’s often sought at a startup. There still needs to be time to learn from more advanced folks, which a larger team can offer.

“Our new developers can learn from them and then hopefully one day work at Duolingo,” Driscoll said.

It’s easy to think in shorthand about tech. There’s Silicon Valley power players and there’s CMU robots. They’re important and will remain so, but with economic change that’s bringing outsize growth, it’s fast becoming apparent that lots of different kinds of organizations will have a role. And that will require both looking outside, and within.

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