Web-based companies find advantages to developing technology in Central Valley

By Adrian Rodriguez
Staff Writer
adrian@thebusinessjournal.com

The Business Journal - In the Central Valley, software development companies like Porterville-based Hyperbidder, Inc. just can't get the same exposure it could in the Silicon Valley.

And that's just the way owner Giorgio Talegon likes it. Talegon, who founded Hyperbidder in 2005, is overseeing the final stage of development on a business solution he says doesn't currently exist-an idea so good that he can't reveal a sliver of detail until it is launched.

"We have a solution that is such a revolutionary product, that once we come out, everybody should start taking notice," Talegon said. "But they will have to wait and see."
And in tiny Porterville, hundreds of miles from the Silicon Valley, Talegon agreed that his secret is probably a lot safer here.

While not all developers have struck upon an industry-shaking idea, many are starting Web-based companies that they hope will shake up the Central Valley. Entrepreneurs are finding ways to tap into the power of the Internet to connect businesses to their demographic in this region.

They are among a new crop of software engineers, developers and programmers from other parts of California who are finding the Central Valley has more advantages than disadvantages. With a lower cost of living and well-defined markets having just deployed broadband and DSL, a city like Fresno looks a lot more appealing to the saturated Silicon Valley.

One such company is Complete Access, which launched VIPspree as its flagship product last year and continues to expand its membership and number of affiliated businesses. VIPspree is a gift card-style service that allows for multiple accounts with participating businesses; customers receive an extra $5 or $10 when they add enough to the card for that business.

Company co-founder Kirk Nagamine said Fresno's size made it an ideal place to launch the company.

"Fresno is a lot less expensive to live in than other areas of the country, or even the state, and so there is an opportunity to attract and keep talent in the Valley," Nagamine said. "But the other side of that coin is that, because of the ability to use the electronic communications today, you can actually have your work done remotely."

While the software behind VIPspree was partly developed in India, Nagamine said the trade-off is that the site itself is focused on Fresno, from where most people would not normally think support could come to a company focused on the Web.

"From a consumer side, I don't think Fresno's very different from any other metropolitan area," Nagamine said. "The Internet has become more prolific, and you see broadband becoming an almost common thing in the area here. Initially, I wondered how many tech savvy people we have here who are actually buying online. In retrospect, that's not the issue. People are familiar with the technology available. They are using it in their professional and personal life."

But Nagamine said national companies may not yet be familiar with the Central Valley.
"It's hard for Web companies to promote via the Web, because we just don't have the major Web brands focused" on cities like Fresno, he said.

Marketing was one of the concerns cited by founders of CityVantage, a membership-based online coupon directory based in Fresno. Formed by three Clovis West alums who left the Central Valley during college, the site offers printable coupons for more than 100 local stores and restaurants in Fresno for an annual membership fee to the site.

Similar to an annually published coupon book, the site takes the idea a step further by tracking which coupons customers used, when they were used, and which coupons are still valid for the customer.

Jeremy Oswald, one of the company's founding partners, said marketing the service to merchants proved difficult.

"We did a survey to determine who would be interested...and we found that a lot of people believed in the Internet as a useful tool, but they were a little unsure," Oswald said. Some thought that an online presence would only attract unneeded attention from people outside of the region, he said.

"I think it intimidates some people," he said. "It's still something we run into from time to time."

But despite this, Oswald said the Fresno market is just the right size for a Web-based company to start with.

"It's small enough here to start a business, but not too big," he said. "Imagine trying to build a merchant network in the Bay Area," where markets would need to be subdivided.

Nagamine said the Fresno market, while smaller, is basically the same as the larger metropolitan areas in terms of Internet use.

"We're actually finding a wide variety of people from this demographic using the technology," he said. "The bias is that the person who uses the Internet is young in age, well educated, with high disposable income. But really what we're finding is that the users come from a wide variety of backgrounds."

Companies should no longer worry that not enough people in Fresno are on the Internet, he said.

"Technology is not the issue, or connectivity. We are comfortable that there is sufficient level of connectivity and understanding technology," he said. "It's the same old issue: How do you get people to know about you?"

That's the challenge of the Regional Job Initiative, which is about to gear up its technology industry group within the information processing cluster, according to task force chairman Jim Michael.

The RJI's goal is to retain and generate jobs for the Central Valley. Jim Michael said there is a large pool of talented computer engineers in the region, but he worries that companies like Hyperbidder that want to stay under the radar are also keeping themselves unknown to an engineer who needs a job here.

"In particular, I'd hate to see us lose talented IT professionals to areas outside of this area just because they don't know" about the opportunities here, Michael said. "Not being quite as visible is useful, but they do need to be visible to their potential employees. So I think there is a dynamic with keeping under wraps but letting people see them."

The RJI brought industry competitors together last year when it addressed the call center cluster of its mission, Michael said. Those meetings, held to find out what the industry as a whole required to sustain itself, resulted in programs that made the industry strong in the Valley.

But Michael acknowledged complaints from software developers who said the call center cluster only trained people to answer phones, not to actually work with software.

"I wouldn't argue with them. That's why we need to start this next group," he said. "That company needs a group with issues that they are facing. That's why we are facing this challenge now."

It's a challenge that won't look the same in a few years, he said. In addition to college students, working professionals often have to go to school to learn the latest technological advancements.

"In this industry, things change at a fairly rapid pace," Michael said. "In their college education, students have exposure, but we also have folks in the industry already who should refresh their skills."

At the high school level, programs such as the Center for Advanced Research and Technology are focused on helping kids prepare for careers involving technology, Michael said.

But the RJI itself doesn't train people. That challenge will be carried by the Valley's schools and colleges, which has its own pitfalls, he said. Michael, who is also associate director of Operating System Information Technology Services at California State University, Fresno, said one pitfall is to choose the right technology to be taught.

"How do we make sure we are betting on the right horse when it's a brand new technology?" he asked. "We have to ask ourselves, 'Is that the one that's going to transform the business?'"

Talegon would hint that his solution, a business-to-business and business-to-customer program, is just like that. But for Hyperbidder, the launch date on the technology is being stalled by snags in the programming of the software. Talegon said they have found a developer who may be able to help who is relocating from Phoenix.

"It's inevitable: Large technology companies are going to be here in the Central Valley one day, and we're trying to make it so that we are the one," he said. Talegon said his solution will level the playing field in its industry.

A Web-based company in Clovis also found that pulling talent from other regions of the globe was helpful. DealPipe, a listing exchange for venture capitalists in the United States, was started by Case Lawrence of Lawrence Ventures.

"I found a developer in Utah, brought him here, and then I found another developer, a database guy, who was a graduate student here," Lawrence said. "I outsourced a few of the components to a gentleman in San Diego. So it was a three-man team that did DealPipe."

Lawrence said his lead programmer in the region, Krishna Krishnameneni, an international student from India, is an example of somebody from outside the region who was trained locally and may stay in Fresno.

"There are people here either with ties to the area who are interested in coming back, or are here at Fresno State," Lawrence said. "Krishna was prepared very well at Fresno State to do anything."

Networking and getting capital are the most important parts of starting a high-tech company here, he said.

"Especially after the growth of the last couple years in the Central Valley area, there is more talent here than there are opportunities," he said. "There are many people who live here, but there is a shortage of opportunities."

As the RJI's task force gets rolling, Michael said it will focus on making sure there is enough training available for the technology industry here. But it will also be crucial to gather representatives from the industry to see what they require to grow, he said.

At CityVantage, long-term goals are clear about growth, but the final location of its headquarters has yet to be decided. The site is fully scalable, and it already has offers within the Central Coast and Santa Cruz for the site.

"We're open to a lot of things," Oswald said. "We really like it here, but you know, we've got to look at what makes sense for the business. The people we hire is one of the most critical factors."