Dave Manzer, ‎Founder of Manzer Communications in Austin

Let me just state for the record that I am not an economist nor an economic development professional with a chamber of commerce. Nor am I familiar with the different economic incentive packages (tax breaks and otherwise) that nearly 250 communities across the U.S., Canada, and Mexico have put together to win the Amazon HQ lottery.

I do know that Amazon will consider a wide variety of factors when deciding where it should build its HQ2. In my own view, Austin is on a very short list of cities that Amazon is actively considering, despite the city’s inherent growth challenges like traffic, zoning, and cost of living. Here are some obvious, and some not-so-obvious, reasons why:

Talent pool

There’s no question that Austin has become one of the few cities in America where there’s an abundance of tech talent. I know. I know. There is still a talent shortage for some jobs, and there has been upward pressure on wages because of it according to recent surveys by Dice and Hired. Still, Austin has proven adept at attracting new blood in order to meet the constant demand. Very few communities have the ability to absorb the number of startups and existing technology companies that call Austin home. Plus, with UT here and Texas A&M and Texas State University both within a 90-minute drive, you have no shortage of new graduates ready to enter the workforce.

Existing operations

Amazon caused quite a stir in the media when it purchased Whole Foods. The e-commerce giant has been quietly working to bring Austin’s iconic brand into the fold without any major disruptions. There’s a rumor that Whole Foods is ramping up hiring to beef up its software development team, including many operations the grocery chain used to outsource. Let’s not forget that Amazon also has a major distribution warehouse in San Marcos with plans to fill 1,000 openings. That gives Amazon a major workforce cluster in Central Texas that would make it easier for it to leverage as it looks to grow and integrate human resources across its disparate parts.

Logistics & Cost

Amazon is already in the farthest northwest corner of the lower 48 states. It makes a great deal of sense that it looks to locate somewhere other than the west coast or northeast corridor if only from practical perspectives like logistics and cost of living. Locating somewhere in the south or southeast of the U.S. comes with the advantage of lower cost of living and easy access to a different part of the country. The cost of doing business in California and New England is far greater than the south and central part of the country. What gives Texas an advantage is that it has a business-friendly climate. It’s also one of the few states with no personal income tax, which would allow Amazon to either give its employees a 3-8% raise or lower its salary structure for HQ2. DFW may have an edge on Austin when it comes to logistics owing to its airport being a hub for several airlines. That said, I feel confident that Austin’s bid included a promise to incentivize major airlines to add more direct flights to and from the Austin-Bergstrom airport, which would effectively negate DFW’s advantage.

Don’t forget politics

We are living in a highly polarized time in American politics. Right now, Amazon has its roots and global HQ in Seattle, Washington, a location known for progressive ideals and liberal politics. Seattle was one of the first and only cities to vote in a $15 minimum wage to help lower income earners enjoy a livable wage. Setting up shop in Austin would be a very shrewd move for Amazon in that it would instantly become a major employer in a red state with a powerful congressional block. Austin would allow Amazon to keep true to any ‘goodwill’ it has earned relative to being a progressive technology company based in the northwest. At the same time, Amazon can lobby Texas’ powerful Senators and Representatives to defend its business against a wide variety of legislation aimed at curbing Amazon’s influence. A long-term impact of Amazon locating in Austin would be to grow Austin’s power base in Texas, allowing it soften the rough edges Texas politics has developed over the past decade.

So, if you are a Machiavellian business mogul like Jeff Bezos with Libertarian leanings, an affinity for tech-friendly culture and a growing footprint in Central Texas, wouldn’t you put Austin on your shortlist, too?

Dave Manzer is the founder of Manzer Communications and PR Over Coffee in Austin. (Manzer Communications also an advertiser with Silicon Hills News)

Kayla Conti from Google shows off its latest line of hardware, made by Google.

On Friday at its downtown Austin office, Google showed off its new Pixel 2 phone, Google Home Mini, Google Clips hands-free camera, Google Pixel Buds, and an updated Daydream View headset. The products harness advanced artificial intelligence to assist consumers. Google also had a mobile truck parked at the Rainey Street District on Saturday that showed the products to the public and gave away Voodoo donuts to visitors.

Google showcased the following products: the $649 Pixel 2 with the best camera of any smartphone and augmented reality capabilities, $49 Google Home Mini with the artificial intelligence Google Assistant, $159 Pixel buds that lets users connect easily to the Google Assistant, the updated $99 Daydream View, a mobile virtual reality headset, and $249 Google Clips, a tiny mobile camera.

“Across all these devices, you can interact with the Google Assistant any way you want—talk to it with your Google Home or your Pixel Buds, squeeze your Pixel 2, or use your Pixelbook’s Assistant key or circle things on your screen with the Pixelbook Pen,” Rick Osterloh, senior vice president of hardware at Google, wrote in a blog post. “Wherever you are, and on any device with the Assistant, you can connect to the information you need and get help with the tasks to get you through your day. No other assistive technology comes close, and it continues to get better every day.”

In the video, Kayla Conti from Google shows off some of Google’s latest hardware products at Google’s office in downtown Austin.

SailPoint Technologies, founded in 2005, filed papers with federal regulators on Friday to raise $100 million in an initial public offering.

The Austin-based cybersecurity firm has raised $26 million to date in venture capital and private equity funding.

The company plans to use the proceeds of its offering to expand operations and add additional customers.

SailPoint creates and sells security software that manages and monitors which employees have access to various programs and platforms online for companies.

The company sells an open identity platform available both on-site and in the cloud to manage access to information for a company or government agency.

The company had more than 750 customers across a variety of industries nationally and worldwide, according to the IPO registration statement. It primarily sells to large companies with 7,500 or more employees and mid-market companies with more than 1,000 employees.

SailPoint’s revenue was $132.4 million in 2016 and $74. 7 million for the first six months of 2017. It reported a net loss of $3.1 million for 2016 and $6.5 million for the first six months of 2017.

Mark McClain co-founded the company with Kevin Cunningham and Jackie Gilbert.

SailPoint has global innovation centers in Austin, Pune, India and Tel Aviv, Israel and it has 228 employees in its research and development teams. Overall, SailPoint has 741 employees.

SailPoint recently “entered into a lease for a new 164,818 square-foot corporate headquarters” and plans to move in during the second quarter of 2019. It currently occupies 44,633 square feet.

Jeff Bezos, founder and CEO of Amazon

And Austin wants the second Amazon headquarters.

City leaders officially submitted Austin’s bid to Amazon on Wednesday, a day before the deadline.

On Sept. 7, Amazon announced the Seattle-based tech giant was looking for a second North American headquarters, Amazon HQ2. The company expects to invest more than $5 billion in construction for the second headquarters and it plans to create as many as 50,000 high-paying jobs.

Amazon then asked cities to submit bids for the project.

Austin Texas Region Bid for @amazon HQ2 submitted.

— Austin Chamber (@AustinChamber) October 18, 2017

And since then Amazon has seen an outpouring of interest. Mayors have submitted videos. Members of Congress have written letters. And Tucson, Arizona even sent a 21-foot Saguaro cactus to Amazon’s headquarters in Seattle with a note “Amazon Can Grow in Arizona,” which the company politely declined, according to a story in Geekwire.

Amazon expects its HQ2 to “be a full equal to our Seattle headquarters,” Jeff Bezos, Amazon founder, and CEO said in a news statement.

Amazon’s criteria for choosing the second headquarters includes a metropolitan area with more than one million people, a stable business-friendly environment, urban or suburban locations with the potential to attract and retain strong technical talent and communities that think big and creatively when considering locations and real estate options.

Austin meets all that criteria.

Moody’s Analytics crunched the data and came up with Austin as its first place contender for Amazon HQ2. It cited Austin’s reputation as a tech hub and home to Dell, the largest Samsung facility outside South Korea, the second biggest Apple facility and a large IBM campus.

“Complementing these large IT employers are smaller IT companies that have either started in Austin or relocated,” according to Moody’s Analytics. Austin also has an educated workforce with 43 percent of its workers have completed college or graduate training, compared to about 30 percent nationally. It also cites the strength of the University of Texas at Austin’s Computer Science Department.

“Austin has a much lower cost of living than places such as Silicon Valley,” Moody’s Analytics reports. “Even though house prices have been rising and are high for Texas or the South, they are well below those in California or the Northeast. Anecdotally the quality of life is high, and many want to live in the “Silicon Hills.” Further, being in Texas, Austin resides in a business-friendly state that seeks to attract and keep companies. Amazon’s recent acquisition of Whole Foods, which is headquartered in Austin, is another factor in the metro area’s favor.”

In addition, Austin has good transportation facilities and is the Central Time zone with an international airport that makes it easy to travel nationally and internationally.

In the Moody’s Analytics report, Atlanta came in second followed by Philadelphia, Rochester, New York, and Pittsburgh.

Amazon launched operations in Texas in 2013 and already has a big presence here with humongous warehouse fulfillment centers located in Schertz and San Marcos in the Austin to San Antonio corridor. Amazon has other centers in Coppell, Haslet, Dallas, Fort Worth, Houston, and Katy. It has more than 10,000 employees in those centers.

Amazon also has a software development center in Austin.

In addition, Bezos owns Blue Origin, a privately-held aerospace company based in Kent, Washington that has a suborbital launch facility located in West Texas, near the town of Van Horn.

Another factor in Texas’ favor is its robust renewable energy market, particularly its wind farms in West Texas. On Wednesday, Bezos tweeted a picture of himself smashing a bottle to christen the company’s largest wind farm in Synder, Texas. Bezos is standing on top of the wind turbine in the video.

Fun day christening Amazon’s latest wind farm. #RenewableEnergy pic.twitter.com/cTxeXdsFop

— Jeff Bezos (@JeffBezos) October 19, 2017

Amazon is also looking for an urban or downtown campus with a similar layout to Amazon’s Seattle campus.

“Amazon HQ2 will be a complete headquarters for Amazon – not a satellite office,” according to the company. “Amazon expects to hire new teams and executives in HQ2 and will also let existing senior leaders across the company decide whether to locate their teams in HQ1, HQ2 or both.”

Dallas and Houston plan to submit bids for Amazon HQ2. San Antonio’s city leaders already stated publicly that San Antonio would not be bidding for the project.

Amazon is expected to announce the new headquarters site in 2018.

Techstars on Wednesday morning announced the launch of the Techstars Impact Accelerator, its first program aimed at for-profit startups that are tackling social and environmental problems.

The accelerator will be based in Austin. Applications open in December. The program kicks off in June of 2018. Zoe Schlag, the program’s Managing Director. Since 2014, Schlag has run UnLtd USA in Austin as its founder and CEO. The accelerator program backed entrepreneurs on a similar mission as the Techstars Impact Accelerator.

The accelerator is focused on financial services, healthcare, education, agriculture, and energy.

“UnLtd USA will join forces with Techstars to bring its global network in the impact space to the Techstars Impact Accelerator,” Schlag wrote in a blog post. “Meanwhile, since Techstars launched 10 years ago, we have had a deeply held belief that some of our biggest global challenges also represent some of our biggest opportunities, so investing in world-class, mission-driven founders is deeply embedded in our DNA.”

The Techstars Impact Accelerator fund is backed by Morgan Stanley, Impact America Fund and Cotter Cunningham, CEO of RetailMeNot.

Techstars has seen an average of 50 percent growth in startups tackling social impact issues over the last three years.

“Over the last several years, we have made several investments into impact companies, including category leaders such as Zipline, which builds drones to deliver crucial medical supplies in Africa; Aunt Bertha, the #1 ranked social service search and referrals platform; and Connxus, a supplier management solution that allows buyers to achieve their goals of responsible and sustainable sourcing,” according to Schlag.

Max Hoberman, founder of Certain Affinity. Photo by John Davidson.

The international investment follows a $5 million investment in Certain Affinity by Capstar Partners, an Austin-based private investment firm.

Under the agreement with Leyou Technologies, Certain Affinity will develop and produce an original game and will share in revenues from the game, according to a news release. Leyou will also provide up to a $15 million loan for costs and expenses related to the game’s development. Leyou also has the option of buying all of Certain Affinity’s remaining shares in 2021 for a valuation not to exceed $150 million.

Certain Affinity, founded in 2006, develops both original titles and it has codeveloped on multiple games in the Call of Duty and Halo franchises, DOOM, and Left 4 Dead.

“I have enormous respect for Alex Xu, Leyou’s CEO, and the team that he’s assembled,” Max Hoberman, Certain Affinity’s President and Founder, said in a news release. “This agreement launches a partnership to create an ambitious and exciting new game together, while the additional investment allows us to continue developing our own original IPs. Certain Affinity has a history of co-development on some of the biggest action franchises in the industry, and we will continue this work in parallel. Our commitment to growing the company and expanding our presence in Austin has never been stronger.”

“With its proven track record producing high-quality video games, Certain Affinity possesses the technical capability and talent to create highly successful titles, which in turn will assist Leyou in further diversifying its video game portfolio and enhancing its revenue streams,” Alex Xu, CEO of Leyou Technologies, said in a news release. “This strategic investment into Certain Affinity is consistent with the growth strategy of our Company as we continue to look for opportunities to invest and increase our market share in the video gaming industry.”

MassChallenge Texas team kicking off the accelerator program.

MassChallenge Texas kicked off Monday evening with a big crowd at the Bullock Texas State History Museum in downtown Austin.

“I want Texas to be the place where startups come to innovate,” said Mike Millard, managing director for MassChallenge Texas.

The global accelerator is now accepting applications for its 2018 Texas cohort that will be hosted at WeWork coworking spaces. The Austin-based nonprofit accelerator will work with up to 100 startups that will compete for up to $500,000 in equity-free cash awards.

All MassChallenge staffers based in Texas will have an office at WeWork and next year all 100 MassChallenge Texas startups will have office space at WeWork, said Cody Julian, regional marketing director at WeWork, based in Austin. WeWork has three locations in Austin right now and other locations throughout Texas, the U.S. and the world.

MassChallenge works with entrepreneurs and corporations to drive innovation, Millard said. The nonprofit organization has a network of accelerators in Boston, the UK, Israel, Switzerland, Mexico and now Texas is the latest, he said.

The key to MassChallenge’s success is its corporate partners, said Bob Metcalfe, professor of innovation at the University of Texas at Austin, inventor of Ethernet and co-founder of 3Com.

Already, more than 1,200 MassChallenge alumni have raised more than $2 billion in funding, generated $900 million in revenue and created more than 65,000 jobs.

Texas is the ideal next location for the MassChallenge accelerator, Millard said. Texas has 28 million people, 50 of the Fortune 500 companies, 40 plus venture capital firms and growing, 40 accelerators and growing and 18 angel groups, he said.

“Those ingredients allow us to be the best in the world,” Millard said.

Texas has deep expertise in energy, petrochemicals, healthcare, defense, financial services, cybersecurity, enterprise software, advanced manufacturing, food and agriculture, Millard said.

The crowd included hundreds of entrepreneurs and advocates of the technology industry including Joshua Baer with Capital Factory, Bill Blackstone with Galvanize, Kerry Rupp of True Wealth Ventures, Claire England with the Central Texas Angel Network, Jan Ryan with Women@Austin and UT Austin, Steve Guengerich with the Institute for Innovation and Entrepreneurship at UT Dallas, Pike Powers, Austin Mayor Steve Adler, San Antonio Mayor Ron Nirenberg and U.S. Congressman Lloyd Doggett.

The founding partners of MassChallenge Texas include Southwest Airlines, USAA, Upstream and TMAC.

Southwest plans to work with MassChallenge Texas by matching its executives with startups to learn from them, said Heather Figallo, senior director of innovation and labs at Southwest Airlines.

USAA, based in San Antonio, is about service to the community and its members, said Zachary Gipson, Chief Innovation Officer of USAA.

“So, when I think of MassChallenge I think of the opportunity to continue to work with entrepreneurial and creative people to think about what service looks like in the future,” Gipson said.

Upstream is looking forward to driving new projects with global impact, said Jeff Mulhausen, founding partner of Upstream.

Texas Manufacturing Assistance Center, TMAC, reports working with MassChallenge can increase innovation, job creation and innovation, said Ron Lehman, TMAC state director.

The MassChallenge Texas inaugural board of advisors includes Metcalfe with UT Austin, Figallo with Southwest Airlines, Gipson with USAA, Pike Powers with the Pike Powers Group and Larry Peterson with the Texas Foundation for Innovative Communities.

At the event, Millard gave special recognition to Powers, who has been a pioneer in Austin’s technology industry.

Millard called him the “Godfather of Austin’s semiconductor industry.” Powers helped Austin and Texas foster a technology industry which laid the foundation for Austin’s vibrant tech industry, Millard said.

Also at the event, Austin Mayor Adler and San Antonio Mayor Nirenberg shared the stage to talk about how their cities are collaborating to drive innovation in the regional technology industry.

“The demographers say the next great metroplex in the country is going to be Austin and San Antonio,” said Mayor Adler.

“The Texas miracle is the Austin-San Antonio corridor,” Nirenberg said. “The future is bright in Texas if you look at it through Austin or San Antonio.”

The two cities are stronger when they work together, Nirenberg said.

“In every way, we can, we need to build momentum for the region and the future metroplex that we’re going to be and that’s what MassChallenge Texas is doing for us now,” Mayor Adler said.

MassChallenge kicked off a statewide roadshow on Tuesday with 35 events in 10 cities in coming weeks, Mayor Adler said. The organization is on a mission to recruit 1,000 startups and 350 mentors, he said.

Robyn Metcalfe, founder of Food+City in Austin, is working with MassChallenge to build a strong network for food startups.

“This is the breakout moment for food entrepreneurs in Austin,” she said.

Food+City is running a food Challenge Prize which is open right now and it’s sending its submissions to MassChallenge, Metcalfe said. It’s the fourth year for Food+City’s Challenge Prize.

At the event, MassChallenge Alumni company, Spoiler Alert, highly recommended the program. It plugged the company into funding, partnerships and mentors, said Emily Malina, chief product officer with Spoiler Alert, which created software to manage food inventory to eliminate waste.

Hydroswarm, based in Boston, which creates smart drones for underwater exploration, is also a MassChallenge alumni company and the program helped bring the project to life, said Sampriti Bhattacharyya, its founder.

“You can’t do it alone,” she said. “You need the support system.”

By LAURA LOREK
Publisher of Silicon Hills News

Fred Schmidt, international director of Capital Factory, at the first Austin Startup Week International Series of Events on Thursday.

Representatives from Australia, Colombia, Mexico, Pakistan, Ireland and the European Union made presentations at Capital Factory on Thursday.

Capital Factory has had 20 international startups set up operations in Austin, said Fred Schmidt, director of international at Capital Factory. It has two startups from South Africa, a cohort of Pakistani entrepreneurs and its first company was Kahoot! from Norway.

“It continues to grow and everyone loves Austin,” Schmidt said.

A delegation from Angers, France is currently visiting Austin, Schmidt said. A delegation from Austin plans to go to France soon too to continue to cultivate Austin’s sister city relationship with Angers, he said. They have been sister cities since 2011.

The afternoon event during Austin Startup Week featured a series of 5-minute lightning talks from key people in Austin’s community and other countries focused on international outreach.

Austin has a great international reputation as a tech hub, said Adrian Farrell, consul general with the Consulate General of Ireland in Austin.

Ireland is in Austin to foster connections between technology companies that want to expand to the U.S. and U.S. companies that want to set up operations in Ireland, Farrell said. Dell, Dropbox and WPEngine all have operations in Ireland.

“There’s enormous potential for the future,” Farrell said.

GlobalAustin, founded in 1960 at the University of Texas at Austin to welcome international students, has broadened its mission to welcome all kinds of international groups to Austin, said Margie Kidd, its executive director. It’s part of the U.S. Department of State’s International Visitor Leadership Program. The organization hosts thousands of international visitors in Austin each year and sets up appointments with them to meet with key figures in the technology industry as well as other businesses, media and the University of Texas.

One of the keys to fostering greater ties between Austin and the world has been the South by Southwest Festival in March, said Grover Bynum, who supports the EU and other stakeholders investing in the Austin community. It showcases Austin to an international audience every year, he said.

The SXSW City Summit is headed up by Julie Yost. SXSW is a great place to share ideas, connect with one another and share culture, Yost said.

SXSW promotes a version of global diplomacy, said Peter Lewis, global head of sales and exhibitions at SXSW.

Technologies put people in contact with each other all over the world, Lewis said. But it’s the conversations people have one on one and face to face at SXSW that makes the magic happen, he said.

SXSW provides an environment where all kinds of international stakeholders can come together and have conversations outside the more formal context of Washington, D.C., said Jesse Spector, policy officer, Digital Economy and ICT with the EU Delegation to the United States.

This past March, the EU rented out the Palm Door on Sixth Street during SXSW to showcase a group of technology startups it brought over and to host meetings, film screenings, panel discussions and talks and other presentations. It will be doing an even bigger series of events next year at Palm Door on Sixth during SXSW opening weekend, she said.

The European Union is interested in what SXSW is doing in its SXSW City Summit, said Tim Rivera, a program officer with the EU Delegation to the United States.

“Cities are becoming important international actors themselves,” Rivera said. The EU has launched an International Urban Cooperation initiative and is deeply involved in the development of the Global Covenant of Mayors for Climate & Energy to engage with leaders in cities, particularly focused on climate and energy, he said.

“Mayors are really the CEOs of the world today,” Schmidt said.

Austin Mayor Steve Adler does a big job of keeping Austin on the global map, Schmidt said. He showed great leadership in pledging to support the Paris Climate accord after President Donald Trump signaled the U.S. would withdraw from the agreement. More than 350 mayors have signed the Climate Mayors agreement to stay with the Paris Climate accord and protect the world’s environment.

Kevin Koym, a founder of Tech Ranch, wants to drive impact innovation between Austin and its sister cities like Adelaide, Australia. Tech Ranch has worked with entrepreneurs from more than 42 countries.

“Entrepreneurs working together around the world are taking on intractable conditions and solving them with business solutions,” he said.

Kerry O’Connor, Chief Innovation Officer for the City of Austin, said she runs a startup within the city. She joined the Austin City government in 2014 and one of the first things she did was she worked with Koym and Tech Ranch to teach the city about the business model canvas. She wanted to know how to implement innovation within the city government.

Austin has committed to be more transparent, more open and more innovative and to focus on homelessness and solve that problem, O’Connor said. Another commitment is to make sure Austin is equitable and to build an equity tool to judge its budget by and to fix the inequities that the city started, O’Connor said.

“My job is to bring technology innovation into government but we cannot leave people behind,” she said. “I refuse, as Chief Innovation Officer, to say this is only about the bright shiny things. It’s actually about a lot of hard work to ensure that the tide raises all boats.”

One of the things the city is doing to engage the tech community and startups to help solve problems is a reverse pitch competition, O’Connor said. The government has access to all the problems and sometimes business doesn’t have access to the problems, she said.

To keep products out of the landfill, the City pitched all the stuff going into the landfills that could be recycled into other goods. The first year, an entrepreneur made granola bars from hops and grains from local breweries. The second year, a startup called Grub Tubs made compost from food scraps and it went on to win Austin’s WeWork Creator Awards competition.

“The idea that your government can’t be innovative is B.S.,” O’Connor said. “Your government is the platform for some companies of the future. Austin, Texas is where it’s going to happen and we’re doing it in partnership with cities around the world.”

AlertMedia, a communication software provider, announced Wednesday that it has raised $8 million

Austin-based Next Coast Ventures led the Series B round with continued investment from ATX Seed Ventures. To date, the Austin-based company has raised more than $17 million from investors including Silverton Partners and angel investors.

AlertMedia plans to use the funds on product development and sales and marketing.

“Our explosive growth is evidence that our modern approach to critical communications is valued by organizations of all sizes across all industries,” Brian Cruver, chief executive officer of AlertMedia said in a news statement. “This funding allows us to continue expanding our product offering while growing our sales and customer success teams. We already have the best product and customer service in the industry, and we will continue to set new standards for how organizations can communicate effectively in critical and time-sensitive situations.”

AlertMedia provides big companies like DHL, AT&T, Greyhound and H-E-B with an emergy mass notification system. AlertMedia’s customers can send and receive critical communications via voice, app, email, text, Slack, social media and other channels with one mobile system.

“At a time when the news seems to be dominated by emergency after emergency, it’s becoming a necessity for corporations – of all sizes and across all industries – to have modern notification systems in place,” Mike Smerklo, co-founder and managing director of Next Coast Ventures, said in a news release. “We feel strongly that AlertMedia represents the future of emergency mass communication and has the right team in place to successfully scale this product.”

AlertMedia has customers in more than 80 countries. Companies are also using the company’s software for day-to-day business communication and operational activities such as scheduling, dispatching, and other coordination activities.