April 30, 2000
Jane Larson
The Arizona Republic
When Tom Castellanos couldn't get pizza delivered to his guys writing
database code late into the evening, he knew it was time to move the
company out of its industrial Phoenix neighborhood.
He looked hard at Scottsdale, the traditional haven for young tech
companies like his American Computer Group. He considered traffic, city
permits, even where his employees might go to whack a few golf balls when
they needed a break. And he picked Tempe.
"There's three sushi places on Mill Avenue, there's pizza and the
environment here is cool," Castellanos explains, nearly shouting over the
din at a recent tech networking event in a downtown Tempe pub.
Castellanos isn't the only company president facing location choices
practically unavailable 10 years ago. Tempe and Scottsdale are becoming
home to New Economy businesses in the way Central Avenue is a corporate
canyon and high-finance types gravitate toward 24th Street and Camelback
Road.
But tech entrepreneurs here and across the country are pioneering
territories that do business in new ways. Work gets done in social settings
- sharing ideas, teaming up on projects or simply meeting like-minded folks
for lunch.
"Even with the Internet, most creative work is still done face to face,"
said Douglas Henton, president of Collaborative Economics, a Palo Alto,
Calif., consulting firm that has studied such new communities.
Place still matters, Henton says, because talent is the only real asset New
Economy companies have, and talented people "want to be in a creative
place." Workers in San Francisco's Multimedia Gulch have told him they
located there for the lunches, while workers in Austin cited the pull of
its country music scene.
Though it may be too soon to typecast, the Valley's tech towns are
developing distinct personalities.
On the one side, entrepreneurs can choose the Greater Scottsdale Airpark,
long the hotbed of small software and tech-oriented firms and still the
address if you want to attract seasoned execs who expect upscale homes
close to work and golf.
Or they can choose Tempe's Tech Oasis, where the atmosphere is more
college-town casual and they have access to nightlife and Arizona State
University's bright young workforce.
Either way, it is north Scottsdale and downtown Tempe where concentrations
of small tech companies are starting and booming.
Cyclone Commerce Inc. is one Scottsdale example.
"If you're in high-tech and you're not in Silicon Valley, this is the place
to be," Kent Petzold, chairman and chief executive officer, said of his
tech town.
From its start in 1996 in a small Airpark office space, Cyclone has boomed
in the past year from 17 employees to more than 100, and is ready to expand
into a third leased building at Perimeter Drive north of Bell Road. The
company has developed e-commerce software being used by big-name clients
like Procter & Gamble and Ford Motor Co.
The Airpark area location helps attract all levels of employees, not just
executives, Petzold said. "Recruiting into the area is important, and
Scottsdale has a really good name," he said. "It's a recruiting mecca."
Scottsdale and Arizona's reputation as a golf and resort destination means
business partners willingly come visit Cyclone from Europe and Asia.
And even though most Airpark businesses have nothing to do with aviation,
having corporate jet facilities nearby is a plus.
"There are some VCs (venture capitalists) who consider anything less than
their private jet to be public transportation," Petzold said.
The Scottsdale Airpark got its start in 1942, when the Army Air Corps
developed the site to train pilots. The municipal airport was established
in 1967, and today the greater Airpark area is host to between 1,800 and
1,900 businesses - mainly in business services, retail and wholesale trade
- and about 30,000 workers.
The Tempe Tech Oasis was conceived in 1997 as software and Internet trade
groups were seeking to build their industries locally. Surrounded by other
communities, Tempe didn't have space for sprawling manufacturing plants or
warehouses, but could take in software and Internet companies that don't
need as much space. The city officially created the Tech Oasis in October,
though officials point out that Tempe has long been home to
start-ups-gone-big like Insight Enterprises.
Executives from both tech towns say location wasn't just a
dollars-and-cents decision. Among the big factors:
* Easy commutes, for either management or employees. A survey of 50 Airpark
area businesses done last year for the city of Scottsdale found that the
primary reason companies located there was the fact that north Scottsdale
is close to where the owners and managers live.
When Homefair.com outgrew its space at Hayden Road and Shea Boulevard, it
studied other locations but moved to the Airpark because most of its 85
employees lived in north Scottsdale, President Bryan Schutjer said.
Tempe, on the other hand, is an easy commute for workers from around the
Valley.
Castellanos said the location helps his company attract former Honeywell
workers from north Phoenix as well as workers from southeast Valley cities
like Chandler and Gilbert.
"More people are catching on to that - windshield time is not quality
time," said Bill Bonnstetter, who moved his TTI Performance Systems to
Scottsdale from the Midwest in 1988 and enjoys a five-minute commute.
* Quality of life. Of course, that depends on whether you consider quality
to be more urban or more suburban.
In Tempe, quality of life includes cultural events, the activities of Mill
Avenue and Town Lake, and a general sense of "happening," said Barry
Harvey, a marketing associate with Colliers Classic real estate service,
who deals in both tech towns.
In Scottsdale, quality includes schools for the kids and a range of housing
from reasonably affordable to luxuriously expensive.
* Workforce. Incubate.com, a private business incubator focusing on New
Economy companies, is moving to Tech Oasis because its hatchlings want
access to student workers.
ASU has a ready pool of students "who will come out of school and work
their butt off," Harvey said.
* Bandwidth. North Scottsdale's explosive growth can be a disadvantage in
this area, Homefair.com's Schutjer said, because companies face long delays
in getting high-speed phone lines in.
Tempe, on the other hand, boasts that a number of its Tech Oasis buildings
are already wired for speed, including the Tower at Hayden Square and the
Tempe Tech Center.
* Image. The jury's out on whether a town's image carries over to the
company, especially when doing business on the Internet makes boundaries -
local or international - irrelevant.
Bonnstetter, for one, says there's a "magic" to Scottsdale that has his
customers flying in at their own expense to attend meetings and golf
tournaments. Magic, too, he says, is an airpark populated with corporate
jets.
"When you tell everyone you're in the Airpark, they can tell you're a
winner because you're with other winners," he said.
Incubate.com, for its part, wants to tap Tempe's energy and help put the
city on the New Economy map.
"In this e-commerce world, things move so quickly it's a matter of
perception and excitement and building on that," Chairman Bruce Whiting
said. Chart
Color maps (2) by The Arizona Republic
Color photo by Paul F. Gero/The Arizona Republic Tech town profiles
The Greater Scottsdale Airpark and the Tempe Tech Oasis are miles apart in
location -- and in the way their people work.
Here's an unscientific profile of each.
What you wear
Scottsdale: Business casual. When customers arrive, your best golf shirt.
Tempe: College casual. Logoed T-shirts are a hit.
What's in your office
Scottsdale: Starbucks coffee machines, grills on the patio, foosball tables.
Tempe: Nerf balls, pingpong tables, foosball tables.
What's your view
Scottsdale: McDowell Mountains.
Tempe: Tempe Butte, Town Lake.
Where you eat
Scottsdale: Earl's, Tournament Players Club Grill, Morton's, P.F. Chang's
if you can get in.
Tempe: Blue Burrito, Crocodile Cafe, Mill Landing, P.F. Chang's if you can
get in.
Where you golf
Scottsdale: Tournament Players Club, Grayhawk.
Tempe: Karsten Golf Course.
Greater Scottsdale Airpark; Focus of Tempe Tech Oasis
Favored modes of transportation for denizens of the Greater Scottsdale
Airpark range from sports cars to private jets. One of the former turns in
at Scottsdale Road and Butherus Drive.