You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • 16 killed in northwest China coal mine collapse
     BEIJING – A coal mine shaft collapsed in northwestern China, killing 16 miners, an official said Saturday, highlighting the persistence of safety problems in the industry despite a leveling off of demand.
  • Kidney settlement derided
    DaVita Healthcare Partners Inc. this week agreed to one of the largest ever anti-kickback settlements in the U.S.But even a $350 million penalty isn’t enough to satisfy Jamie Court’s sense of justice.
  • Disney woos Japanese moviegoers
    TOKYO – Disney executives call their next film “a love letter to Japanese culture.” No wonder: This nation can't get enough of animation, especially Disney's.
Advertisement

DC area edges in as tech hotspot

Savi finds fortune in stable alternative to Silicon Valley savvy

– In 2011, the executives of Savi Technology faced a classic business problem. To cut costs, they needed to close one of their three offices and consolidate their workers in another. Their choices were Mountain View, Calif., home to their hardware engineers; Lexington, Ky., where officials were dangling a wide array of tax breaks if Savi expanded there; and Alexandria, Va., in an office park a stone’s throw from the Capital Beltway.

The company’s engineers warned executives that they would have trouble finding enough similarly skilled employees outside Silicon Valley, especially in the Washington area. The executives decided to ditch California anyway and move their headquarters to Virginia.

Turns out, Savi’s employees were wrong. Not only did Savi executives find enough engineers who they say are fully capable of designing the company’s wireless tracking devices, which are used to monitor equipment all over the world, but they also found a better fit in the Washington area’s more stable workforce.

Savi’s success suggests that the Washington region is beginning to find a way to compete with Silicon Valley, carving out a niche that turns a traditional drawback – a working culture more like the federal government’s than Google’s – into a strength.

Silicon Valley remains a powerhouse in the technology world, and some in the industry are skeptical of the Washington region’s ability to unseat it.

“Silicon Valley is the hub of the tech industry. I would say you ignore it at your peril,” said Joe Payne, who sold his Tysons Corner, Va., software company, Eloqua, to Oracle last year.

But the Washington region is creating a selling point in stability and predictability.

Take Tim Sullivan, who in 2004 was seeking West Coast investors for cybersecurity company Fidelis Security Systems. Venture capitalists in California insisted that he move there, but he declined and found East Coast investors for the company, which has since been sold to contracting giant General Dynamics.

Sullivan, who now heads a cybersecurity company with a Chantilly, Va., office, said he’s never had trouble finding qualified engineers in the Washington area, and he thought turnover would drive his costs higher on the West Coast. “If people feel like the venture’s not working out, they may not stick it out and they may look to the next hotter venture,” he said.

Savi abandoned its campus-style office a few miles from the San Francisco Bay in favor of an Alexandria headquarters in a nondescript building west of Old Town, sandwiched between a townhouse development and an extended-stay hotel with a view of the Beltway.

The office keeps Savi’s Silicon Valley ingenuity front and center, displaying rows of framed patents in the entryway. It’s in the company’s culture where you find the decidedly Washington spin on the tech world that lured the company from California.

Silicon Valley is known for punishing hours, a young and sleep-deprived workforce and near-constant job-hopping among tech firms that ruthlessly recruit top talent. Washington, on the other hand, is viewed as a company town – the company is, more often than not, the government – with a buttoned-down crowd and predictable workdays.

When Savi decided to move, its executives figured that the California employees wouldn’t want to move – and that was fine by its chief executive, William Clark, a four-year Valley veteran. What makes this relocation all the more unlikely is that Clark is seeking to shift Savi from its traditional stronghold of selling tracking devices to the military to pursue more commercial business.

“People in Silicon Valley are always on the lookout for the next hot thing, so employee turnover – unless you’re one of the hottest companies – can be very high,” Clark said. “We made an assumption that the talent would be available in the D.C. region, and it turned out that it was.”

The lure, he said, has been a workforce that is skilled enough to do cutting-edge work but more loyal than the typical California startup crew.

Ken Gemmell, a 35-year-old electrical engineer, graduated from college in New Jersey just as some telecommunications companies were seeing a downturn. His family encouraged him to stay nearby, but Gemmell eyed opportunities in California before opting for the Washington area.

He got his first job at a Gaithersburg, Md., office of Hughes Network Systems and eventually moved to various contractors, including two military communications contractors, Thales Communications and Ultra Electronics 3eTI.

What drew him to Savi, where he was hired early last year as one of four hardware engineers, was the freedom to take on larger projects and flexibility to approach them in new ways, Gemmell said. Now, he’s trying to create a simpler, cheaper version of Savi’s signature product – but without sacrificing his quality of life.

Startups are “probably going to work you to death,” Gemmell said. At Savi, “they’re not expecting you to work 90 hours a week.”

Savi was owned by defense contracting giant Lockheed Martin for several years but was sold to affiliates of private equity firm LaSalle Capital in 2012. Now, the company is shifting from simply manufacturing special tags to track equipment moved across the world to analyzing the data the tags collect.

The company’s arrival in the Washington area got the attention of Bill Poulsen, a 57-year-old systems engineer who launched and then sold his own radio-frequency identification business and spent part of his career as a Navy contractor. Poulsen, skeptical of the startup mentality, jumped at the chance to work for the established Savi. It’s a bad philosophy, he said, to figure, “Build it – they will come.”

Mark Siegel, managing director of the Bay Area venture capital firm Menlo Ventures, said he sees tech investment opportunity outside of Silicon Valley these days, including in Washington, which has popped onto the radar recently.

“There’s been a lot of talent in and around D.C.,” he said, largely spawned by the intelligence and contracting communities. Washington, he said, could be close to joining cities such as Seattle and Austin in “a certain critical mass … of entrepreneurial companies that then spawn new companies. It just takes a little while to get going.”

Before selling his software firm to Oracle, Payne had already established a San Francisco office and was opening another office in that area.

“Can you make a movie outside of Hollywood? Well, sure you can,” Payne said.

But companies without a Silicon Valley presence risk missing out on the area’s pool of tech-savvy workers and the networking opportunities that could lead to finding a buyer for your company, he said.

“I would love it if D.C. was the technology capital of the world, but today it’s not,” said Payne, who grew up in the Washington area.

Savi employees acknowledge that the culture isn’t exactly Silicon Valleyesque. There’s no foosball table or free dinners to encourage employees to stay late.

But Savi employees have fun, Poulsen said. “We still have the exciting environment you would see in California, but it seems to be a little more measured,” he said.

What does that excitement look like, in the shadow of the Beltway? There’s ice cream in the freezer.

Advertisement