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Walk down First Street in downtown Reno, Nevada and you see an evolving city that’s like an awkward teenager transitioning between an old life and the glimpse of a new one. The street, which hugs the Truckee River, has been informally nicknamed “Startup Row,” because of the 20 or so startups that have come to call the area home; there are young developers building internet of things hardware devices, kid-focused iPad apps, and connected bike training kits.
Smack dab in the middle of the “Row,” and across the street from a lush park in the center of the river, over 100 people — freelancers, contractors, developers — work out of a space called the Reno Collective. It’s a fishbowl-style co-working loft that would easily be at home in the South of Market area of San Francisco. On the Thursday that I visited, Reno Collective founder Colin Loretz and fellow members were testing the wireless mesh network to get it ready for the hardware meetup later that night.
Just a few feet away from the tech sanctuary — which firmly locks its doors for anyone other than members (and friendly press) — sits Reno’s gaming industry; sprawling casinos, buffet restaurants, liquor stores, check cashing spots, and everything else that complements that world. It’s a gaming industry that was hit terribly hard by the recession (one of the hardest hit places in the country) and some of the casinos had to shut their doors.
And a few blocks from the Collective there’s a smattering of boarded-up buildings, as well as Reno’s most famous picture spot, the Reno Arch. After my visit, I cut through downtown to get to the freeway, and saw a woman sitting on the sidewalk with her hands cuffed behind her back and three Reno bike cops standing over her. I take it she’s not as pumped about the internet of things as the tech kids on Startup Row are.
Startup Row isn’t the reason that Apple and Tesla are interested in the Reno area. But it’s a symbol of how the city is trying to remake its image around the tech sector.
Apple is building a large data center (recently expanded to nine buildings and 345 acres) at the Reno Technology Park about 20 miles east of Reno. Tesla has cleared a massive amount of land at the Tahoe-Reno Industrial Center, another 10 miles east along Interstate 80, and it confirmed last week that the spot is one of a couple areas it’s looking at to build its huge battery factory.
Apple and Tesla are attracted to Reno for a variety of reasons. One of the main ones is its location: a few hours drive from the Bay Area and the headquarters of those companies. If Tesla ends up making batteries outside of Reno, it can use the nearby highway to get them easily down to its Fremont, California-based car-making factory. Apple’s data center isn’t manufacturing anything (it’s running its web services) but company engineers from Northern California can access the site easily.
At the top of the area’s attractions list is the state’s oft-discussed low cost of doing business. Land is relatively cheap in Northern and Western Nevada — there’s a lot of it and it’s under developed. Nevada doesn’t have a lot taxes, including no corporate income tax, and minimal employer payroll tax. And because of the way Nevada’s state government operates, its environmental and regulatory bodies can move more quickly than many other states. Economic Development Authority of Western Nevada CEO Mike Kazmierski attributes this to the state’s mindset that “government should get out of the way.” It’s the same reason why the state is one of the few that has legalized gambling and the sex industry.
Notably the state has been able to offer Apple aggressive incentives, and is working with Tesla on an incentives package (Tesla CEO Elon Musk said on its recent earnings call that the ball was in the court of the state to offer incentives for the battery factory). Part of Apple’s deal was to build some sort of facility in downtown Reno, but the company has yet to vocalize exactly what it plans to do there. Reno Collective’s Loretz told me just putting an Apple store in downtown Reno would help to continue revitalizing the area.
Energy & it’s clean
Another major reason this area is attractive to industry is energy. The region has ample, reliable and low cost sources of power. And for companies that care — like Tesla and Apple do — Nevada has a large and growing amount of renewable energy. Tesla plans to power a substantial part of its factory with clean energy, wherever it ends up. Apple’s goal is to power 100 percent of its data centers and facilities with clean energy.
Nevada has some of the largest geothermal and solar assets in the country. The state boasts 45 geothermal projects under development (there’s enough power from Ormat’s Steamboat geothermal plant to power the city of Reno) and some of the largest utility-scale solar projects out there. The state utility NV Energy, which was recently bought by Warren Buffett’s Berkshire Hathaway Energy, has been aggressive in offering new types of ways for companies to buy clean energy, in particular Nevada’s Green Power Program.
Apple was one of the first companies to take advantage of the state’s green power program, and Apple is building a solar project about an hour drive east from Reno, almost 70 miles away from the data center. The solar farm can deliver solar power onto the grid, and Apple can use grid power miles away at its data center. I checked out Apple’s solar field on a Sunday afternoon and despite that it’s supposed to be an 18 to 20 MW site by 2015, it’s still only got a few rows of arrays on it.
Solar developer SunPower (s SPWR) is building the solar farm next to an older natural gas plant called the Fort Churchill Power Station. The solar farm is down interstate 50, often called the Loneliest Highway in America, and featuring desert valleys and ghost towns. I passed a Monster Truck Rally off of the highway on my way there Sunday later afternoon.
Clean energy might not be the main draw for manufacturing and industry to come to Western Nevada. Paul Thomsen, the Director of the Governor’s Office of Energy, called clean energy a “peripheral issue” but one that was like icing on a cake for already-interested companies. But for companies that find the issue important from a branding perspective, and have sustainability initiatives that they need to meet, at the end of the day it does matter.
The future of Reno
Reno won’t be able to make itself over into a hub for high tech manufacturing overnight. But it’s slowly happening.
Amazon, Barnes and Nobles and Urban Outfitters have placed fulfillment centers there. EDAWN’s Kazmierski told me he used to get four inquiries from tech companies to move to the Reno area a month, and now he gets an average of 11. The area has tripled the amount of jobs in the region over the past few years, he said and next year they’ll grow the amount of jobs even more.
When I asked him how important Tesla would be to the region, he said: “Tesla will change this community, there’s no doubt about that.” The region is still a relatively small town, with a population of 430,000 (San Francisco has a little more than 800,000 people and San Jose has just under 1 million). With Tesla, and a developing ecosystem around it, the population could grow to over 500,000 “sooner rather than later.” In five years Kazierski sees Reno with a vibrant downtown, a college town feel and a high tech hub.
But don’t expect it to look like the Bay Area or Silicon Valley. The tech people who end up in Reno are more “Burning Man,” and more hardware and hacker oriented, said Loretz of The Collective. A drone company is relocating to Reno soon, and people who transplant to Reno are usually the ones who love the outdoors and want to take advantage of the environment; beautiful Lake Tahoe is just a 40 minute drive.
Cities all over the world are trying to use high tech to revitalize depressed neighborhoods. Las Vegas, several hours from Reno, has started to do it with Tony Shieh’s Downtown Project. In London, Shoreditch is the new Silicon Valley in Europe with tech startups working out of Google’s busy London campus. Similar things are happening in cities in India, Brazil, and in countries in Africa.
With Reno’s close connection to the actual Silicon Valley, odds are it’s attempts to lure some of that up North, are pretty good. And if Tesla lands there, you can bet it’ll happen in a much shorter period of time.