Silicon Valley sprawls East: How tech jobs, housing and transit are shaping a megaregion

Posted on October 23, 2014

by Lauren Hepler
Silicon Valley Business Journal

October 21, 2014, Santa Cruz — On the outside, the SpinDx technology pioneered at Livermore’s Sandia National Laboratory looks like little more than a beige cube with a retro CD player on one end. But the “lab-on-a-disk” tool developed with $4 million in federal funding has been hailed as a potential game changer in the detection of biological warfare agents, like anthrax, for its capability to manipulate and identify unknown substances.

Now, startups in the Tri-Valley area of the East Bay — a region immediately northeast of Silicon Valley, centered around the cities San Ramon, Danville, Dublin, Livermore and Pleasanton — want to harness the technology’s healthcare potential to diagnose cancer or conduct in-home fertility testing. The technology represents the crystallization of the type of public-private business development work that Tri-Valley officials and economic boosters want to use to foster a growing local tech industry.

In addition to research spun out of national research centers in the area like the Lawrence Livermore National Laboratory, they cite the region’s highly educated workforce, strong base of corporate tenants, an emerging startup scene and increasing economic ties to Silicon Valley as variables working in their favor. Though the Tri-Valley’s billion-dollar research tenants offer a potential leg up, the business push also comes as outlying regions from Santa Cruz to the San Joaquin Valley up to Davis also look to strengthen ties to Silicon Valley. It all adds fuel to demographers’ predictions that Northern California will likely look like a 24 million-resident “Megaregion” in just a few decades.

“This is not simply a story about the Tri-Valley,” said Tracey Grose, the author of a new Bay Area Council report on tech growth in the region. “There’s growing economic activity taking place in collaboration with the rest of the Bay Area.” Beyond the flows of technical talent and venture capital funding spreading out from what is traditionally thought of as Silicon Valley, the increasing economic interconnectedness between the Peninsula, San Francisco, the East Bay, the North Bay and parts of California’s Central Coast is also driven by more banal factors.

Housing, that most basic necessity, has become so expensive in the Peninsula, the South Bay and San Francisco that area workers are pushed to far-flung suburbs in the Tri-Valley, or even farther toward Sacramento or the Central Valley. That disconnect between where jobs are located and where housing is located, in turn, manifests day-to-day in gridlocked highways or packed public transit (in the select areas that effective public transit is an option).

For the Tri-Valley, all those forces resulted in a 66 percent increase in the number of commuters heading to Silicon Valley each day, according to the new Bay Area Council report. The region itself also grew its employment number 21 percent from 2000-2012, adding 40,000 jobs. When it comes to bolstering the local tech industry, the Tri-Valley’s 925 area code attracted $272 million in startup investment during 2012 — a relative drop in the bucket compared to the $4 billion in capital that cycled through Silicon Valley proper that year, according to the National Venture Capital Association. But that number gives local tech advocates hope for future growth.

“The Tri-Valley is certainly part of the Bay Area, but it hasn’t been part of the Bay Area’s startup community in the past,” said Brandon Cardwell, senior management analyst for regional incubator i-Gate. ” I think you’re going to see more of that as Silicon Valley grows.”

Branching out

From public universities to large research institutions, like the Tri-Valley’s 6,000-person Lawrence Livermore National Laboratory, California has aggressively pushed to make the most of its public assets while trying to jumpstart more than a dozen innovation hubs, or i-hubs, throughout the state. For Livermore-based i-Gate, which operates a nonprofit incubator focused largely on life science and biotech startups, the process has entailed a shift in mentality from top-down, government-mandated innovation to heavier reliance on advice from tech-industry veterans.

“It turns out our methodology was a little bit backward,” Cardwell said of the initial “if we build it they will come strategy.” He added that, “If you don’t have an ecosystem, those commercializable ideas don’t have anywhere to go.”

One potential source of help: The Tri-Valley is already home to offices for Cisco Systems Inc., Accenture Plc and EMC Corp. Other business technology leaders like Oracle Corp. and SAP AG have acquired local companies including Dublin-based Taleo Corp., Pleasanton-based PeopleSoft and Berkeley-founded Sybase. I-Gate also has new office space in downtown Livermore that provides startups with workspace, and several alumni have since cycled through name-brand Silicon Valley incubators like Y Combinator or received capital from organizations affiliated with big-name entrepreneurs like Peter Thiel.

Though the organization doesn’t require companies to commit to staying in the Tri-Valley long term, Cardwell said $1-per-square-foot real estate costs and highly-educated local talent are strong draws.

When it comes to developing the existing local workforce, he said one priority is to encourage highly educated researchers used to Lawrence Livermore’s $1.5 billion-a-year budget to flex their entrepreneurial muscles. “We believe in unlocking the entrepreneurial potential of a region by removing the barriers,” Cardwell said. “We are often dealing with first-time founders with a technology background who don’t have as much experience with the business side.”

In addition to giving researchers some leash to develop promising products outside the lab, Lawrence Livermore and Sandia National Laboratory’s 1,200-person Livermore site are also embarking on a joint effort to add up to 200,000 square feet of R&D office and laboratory space to better connect with the outside world. “It offers a new front door into both of these national laboratories,” said Camille Bibeau, who handles program development and academic alliances for the facility, called the Livermore Valley Open Campus. “It allows us to hold workshops and various engagements with the public and the private sector that are otherwise difficult to do behind a security fence.”

In reporting this story, I heard from people who didn’t want to be quoted because they weren’t authorized to speak on the matter that Google Inc. and IBM Corp. could be two tenants in the new space. IBM has already worked with Sandia on a deep computing project. A Google spokesperson declined to comment. Bibeau said the laboratories are awaiting permitting clearance on the office expansion, which they hope to receive in the next 6-9 months before an anticipated 18-24 months of construction.

Drawbacks of sprawl

Even a relatively short commute in Silicon Valley proper — say, from the suburbs of San Jose to work in a tech hub like Palo Alto — can take upwards of an hour on an average day by car. Those going from downtown area to downtown area might get lucky with a shorter Caltrain commute. But light rail, buses and even carpool lanes generally don’t offer quicker alternatives. Those dynamics are becoming even more extreme in the Tri-Valley area, where commuters from the Central Valley now converge with East Bay traffic heading into San Francisco, the Peninsula or the South Bay.

The new Bay Area Council report indicates that commuters to San Francisco, San Mateo and Santa Clara counties have increased 66 percent since 2007, while the amount of time spent sitting in gridlocked traffic on Highway 580, a north-south artery in the East Bay, has increased 26 percent since 2011.

“First we bragged about 580 and 680 and being at the crossroads and all that,” said Dale Kaye, CEO of regional business group Innovation Tri-Valley. “We do have a good transportation system, but it’s clogged right now.”

As I have reported, unaffordable housing is a huge driver of traffic throughout the Bay Area. “Megacommutes,” where workers travel more than 50 miles to work, are increasing in large metro areas nationwide, but Northern California’s fairly unique concentration of so many mid-sized or large cities have seriously strained existing infrastructure.

The new Bay Area Council report advocates for voters to pass an East Bay transit funding measure that would allocate some $840 million to expand highways, add carpool lanes and extend BART to Livermore — following Silicon Valley’s lead trying to invest in both roadways and public transit, which some Bay Area urban planning advocates oppose. In the meantime, Grose said the region will look to play up its best existing assets.

“Part of what has driven people out to the Tri-Valley is the quality of life” said Grose, mentioning abundant single-family housing, warmer weather than San Francisco and more open space. “Today there’s a lot of high-end housing out there. Dublin is going gangbusters building denser housing around the BART station.”

Original Article – http://www.bizjournals.com/sanjose/news/2014/10/21/silicon-valley-sprawls-east-how-tech-jobs-housing.html