When Dan Vetras learned that his company Kollective would need to move out its Sunnyvale office space, he floated a seemingly radical idea. What if instead of simply finding more expensive space in Silicon Valley, he moved his office — and willing employees — to Bend?
That idea became reality in July. Kollective will celebrate the grand opening of its new 4,000-square-foot space in the 1001 Tech Center next week. And though some startup founders here have faced questions and skepticism about the viability of scaling a tech company outside of a major tech city, Vetras has turned that concern on its head.
“I realized that managing and maintaining a VC-funded startup in Silicon Valley was becoming cost prohibitive,” he says. “Investors are very reluctant to spend their money on things that are not core to running the company or that appear to be overly inflated by abnormal market demand.”
For example, he notes that the Bay Area commercial real estate market is dominated by giant tech companies. Kollective was asked to move from its space so the building owner could make room for much larger neighbor. But when Vetras began to look for a similar digs, he faced paying three times what his previous lease had been to be in Sunnyvale or the surrounding area.
Recruiting employees in direct competition with employers like Apple or Facebook is another challenge. For a cost-conscious startup it’s hard to provide comparable perks (onsite dry cleaning anyone?) while also offering salaries that keep pace with the cost of living in Northern California, Vetras says.
“We needed to find a way to get to cash-flow positive faster, and improve the quality of life our employees,” he says. “I realized Bend could be someplace we could go.”
Kollective was founded as Kontiki in 2001 and rebranded as Kollective earlier this year. Its cloud-based products, including the Kontiki Business Video platform, help corporations deliver video and large files to their employees and clients.
For instance, consider how a corporation with tens of thousands of employees lives streams and then stores a speech by their CEO or distributes a series of internal training videos. Kollective makes that process seamless and secure. The company employs about 60 people in California, London, Bangalore and now Bend.
Vetras was introduced to Central Oregon by his friend and Kollective board observer Dino Vendetti, general partner of Bend-based Seven Peaks Ventures (now Kollective’s neighbor at 1001). As Vetras investigated Bend, he liked what he saw.
There was a small, but growing tech community. The housing and office space were reasonably priced relative to California. The weather was warm and dry. And Bend was in the same time zone and just one flight away from San Francisco. However the CEO wanted buy-in from his employees before he could make a decision.
“It couldn’t be just me saying I wanted to move here,” he says. He offered to fly his 35 California based employees to Bend for an exploratory visit. Fifteen came up, and eventually a dozen decided to move here. That was enough for Vetras.
“They’re the early adopters,” he says. The company took on smaller space in Sunnyvale for its remaining California employees. And Kollective realized a 65% savings in its commercial real estate costs by opening the Bend office.
“We’ve cut the burn in ways in we can control — without affecting the business,” Vetras says. “We can now invest back into the business itself through the money we save on the real estate and compensation fronts.”
The company is poised for growth. Kollective is gearing up to launch a new product and raise $15 million as part of Series C beginning this fall. The company hired three people in Bend its first three weeks and has about a dozen more openings. Vetras says he’ll try hard to fill those positions here, though he acknowledges that finding core engineers in Central Oregon remains a challenge.
“My expectation is that we’ll continue to expand and eventually grow out of this facility,” Vetras says. “In the future, we will likely have more employees based in Bend than in California.
As for how his current Bend team is faring as new Oregonians, Vetras says they recently sat down for a company lunch and spent the hour comparing notes on everything everyone wanted to do that weekend. “So far, everything has exceeded my expectations,” he says.
You can reach Kelly by email at [email protected].