Final Frontiers

How the obstacles and allure of small-town startups impact rural innovation

Back Longreads Dec 28, 2021 By Dakota Morlan

This story is part of our December 2021 innovation-themed issue. To subscribe, click here.

When Richard Miles moved to Jackson in 2019, the serial entrepreneur with Bay Area roots was travel-weary and looking to be part of a community.

“The foothills are a damned attractive destination,” Miles says. “You can swap an overpriced house in Palo Alto and buy a much better spot with a much better view. You don’t worry about parking, you don’t worry about traffic. There was a huge earthquake in employment (during) the pandemic. People realized, ‘I don’t want to do that anymore. I don’t want to sit in my car for 20 hours a week to have a 50-hour-a-week job where I’m not appreciated enough. I’m a much better mom or dad — why do I have to go back?’”

Happily settled in Amador County, Miles first tried buying a local business but had no luck, and he ultimately pursued a “nagging idea” that would become CLOSEM. The startup is a “simple yet powerful” contact management system with email, texting and voice messaging capabilities, as well as built-in marketing message templates. The system allows clients to combine these mediums into an ongoing campaign that Miles says can yield four times the response of emailing alone.  

Miles recognizes that the pandemic has changed the way society works and altered how people approach their careers — seeking balance and comfort where they may have previously sought prestige; trading the stimulation of a high-octane workplace for the freedom to eat, sleep and exist whenever, wherever.

This is especially true within the technology industry, where the required tools are a laptop and a Wi-Fi password. If the trend toward remote work was inevitable, the pandemic only expedited it; and the migration of techies to the Sierra Nevada foothills of Northern California, where the Bay Area dollar stretches like traffic-free miles on a rustic highway, was a predictable outcome. There isn’t yet any data to prove this massive industrial shift, but those who have been watching most ardently — real estate agents and business councils — attest that it’s happening.

Gil Mathew is the executive director of Nevada County Economic Resource Council. Part of his job is to attract new businesses to the community of fewer than 100,000, and tech startups are a primary focus. Tech startups are desirable additions to rural counties in part because they have the potential to pay better than most jobs in the Employment Development Department’s Eastern Sierra Region, where the fastest-growing occupations are within the medical, veterinary and interpreter fields. In Amador County, one of the least populated and lowest paid counties in the Capital Region, the leading industries cater to retail, educational and health services, government and tourism. 

In these small communities, it is rare to have growth potential outside of the home turf, and that is exactly what tech companies have to offer. On top of that, the technology industry is “clean,” Mathew says. It’s relatively low impact on pre-existing infrastructure and can be seamlessly incorporated into a tranquil setting.

“It’s all about balance in the community. Tech is not the answer for everything. The goal is not to be like Silicon Valley.”

Kristin York, vice president, Sierra Business Council

“It’s all about balance in the community. Tech is not the answer for everything,” says Kristin York, vice president of the Sierra Business Council, which is based in Truckee. “The goal is not to be like Silicon Valley. At the end of the day,  those (rural) communities want the people who work there and the youth who grow up to have the opportunity, if they choose, to go to college and come back with a decent job or stay in the community and thrive.”

As the definition of “tech company” grows increasingly vague and most mom-and-pop shops rely on some kind of computer software, rural counties must sprint ahead of the curve or be left in the dark age of yesteryear. Small communities are no longer competing against urban giants but with each other in selling the sweetest setting for work-life balance. While Sierra foothill counties have the enviable perks of proximity to Bay Area tech centers, limitless outdoor pursuits and manageable housing prices, they also present obstacles to starting a technology-reliant enterprise. That hasn’t stopped some tech pioneers from doing it anyway.

Lost connections

Despite its pandemic-time launch, CLOSEM already serves nearly 1,000 customers globally, and its employee ranks will be growing, hopefully, in the coming months. Specifically, Miles needs a part-time administrative assistant. Due to the remote nature of his work, Miles could hire someone anywhere in the world. 

The cofounder of CLOSEM, Laura Betterly, lives in Florida, and the company employs one in-house developer and two full-time freelancers, who are all remote workers. But Miles still prefers to hire locally. “It is convenient to be in the same time zone, to be able to swing by and be face-to-face from time to time,” Miles says. “I’d like to contribute to the local economy, but ‘business first.’”

Miles has been unsuccessful in finding local talent to join his team. While he considers himself fortunate to have “fabulous but expensive” internet connection at his Jackson home, the same cannot be said for his prospective hires. One local he was interested in hiring had “spotty” connectivity at home and would have to work at a Starbucks, which wasn’t a viable option.

Yet Miles knows there are many entities working on this issue. High-speed internet is increasingly essential to everyday life, emphasized by the remote work and schooling of the pandemic, and the state and federal government will soon be pouring “buckets of money” into broadband equity, according to Trish Kelly, managing director of Sacramento regional civic leadership organization Valley Vision.

In July, Gov. Gavin Newsom signed off on a $6 billion multiyear investment into expanding broadband infrastructure and improving internet access for unserved and underserved communities. In October, the governor signed two complementary bills designed to fund broadband improvements for the long term with an additional $1.5 billion over the next 10 years. Communities are now vying for these funds in order to connect to the expanding “middle mile” of fiber optic cable and are developing ways to incentivize service providers to plug in. According to Kelly, rural governments must lay the groundwork by streamlining their permitting policies in order to attract investors.

Many jurisdictions are doing just that; and some, like the City of Placerville, are exploring the option of community-owned fiber optic infrastructure. In some areas including Nevada County, homeowners are banding together to form nonprofit organizations, borrowing funds to bridge the fiber optic “last mile” to their neighborhood and paying off loans with broadband fees. 

But no matter the means or methods deployed in the “Wild West” of expanding connectivity, those who depend on high-speed internet assert that the utility is now as vital as any other. 

“All things you need for modern life, as well as work life — if you don’t have good internet, that’s a barrier to economic development,” Kelly says. “You cannot compete and thrive in the new economy.”

In November, President Joe Biden signed into law a $1.4 trillion infrastructure bill that includes $65 billion for broadband investment, which supporters say could go a long way toward closing the digital divide for Americans, including in rural communities.

People problems

Another factor contributing to his hiring woes, Miles believes, is the absence of a community college in Amador County. Though the county is served by the Amador Community College Foundation, which facilitates access to online college courses and apprenticeship programs through Amador College Connect, Miles advocates the necessity of a brick-and-mortar campus.

“If I was king of Amador County, I would build a community college, also a trade school,” Miles says. “The sad thing about Amador County is there is no future for young people here unless folks like me create businesses and train them.”

Mathew agrees that the current workforce is “an ugly picture,” though there are plans in motion for its improvement. From his experience starting his own manufacturing company in Grass Valley during the 1980s and his years working for ERC, Mathew learned that the old model of “stealing companies” from other counties is largely ineffective. The key is to provide a safe and nurturing locale for new ideas to flourish. “If you can find two young kids who want to start a company, that’s how you’re going to do it,” he says.

From 2008 until 2010, while he was CEO of ERC, Mathew implemented a program to track young college graduates who grew up in Nevada County and bring them back to the area. “My technique would be, three to four times a year, (to) be in touch with them. Obviously, every year another group graduates, and every year you have thousands of these graduates,” Mathew says. The goal was to “create a landing point for all of these graduates so they can chat … connecting people, creating this forum for them to work in. And when they get ready to come back, say ‘Here’s an office and a desk and a copy machine.’”

The program fell to the wayside during Mathew’s decade-long hiatus, but now that he’s returned to the helm at ERC, he hopes to bring it back.

Coming home

Entrepreneurs Leo Zlimen and Bowen Kyle are blazing a trail in Nevada City to prove that bringing a big idea back home is not only possible but often preferable to fighting for dominance in the big city.

Zlimen and Kyle were childhood friends who graduated from Nevada Union High School in 2017, leaving their town of 3,000 to attend UC Berkeley. After graduating in 2021, the pair knew they wanted to use their computing skills for a greater purpose, and that purpose drew them back to Nevada County.

As college students in 2019, Zlimen and Kyle developed Ladris Technologies, an artificial intelligence and data integration company. They soon realized the technology could be utilized to address an issue that has plagued their community with growing intensity: wildfires. “(There is) an existential crisis with climate change. It gets worse every year,” Zlimen says. “There is also an exponential amount of data. Why not use that to mitigate the risk? Because that’s what we worry about. It’s what our parents worry about.”

Ladris puts data to work for the agencies who produce it, sourcing from population, demographic, weather, historical fire, traffic conditions and road network information to simulate evacuation models for every conceivable scenario. The company has already partnered with Nevada County and the Town of Truckee to increase wildfire preparedness, and are launching a consumer application for homeowners.

Childhood friends Leo Zlimen (from left) and Bowen Kyle graduated from UC Berkeley and then returned to Nevada City to launch Ladris Technologies, an artificial intelligence and data integration company. (Photo by Kial James)

Zlimen says the support they have received from the community, including the Nevada County Economic Resource Council and the Sierra Business Council, has been invaluable. He highly recommends other young entrepreneurs consider their hometown in deciding where to start.

“Here, you’re not just a number. You’re not just a stat. … Here, it’s about building sustainable value,” Zlimen says. “For a lot of these companies we’ve seen and been around, you’ve got to have space and time. … These kinds of relationships where time is invested in us would not be accessible if we’d not grown up in the community. The community pays itself back in a really cool way.”

“These kinds of relationships where time is invested in us would not be accessible if we’d not grown up in the community. The community pays itself back in a really cool way.”

Leo Zlimen, cofounder, Ladris Technologies

It isn’t lost on Zlimen that his company addresses an issue that might deter other startups from following his lead to move to a small-town community vulnerable to wildfires. In 2020, there were 8,700 wildfires in California and 4 million acres burned. Zlimen is optimistic that Ladris will make the Sierra foothills and other areas in the wildland-urban interface a safer place for all and even more alluring to future pioneers. “People shouldn’t have to live in fear of these events,” he says, and technology is a tangible way to alleviate that concern.

Taming the wilderness

Some tech companies have been doing it for decades, like EDEX Information Systems, founded in 1995, which is a leading provider of workers’ compensation court data, case tracking, electronic court form filing and legal document mailing in California. Based in Jackson, the company has no local clients. Its success skyrocketed during the pandemic when it pivoted to create a new document mailing engine for attorneys and businesses that were impacted by shutdowns.

CEO Christopher Floyd, a former law enforcement officer and computer programmer, has navigated the ups and downs of small-town tech since the time of dial-up internet, and he (mostly) has it figured out. Floyd’s office happens to be situated in a “very small footprint” of area connected to fiber-optic cable, so connectivity has never been an issue at EDEX. In 2019, the company fully transitioned from a Sacramento data center to Amazon Web Services, which has allowed for data storage without the periodical commute to maintenance servers.

In response to a PG&E wildfire prevention power shutoff last year, Floyd vowed his office would never be left in the dark again, and he spent roughly $3,500 to install a generator. He hasn’t had to use it yet.

Most importantly, according to Floyd, he hasn’t needed to dip into a stagnant hiring pool, as his 15 employees have stuck with him for decades. “We don’t care what your skillset is. We want to give you the training you need. We hire for interpersonal relationship ability — as long as you have the right personality for us, we can train you for anything you want to be,” Floyd says of his hiring process.

By virtue of being a tech company, EDEX offers wages at the higher end of the spectrum in Amador County, where the median household annual income is under $63,000. The company also offers benefits including health insurance, but Floyd doesn’t believe pay is the most important aspect of employee retention.

“I think money is no longer the driving issue. It’s job satisfaction,” says Floyd, who has had employees leave for higher paying jobs in Sacramento and the Bay Area only to return to EDEX. “It’s the culture as well as the product we make.”

But would he do it all again? Floyd says starting his company in Jackson was not so much intentional as it was a twist of fate when he was presented with a family business opportunity in the area prior to starting EDEX. He won’t discourage others from making the same choice, but he advises to be aware of the hurdles lining the road to bucolic business bliss. 

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