Oklahoma City Finds a Sweet Spot on America’s ‘Silicon Prairie’

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A brewfest at a baseball stadium is not the most obvious place to discover a vibrant tech ecosystem. But at the OKBio BrewFest earlier this month, at Oklahoma City’s Chickasaw Bricktown Ballpark, Red Herring met key players in a scene that is growing fast. And, as the state’s ubiquitous oil and gas industry falters, a new generation of tech talent is driving economic change in the Sooner State.

The scene began, arguably, in the eighties. Then, as now, Oklahoma was dependent on its oilfields (one in every three dollars of gross state products currently comes from the industry). But an oil bust was devastating: real estate, banking and other sectors collapsed.

Oklahoma City threw a Hail Mary: in came a controversial 1c sales tax that would rebuild the core of the capital, which had been neglected in favor of one of the world’s most sprawling suburban metro areas. The project included Bricktown, a crumbling warehouse district serving the Santa Fe railroad.

It was a canny move. The city did “exactly the right thing at the right time,” says Scott Meacham, president and CEO of OKBio and i2E, two of the state’s premier tech associations. By the nineties young people were moving in from the sprawl. Oklahoma City had stumbled on a global trend for city living. The talent that had been shed by the oil and gas industry got to work elsewhere.

Biotech and life sciences were particularly appealing to the state’s small but fledgling tech scene. Buoyed by the presence of two huge universities–the University of Oklahoma and Oklahoma State University–research flourished and companies began making money.

But oil and gas, as it invariably does, made a comeback. Talent flocked back to the fields: today an oil and gas worker can expect to make over $133,000 per year–well over twice the state median salary.

If you want proof of oil and gas’ dominance in Oklahoma City, just take a look at it: the Devon Energy Center, the 45th tallest building in the United States, soars above anything else downtown. The nearby home of the Oklahoma City Thunder basketball team is sponsored by energy giant Chesapeake.

But with attractive infrastructure already in place, oil and gas’ latest slump has resulted in a far brighter, and faster, tech boom. “It’s this weird kind of counter-cyclical relationship where, when the industry goes down, we see an increase in industry-related innovation as the people that are shed head out and make their own deals,” says Meacham.

Immuno Mycologics, or ‘IMMY’, a family-owned diagnostics firm based out of Norman, was founded back in 1979. In 2010 it developed a ten-minute rapid test for cryptococcal meningitis, a fungal infection that claims 600,000 lives a year. Since the test’s 2012 launch IMMY has onboarded dozens of staff and has seen revenues soar.

It’s been really fun to see the growth and people coming in and getting excited about something they knew nothing about,” says marketing director JT Harrison. “I feel like it’s a unique time for the city because it’s been so heavily in one industry with oil and gas…Because you have a group of people who have been walking this corporate line in this industry for so long, and then the rug has come from under them, and it creates this entrepreneurial spirit.”

Paul Deangelis is a University of Oklahoma professor of biochemistry who has spun out four startups during his time in the state. “Here if you do have a very good idea, you can stand out pretty quickly,” he says. “If I was in the Boston area, with all those schools and colleges, it’d be tougher.

“Here you can make a bigger splash, and they are excited and willing to help you,” adds Deangelis. “So there are government programs where, if I wanted to get $1 million of equipment, it’d be tougher to do that with the federal government. But the state realizes that it’s not all cows and wheat and wood. You have to diversify.”

Harrison, Deangelis and others will have eyed this week’s $665m buy of OKC firm Selexys Pharmaceuticals, by Swiss giant Novartis, with considerable excitement. Selexys, which specializes in sickle cell research, had recently published Phase II data linking its antibody to a drop in the number of sickle cell-related pain crises.

The deal proves there is big money to be made away from America’s traditional tech hubs, in the Midwest’s “Silicon Prairie”. It should not come as a surprise: Oklahoma has basement energy costs and it is located in the geographic center of the country. That is a key advantage for Dirk Spiers, president and CEO of Spiers New Technologies, which manages lifecycle for advanced battery packs.

Spiers, who is originally from the Netherlands and has lived in Europe, Asia and Silicon Valley, first came to OKC a decade ago as head of international business development for a major corporation. “People asked me what my favorite place here was,” he says. “I said it was the departures lounge at the airport because I couldn’t wait to get out of this place: I was counting the days.

“But now I live here,” Spiers chuckles. “The transformation has been incredible. Now we have the botanical gardens, the water park. Every year this place is getting better.” Even Bricktown has become a popular tourist haunt. The Bay Area, Spiers adds, is busy and traffic can be awful. “It’s expensive too. Here you have space.”

Bringing batteries to the center of America is a big logistical plus, Spiers says. So are the state’s “very short lines to the powers that be…it’s very easy to meet people.” Google has its fifth-largest center in Oklahoma and has proposed Google Fiber. But rollout, as elsewhere, will take some time.

“Internet is so slow and so expensive, it is nuts,” adds Spiers. “Just give the city a fat pipe. It’s easy to do.”

Perhaps the biggest difference in today’s Oklahoma tech wave from that of before, is the diversity in companies emerging from it. Across town from the Chickasaw Ballpark is a low-slung warren of stockyards and warehouses that once served the state’s huge agriculture industry.

Today the district, just west of OKC’s downtown, might just be its most exciting. Its 1928-built farmers market draws young crowds to vintage sales and other events. Powerhouse, a dim-lit bar and grill nearby, wouldn’t look out of place in Brooklyn or Silverlake (its green chili rivals that in either).

Among them, and a host of SMBs and auto dealers, is StarSpace46, a cutting-edge coworking space. “The goal of StarSpace46 is to build critical mass of entrepreneurial and tech activity for Oklahoma City,” co-founder Tommy Yi tells Red Herring

“We want to be a hub for innovation activity where technologists, investors, designers, innovators and dreamers can all meet, collaborate, share and create new ideas and new businesses,” he adds.

Yi, originally from the small town of Lawton, likens StarSpace46 to Life.Church, a multisite evangelical church that allows people to watch sermons remotely. “Outside of Tulsa and Oklahoma City, there is not a lot of “community” around tech and entrepreneurship.

“StarSpace46 wants to help create a “digital bridge” between communities in Oklahoma,” he adds. “This would allow a real time syndication of programming and content to multiple communities between not just Tulsa and OKC, but to all communities in Oklahoma.”

The space has already drawn some of the state’s most exciting young companies. Nodecraft is a local hosting service, while Monscierge, a hospitality software solution that has won over $6.5m in venture capital, is helping build StarSpace46’s digital infrastructure. Techlahoma, another local association, has been instrumental in the project.

Yi coos about the number of companies that are now present outside of oil and gas in Oklahoma. And the industry isn’t simply a drain on talent, either: Oseberg is a workflow solution provider for the industry that is backed to the tune of $10m.

“There are huge opportunities within the energy sector for tech companies to emerge, as there are a lot of legacy problems that can be solved with technology,” Yi says. So excited is OKC’s city hall with StarSpace46, that it is hoping to revamp the entire district around it. Yi believes it could be a new “Tech Row” for the city many simply call “The 405”.

Oklahoma City may not be particularly large: it is home to around 640,000 people currently. But it is growing at a rate of 3,000 people per month. And with so much change afoot, the city is beginning to import, rather than export, tech talent.

“Instead of losing our best and brightest to the Dallases and Bostons and New Yorks, we actually have in our portfolio a company with a CEO who moved from New York, one from Boston and one from Seattle,” says Meacham.

“Oklahoma has stepped up to the plate,” adds Deangelis. “We want to make this happen.” Spirits are high in OKC. It’s not just the beer talking.