Fledgling High-Tech Companies Face Space, Recruitment Challenges Here

It would have been easier, says Bernard Daines, to keep Packet Engines in California.

“I don’t hate California,” says Daines. “I’m not one of those people getting out because I don’t like it. We could have stayed in the Bay Area, and been one of hundreds of new companies in technology.

“But I’ve done that for many years, and I wanted to do something different.”

Daines is a builder, and degree of difficulty only adds to the challenge.

And, he says, “We do have some very, very unique challenges in making this work in Spokane.”

The primary difficulty, he says, is recruitment. The engineers Daines needs at Packet Engines have a pretty unique set of skills usually applied only in the nation’s technology centers.

“It’s a critical mass issue with the engineering folks who we are bringing in from out of town,” Daines explains. “They might like what we’re doing, and think its exciting. But they look around and say, ‘What if it doesn’t work out? Where else am I going to get work up there?”’

Packet Engines needs all the “good digital design engineers” it can find, Daines says.

And Daines is exploring all kinds of strategies in order to get them, from establishing training programs to playing on hometown sympathies of other folks like him who left the Northwest in pursuit of highly specialized careers.

He’s already had some success with the latter approach.

Digital design hardware engineer Dennis Paul was raised in Spokane, and has long wanted to move back, but his job skills kept him in Iowa.

Software engineer Steve Ramberg was born in Missoula, and was anxious to get back to the Northwest. But the only jobs that matched his skills were in the Silicon Valley.

Both now work for Packet Engines.

“Again,” says Daines, “I’m not knocking California. It’s just that these are people who, like me, choose to be in a different place.

“And I think there are a significant number of like-minded individuals that went to school in Montana, or Idaho or Washington, and they’re living somewhere else because there just aren’t the jobs for them here.”

A second challenge, Daines says, is support companies. Spokane simply doesn’t have the infrastructure of circuit board manufacturers, sheet metal companies, cable-making companies and the like needed to support a company like Packet Engines.

So those things must be brought in from elsewhere, at more cost and less convenience.

But the challenge Daines says he most underestimated here is the real estate conundrum. Most companies in the development stage Packet Engines is now in simply couldn’t find space here, he says.

“The last thing any developing company wants to do is spend its resources on a building,” Daines says.

The Spokane area real estate community is not acquainted with what a growing high-tech manufacturer needs, Daines says.

“People want 10-year leases,” he says. “I’d have to stretch everything even to justify a five-year lease.”

The problem is that the high-tech industry moves so fast and so unpredictably, a company like Packet Engines has little way of knowing what its physical space needs will be two years from now, much less 10.

“If you’d have asked me when I first opened this office in December how many people I’d have here this year, I’d have said 10 or 15, and that would have been with tongue-incheek,” Daines says. “But we’ll have 40 to 50 people in here by the end of the year.”

Packet Engines is now housed in a small strip-mall-type development at 12119 E. Mission.

Right now, the company sells only intellectual property. But by 1998, it will set up a small manufacturing operation to build its own gigabit switches. The funding for that came last week when the company announced it had received $7.5 million in venture capital from the Mayfield Fund, out of Menlo Park, Calif., and Battery Ventures out of Boston. In exchange for their investment, the two venture capital firms will own 42.5 percent of Packet Engines.

In the Silicon Valley, Daines says, short-term lease opportunities abound. Industrial parks spring up and expand quickly. If one company outgrows a space and needs to move on, landlords know that others will come along to fill it.

Daines says some industrial parks there will offer a company a lease, and have a larger space available should the company outgrow its leased space before the term of agreement is up.

Incubator space and low-rent space with flexible leases are important, he says, if Spokane really does harbor ambitions to attract the high-tech manufacturing industry.

, DataTimes