It was just about five years ago when a small Santa Cruz software startup operating in the vague realm of “business intelligence” moved a couple dozen employees into the top corner of downtown’s stately E.C. Rittenhouse building.
Last week, Google paid $2.6 billion to acquire that now-not-so-little company, data analytics provider Looker.
“My gut reaction was, ‘Wow, this is huge news for Santa Cruz and for Looker,’” says Sara Isenberg, founder of the Santa Cruz Tech Beat news site.
Isenberg has seen past tech booms spawn local outposts for companies like Netflix, Seagate, Intel and Cisco, but a familiar migration pattern over Highway 17 to Silicon Valley has lent Santa Cruz a reputation as a place for tech companies to set up shop and have fun before they leave and get serious.
Though the terms of Looker’s new deal with Google are still being finalized, the company founded by local entrepreneur Lloyd Tabb in 2012 plans to keep its headquarters in Santa Cruz, a spokesperson tells GT.
“This is not, by any means, the end for Looker, but simply the closing of our first chapter,” Looker President and CEO Frank Bien wrote in a blog post announcing the deal last Thursday. Though Silicon Valley’s biggest companies have something of a reputation for smothering promising startups—a “kill-zone,” as The Economist put it—Google Cloud CEO Thomas Kurian wrote in his own blog post that the Looker acquisition “builds on an existing partnership” between the two companies, which share 350 joint customers like Buzzfeed, Hearst and Yahoo.
The Central Coast tech industry has seen a flurry of activity in recent years as local officials and business leaders aim to branch out from the area’s entrenched mix of long commutes and low-paying jobs in fields like hospitality. In addition to Looker’s success (it raised $280 million from investors), smaller startups in fields like genomics have been launched by researchers emerging from UCSC. Robust agriculture industries in Salinas and Watsonville have also fueled startups focused on next-generation farming or water efficiency. Still, Looker’s 10-figure deal with Google is far and away the biggest in recent memory.
On the day the acquisition was announced, Looker listed 102 open jobs on LinkedIn in locations from Tokyo to Dublin to New York. About two-thirds of all hiring was for positions in the greater Bay Area, including around 30 jobs in San Francisco and three dozen new positions in Santa Cruz in sales, finance, engineering and other corporate roles.
The company has come a long way since it first set up shop on the top floor of the Rittenhouse building in 2014.
“They started off with using half a floor, then the whole floor. At the time they had no idea how big it would be,” says Matt Shelton, a real estate broker with J.R. Parrish who has since helped Looker expand its downtown headquarters to almost the entire four-story building. “Nothing’s ever happened like this in downtown.”
Amid Looker’s growth spurt, Santa Cruz has also been forced to reckon with the region’s changing connection to high-value tech companies. In addition to homegrown startups like Looker, new outposts for big names like Amazon and growing legions of freelancers—plus the many local residents who ride private tech shuttles over Highway 17 each day—the influx of more affluent white collar workers has put pressure on the local housing market and notoriously anti-growth cities.
Looker’s new parent company is already expanding in all directions in the Bay Area, including Google’s planned 25,000-person office in downtown San Jose. If and how Santa Cruz could figure into those plans remains to be seen.
“Santa Cruz is one of the few corners of the San Francisco Bay Area that Google doesn’t own a big chunk of,” CNBC wrote in an article about the Looker deal. “Should Google decide it wants to expand in the area, it could have political capital with Looker’s Santa Cruz-native leaders.”
IN THE CLOUDS
Founded at the height of the “Big Data” craze, Looker describes itself as a company “dedicated to empowering humans through the smarter use of data.” Google Cloud’s Kurian praised the “unified platform for business intelligence, data applications, and embedded analytics.”
In human speak, Looker sells businesses software to better manage information that could help increase sales, save money or otherwise improve operations. Like other data-centric companies, that puts Looker at the center of the fast-evolving conversation about privacy in the digital economy. Late last year, the company hired a chief privacy and data ethics officer, tech industry veteran Barbara Lawler.
To compete for experienced corporate executives and highly-sought-after engineers, Looker has waded deeper into the world of Silicon Valley employee perks. In 2014, Carolyn Hughes, Looker’s vice president of talent and culture, told me as a reporter for the Silicon Valley Business Journal that the startup was recruiting workers from other parts of the Bay Area by offering relocation bonuses worth 15% of annual salaries and renting rooms at Hotel Paradox for those who still chose to live elsewhere.
Though large tech buyouts often result in vastly different payouts for employees with varying levels of seniority, an influx of new money could exacerbate tension in a community already grappling with mounting anxiety about income inequality. The pressure is particularly acute for the region’s low-wage workers, but it’s also felt by other would-be founders.
“I think the cost of housing is an issue for startups,” Isenberg says. “The fact is that’s a California problem. That’s not going to be fixed if they go to Silicon Valley.”
Santa Cruz County had a total of about 5,000 local tech jobs and 10,000 tech commuters as of early last year, according to a report by Christopher Thornberg of Beacon Economics. Though six-figure jobs at area tech companies are getting more common, he said that “growth depends on land use” and adding more housing, according to a write-up in the Sentinel.
There are also logistical issues like office space to contend with. Between Looker, Kaiser Permanente and other growing companies like Warrior Media, Shelton says the city is approaching capacity for large office space. “It’s gonna be difficult for the next big company,” he says.
All this means for Santa Cruz is a bunch of high-end tech jobs mainly for people that live outside of this area, more traffic and more Google buses, more million-dollar housing to support the really really rich but in the long run the people that actually have lived here their entire lives are the ones that get screwed as always unless of course they work for Google.
Yup.. worked for high tech a long time. Used to think that was a good thing.. no longer.. running over every smallish town on the west coast..
Exactly what I think!
I think Frank is being extremely optimistic. Unless there is some prior arrangement made in the buyout deal, it makes no logistical or economic sense for Google to keep a 600 person outpost open in Santa Cruz, let alone expand, as Google is already planning a 20,000 person campus in DT San Jose. Looker is a software company and software can be developed pretty much anywhere in the world these days. My bet is Looker will eventually get swallowed up by the Google machine and with Google stock at $1K/share, anyone with a sizable Looker interest will be headed to early retirement when those shares become salable rather than have to commute over to Mt View or San Jose after they eventually shutter the SC outpost.