AZTECH AzBusiness magazine September/October 2016

2016 Page 100

ARIZONA’S TECH SECTOR IS BOOMING Page 102

THE TECH EFFECT

Page 108

ONE STEP BEYOND

BOUNDLESS INNOVATION. GROUNDBREAKING DISCOVERIES.

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ARIZONA TECHNOLOGY COUNCIL

ARIZONA’S TECH SECTOR IS

BOOMING

A

rizona’s economy is shifting from being strictly tourism- and real estate-centric as technology emerges to become one of the state’s main drivers. The year 2016 has been especially important to the state’s growth as more companies see Arizona as a promising destination to do business. These technology companies recognize the favorable cost of living, our educators’ focus on innovation and support from a protech government as top factors for starting up or relocating here.

CompTIA’s “Cyberstates 2016” reports there are more Steven G. Zylstra than 135,000 tech Technology industry jobs in Arizona.

This means 61 of every 1,000 private sector workers in Arizona are employed by high-tech firms. On a national level, Phoenix is ranked third for tech job growth among large markets in CBRE’s 2015 annual “Scoring Tech Talent” report.

Arizona’s affordable living can’t be denied, with Phoenix and Tucson ranked as more favorable places

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to live compared with other high-paying and highcost cities such as Boston and San Jose. Analysts at Glassdoor determined a software engineer’s “real adjusted salary” by comparing the median base salary to a resident’s cost of living in different cities around the nation. Phoenix and Tucson both made the Top 25 highest-paying city list.

Companies are encouraged by the fact that engineers are choosing Arizona over traditional tech hubs, but they also consider the growth in science, technology, engineering and math (STEM) education as a major factor in producing the next wave of homegrown tech talent. U.S. News & World Report ranked Arizona State University No. 1 among the “Most Innovative Schools” in America for 2016. That was ahead of second-place Stanford University. And at the high school level, the Top 10 list of the 2016 Best STEM High Schools included BASIS Scottsdale and BASIS Tucson North.

Through tremendous effort by the Office of the Arizona Governor, Greater Phoenix Economic Council (GPEC), Sun Corridor Inc. in Tucson and the Arizona Commerce Authority (ACA), the state also has become a hot spot for innovators and entrepreneurs. For example, ACA named two software, three biotech and an aerospace company as its Arizona Innovation Challenge winners in the spring.

Celebrate innovation What: The Governor’s Celebration of Innovation (GCOI) is the Arizona Technology Council’s (AZTC) annual awards gala in partnership with the Arizona Commerce Authority (ACA).

The event honors technology leaders and innovators from across the state.

The event attracts more than 850 attendees each year for a night of

networking, food and entertainment.

2016 marks the 13th year of this prestigious event. For 2016, the event will consist of a theatre style awards program followed by specialty desserts and live music after the awards. The event will also feature the Technology Showcase, with more than 50 Arizona companies exhibiting. These

The bi-annual business plan competition provides $3 million in grants a year to the most qualified, innovative startups and early-stage companies.

In PwC’s 2016 Aerospace Manufacturing Attractiveness Rankings, Arizona jumped to first place with improvements in the state’s industry rank (No. 6) and operating costs (No. 12), as well as high scores in property and unemployment tax (No. 8). It also benefited from the tax methodology changes, with high scores in property tax (No. 6) and unemployment tax (No. 3). This all bodes well for the state’s manufacturing sector, which includes major semiconductor companies such as Intel and Microchip Technology.

In the “space” sector of aerospace, Orbital ATK, Iridium, Paragon Space Development, World View Enterprises, KinetX Aerospace and Honeywell Aerospace are making major contributions. The OSIRIS-REx spacecraft, under NASA’s New Frontiers program and led by The University of Arizona with navigation by KinetX Aerospace, was scheduled to launch as soon as Sept. 8 on a mission to the asteroid Bennu. If successful, this will be the first time a spacecraft from Earth lands on an asteroid and brings

companies consist of award finalists, sponsors and AZTC partners.

When: Thursday, Nov. 10, 2016 from 4 p.m.-8 p.m.

Where: Phoenix Convention Center’s West Building Information: aztechcouncil.org

back a sample of its surface material to our planet.

While there is still work to do, even the venture capital front has some positive news. Dow Jones Ventures Source recently reported the state’s venture capital total for the first half of 2016 topped $171.8 million — 36 percent ahead of the same period last year.

Phoenix also is a growing center for cyber solutions for the national and international epidemic of cyberwarfare, intellectual property theft, identity theft and data breach. The Arizona Technology Council is working with numerous leaders from public and private sectors, including elected officials and corporate CEOs, along with the city of Phoenix and other cities in the region to get “Cyber Security Valley” off the ground.

This is just a snapshot of the growth and excitement currently underway in Arizona’s technology sector. With its higher than average salaries and continued wealth created by innovators, the industry is critical for the future for the state’s technological and economic goals.

Steven G. Zylstra is president and CEO of the Arizona Technology Council, where he is responsible for strategy, operations and accomplishment of policy development.

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AZ TECH

tech The

effect

Industry leaders and economic developers boost Arizona’s brand and reputation for innovation in software and optics

By JESSE A. MILLARD

I

f you grew up in Arizona, the Five C’s of Arizona — copper, cattle, cotton, citrus and climate — have been drilled into your head as the first mainstays of Arizona’s economy since elementary school.

Arizona’s economic base has morphed over the years, transitioning into a more knowledge-based economy. In the 1990s, an economic analysis of the state’s main industries Arizona found itself as home to two technology-based high-wage industries: software development and optics and photonics.

“To Arizona’s surprise, one of the 11 clusters driving Arizona’s economy was software,” says Steven G. Zylstra, president and CEO of the Arizona Technology Council. “And this was sort of a big surprise to a lot of people.”

People were starting software firms out of their garages, or as off-shoots from larger companies operating in Arizona.

The state’s optics and photonics industry has been here since the 1950s and 1960s. The industry grew due to Southern Arizona’s dark skies, large concentrations of telescopes in the state and the

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world-renowned University of Arizona College of Optical Sciences, Zylstra says.

For years, many legacy sectors have been getting into emerging technologies. It’s hard to have any piece of hardware that doesn’t utilize some form of software, and just about everything — from your cellphone to medical imaging devices — rely on optics.

These national trends, relying on emerging tech, have driven Arizona’s technology industry growth, especially in software, says Chris Camacho, president and CEO of the Greater Phoenix Economic Council.

Arizona also excels in talent production. ASU has one of the largest engineering schools, with more than 5,000 students in its computer information systems programs, Camacho notes. A large portion of Grand Canyon University’s student base is on STEMrelated career paths, he notes.

“This concept of sheer production of talent is not only drawing companies from outside the market, but also supplying organic growth for our current industry,” Camacho says.

AZ TECH

Software From Zylstra’s recollection, software is one of Arizona’s key industries that bootstrapped itself into existence. There were people in Arizona who were working at larger companies and started to write their own software, Zylstra recalls, and there were other folks who wanted to live here and they worked in software.

As software has become a key component for any business’ success and a key component to successfully and efficiently utilizing hardware, Arizona has had its fair share of software companies starting and operating here, Zylstra says.

With a base ecosystem in place, economic developers like Camacho and

Bob Breault

Chris Camacho

Clate Mask

Hamid Shojaee 104

Thomas L. Koch

Alex Rodriguez

Steven G. Zylstra

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the folks at GPEC started to focus on convincing more software firms to call Arizona home.

Camacho says there’s been a national shift in which intellectual property is initially created in California. When those firms developing the intellectual property look to grow their business, they turn to places like Arizona to go to scale.

Companies like Uber, Yelp and Weebly have set up offices in Phoenix when they were looking to grow outside of their California offices, Camacho says.

The state’s low cost of business, access to affordable living for employees and the state’s reduced regulations make it ideal for expansion compared with California, Camacho explains.

Not to mention the state’s talent availability, as many parts in the country struggle to fill engineering positions.

“Most people think of Denver and Austin as great software and IT hubs, but actually Phoenix has a larger depth and breadth of software talent in the market,” Camacho says.

Just ask the companies themselves.

Infusionsoft CEO and Co-Founder Clate Mask says Arizona has great talent, a great business environment and a great entrepreneur community that has helped his firm grow from an idea into a $100 million software and small business service company with 600 employees.

Optics and photonics The optics and photonics industry is deeply embedded in many different technologies, says Thomas L. Koch, Ph.D., dead of the College of Optical Sciences at the University of Arizona.

Many folks only think of optics in terms of imaging systems — things with lenses — but they don’t think about the Internet, integrated circuit industries and beyond, Koch says.

“In a lot of ways, it’s hard to get your arms around how broad optics is and how impactful it is,” he adds.

But the industry is here and it’s been working hard to boost the state’s economy.

The College of Optical Sciences has been working closely with the optics industry, giving students opportunities to work with local firms on projects and working on federal research projects, Koch says.

The school’s students don’t have a hard

Top tech companies

A

ccording to the National Optical Astronomy Observatory, these are five of the biggest optics companies in Arizona, in no particular order.

•

Raytheon Systems Company

•

Arizona Optical Systems

•

Photometric’s

•

NP Photonics

•

4D Technology

According to the Arizona Technology Council, these are five of the biggest software companies in Arizona, in no particular order.

Largest Software firms: •

Infusionsoft

•

JDA Software Group Inc.

•

WebPT

•

Insight Enterprises Inc.

•

Computer Guidance Corp.

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AZ TECH time finding work, either. But the optics and photonics industry hasn’t really been at the forefront of conversation.

Dr. Bob Breault has been the optics industry’s chief evangelist in Arizona for 24 years. Breault is president of the Arizona Optics Industry Association, which is one of the only industry associations whose members work completely on a volunteer basis, Breault mentions.

In the early days of the industry, Arizona’s prominent aerospace and astronomy industries fueled optics in Arizona. The Tucson area has even been called “Optics Valley,” a play off of Silicon Valley. Breault says when the UA’s College of Optical Sciences is called the best in the world, it isn’t bragging, it’s a well-known fact.

Even though optics has been a major player for many years in Arizona, it has been under the radar without much support, Breault says, noting that the 1990s were the prime years for optics.

The Arizona Optics Industry Association has been meeting regularly since its 1992 inception, but there hasn’t been much conversation between the industry and the state’s foundations, banks, state infrastructure and convention centers. The optics industry has been dying to have a world-wide convention in Tucson, but Breault says the Tucson Convention Center isn’t big enough to support one.

“You need this interface,” Breault says. “Over the last eight years or so, (the optics industry) has had no interface with organized foundations.”

Shifting tide But that’s starting to change. The Arizona Optics Industry Association recently signed a collaborative agreement with the Arizona Technology Council to form an Arizona Optics Industry Committee to reinvigorate the state’s industry.

“We believe by joining forces, we’ll be in a strong position to help take the optics industry to the next era of impact and success,” says Alex Rodriguez, vice president of Arizona Technology Counicl’s Southern Arizona branch.

The partnership plans to bring everyone to the table — government officials and key stake holders in the optics industry — to help promote the industry and let it flourish, Rodriguez says.

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The partnership will also establish a clear view for how big of an economic impact the industry has on the state, as well as examine the state’s workforce availability for the next generation of optics, he says.

That all sounds great, but where’s the money?

Whether you’re in software or optics, everyone seems to agree on one thing: where is the risk capital?

In an email statement, Axosoft Founder Hamid Shojaee states there isn’t anything preventing software firms from succeeding in Arizona, but “that’s not to say that more capital investment in tech companies wouldn’t help.”

Even though there are prominent venture capital firms like Desert Angels and the state has its fair share of millionaires and billionaires, Zylstra says many startups are having to look out of state for capital.

Every vibrant tech community has successful entrepreneurs acting as angel investors, helping boost the next generation of startups, Zylstra says.

“We’re pretty youthful in that regards, so it takes time for that kind of thing to happen, but reinvestment from the successful companies is going to be necessary to take Arizona to the next level in technology,” he says.

When firms have to look outside of their home state for capital, their investors like to have them close by, which means companies might end up leaving Arizona, which has happened.

Camacho says that is changing. Firms like Infusionsoft and WebPT received outside capital and they’re both operating successfully here in Arizona.

Despite lack of access to capital, groups like the Arizona Technology Council, GPEC, the Arizona Commerce Authority and more have been working to keep and turn Arizona into a tech hotspot. The success of many initially small firms like Axosoft, Infusionsoft and WebPT are just a couple examples of the state’s thriving technology industry.

“As the larger companies have successful exits, you’ll continue to see more of them not only start here, but stay here and grow here,” Camacho says.

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AZ TECH

ONE STEP

BEYOND

BEYON ARIZONA BOLDLY GROWS INTO A COMPETITIVE DEEP SPACE EXPLORATION DESTINATION

By ERIN DAVIS

S

pace: the final frontier. These are the voyages of local Arizona aerospace enterprises. If you think for a minute that Arizona enterprises don’t measure up to “The Enterprise,” think again. We may not have Spock, Kirk or warp drive, but what Arizona does have is an impressive list of some of the most progressive aerospace contributions in the nation.

From commercial and private sectors, alongside extremely competitive planetary and astronomy university programs, this desert state is an oasis for aerospace innovation. Missions to Mars and interplanetary asteroids and complex satellite, orbit and navigation systems are only part of what have made Arizona a top contender in deep-space exploration and preparation.

Boldly going …

When considering “deep space exploration,” one may be tempted to visualize a monolithic bunker smack dab in a desolate Arizona desert, complete with docking station where an Enterprise or X-Wing fighter is in some impressive state of construction. Although that may be a reality for Arizona in a decade or three, our current aerospace contributions focus on the infrastructure and inter-workings of deep-space missions.

Where we skyrocket (pun intended) is in providing the essentials — life support, thermal control and habitat design; without which, those shiny rockets would not have a payload the public can get excited about.

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Perhaps Grant Anderson, president and CEO of Paragon, explains it best when saying, “Warp drive is sexier than life support.”

Paragon, striving to be No. 1 in life-support systems, has and continues to affect many of the design elements of spacecrafts, and although they may not be sexy, they’re essential.

“We make sure life support isn’t an afterthought,” Anderson explains.

In a study Paragon conducted for the proposed, but now in limbo, “Inspiration Mars,” Paragon was instrumental in conceptualizing habitat architectures that were both maintainable and redundant — not an easy feat, according to Anderson.

As far as current life support projects, Paragon is working on a NASA-awarded contract for a patented lonomer-membrane Water Processor (IWP) that will soon be tested on the International Space Station (ISS). This particular application is designed to increase the ISS water supply, reduce costly water deliveries from Earth and can be used for high-efficiency (up to 98 percent) water recovery for future deep space missions.

Arizona academia and asteroids While a Mars mission simmers on the back burner, other deep-space endeavors are underway — perhaps most notably the OSIRIS-Rex mission. Spearheaded by the University of Arizona under the leadership of professor and principal investigator Dante Lauretta, spacecraft OSIRIS-Rex will travel to the near-Earth

ND asteroid Bennu the beginning of September.

The $800-million dollar project (not including the launch vehicle) is a collaborative mission that includes commercial aerospace involvement with companies like Lockheed, who built the spacecraft, and KinetX Aerospace, directing navigation.

“This will be the first mission to bring back enough asteroid material to examine thoroughly,” says Tim Swindle, University of Arizona director of the Lunar and Planetary Laboratory (LPL).

The material Swindle refers to will be extracted from a 500-meter asteroid just inside the Earth’s orbit. Bennu is particularly lucrative as a study subject, as it’s suspected to have the kind of organic molecules that seeded Earth when life was starting.

In addition to collecting samples (slated to return somewhere around 2023), OSIRIS-Rex will transport an infrared spectrometer.

This technological contribution comes from another Arizona academic institution — Arizona State University.

Dr. Phil Christensen, regents professor of Geological Sciences, Arizona State University was commissioned to build the apparatus to scan the surface of Bennu for minerals.

No stranger to sneaking a peak at celestial sights, ASU is also responsible for THEMIS, a camera capable of producing visible and infrared wavelengths. THEMIS made its debut on Mars on October 2001.

“We have built five instruments for five different NASA missions,” Christensen says, “and we currently send communication to

Grant Anderson

Phil Christensen

Shawn Linam

Rick Kettner

Taber MacCallum

Kjell Stakkestad

satellites that take 100 images of Mars daily.”

ASU has also submitted a proposal to build an infrared camera for Europa. Jupiter’s small moon, close in size to our own, is an exciting prospect for exploration because of its liquidwater ocean hiding under a thick layer of ice.

All systems are a go While advances in the academic realm rise, so do developments in orbit, navigation and Tim Swindle communications systems. KinetX Aerospace has been a heavy hitter in in all three.

“We were the longest-running subcontractor on the IRIDIUM project,” says Kjell Stakkestad, president and CEO, KinetX Aerospace.

Not only did KinetX help develop and implement the IRIDIUM ground system, they also created software for the 66-satellite communication system.

In navigational pursuits, KinetX has 700 years of combined space navigation experience, including spacecraft missions to Mercury and Pluto.

“We are the first commercial company to orbit Mercury,” Stakkestad says.

While KinetX continues to expand on an impressive AB | September- October 2016

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navigational foundation, another Arizona company is making strides in propulsion and cargo delivery to the ISS. Orbital ATK has supported missions like “Deep Space One,” the first interplanetary spacecraft to utilize solar electric propulsion; and “Dawn,” that just celebrated a nine-year exploration orbiting two interplanetary bodies in the main asteroid belt between Mars and Jupiter.

Tempe-based Qwaltec, a systems engineering, mission readiness and technical-training company, is a valuable asset to sister commercial space companies in terms of deep-space exploration preparation.

“They bring us in before a launch,” explains Qwaltec Co-founder and CEO Shawn Linam. “What we do applies to any space system. Most of our business is satellites, but we apply the same application to human space flight systems, training actual crews and preparing for the mission by doing things like writing procedures, running risk assessments and establishing mission rules.”

The Force is with us For Further Information Contact: Michael DiGrazia, CIMA®, CFP®0 Institutional Consultant Senior Retirement Plan Consultant UBS Institutional Consulting Group UBS Financial Services, Inc. 2555 E. Camelback Rd., Suite 600 Phoenix, AZ 85016 (602) 957-5133 michael.digrazia@ubs.com

T URNASMART PHONEI NT O

AMOBI LETI MECLOCK NOW WI T HGE OF E NCI NG

Now back to that space-docking station in the middle of the dessert. While there can be no promise of a glimpse of a Millennium Falcon under construction, if you look at the right spot in Tucson, you may see a high-altitude Stratollite balloon on its way to hover essentially on top of the Earth’s atmosphere.

World View, which also set the human stratospheric ballooning altitude record with the “StratEx” (Stratospheric Exploration) mission, has successfully tapped into the market for luxury experiences with a space-exploration twist.

“When we began to explore this idea, the timing was right, particularly in relation to Baby Boomers. They want experiences,” explains World View Chief Technology Officer Taber MacCallum.

World View goes beyond the half-trillion dollar luxury experiences market, however, by utilizing Stratollites as a means of transporting commercial payloads such as sensors, telescopes, communications arrays and more.

What comes next?

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With all the navigating, orbiting, innovating, strategizing and conceptualizing taking place in Arizona’s aerospace industry, what can we look forward to in further deep-space exploration advancement?

“In the end it’s a political will,” MacCallum says, “I’m biased, but I think it’s tragic not to have a human deep space exploration mission that is on the books and adequately funded. We can also do a lot with the funding NASA has, if we do it differently.”

“Arizona is one of the leaders in the nation,” Christensen says, “Between UA — which has one of the best astronomy programs and planetary science programs — and ASU — as one of a handful of universities that can build instruments on campus — I bet Arizona is poised to be in the Top 5 for space exploration and space science.”

“I’m always excited about the possibilities, but they don’t always come along,” Swindle says, “You never know which ones will come along for you. “

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