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Innovative. Albuquerque.

Innovative. Albuquerque.
Image credit: Steven St. John
Employees at Lavu Inc.

Step inside, onto the blond hardwood floor, and among the first things you notice are the drums, a keyboard, microphone and multiple guitars hugging a fluorescent lime green wall. Rock music is streaming from behind a light gray snakelike partition giving privacy to the T-shirt wearing 20- and 30-somethings at desks within its curves. An L-shaped black leather couch slouches at the heart of the contemporary industrial space. By appearances, this is either a sleek fraternity house or home to a start-up band.

Think again.

This is headquarters for Lavu Inc., a 2-year-old, cutting-edge point-of-sale software company. With its worldwide distribution, regular guest spots on a popular cable TV show, and a palpable energy and vision, would you guess them to be in Silicon Valley, Boston or Los Angeles? Actually, LAVU lives in Albuquerque, NM.

"Bloody Brilliant"
"It's a vibrant city and it's really coming up, and the cost of everything is lower than in larger cities," said Travis Kellerman, senior vice president of operations. "You see a lot of opportunity and really talented people in this town."

"We have all the infrastructure you need to launch whatever idea you want."

Lavu CEO Andy Lim, 37, came to Albuquerque from Taiwan, not knowing English, in 2000. He took language classes before entering the University of New Mexico for a degree in management information systems. Lim developed the idea for his company's point-of-sale software in 2010, when a friend and local restaurant owner for whom he had been doing Web design asked him to come up with a way to streamline services for customers -- things as simple as order-taking and checkout.

"There was a complaint by restaurants here that point-of-sales (technologies) were too expensive, bulky and they looked ugly -- that they can't do what the business owner wants. So we met the need that we heard existed."

The company began in Lim's house and grew from there as he gathered other young, technology-minded entrepreneurs -- he calls them "smart, good-looking friends" -- to help him grow the company. Most are graduates of the University of New Mexico located in Albuquerque.

One of the young company's biggest fans is British chef, entrepreneur and reality TV sensation Gordon Ramsay. Lavu employees have appeared on the popular "Kitchen Nightmares" series numerous times, including fi lming at restaurants in New Jersey, California and Massachusetts. On the show, Ramsay helps troubled restaurants become more efficient by simplifying their business to improve daily operations as well as the bottom line.

"Ramsay believes in us, and he personally connects with us. He says we're 'bloody brilliant'," Lim says.

Much of the world just might say that as well. Lavu, with 27 employees, has 200 distributors in 30 countries. Despite the global presence, Lavu is 100 percent Albuquerque. Nothing is outsourced, not even tech-support, and all employees are local.

Kellerman and Lim appreciate the fact that Albuquerque is mellow, less costly, friendlier and more creative than a lot of bigger locations. "It's a good place for friends and family and technology. Albuquerque is a growing, dynamic city."

"For us," added Lim, "It's always about, 'What's next? What's next?'"

Approaching 1 Million
As a city bursting with entrepreneurial talent, Albuquerque, too, is naturally excited to be asking that question. Albuquerque is known for its mountainous beauty, 300-plus days of sun, outdoor activities, four seasons, and the familyfriendly International Balloon Fiesta.

In addition to major corporate operations such as Intel, General Mills, and Gap Inc.'s Corporate Shared Service Center, Albuquerque enjoys a rich blend of entrepreneurs who are here for the combined economic and social ecology that makes this an exciting place to grow their business.

"Companies and entrepreneurs who have invested here applaud Albuquerque as much for its unique cultural attributes as for its business assistance, educated workforce, scientific centers and state universities," according to Albuquerque Mayor Richard J. Berry. "Growth areas include life sciences, cyber security, water and environmental technologies, fi lm and digital media, advanced manufacturing, software, optics and avionics."

Entrepreneurs in this metro area of about 900,000 people say the low cost of doing business in Albuquerque allows them to focus on their passion, as opposed to worrying as much about how to fi nance it.

Olympian Success
If you watched the Olympics, you probably saw in action a product that has found acclaim in 90 countries and has its creator in Albuquerque. It is called Kinesio tape. The elastic therapeutic tape helps stabilize aching or injured joints and muscles without affecting range of motion.

It was conceived in the 1970s when Tokyo chiropractor Kenzo Kase sought a way to keep his patients pain-free when the manipulation he had performed did not hold between office visits.

Kinesio tape first rolled out in Japan, but in 2012 CEO Kenso Kase relocated all of the manufacturing to Albuquerque, where Kinesio also has its headquarters.
Kinesio tape first rolled out in Japan, but in 2012 CEO Kenso Kase relocated all of the manufacturing to Albuquerque, where Kinesio also has its headquarters.
Image courtesy of Kinesio

His company, Kinesio Holding Corp., was launched in the '80s and initially incorporated in Japan. But Kase increasingly wanted his focus to be on educating professionals about how to use the tape. Keeping costs down would be integral to making that happen.

Kase, who at 70 still runs the company, said, "Real estate is cheap in Albuquerque. We have good regional suppliers. If we have to make big money at the big price, we have to focus on the business. But my point is, I want to focus on education and high quality. It's not just about selling the product."

"If we were somewhere else, we would have to focus purely on sales at any cost," added international director Michael Good.

While it seems silly, there is also the tiny matter of insects. Their absence here prevents problems with the tape's storage. Plus, the area's lack of humidity is ideal for manufacturing since humidity is bad for glues. As of this month, in fact, the company has relocated all of its manufacturing to Albuquerque.

"We are the wholesaler of the product and the education center," Good said. "We do 600 courses around the world each year, so we're training worldwide almost 20,000 therapists each year (on how to use the tape). In the U.S., we have 400 courses going on annually."

With sales mostly outside of New Mexico, travel access and shipping capability were also primary considerations for where the company would land permanently.

"Albuquerque's convenient. We can be in Denver or Phoenix in an hour, L.A. in an hour and a half. It's a commuter city, and I think that makes a lot of sense. I'm going to Tucson today," said Good, "and I'm there in an hour. Albuquerque is just such a good location for business."

Albuquerque, Naturally
Chicago-born Mitchell Coven, an entrepreneur in natural health products, stopped in the city years ago to visit family. He never left.

Coven was 24 when he began his business, Vitality Works, in 1982. The company develops supplement products for nutraceutical companies and health food store brands.

Vitality Works' major expansion was due to "the generous pool of educated employees...and the cost of doing business."
Vitality Works' major expansion was due to "the generous pool of educated employees...and the cost of doing business."
Image courtesy of Vitality Works

"Per capita, (Albuquerque) would be at the top end of the spectrum for people who are educated in natural products, supplements and natural living. Between all the schools that are teaching degreed positions, whether it be Chinese medicine, Ayurvedic medicine, Western herbal medicine… it's one of the meccas in education for holistic medicine," he said.

Coven says there is a generous pool of educated employees trained in quality manufacturing practices from the pharmaceutical industry. Vitality Works employs about 85 people, most of them local.

"The cost of doing business was inexpensive, there was an eager public, and within a month, I was breaking even," he said of his start. "After a year, I was profiting."

"I could be anywhere," he acknowledges. "But I choose to be here because of the cost of doing business. I was able to purchase 22 acres and 110,000 square feet very easily in 2011. People in my industry are quality- and health-minded, and being in Albuquerque, it matches the type of person who would want that lifestyle. There is a synergy."

Connections
Mark McCausland, owner of Ultramain Systems, says connectivity is essential to his company, which develops aircraft maintenance software to help airlines keep track of the maintenance of their aircraft through an automated flight log.

Clients include British Airways, Singapore Airlines, Japan Airlines, Cathay Pacific Airways, Virgin Atlantic Airways, KLM and Emirates. Earlier this year, Ultramain signed a technology supplier agreement with Boeing, becoming the airline's sole tech log supplier.

There's a wealth of high-tech talent in Albuquerque, due in part to the national laboratories, universities, Intel and about 60,000 college students.

"We travel frequently, so Albuquerque is a very good place to be," McCausland said. "We can be anywhere at any one of our customer sites in the world with one connection out of Albuquerque -- Singapore, Hong Kong, Australia, Dubai. We have great connections virtually anywhere in the world."

Great connections are important because 80 percent of their sales are outside of the United States. Ultramain even has a few members of its 100-person staff permanently maintained in both the United Kingdom and Hong Kong, and the company opened an office in India this year.

But Albuquerque remains its central nervous system.

"We hire a lot of people from UNM, most with master's degrees and/or doctorates, and the first thing we tell them is to get a passport," McCausland said. "We get good high-tech talent in Albuquerque, and part of that is because of the labs, the universities…and having Intel in the area. There's really a lot of IT activity. It's advantageous to be in the Albuquerque area."

Other compelling reasons for an entrepreneur to be here, especially if they are younger, he said, is the steady increase in the number and quality of eclectic restaurants, brewpubs and bars, a vibrant arts scene, 60,000 college students, and some of the best weather in the country.

"Anybody in business who came to Albuquerque would fi nd themselves in friendly territory. If they needed anything, there are multiple layers of organizations that could help them or could point them in a direction that they could fi nd assistance of any nature," McCausland said.

"Bluntly, There's Not A Better Deal."
Those resources helped the city land its first aircraft manufacturer – no easy task for any community.

Eclipse Aviation, maker of the Eclipse 500 very light jet, decided to move its headquarters from Scottsdale, Arizona, to Albuquerque in 2000. That might not have happened without the great support and the strong economic development package the company received.

Eclipse Aerospace President and CEO Mason Holland chose Albuquerque for the production of the Eclipse 550. "I think any company would shortchange themselves" if they are not vetting Albuquerque.
Eclipse Aerospace President and CEO Mason Holland chose Albuquerque for the production of the Eclipse 550. "I think any company would shortchange themselves" if they are not vetting Albuquerque.
Steven St. John

"The aviation world is growing, and there's a lot of competition out there for it," said Mason Holland, president and CEO of what is now Eclipse Aerospace. "A city has to step up the incentive packages pretty hard. It does take a significant economic development effort."

And not every place is as ideal geographically as Albuquerque for manufacturing aircraft. Holland said the city was also attractive to the original Eclipse Aviation because it has the proper environment for conducting test fl ights, the weather is good, and "the airport lends itself to that with long runways and additional capacity that can be expanded upon."

Like a number of entrepreneurial ventures, Eclipse Aviation didn't survive the international economic crisis. However, Holland acquired the assets and opened Eclipse Aerospace in the former company's facilities in 2009.

Why did Holland, a successful entrepreneur and South Carolina resident, decide to keep the new company in Albuquerque? Eclipse Aviation at its height had about 1,500 employees who knew how to work on aircraft, and most of them are still in the city. Holland says he plans to draw from that talent, tripling his current workforce of 110 in the next two years as Eclipse ramps up production of the Eclipse 550, the new version of the
previous twin-engine jet.

"We're very happy about our fi nal assembly process staying here," Holland said. "(Albuquerque) should be a worthy consideration of most businesses. I think Albuquerque Economic Development is very proactive and works very hard to fi t the right companies into the right places in Albuquerque, and I think any company would shortchange themselves if they are not putting Albuquerque on the list and not vetting it properly."

Eclipse Aviation put the city on the map internationally, and created a talent pool capable of building a foundation for Albuquerque's expansion as an aviation hub.

Risk Takers
"Eclipse drew a lot of people into the area that had an entrepreneurial mind, were risk-takers, tended to be earlier in their careers and wanted to take chances and had the excitement of aerospace," said John Uczekaj, president and CEO of Aspen Avionics, which was created in 2004 by two former Eclipse Aviation employees.

Aspen Avionics' flight display is revolutionizing the industry, with 5,000 airplanes worldwide already retrofitted. Aspen Avionics landed $12.8M in new equity investment in October 2012.
Aspen Avionics' flight display is revolutionizing the industry, with 5,000 airplanes worldwide already retrofitted. Aspen Avionics landed $12.8M in new equity investment in October 2012.
Image courtesy of Aspen Avionics

Aspen upgrades cockpit technology by placing iPad-like devices in older airplanes to make them more reliable, safer and more integrated into the traffic control system. "Our fl ight display has really revolutionized avionics," Uczekaj said. "We're a global product. Over 5,000 airplanes have already been retrofi tted."

Another start-up that came out of Eclipse is Vertical Power, which manufactures electronic circuit breakers for experimental and light sport aircraft, he said.

Eclipse Aviation energized the aviation industry in Albuquerque, which has since been enjoying growth and gaining momentum as each new company builds upon the last. The city has a culture of entrepreneurism for those willing to jump in.

"For example," Uczekaj says, "if you're moving to Albuquerque just for Aspen Avionics, that's high-risk for a high-tech person. You've got to know that there are other companies to go to for career advancement, for career interest, all those sorts of things. They've got to know they've got options, and the growth of all these companies does it.

"Bluntly, there's not a better deal."

Albuquerque: Well Engineered
One of the largest catalysts of the burgeoning business climate is Sandia National Laboratories. The federally-funded research and development center employs almost 9,000. It is one of the nation's leading labs for technology innovation and transfer and a haven for some of the nation's most brilliant scientists and engineers. It is also the birthplace of many of the city's most innovative entrepreneurs.

Serial entrepreneur and Stanford University graduate Ned Godshall is just one example. He left Silicon Valley for a job in nanotechnology at Sandia, and from that work, spun off his first start-up in the same field.

"You need a reason why some things occur uniquely in some places, and here, it is the national labs," he said, referring also to Los Alamos National Laboratory, 90 miles north of Albuquerque. (The Air Force Research Laboratory is also in Albuquerque, with Directorates in Space Vehicles and Directed Energy.) "Similar to how Silicon Valley is anchored around two universities – Stanford, and the University of California, Berkeley – I felt that Sandia and Los Alamos would be analogous to being the anchor to another Silicon Valley, and that's still true today," he said.

For its size and population, Albuquerque has the primordial mixings for an evolution of start-ups capable of making such a rumble in modern business as to rival the Big Bang. They are technology, money and the creative minds to light the fuse between the two.

"Other states have tried to lure us away," Godshall said, "but I did not leave Albuquerque because I thought this was the best combination of all three ingredients."

Godshall has started four companies since leaving Sandia in 1994. He is currently co-founder and CEO of Altela, which makes technology to desalinate and decontaminate water. Aside from two employees working in Colorado and one in Pennsylvania, 38 are local hires extracted from what Godshall calls a "well-trained workforce." Annual revenues last year exceeded $6 million.

Serial Entrepreneurs
But even Godshall says he could not have succeeded without initial help from resources outside the labs. In his case, that resource was native New Mexican Waneta Tuttle, CEO of Southwest Medical Ventures. "She helped me leave Sandia and actually gave me a free office," Godshall recalls.

Southwest Medical Ventures' CEO Waneta Tuttle: "People are moving here. It seems like once a week someone is calling up and saying I need to meet with them."
Southwest Medical Ventures' CEO Waneta Tuttle: "People are moving here. It seems like once a week someone is calling up and saying I need to meet with them."
Image courtesy of Steven St. John

Tuttle's venture development company has helped create six start-ups from scratch, predominantly in life sciences and health care, since 1992. Essentially, she helps bridge the gap between the science lab and the commercial world by evaluating the potential technology, determining whether there is an unmet need and then helping to develop a business plan to attract investment. Once that occurs, her job is done.

But lately, there is no rest. "For various reasons, people are moving here from other places. It just seems like once a week someone is calling up and saying I need to meet with them."

Tuttle says that for a metropolitan area of Albuquerque's size, the investment environment is likely better than in other similarly-sized cities and certainly more easily accessed than in larger urban areas. She agrees with Godshall that it has the right qualities to breed extraordinary successes.

"We do have an unusual juxtaposition of engineering, physics and the life sciences, because if you think about it, fi nding a major medical school (University of New Mexico), just a few miles from a national laboratory (Sandia) and a hundred from another one (Los Alamos), I don't think there's another place in the country where that happens, except maybe the Bay Area."

Grow Like Wildfire
Dr. Ries Robinson attributes his success to the local university-lab connection. A New Mexico native as well, Robinson received engineering degrees from Stanford but returned to his home state for medical school, where he became interested in conducting optical measurements in the body. Specifically, he had taken note of the use of oxygen sensors in hospitals -- the plastic clips placed on patients' fingers to detect the amount of oxygen in the blood. That made him wonder why a similar noninvasive procedure could not be developed for glucose measurement.

With that in mind, Robinson said, he connected with people at Sandia who had knowledge in optics and "did some experimentation at Sandia that was incredibly suggestive of the idea of measuring glucose with light."

As a result of an informal collaboration among himself, Sandia and the University of New Mexico, "We published the first ever peer review publication on noninvasive glucose measurement, and that attracted a great deal of attention nationwide. It got picked up by the Wall Street Journal, and my life changed dramatically after that."

So he decided to create the company, originally known as Rio Grande Medical Technology in 1993, in Albuquerque, in part because the people and resources were readily available here to develop the company, and in part because Robinson found a commercialization partner in Johnson & Johnson. (J&J has an Ethicon Endo-Surgery plant in Albuquerque.)

About 10 years into Robinson's endeavor, numerous other uses were discovered for his company's technology, resulting in four more start-ups in Albuquerque using light for their measurement modalities in the health sciences. While the companies collaborate among one another, they do have different ownership, and "they're all supposed to grow like wildfire," Robinson says.

But neither he nor other Albuquerque entrepreneurs are so naive as to think their businesses could only have been born and have thrived here. There are other well-known cities with a reputation for tech, a solid workforce, and access to both capital and elite universities. But those who live and work here say Albuquerque has that, and, well, less: Less cost. Less traffic. Less pollution. Less time away from family. Less hassle. Fewer headaches.

Add it all up, and Albuquerque's "less" means more for entrepreneurs when compared with almost any of the nation's larger cities.

"Your operating costs will easily be 30 to 40 percent lower, whether it's the cost of rent, hiring people, or lunch. All of that has an impact," Robinson said. Driving commutes here are virtually nonexistent, allowing employees more quality time, so that ultimately, they are more productive and happier when in the office.

"As an entrepreneur, you're looking to have people who are mentally healthy and physically healthy, and I think due to the weather, outdoor activities and reasonable commute times, you can have those kinds of employees" in Albuquerque, Robinson said.

Albuquerque offers an incredible variety of housing options and a median housing price of $165,000 (8/12)
Albuquerque offers an incredible variety of housing options and a median housing price of $165,000 (8/12)
Image courtesy of Bill Tondreau

"You Can Make A Difference"
For Roberto Espat, CEO of Roses Southwest Papers, it was the weather that brought him and his family to Albuquerque from Belize in the early '80s. He had an asthmatic child who could only thrive in a dry, warm climate. But it was the ease of doing business, the moderate population size and the market opportunity that made the area ideal for starting his company. A feasibility study showed there were no tissue manufacturers within an 800-mile radius.

The paper converting company primarily services the restaurant and janitorial industries with paper towels, napkins and toilet paper. What started as a 20,000-square-foot building and fi ve acres is today 9.5 acres with a 250,000-square-foot facility. The company also has a paper mill in Florida, and though it services companies nationwide, most are in the Southwest and along the West Coast. Clients include all the McDonald's in the Southwest, TGI Friday's, Denny's, Red Lobster and Olive Garden.

Espat says he did consider larger cities, including Phoenix and some in Southern California, but "I didn't want the rat race. We love it here. When doing the feasibility study, I saw there were a lot of incentives for investing in the city and state," he said.

"I think it's one of the friendliest cities you'll ever visit," said Espat's son, Roberto Espat, Jr., president of the company. "And there are a lot of organizations that go to bat for business -- Albuquerque Economic Development, the Greater Albuquerque Chamber of Commerce and the Hispano Chamber."

It's not just the local business organizations that are supportive of small businesses. When Espat needed help to come up with a glue that would work on his new recycled paper bags, he turned to the small business assistance program at Sandia Labs, which came up with a successful formula. How many places are there where an entrepreneur has access to some of the world's leading scientists to help them solve their business issues?

"There's also a reason this state is called the 'Land of Enchantment' -- the weather, the culture, the food. It's a fantastic place to raise a family and there's just a great quality of life," Espat said. "You have the ability to get involved in the community and make a difference."

Entrepreneurs As Rock Stars
One of the best-known organizations for entrepreneurial assistance is Technology Ventures Corporation, a nonprofi t formed by Lockheed Martin to help start-up companies commercialize technology coming out of Sandia National Laboratories. The initial goal was to increase the local economic impact of the labs' operations, but TVC also contributes to the community by introducing investors to those entrepreneurs who have well-screened projects that are ready for investment.

TVC actively recruits venture capital firms to locate in New Mexico and assists entrepreneurs with fundraising efforts.

"We don't fund anybody directly," said president and CEO John Freisinger.

"Your operating costs will easily be 30 to 40 percent lower, whether it's the cost of rent, hiring people, or lunch. All of that has an impact."-- Robinson

"We provide services to help them develop strategies. You have to have a world-class business strategy because no longer are you competing with just local entrepreneurs, but some who may be in Singapore and London… So, the fi nal project they have is a business plan that we can then introduce to the business community and get them to venture capitalists."

Since its creation in 1993, TVC has connected entrepreneurs with $1.3 billion in venture capital. In fact, there are more venture investors in this state than in surrounding states, with the exception of Texas, according to Freisinger. And TVC's assistance is free.

If the company is in New Mexico, there are state programs that allow an entrepreneur to get help from laboratory technicians free of charge as well.

"If you have a problem and you're a company in New Mexico, Sandia Labs can help solve that problem with scientific expertise," Freisinger said.

"Albuquerque treats its entrepreneurs like rock stars," he said.

Though TVC concentrates on helping entrepreneurs well beyond the idea phase, there is plenty of help in Albuquerque for those needing initial stage investments. The small-business assistance and micro-lending environment is so healthy and supportive, "You almost have to refuse services here, there are so many people to help entrepreneurs," Freisinger said.

"There is always going to be good money for good ideas. Sometimes the difference between getting that investment or not is access to world-class technology and assistance. If that is what your company needs, the place to be is Albuquerque.

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