Why Google, Uber, and Facebook Are Flocking to Pittsburgh

Jill Krasny

Published May 2018


Biotech, self-driving cars, and robotics? Pittsburgh, the Steel Belt city, is the best-kept secret east of Silicon Valley.

Startup neighborhoods.

The old factories and warehouses dotting the Alle­gheny River make up Robotics Row, where Edge Case Research--which, among other things, tests self-driving-car soft­­ware--works out of 19th-century stables.

CREDIT: Courtesy RE2 Robotics

Boutiques and craft breweries have taken over Lawrenceville's vacant storefronts in this once blue-collar neighbor­hood. Grab a coffee at Caffè d'Amore in Upper Lawrenceville on your way to RE2 Robotics, a robotic arm manufacturer. Farther south, Toll Gate Revival sells reclaimed indus­trial objects near Uber's Advanced Technologies.

With more than 500 employees, Google's presence in Bakery Square, site of a former Nabisco factory, looms large in East Liberty. Startup accelera­tors Alpha­Lab and AlphaLab Gear reside here, as does language-learning app Duo­lingo, which recently relocated from the Shadyside neighborhood.

Small businesses that create 25 new jobs or increase staff by at least 20 percent in three years receive a $1,000-per-job tax credit.Source: Job Creation Tax Credit Program

Who to know.

A super-connector who's watched "the hardware scene explode," Ilana Diamond has an eye for talent. As managing director of Alpha­­Lab Gear--Innovation Works' hardware startup accelerator--she mentored smart headset maker Maven Machines, ran consumer electronics company Sima Products for 16 years, and served on the board of the Consumer Technology Association, which hosts CES. "Pittsburgh has a huge edge in making physical products because we have the manufacturing expertise," says Diamond, an asset to early-stage startups in the business of making things.

AlphaLab Gear managing director Illana Diamond (left) and mSpoke co-founder Dave Mawhinney.CREDIT: Courtesy Companies

Dave Mawhinney is connected to power players like Craig Markovitz, founder of Blue Belt Technologies, and Robb Myer, founder of Nowait. But before he joined Carnegie Mellon as executive director of the Swartz Center for Entrepreneurship and its Donald H. Jones Center for Entrepreneur­ship, he co-founded mSpoke, a content-recommendation engine acquired by LinkedIn in 2010.

You're no entrepreneur until you've been hit by "a two-by-Frank," Carnegie Mellon's Mawhinney jokes, referring to Frank Demmler, who takes credit for more than 500 companies, some 10,000 jobs, and $1 billion in investment capital. A managing director at Riverfront Ventures and a VP at Innovation Works, Demmler is a local startup whisperer.

In 2016, there was an 8 percent increase in VC funding for Pittsburgh companies, while VC funding dropped 32 percent nationally.Source: Innovation Works and Ernst & Young

Red flags.

Poor Airline Access: Direct flights to the West Coast are rare, which deters some key venture capitalists from making the schlep.

Fewer Angels: Initiatives like 99 Tartans and Innovation Works help facilitate seed investment, but they aren't enough. The investor community isn't as developed as those in Seattle or Austin. "We are talent rich and capital poor," says Mawhinney, who warns, "We'll reach a plateau if we don't get risk capital."

Rust Belt Bias: Lack of awareness about the city is its biggest hurdle, says Chris Olsen, a Duolingo investor. "Once people show up, they tend to stay. But people are skeptical of the reputation that this is the Rust Belt."

Recently funded startups.

$1 billion: Argo AI (self-driving-car software)

$93 million: Petuum (enterprise A.I. software)

$25 million: Duolingo (language-learning app)

CREDIT: Courtesy Argo AI

Recent big exits.

$400 million: Health care services provider CECity to Premier (2015)

$275 million: Robot-assisted surgery technology firm Blue Belt Technologies to Smith & Nephew (2015)

$40 million: Restaurant app maker Nowait to Yelp (2017)

Companies to watch.

Aurora Innovation founders Sterling Anderson (left), Drew Bagnell and Chris Urmson.CREDIT: Courtesy Aurora Innovation

After the auton­omous-car-software startup Aurora Innovation (founded by Google, Uber, and Tesla veterans Sterling Anderson, Drew Bagnell, and Chris Urmson) was sued by Tesla last year for poaching at least a dozen engineers, the stealth startup raised $3.1 million (and paid an out-of-court settlement).

CM grad Sophia Berman found inspiration in the truss bridge--a heavy-load-bearing superstructure--for the Trusst Lingerie bra she co-created with 3-D technol­ogy for fuller-busted women, now backed by Innovation Works.

With $96 million in funding, the founders of 4moms--roboticist Henry Thorne and venture capitalist Rob Daley--continue to put a high-tech spin on baby gear, including the MamaRoo, an electronic infant seat that replicates a parent's rocking movements.

More than $687M was invested in tech companies here in 2017.Source: Innovation Works and Ernst & Young

Talent pipeline.

Google, Uber, Facebook, and Ford have outposts here, drawing tech talent from all over the country. A year after game designer Jack Tsai relocated from Los Angeles to work in Face­book's new Oculus Research Lab, he co-founded his own Pittsburgh-based virtual reality studio, Stitchbridge, in 2016.

Carnegie Mellon and the University of Pittsburgh churn out top talent in robotics, biotech, and computer engineering. Pitt's Medical Center sets the bar for medical research, while CM's Robotics Institute laid the groundwork for self-driving cars, prompting a 2015 talent war between Uber, Argo AI, and Aurora Innovation.

Where to talk shop.

Googlers flock to the Ace Hotel, housed in a former YMCA in East Liberty, for Fourth River Mules and Ping-Pong. Split a family-style steak at the Ace's Whitfield, the brainchild of Pittsburgh native Brent Young.

This was the No. 1 city in the U.S. for job openings in 2017.Source: Glassdoor
Prototype co-founders Louise Larson (left) and Erin Gatz.CREDIT: Courtesy Prototype

Investors often woo founders in Heinz Field's 300 Level Suites at Steelers games, though billionaire Thomas Tull's owner's box is the one to get. Week­­day Penguins games at the PPG Paints Arena are a cheaper alternative, where founders can gab over animal-free Impossible Burgers at Burgatory.

Last year, Erin Gatz and Louise Larson launched STEM makers-pace Prototype, in North Oakland, where "feminists of all genders" work on projects, network, and take workshops on laser cutting.

PNC Park Photo CREDIT: Joshua Peacock/Unsplash

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