When one of the steak knives Mike Klanac received as a Christmas gift broke, he wanted to throw it out. But his wife insisted that he complain to the company. He did – by phone, online and on social media. A response came a month later and the replacement knife came a few weeks after that.
Annoying? Yes. Inspiring? Surprisingly, also yes. Because the experience led Klanac to quit his day job to follow the 21st century entrepreneurial dream of creating a website and app that became “GripeO: A Better Way to Complain.”
But what might be most intriguing about Klanac’s story is its dateline: This is a Buffalo story, and he and others believe it could be the start of something bigger. While many flock to Silicon Valley and New York City to launch the next Instagram or Twitter, a small but dedicated group of app developers have decided to establish a foothold in Western New York.
GripeO is one of them. Klanac has moved to Houston to be closer to his wife’s family, but his company’s 10 employees are all from Buffalo. Four developers remain here, and the company’s headquarters are at Z80 Labs, the tech incubator in downtown Buffalo.
Other apps with a Buffalo connection include Vidbolt, which allows users to interact with other people while watching videos online; Cake Face, which allows people who are hosting or attending weddings and similar occasions to compile all the photos taken on smartphones during that event in one place; CoachMePlus, a sports performance data tracker app that helps professional coaches follow their athletes during strength and conditioning programs; and an app in stealth beta – in its second phase of development, but specifics are kept under wraps – that its Buffalo-native developer hopes will become the “premiere platform” for discovering rising filmmakers.
It’s unlikely that any of the apps will reap the success of already iconic brands such as Instagram or SnapChat. Some already are barely hanging on in the ultra-competitive app marketplace. But for some of the developers, success is about more than money.
“All of us love Buffalo. We wanted to stay and serve the community,” Klanac said. “The guys that did leave, it was because of relationships.”
Jerod Sikorskyj, one of the two minds behind Vidbolt, believes the region is increasingly attractive to his peers.
“People here are not in burnout mode,” he said. “People are more rooted here, and they don’t want to leave. You can build a family of people and a quality of relationship.”
The number of events and spaces that are catering to entrepreneurs would suggest that the start-up scene here is growing just as many app developers say it is. In March, Buffalo had its first “Maker Faire,” an event that started in Silicon Valley in 2006 and at which entrepreneurs can show off their products and businesses. Along with 43North, a business idea competition, co-working spaces – many of which specialize in tech – also are popping up.
“Buffalo has a lot of people starting things. There’s so much opportunity for collaboration. It’s both big and small enough,” said Teo Balbach, the CEO of CoachMePlus. Like GripeO, it also operates out of Z80.
Sitting close by in the open-concept work space of Z80 is Crystal Callahan, the founder and president of the World Wide App Inc. Callahan grew up on the East Side, but left Buffalo at age 17 because she didn’t think there were enough opportunities for her.
She had been living in Hollywood near the Adobe Theater as a film distributor after a stint in Silicon Valley. A year ago, Jordan Levy, venture capitalist and founder of Z80, invited Callahan back to Buffalo to be on the forefront of what she likes to refer to as the “high-tech revolution.”
“Some people call it a renaissance or revival, but I like revolution,” said Callahan, who is working on the app that she hopes will help discover independent filmmakers. “We have ideas and talent and passion and a good work ethic and faith.”
If it is a revolution, it’s a small one; Buffalo is no threat to become the Silicon Valley of the East, despite the fact that it might make economic sense to establish a company that relies on youth and risk-taking in order to succeed in a place with such a low cost of living.
Many local high-tech start-ups have started to use the website nextplex.com, which provides a network of other start-ups, to connect with like-minded people. Some have used it as a barometer to compare how Buffalo is doing to other cities when it comes to high tech. There are 14 cities on the site, which includes Buffalo, Rochester, Philadelphia, Charlotte and Phoenix.
Cleveland and Pittsburgh, two cities to which Buffalo is often compared, also make the list. Compared with those places, which both have 20 start-ups listed, Buffalo has 58, and the list is not exhaustive. It also includes companies that do not produce apps for everyday use.
Enrico Moretti, a professor of economics at the University of California, Berkeley, and the author of “The New Geography of Jobs,” explains in his recent book what he refers to as a “baffling” phenomenon.
“Companies appear to locate in absolutely the worst places: They pick very expensive areas – the Bostons, San Franciscos and New Yorks of the world. With sky-high wages and office rents, these are among the costliest places in America to operate a business,” he wrote.
According to Moretti, one of the reasons new companies go through with what might initially seem like a bad idea is that there are cluster effects in these areas that make all the difference in allowing developers to inspire each other.
Dan Gigante, a co-owner of 19 Ideas, a local marketing and communications agency that builds websites among other services, has dedicated himself to building the tech community here through Buffalo’s tech “unconference,” “BarCamp” and Buffalo’s “Startup Weekend,” an event that takes place in cities around the world and caters to entrepreneurs. He pointed to another issue that holds back more growth.
“For now, there are a lot of opportunities and only so many qualified people,” Gigante said. “Everyone and their brother want to develop an app right now, but barely anyone knows how to do it. We need more developers.”
Still, a positive mood is in the air both at Z80 and elsewhere. Many local “techies” say they are excited about the future of Buffalo’s start-up scene, but there is one factor that many believe could make or break future growth: local funding.
Chris Castleman, who co-founded the app Cake Face, said banks and investors were not interested in their company.
“People don’t really understand what an app is. It was difficult trying to get lawyers even to wrap their head around what we are trying to do,” Castleman said of the experience in Buffalo.
Moretti argued venture capital is “the most important part of the high-tech ecosystem.” He wrote there is a lot of money to be had in tech hubs such as Silicon Valley, but few investors are willing to spread the wealth very far from where they are based.
Jack McGowan, executive director of the seed investing Buffalo Angels, said that problem is not unique to Buffalo. He said that not many cities can achieve what is happening in larger markets.
“Here we have a much more limited amount of capital to go into these projects. We can’t take risks like they do in Silicon Valley,” McGowan said.
Apps are like restaurants; very few make it. Cake Face, for one, has about 10 customers who pay $199 for the service during the peak summer months.
In Silicon Valley, so much money is floating around that investors can pour resources into many apps in the hope that one of them will be the next big thing, according to McGowan. He said he believes this might start to become more of a reality in Western New York and that more money for these projects could come soon because the tech culture is starting to grow.
“You are starting to see more formal and informal education in entrepreneurship,” he said, referring to events like Startup Weekend. “It takes a lot of time to bring these pieces up together.”