The Google effect: How has the tech giant changed Pittsburgh’s commerce and culture?

http://www.post-gazette.com/business/tech-news/2014/12/07/Google-effect-How-has-tech-giant-changed-Pittsburgh-s-commerce-and-culture/stories/201412040291

Attracting creative brains from all over, Google has grown steadily since opening an office here in 2006
December 7, 2014 12:00 AM

The first of three parts

You can see them at The Coffee Tree Roasters at Bakery Square — scruffy Mark Zuckerberg lookalikes sauntering in for a latte, their Google badges dangling from blue lanyards. (It’s not a status they care to advertise: Gaze too long and one young man tucks his lanyard under his T-shirt.)

They are the Googlers, approximately 350 of them housed in the former Nabisco Factory on Penn Avenue in Larimer. Where decades ago the aroma of baking Lorna Doones wafted out the windows, now every 150 feet or so, microkitchens stand ready to supply free salads, Cheerios, organic protein bars and quinoa.

Soon, the local Google head count will grow to 500, maybe more.

The people who work for Google Pittsburgh have a reputation as an enigmatic mix of well-compensated, Mensa-minded, 20- to 30-something graduates of colleges for the cognitive elite. The stereotype also assumes they are mostly single hipsters who ride bikes to work and hang out at bars and restaurants like The Livermore, Spoon, Avenue B, BRGR and Social after work.

There’s no denying parts of the stereotype hold true, but it’s hard to tell whether it’s Googlers or everyday Pittsburghers snagging booths in East Liberty restaurants. While Google’s move from Carnegie Mellon University to Bakery Square in 2010 brought an infusion of hundreds — compared to dozens of Apple and Intel employees operating out of CMU’s Collaborative Innovation Center at the time — it also reinforced an existing culture in the neighborhood of hipsters and geeks who never quite fit in the city’s blue-collar box.

Still, to Pittsburgh at large, the Googlers — as they are commonly called — are living, breathing examples of the regional transformation from a blue-collar workforce built on ore to a silicon-powered center of science and technology.

On a larger scale, Google has 70 offices in more than 40 countries, and just where Pittsburgh falls in that equation isn’t clear to area residents eight years after the secretive California tech giant first laid its foundation in Larimer.

Tech talent was already here

More than 350,000 people live within five miles of Google Pittsburgh’s offices, according to census data, and some of the region’s top employers — UPMC, Pitt and Carnegie Mellon University — are within two miles. There’s a lot of cross-pollination: A 24-hour shuttle runs between Google and CMU, where Google staffers even sit on thesis committees.

Some bristle at the notion that Pittsburgh’s reputation as a high-tech magnet was only created after Google opened an office.

Carnegie Mellon had spent decades fostering some of the most brilliant computer scientists and software engineers in the world, so it only makes sense that companies would be drawn here to harness that brainpower for commerce, said Andrew Moore, founder of the original Google Pittsburgh office. The British-born, Cambridge-educated computer scientist came to CMU in 1993, joined Google in 2006 and recently returned to the university as dean of the School of Computer Science.

“When I relocate people, it’s not all about CMU or Google,” he said. “They ask, ‘What else is going on? What other interesting, exciting things are there to do?’ ”

In 2001 — the year Wikipedia and Apple iTunes were launched — Google had already become the largest search engine in the world. By 2005, it was wooing CMU’s Mr. Moore — developer of ingenious advertising search software — and other engineers to come to its headquarters in Mountain View, Calif.

Mr. Moore didn’t go to the mountain, as it were, so the mountain came to Mr. Moore, hiring him and opening its first office at CMU. In 2010, Google moved into 40,000 square feet at the newly developed Bakery Square.

Actually, Mr. Moore hates being cited as the reason Google came to Pittsburgh.

“You can write that I stormed angrily out of the room when asked that question,” the affable engineer said in an interview in Carnegie Mellon’s Gates Center for Computer Science. “There were some very good people involved in this from the beginning,” he said, adding that CMU and Google remain very close.

Google is fiercely protective of its turf, even when it comes to CMU.

When Luis von Ahn sold the first game that he’d developed at Carnegie Mellon to Google — the ESP Game — the company wouldn’t permit a news release mentioning the university at all.

So when Mr. von Ahn sold reCAPTCHA, the human recognition technology he developed at CMU, to the search engine giant in 2009, he had it written into the contract that Carnegie Mellon could issue its own news release.

“They have their own strategic reasons for wanting to say this or that,” said Mr. von Ahn, 35, of Shadyside. His digital company Duolingo, a language teaching app, employs 40 people — many of them former Google employees. (Duolingo was Apple’s best free iPhone app of 2013 and was among the best on Google Play as well.)

CMU is to Google and the rest of the city’s tech companies what, perhaps, iron ore factories were to the steel industry in the 19th century, suggested Pittsburgh Mayor Bill Peduto.

“Andrew Carnegie decided to locate in Pittsburgh because he had rivers and rails to get the materials to build his products and get them to market,” said Mr. Peduto. “This new economy is not under that same structure. Google is not looking to locate next to a highway. They don’t need an infrastructure of raw materials. CMU and Pitt are the factories churning out that talent.”

If you build it, they will come

Today, at 160,000 square feet, Google is the largest tenant at Bakery Square.

Others include the UPMC Technology Department Center, the Pitt Human Engineering Research Laboratories at the Veterans Affairs Pittsburgh Healthcare System office, and TechShop, a workshop and prototyping studio designed to encourage innovation among the general public.

The rise in talent concentrated in the neighborhood has helped fuel a rise in commercial growth.

A Target store opened at the intersection formerly known as Penn Circle in 2011, high-end boutiques joined the newly constructed Broad Street development Indigo Square and a $23 million renovation is now transforming a former YMCA into the Ace Hotel — a boutique chain rumored to be a favorite among Googlers worldwide.

Besides small to medium organizations such as TechShop, which President Barack Obama visited earlier this year, the neighborhood also has drawn in startup incubator/​accelerator Thrill Mill and co-working spaces such as Beauty Shoppe.

But is that a direct result of Google, or just coincidence?

Lori Moran, president of the East Liberty Quarter Chamber of Commerce, said Google is helping to accelerate commercial and residential growth that had been on the rise, in fits and starts, since 2000, when Home Depot set up shop on Highland Avenue.

“Google’s entrance into this market has helped focus a national spotlight on East Liberty,” Ms. Moran said.

When Google came in, it brought more spending power and a less conservative population, she said.

One direct spinoff from Google is Vanessa Jameson.

The East Liberty resident and mother of a 2-year-old had worked for Google since 2007, first in the Bay Area and then moving to the Pittsburgh office in 2011 to be closer to family. She decided to start her own company, developing a mobile app that would allow mothers to network with other mothers. After getting funding from South Side-based startup investment fund Innovation Works, she left Google to oversee what will be an app called Covey — as in a group of birds.

“I’m an interesting case,” she said. “I joke about how I did it all backwards.”

Meanwhile, over at CMU, Apple, Intel, Caterpillar and Disney have all established or increased their own Pittsburgh profile — not necessarily because of Google, said Terri Glueck, spokeswoman for Innovation Works.

“There’s no real cause and effect. You can’t directly say that when Google moved here that’s when things took off, but it is relational. They’re part of a rising tide that is making Google better, Pittsburgh better and startups better,” said Ms. Glueck, noting that venture capital investment dollars peaked in 2010 at $205 million, slipping a bit in 2011 and 2012 but recovering in 2013.

This year promises to set new local records. For the first nine months of 2014, the region attracted $250 million in venture capital, already well beyond the amount raised in 2010.

And the local tech industry’s growth hasn’t just been seen in the East End, Ms. Glueck said. There’s 4moms, in the Strip District, which got $41 million in venture capital; NoWait, in Oakland, $10 million; The Resumator, in the North Hills, $15 million; and Complexa, on the South Side, $10 million.

In high-tech “innovative” cultures, hopping from one firm to another is a sign of desirability, not failure, Mr. Peduto noted.

“In the past, you worked for one firm and if you wanted to advance, you had to leave Pittsburgh. Now, you have the ability to work at one company and do parallel advancement at another and that is going to build off itself,” he said.

“Google’s entrance into this market has helped focus a national spotlight on East Liberty.”

Sparking development

Another spinoff from Google could be the robust growth in housing prices in the East End.

But while real estate agent Elizabeth Swartz has helped several Google families settle in the city, not all do. One client chose O’Hara, and she knows of other Googlers who have bought houses in the suburbs.

Pittsburgh’s appeal to Googlers or transplants working for other tech companies from California or Boston “is the affordability, the ability to have a single-income family where only one spouse has to work. The schools are also a deciding factor, and for some, that tends to mean the suburbs,” she said.

Then again, Cindy Ingram, a real estate agent with Coldwell Banker, sold a house in Squirrel Hill to a Googler for nearly $800,000. “They want to bike to work, they love the parks, they’re interested in the public schools — and they don’t talk about their jobs. I spent six months with one client and I never did find out what he did at Google,” she said.

It might make sense that a lot of Google employees would move in across Penn Avenue into Bakery Square 2.0, located where the mostly windowless 1970s-era Reizenstein Middle School, later the Pittsburgh Barack Obama Academy of International Studies, stood until it was demolished in early 2013.

The new apartment building is part of a mixed-use complex called Bakery Living that will include a 218,000-square-foot office building and more apartments. So far, the first building is 90 percent occupied, with only a few one-bedroom units left, said Todd Reidbord, co-owner of Shadyside-based Walnut Capital, which developed Bakery Square and Bakery Living.

How many new Google employees working in the new LEED-certified office tower will take a short walk home to a Bakery Living space?

According to a survey by Walnut Capital this past summer, only 4 percent of residents of the new apartment complex work at Google. Thirteen percent work at UPMC, 6 percent at Pitt, 3 percent at AGH, 3 percent at CMU and 71 percent are categorized as “other.”

Most of the residents — 57 percent — come from other states, 32 percent from the city, 8 percent from Pennsylvania, 1 percent from Western Pennsylvania and 2 percent from foreign countries.

The “luxury” apartments are relatively spare, but the idea is to encourage social activity downstairs in the soaring, two-story lobby, said Gregg Perelman, Mr. Reidbord’s partner at Walnut Capital, which makes sense given that 58 percent of the residents are in their 20s and another 26 percent are in their 30s.

Walnut Capital was by no means the pioneer in drawing young professionals and families to the neighborhood. Lots of people, starting with former Mayor Tom Murphy, who lured Home Depot to East Liberty, can take credit for the neighborhood’s rebirth.

Then there’s Molly Blasier, a developer based in Point Breeze who identified properties in 1998 along Centre Avenue that she thought could make a perfect site for a Whole Foods Market. She contacted the grocery company and partnered with Steve Mosites Jr. of the Mosites Co. to bring Whole Foods here in 2002 as part of Eastside I.

The entrance of the high-end grocer was one of the first signs of the neighborhood’s pending demographic shift. Within the next few years, East Liberty’s East Mall, Liberty Park and Penn Circle High Rise complexes were razed and replaced with new housing developments and businesses, including the Target complex that rerouted the course of what was once Penn Circle.

Over the next two years, another Mosites project, Eastside III, is slated to emerge with more than 360 housing units and 40,000 square feet of retail space.

A lot of this kind of development would have happened anyway, given the growth of the neighborhood. “But Google certainly helps,” Mr. Reidbord said.

A real estate boom

With hundreds of units of subsidized and mixed income projects in the pipeline, East Liberty is maintaining a balance that, so far, also makes room for families with a range of incomes, although in nearby neighborhoods — Highland Park and North Point Breeze, for example — there are stories of large sums being paid for single family homes by Google employees or other beneficiaries of the East End’s high-tech boom.

A Highland Park resident who moved to the neighborhood three years ago from the suburbs has seen that happening firsthand, noting that a boarded-up house next door was bought by a real estate agent for $70,000, who then spent $150,000 renovating it. The day the newly renovated house was put on the market, it was bought at asking price for $450,000 by a Google employee, said the resident, a local business executive who declined to be identified.

County assessment figures back up the residents’ claims. One parcel in the 800 block of Highland Avenue that sold for $165,000 in 1998 went for $310,000 last year. Two blocks over in the 1200 block of Farragut Street, a home valued at $307,400 this year sold for $520,000 in July.

While Google and Bakery Square sit firmly inside the neighborhood of Larimer for city planning purposes, East Liberty and other surrounding communities may be the ones that have benefited most from the tech giant’s presence.

The city’s 11th Ward — which encompasses a large part of East Liberty, Highland Park and Morningside — saw housing prices nearly double from an average of $100,835 in 2005 to an average of $198,357 as of Nov. 17. according to South Side-based real estate information service RealStats.

In the 8th Ward — containing portions of East Liberty, Friendship and Bloomfield — sale prices jumped from an average of $105,061 in 2005 to $177,439 during the same period.

The 7th Ward, home to portions of Shadyside and Point Breeze, saw home sales sail from an average of $249,086 in 2005 to an average of $352,322 in that span of time.

The 12th Ward — home to Lincoln-Lemington, Belmar and Larimer — didn’t fare as well: average sale prices dropped from $34,880 in 2005 to $31,694 as of Nov. 17.

As real estate in the East End’s formerly depressed areas continues to percolate, Google’s presence at what might be just another upscale mall has added cachet for customers who patronize Social, a bar/restaurant at Bakery Square frequented not just by Google employees but locals interested in soaking up the atmosphere — one augmented by the sight of people coding at their computers while sitting at the bar.

“Google definitely ups the coolness factor,” said Ryan Teeder, 25, who was sipping a craft beer at one of Social’s outdoor tables on a warm August evening. He had actually come to pick up his 14-year-old brother Ross, who had spent the afternoon at TechShop. “I live in White Oak, but when I come here, I feel like I’m in Brooklyn or some other really cool place where all the action is.”

Bobby Fry, a co-owner of the South Highland Avenue craft cocktail bar The Livermore, agrees. “They’re very interesting and interested in things outside their day job,” said Mr. Fry, who opened his establishment 18 months ago and now serves 1,500 people a week, many of them from Google. “They give more atmosphere to the place.”

“We’ve become really good friends with people in the startup community, including Google, but also folks at these awesome co-working spaces that have sprung up around the neighborhood,” he said.

As he spoke, he was in the process of planning a live podcast from the bar that night with Serge Smailbegovic, one of the founders of Thrill Mill, an early incubator startup and a neighbor of Google’s.

The podcast was going to be about Mr. Smailbegovic’s new app, which will provide “an alternative way to order food from your seat at baseball games,” he said.

And no, the app is not a Google product, but Google’s very presence has given smaller entrepreneurs the confidence to come in and start something new, said Mr. Fry, 29, who’s also a co-owner of Bar Marco in The Strip — another Googler hangout.

“So far, so good,” he said. “I’ll take it.”

Mack­en­zie Car­pen­ter: mc­ar­pen­ter@post-ga­zette.com or 412-263-1949. Deb­o­rah M. Todd: dtodd@post-ga­zette.com or 412-263-1652. Twit­ter: @deb­o­rahtodd.