Building technology, as it turns out, might actually be easier than inventing it.
“Easier” is not the word Rogue Valley Microdevices cofounders Jessica Gomez and Patrick Kayatta would choose. But when the husband-and-wife team wanted to launch a business in their field of expertise, it came down to making other’s inventions or trying to launch one of their own.
They opted to make stuff—really complex, precise, high-tech stuff—in contrast to the high-dollar, high-wire investment common in micro-processing. In so doing, they launched a one-of-a-kind business that has solidified its niche.
“Our business model isn’t the typical startup business model based on emerging tech or a new product launch, which a lot of times comes from working on technology in the university,” Gomez says. “Eventually patents are filed and they’ll do some proof-of-concept work and start raising money. If they are lucky and tenacious they’ll get funded eventually. Then the clock starts ticking. They have five years maybe to get that product to market. It’s very difficult. Our model is different.”
The decision likely meant more work, longer hours, and a gut-wrenching level of risk, but it has paid off how they both hoped, with steady work in a place they wanted to raise a family.
Gomez, 37, Rogue Valley Microdevices CEO says, their company is the only microelectronics manufacturing facility in Southern Oregon.
“We build other entities’ projects,” Gomez says. Customers include universities, hi-tech companies, even startups. “Really anyone who is lacking the ability to manufacture the chip that they have designed or need.”
Asked where the competition is, Gomez says, “Taiwan.”
“This is becoming more difficult to do in the U.S., but there is a strong market for it. It’s the story of the U.S. with all these companies building this disruptive technology. But once it becomes a commodity it goes offshore.”
Global competition is fierce. But relative proximity to American companies and universities has its advantages as well. In some ways, this Southern Oregon company is the best local alternative.
From New York to Ashland
Gomez and Kayatta first met during the late 1980s when both worked at Standard Microsystems Corporation in Long Island, N.Y.
Gomez started as a minimum-wage lab operator on an assembly line. Boredom motivated her to educate herself in other aspects of the business like manufacturing, processes and software configuration.
Kayatta was recruited to a startup in Los Angeles. Gomez followed. They saw first-hand the perils of the startup culture when the business eventually shut down. The couple then decided to go into business of their own.
The big decision was where.
“We thought about staying but the cost of operating a facility there it didn’t look financially doable,” Gomez says.
They thought about going back to Long Island, which also was cost prohibitive. Florida? Wasn’t a good fit, they thought. Finally, Gomez started thinking about Southern Oregon for its proximity to the Bay Area and Portland and its relative cost of living. It didn’t hurt that she had lived there for a while as teen and still had family there. She hadn’t loved it back then, but now with a family and a business in their plans, it grew on her.
The favorable business culture, especially assistance from Southern Oregon Regional Economic Development Inc. (SOREDI), sealed the deal.
SOREDI is a non-profit organization tasked with developing business prosperity in Jackson and Josephine Counties. It offers services including assistance in site selection, permit applications and access to capital. For Gomez and Kayatta who were making repeated trips up Interstate 5, the help from SOREDI was enough to leap in and make the move.
The couple invested everything they had. SOREDI took a second position on the bank financing, which mitigated the bank’s risk and helped secure the loan.
“That’s the only way we could fund the company with the start-up costs,” she says.
They set up their first clean rooms and got to work.
“We started really basic. We did two types of films. We had maybe 500 to 1,000 square feet of clean rooms and started making money,” Gomez recalls.
She estimates that the monthly budget demanded about $14,000 in revenue just to survive and keep up the lines of credits they took. Credit card debt grew as well. So did their work hours.
“It’s sort of out necessity right?” she says. “Because we don’t have the ability to have this big multimillion dollar exit. It’s not attractive for an investor to put a bunch of money into this company, so we just kept putting it in ourselves. We wanted something that was going to be around for many years.”
They succeeded. The business has enjoyed steady growth and earned a reputation for quality and attention to detail that is critical in microdevice manufacturing.
“We didn’t have the option to fail. We took everything we had, our income, our house, our credit into this company. We lived off Pat’s 401K working 18 hours a day,” Gomez says. “The first five years were really tough. We’d basically sleep here.”
But perhaps the biggest accomplishment is they survived with their marriage intact.
“We had no idea what we were getting ourselves into,” Gomez says. “I was 25 when we started this company. It was two of us. We didn’t have a team of engineers.”
That common sense focus still guides the company, she says. They continue to focus on what they do very well. They don’t worry about the mega deals that happen in other companies, like the recently announced billion dollar super merger between Spansion and Cypress. That’s not their business model and it’s never been their goal, she says.
“That big giant pay-off for us is not as important as steady jobs,” she says.
Often it’s inevitable when a company scales up its technology and begins mass production for it to take the work offshore. Prior to that expansion is a niche where Rogue Valley Microdevices excels.
“We are supporting a lot of this cutting edge stuff that we don’t want to introduce to a foreign environment especially in those beginning,” Gomez says.
Building Southern Oregon tech
With the business more secure and a team of roughly 20 employees, the work hours remain long but the survival stress has abated. Gomez has begun to connect with others to offer what help she can. She also wants to help generate funding for other startups, which will help the nascent tech corridor in the Rogue Valley grow, recruit a strong workforce and improve the community’s economy.
The region’s tech culture doesn’t have a lot of depth, but it does have “one of everything,” Gomez says. The diversity of tech interests and culture isn’t common in a rural area.
“We are all very unique so we have to do it in a unique way,” she says.
Part of that is continued work with SOREDI and other public and private agencies seeking to boost the innovation economy. She helped start the Sustainable Valley Technology group to help develop resources for entrepreneurs. Jackson County came aboard as an initial funder with an investment of $50,000 to help attract and assist high-tech, clean energy businesses.
“We thought this was the best and brightest idea we’ve heard in a long time,” Commissioner C.W. Smith said.
The focus of the group is to help provide office space, support services and venture capital for emerging businesses, a Jackson County press release stated.
“I’ve been working a long time to develop resources for startup companies. I believe that’s critical for our local economy,” Gomez says.
She also serves on the state workforce board. She’s well aware of the obstacles for the region.
“It’s hard to find really good well qualified employees to hire in any of these companies. I thought we were unique but I hear stories and I don’t think we are.”
Plans for the future look very much like the present. Hard work, excellent quality products delivered to innovative companies that need that specialized care Rogue Valley Microsystems provides.
Expansion is coming, but not in the form of a massive multi-million dollar merger or investment partner. It looks more like a larger building and putting into use more clean room space that is critical to increase production.
“We are pretty packed,” Gomez says. They recently purchased a $10,000-foot clean room that was decommissioned by Intel, she says, but they don’t have anywhere to put. That will have to change soon.
It’s all part of the original plan, the so-called easier way to launch a high-tech company in a rural outpost.
“We still want jobs and to provide for ourselves and make a decent living,” she says, for herself, her husband and their growing number of employees. Just like they started, it’s pretty basic, but in the fundamentals have come the success and perhaps a model for others coming to the region to follow.