Growing trend
San Francisco startups powered by engineers in Kitchener
KITCHENER — Marcelo Cortes and Duncan McDowell both lead software-development teams for fast-growing startups in San Francisco, but their offices are in downtown Kitchener.
They are part of a growing trend in this region’s tech sector that sees software engineers working here for startups headquartered in Silicon Valley.
“Hiring software engineers in Silicon Valley today is insane, I would say,” said Cortes.
Cortes is the co-founder and chief technology officer for Faire. It is an online platform that uses artificial intelligence and machine learning to wholesale artisanal products to smaller shops in markets across the U.S. If the products do not sell within 60 days, the retailers can return them at not cost.
McDowell is the director of engineering for Bungalow, which finds people with common interests and backgrounds to share the cost of renting a house in big cities across the U.S.
Both Cortes and McDowell are hiring programmers for their companies, which are backed by some of the biggest venture capitalists in Silicon Valley. Both startups are growing quickly.
“Building an engineering team here in Kitchener and having a successful business in San Francisco is an interesting model that I think we are going to see more of going forward,” said McDowell.
San Francisco and Silicon Valley are expensive. It can be difficult for startups to afford the salaries software engineers command there, and a one-bedroom apartment in San Francisco can cost $6,000 a month.
“That is insane,” said McDowell.
It took Bungalow months to find and hire a lead engineer, and when that person left, McDowell got the position, but he was not moving to the Bay Area.
McDowell was in early enough that he gets to build out his own team of software engineers with people he knows and trusts.
“The nice added benefit is that I don’t have to ask for an extortionate salary, the living costs are cheaper, the market is obviously different for wages,” said McDowell.
The first high-profile startup to do this was Square, the mobile payment company that is headquartered in San Francisco. At first, Square had a one person here — Jesse Wilson — working out of his house. He brought on
some other programmers, including Cortes. In May 2014, Square opened an office at 305 King St. W.
Wilson and Cortes knew one another from their days at Google. But both liked working for startups, and Square was a great fit. While he was there, Cortes developed Square Cash — a quick and inexpensive way to transfer funds.
Last year, Cortes left Square to help start Faire, and he had no intention of moving to California. Cortes wanted to build the software team here.
“Our investors, on the other hand, were skeptical. They were like: ‘I never saw this working before, it is very hard to start a company like this,’” said Cortes.
“But we told them: ‘Don’t worry, we know what we are doing,’ and they trusted us,” said Cortes.
Currently, Faire has 16 programmers working in downtown Kitchener. Four more are starting soon. Three more employees will be added for customer support. By year’s end, Cortes expects to hire 10 new employees. But next year, he plans to hire between 40 and 50 programmers.
“The market is huge — we have just scratched the surface,” said Cortes.
So Faire signed a lease for 7,000 square feet of space, taking over the entire third floor at 165 King St. W., the former Budds department store. If Faire keeps growing at its current pace, Cortes said he will need even more space in that building. He plans to move into the building next February or March. It is undergoing a gut renovation that will transform the former store into a 21st-century office building for startups.
“I think we have the best of both worlds — we are a Silicon Valley company, but we have the benefit of having a big chunk of our company here,” said Cortes.
Both Faire and Bungalow have space at Terminal, which occupies the top two floors at 305 King St. W. It specializes in providing offices and supports for engineering teams that work remotely. After opening an expanded office here a year ago, the Terminal space is nearly full.
“The Terminal model is interesting for us,” said McDowell. “It has been very successful so far.”