Wannabe tech cities need angel investors, too

Insulated fiber-optic cable from the Fiberoptic Supply Company is on display

The suburb of San Leandro sits just east of Oakland, California, within striking distance of San Francisco and Silicon Valley. Underneath the city lies a loop of ultrafast fiber optic cable known as Lit San Leandro. Data speeds through these cables about 2,000 times faster than a typical internet hookup. 

The cable exists because of one guy: Pat Kennedy.

Kennedy runs OSIsoft, a company based in San Leandro. A few years ago, he was looking to expand, but he wanted the kind of infrastructure he saw in towns like Palo Alto. So he put down $3 million of his own money to make it happen in his backyard.

“The reason I did it is that I’ve actually been a 40-year resident of San Leandro," Kennedy says.

It became clear to him that industrial cities like his were never going to be top picks for things like broadband or fiber. "We’re really going to suffer as a result,” Kennedy says.

Can broadband speed up the economic of industrial towns? 

San Leandro was already struggling. It used to be a manufacturing town, but those jobs dried up in the '70s and '80s.

At one time, there were more than 20,000 manufacturing jobs in San Leandro. In 2013, fewer than 7,000 of those remained. Industrial-zoned land, much of it now used for storage, makes up nearly a quarter of the city. A 2013 report calls these areas “neither memorable nor particularly pleasant to get around.” 

On the other hand, a presentation by City Manager Chris Zapata calls broadband “a laser cheetah with explosive power accelerating economic growth.”

Deborah Acosta, San Leandro’s new Chief Innovation Officer, frames the issue differently: “How do we re-energize this industrial space to actually become alive again?” Her job is to convince businesses that San Leandro is the place to be.

That starts with the bright red streaks running through her hair. They put people on notice, Acosta says.

“When they see my red hair, they’re going, ‘Holy smokes! Something’s different here, I think I need to pay attention,’” she says. 

Investment in fiber and infrastructure — now at more than $13 million — wouldn’t have happened if Pat Kennedy hadn’t put down that initial money, Acosta says.

Analyst Craig Settles says private investment, like Kennedy's, is one way for cities to get broadband.

“The idea of going to local businesses and saying ‘can you contribute to the network?’ is one of the more viable options, in my book,” Settles says. Local businesspeople have helped get broadband off the ground in places far away from tech centers, like Emporia, Kansas; Fredericton, New Brunswick; Keene, New York.

In San Leandro, Pat Kennedy’s investment has paid off with buzzing and whirring on the second floor of the West Gate shopping mall. The sound comes from 3-D printers, manufactured by Type A Machines.

Based in San Francisco, Type A moved its manufacturing operations to San Leandro earlier this year. They’re currently based above a Sports Authority at the mall, a massive building that was once a Dodge auto plant. If all goes well this year, Type A’s workforce here could more than double, to about 50.

Since San Leandro first installed broadband a couple of years ago, the initiative has created about 90 jobs. But Acosta and Kennedy think they’re on to something. They’re doubling down, and point to half a million square feet of office space going up, with those ultrafast connections.

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