App maker gets a Zappos lift

Dylan Bathurst, Alex Coleman and Ray Morgan are getting by with a little help from some high-powered friends.

The developers behind iPhone garage sale application Rumgr last week confirmed they have received $500,000 in angel investment from Zappos.com CEO Tony Hsieh, Zappos insider Fred Mossler, Zappos technology chief Arun Rajan and Resort Gaming Group CEO Andrew Donner. The funding will allow Rumgr to operate for one year and hire two employees, including an Android developer.

"We don't have to starve anymore," Bathurst said with a laugh.

It's too soon to tell whether Rumgr is an idea whose time has come. But it's clearly a new development for Las Vegas -- the first in what could be a wave of tech spinoffs from an established company. That model of economic growth is commonplace in California's Silicon Valley, but less well-known in the shadow of the Strip.

Bathurst, Coleman and Morgan all have Zappos ties -- Bathurst and Morgan each put in four years at the Henderson-based online shoe retailer before leaving to focus on Rumgr; Coleman still works for the company. The trio work from a downtown apartment provided by Hsieh.

The Zappos link made it easier to obtain funding, Morgan and Bathurst agreed. They want to make it easier for startups that aren't Zappos-related to find investors, too.

"We want to bridge that gap between startups that didn't work at Zappos and the investors," Bathurst said.

Rumgr isn't the first Vegas tech startup to land an investment from Hsieh. He also funded robot developers Romotive and organic e-retailer Ecomom.com, among others. But Rumgr is the first startup to successfully spin off from Zappos. A handful of other Zappos employee startups are in development, but have yet to launch.

Encouraging workers to be creative is a central tenet of the Zappos philosophy, even if that means eventually losing a valued employee.

"We've always encouraged employees to pursue their passions," Hsieh said in an email to the Las Vegas Review-Journal. "Within Zappos, that means that employees are encouraged to apply for jobs in other departments if there is an opening for their dream job. It also means that if an opportunity comes up for an employee that's outside of Zappos, we wish them well in their future endeavors."

And even offer to finance their dreams of entrepreneurship.

Hsieh's investments so far have been a bit informal, but he is in the process of forming a Vegas tech fund through Downtown Project, a separate company he started to invest in downtown redevelopment.

Las Vegas has a long way to go before its tech industry reaches critical mass. It lacks the Stanford-size intellectual push that helped Silicon Valley become the technology hub it is today.

But Vegas may be able to carve a niche for itself, said Zappos executive Rick Duggan, who mentors local tech startups in his spare time.

"Vegas is something completely different," Duggan said. "I liken us to the Austin (Texases) of the world, or Boulder, Colo. -- cities that are smaller, but have a tech presence.

"I don't expect the first thing on someone's mind when they think of Vegas to be tech. Gaming and tourism are first," Duggan added. "But if someone thinks of gaming and tourism and tech, that would be a victory."

Las Vegas is fostering a homegrown tech community, but the city also has a few benefits that could draw startups away from San Francisco.

"Startups are often dealing with the problem of working with limited funding, and the fact that Las Vegas is now a very low-cost place to live in the West is a real big draw," said Stephen Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

Zappos is also a draw. Romotive co-owner Keller Rinaudo has credited Tony Hsieh's vision for downtown with attracting his company to Las Vegas. Brown said Zappos could easily spawn offshoots like app and software development companies or even competing online retailers.

Vegas tech is still in its infancy. So is Rumgr. The startup's next step is marketing. The team hired a San Francisco-based public relations agency and plans to take the app nationwide.

Rumgr also last week launched a new version of its app, which allows buyers to submit more formal bids on items. The app is available for free on iTunes. Bathurst said the company hasn't yet implemented a way to make money from the app, but may do so late this year.

Contact reporter Caitlin McGarry at cmcgarry@reviewjournal.com or 702-387-5273.