At a Private Xconomy Dinner, Luminaries Debate the Future of Innovation in San Diego

12/22/10

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alternative sources of funding. “Is what’s fueled the growth in the last two years sustainable?” asked Bruvold. “If not, what replaces it?”

—As an innovation community, San Diego’s startups tend to follow a “build and sell” business model. It’s rare when a San Diego startup grows to become a Fortune 500 company like Qualcomm, and the innovation economy would benefit if Motorola’s spinout Motorola Mobility and other big technology and life sciences companies established their headquarters here.

While Qualcomm may rank as San Diego’s greatest technology triumph, the company’s presence tends to work against innovation and entrepreneurship by recruiting the available engineering talent in the region. Watkins said it’s hard to recruit engineering talent to San Diego because potential recruits ask themselves, “If I don’t make it at Qualcomm, what am I going to do?” That problem is absent in Silicon Valley, because there are so many tech companies and job opportunities in the region.

Kirby acknowledged that Qualcomm itself has been forced to look elsewhere for talent. “I’m in corporate research and development, and we recently started a group in the Bay Area doing R&D,” Kirby said. “Part of it was to attract new talent that we couldn’t get in San Diego. We felt that in San Diego there were a lot of folks who were very good at wireless, but in adjacent areas there was less diversity.”

—It’s important that companies have either the cash or the access to new investment they’ll need to start over if their first technology idea doesn’t work, both Blue and Rastetter commented. “The majority of biotechs succeed in doing something different from what they set out to do,” Rastetter said, speaking from experience as the former head of Idec Pharmaceuticals. “I think biology is so complex that we are just cutting the surface of understanding systems biology, the epigenome, the entire genome. It’s going to take 50, 100, 120 years before ideas are easier to come by than capital. Biology ideas remain the limiting factor in biotech startups today.”

—Watkins and others commented that there is a perception that San Diego’s geographic and cultural attractions tend to work against the needs of the region’s life sciences and technology ecosystems. San Diego’s innovation community prides itself on its reputation for collegiality and of collaboration, but the region also has existed as a corporate cul de sac, constrained to the east by the desert, to the west by the ocean, and to the south by the international border with Mexico. Housing costs are high, and the inadequacies of San Diego’s airport and rail connections to the East only compound the problem.

—Along with its unique problems, San Diego has unique strengths. “It’s important to understand we are not a small Silicon Valley,” Titus argued. “There’s a different culture here. You look at companies in EvoNexus—they are different than the companies at a Plug and Play in the Bay Area. Rightly or wrongly, on the tech side we do hard things. We don’t do 100 different consumer Web apps—we do mini-cameras, we do 3D imaging.”

“What really makes San Diego strong is innovation, and its spirit of collaboration,” said Hui Cai of WuXi AppTec, the wildly successful clinical research organization based in Shanghai, China. She points to the synergies that come when mixed disciplines combine forces to develop “convergence” technologies, such as computational genomics and mobile health, that have the potential to create new fields and open new commercial markets.

Bruce Bigelow is San Diego Editor of Xconomy. Wade Roush is Chief Correspondent and San Francisco Editor. Follow @

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  • June

    Maybe its time San Diego grows up and starts playing in the big game. The build and sell, begging for money cycle is no longer functioning effectively. Time for a more sustainable company economy, so talent does start to feel good about coming to and staying in San Diego. Otherwise, what’s the point of moving to a region, buying an expensive home etc., losing your job and having to leave because there’s no great senior level roles to replace it?

  • http://www.ascertain-ment.com Lou Volpano

    I live and operate in OC and come to SD frequently to explore, and network. Start up capitals never a problem, but the start up attitude is. With all the academics, and ‘institutes’ ready to pontificate, are there any that produce productivity? Coming up with a great idea can be done by a high school drop out. In short – “TALENT” is organic, not manufactured…. and most have not learned – in their hallowed MBA programs – how to even WORK in company, much less form one.

  • http://www.techcoastangels.com Steve Flaim

    Regarding the comment about individual angel investors, I think the critical issue is how many deals are actually done by angels in Southern California, not how many deals an individual angel actually invests in. Tech Coast Angels, located in Southern California, is the largest organized angel investor group in the country. We started operations in 1997 and are now nearly 300 members strong organized into 5 networks (Orange County, Las Angeles, Westlake/Santa Barbara, Inland Empire, and San Diego). We have funded over 150 startup companies with over $150M of our own funds. These companies have gone on to raise over $1B in follow-on funding. We believe that we have made a significant difference in Southern California and it is the aggregate effect that counts rather than any one individual’s investment performance.

  • Cliff

    Great comments and I think talent is one of the biggest issues at hand. Funding aside, the team needs to be able to execute and finding a proven team is now (IMHO) the biggest challenge in SD. The ambitious and passionate leave for greener pastures where they team up with thought leaders.