The Story Behind the Story: Why the Qualcomm Study is Important

1/15/13Follow @bvbigelow

Mark Cafferty, CEO of the San Diego Regional Economic Development Corp. (EDC), said the local media seemed a little nonplussed when he stepped to the lectern Friday to announce that Qualcomm (Nasdaq:QCOM) has a huge economic presence in San Diego.

After the news conference, as TV reporters were recording their standup bits outside Qualcomm’s headquarters, Cafferty told me their reaction was along the line of “Why is this news?”

Nevertheless, the ensuing news coverage faithfully explained that a new study from the EDC and San Diego Workforce Partnership details Qualcomm’s economic impact in the region. On top of employing almost 12,000 people locally (out of 21,000 employees worldwide) and generating more than $4.5 billion in direct and indirect economic activity, Qualcomm is the innovation engine driving telecommunications and IT in San Diego and elsewhere. As the KPBS account put it, “It is no surprise that Qualcomm is big in San Diego.”

What may be more interesting, though, is why Cafferty and the EDC produced the study.

CEO Mark Cafferty of the San Diego Regional Economic Development Corp.

Mark Cafferty

As a quick glance of the EDC website reveals, a primary mission of the quasi-government agency has been “to attract high-wage companies to the region from around the world.” As Cafferty put it, providing research and assistance to companies interested in moving to San Diego (or in doing business here) is something the EDC has done for decades, and “we can do it all day long.”

Yet San Diego has not accumulated much of a record in terms of luring major Fortune 500 companies here. The best example may be Gateway, the personal computer maker that moved its headquarters to San Diego from South Dakota in 1998. Gateway, which rivaled Dell and Compaq in the golden age of desktop computing, was caught like an iceberg in the Gulf Stream in the years after Ted Waitt moved the headquarters to San Diego. Gateway left town following its 2004 acquisition of Irvine, CA-based eMachines, and was itself acquired by Acer in 2007. And that was the end of that.

Cafferty, who joined the EDC almost a year ago, says he wants to add some other goals—or perhaps values—into the mix of economic development priorities. One of those values, Cafferty said, is recognizing the importance of homegrown giants like Qualcomm. A corollary is the importance of cultivating the local startup ecosystem, so the Qualcomm story can be repeated—and sustained—more often. If anything, the Qualcomm study is a blueprint for what worked, with a few pointers to things that could help expand the innovation economy in San Diego.

San Diego Regional Economic Development Corp.The 42-page study is important because San Diego’s startup ecosystem has mostly become “a build to sell” market—a nursery for innovative companies that get acquired (and often transplanted elsewhere). Qualcomm deserves study because it is the critical outlier—the startup that stayed to become a successful global technology giant.

Considering the record of companies like SAIC, or Idec Pharmaceuticals, which “merged” with Biogen in 2003 and moved entirely to Weston, MA, in 2010, the EDC might want to replace “attracting high-wage companies” in its mission statement with “retaining San Diego’s homegrown companies.” (From what I’m hearing, it might already be too late to talk Bristol-Myers Squibb out of moving Amylin Pharmaceuticals’ remaining San Diego operations, following the $5.3 billion deal last summer.)

Cafferty told me that when new San Diego Mayor Bob Filner asked him, “What can I do?” he cited the example of New York Mayor Michael Bloomberg, who has used his bully … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • http://www.facebook.com/brant.cooper Brant Cooper

    Haven’t read the report and will do so, but “lamenting the shortage of software developers” is hardly a problem unique to San Diego. Silicon Valley has a shortage, too. Not sure of the point being made. Also, would be interesting to know what the impact of the defense industry is on availability of developers to tech industry.

  • Kian Saneii

    Bruce,

    * Outstanding writing, as always!

    * Mark Cafferty is truly a rock star, big time. I’m so excited for EDC and for all of us that he’s in this position of leadership and influence. I know he’ll make a TREMENDOUS, positive impact!
    * The point about SOFTWARE that you raise is absolutely critical. Very important.
    * The point about home grown versus plucked out elsewhere and dropped into San Diego is a great one that he, and you, raise.
    * Observation: Home grown requires support for amazing incubators like Evo (of which there are exactly NO others), and support from VENTURE capital. When the going was still good up North and in Boston, we ended up having not our fare share of VC funding. As the entire VC market / industry has recently essentially transformed (to put it politely), we are getting our disproportionately negative impact from that. For our size, and more importantly for the level of INNOVATION which actually goes on, there’s very, VERY little funding that’s going on locally. We’re producing and nurturing innovators, and we’re kicking off decent-chance ventures … only to have them stifled at worst and significantly hampered at best in pursuit of funding. If EDC can crack the code in this front, there will be tremendous uplift in economic activity, and just maybe a few Q’s built too — although I have to say that’s unlikely — but we don’t need a few Q’s, we need MANY MANY smaller companies, which WILL happen. We don’t need 12K employee successes, we need 12K medium sized successes! Sadly, I think Austin is coming on strong in this area, and they have NOTHING over us … other than an effective conference now and I’m sure a concerted, coordinated effort amongst city leaders, academia and industry.

    Thanks Bruce. My $.02!

    Best,

    Kian.