San Diego’s Innovation Establishment Faces Its Own Innovators’ Dilemma

4/9/13Follow @bvbigelow

Can San Diego re-invent itself as a capital of innovation?

San Diego established itself as an innovation hub decades ago—understanding early on the importance of technology clusters in creating a critical mass of self-sustaining innovation. Today it is still renowned as a hotbed for hundreds of life sciences startups (We Are the Wildcatters) and as the home of Qualcomm (NASDAQ: QCOM) the world’s largest wireless chipmaker.

But whatever happened to San Diego’s prowess in software startups as the revolution in Internet software, app development, and software as a service went viral in Silicon Valley and places like New York and Boulder, CO?

The way Brant Cooper tells it, the venerable organizations that are most directly responsible for promoting innovation and entrepreneurship in San Diego are themselves suffering from The Innovator’s Dilemma.

In a provocative blog post, Cooper writes that San Diego’s innovation establishment—the legacy groups like Connect, CommNexus, Tech Coast Angels, San Diego Venture Group, and Software San Diego—are so tied to outdated values and organizational norms that they are failing a key sector of the tech entrepreneurs and innovators they were created to serve. Citing Brad Feld, a prominent tech investor and author of Startup Communities: Building an Entrepreneurial Ecosystem in Your City, Cooper argues that San Diego’s innovation establishment is led by the “old white guys” who just don’t get it. As he puts it:

San Diego is dominated by the old school; by people who were instrumental in diversifying San Diego’s economy 20 years ago, by former C-level executives of large, successful companies, and yes, even by some people who actually started and grew new businesses once upon a time. Great people, I’m sure. Many wish to ‘give back,’ want to see San Diego grow economically, and would like to contribute their expertise.

Unfortunately, the legacy institutions that serve as the vehicles for their contributions are anachronistic, decidedly old-school, and arguably more harmful to San Diego than beneficial.

Cooper quips that his dark secret is that he’s also an old guy. He is 49, “a happy papa,” and co-author (with Patrick Vlaskovits) of The Lean Entrepreneur, a book about the lean startup methodology and how visionary entrepreneurs can use new ventures to innovate, create new products, and disrupt markets. He returned to San Diego (where he grew up) in 2007, after spending 18 years in the Bay Area, where he attended U.C. Davis and worked at a series of tech startups.

After settling in suburban Encinitas, Cooper set out to join the innovation scene in San Diego. He joined Connect, the San Diego Venture Group, and the local chapter of the MIT Enterprise Forum to help mentor entrepreneurs. But he became disillusioned by the caliber of the programs they offered, and by their use of “vanity metrics” (how many startups have graduated or total amount of venture capital raised) instead of evaluating their programs more honestly—and transparently.

The success San Diego achieved in the 1990s spawned multiple nonprofit groups focused on different sectors of innovation. But as the decade wore on, Cooper argues that the local innovation groups began to compete for the limited supply of sponsorship dollars needed to meet their own nonprofit payroll. The sponsors became the customers, and as he puts it, “The entrepreneurs are chased underground, running from endless attempts to monetize them by both the organizations and event sponsors and attendees!”

His disenchantment led him to San Diego Tech Founders, a virtual meetup organization where he has sought to promote the lean startup model and such concepts as viral coefficient, gamification, mobile monetization strategies, and crowdsourcing funding. (At least 220 people have registered to attend a presentation by Brad Feld at a meetup hosted tomorrow evening by the San Diego Tech Founders.)

Cooper’s post, Success and Failure—San Diego Startup Community, has prompted a flurry of responses on his own blog and on San Diego Tech Founders’ Facebook page. The comments include an extended rebuttal from Mark Bowles, a co-founder of San Diego-based EcoATM, who tells Cooper, “You are a much-needed mentor and point of view here in San Diego, but I think collaboration with these existing organization is a better way to accelerate the whole thing.”

If nothing else, he has provoked a worthwhile discussion about San Diego’s startup ecosystem. In the end, though, the question is the same as it was at the beginning: Can San Diego re-invent itself as a capital for innovation?

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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  • Mike

    I can’t agree more with this post. I’m in the process of moving from Seattle and was astonished at how nascent the tech and angel community is in a city of this size. The level of software / technology activity and raw energy outside of life sciences is low to very low. That said, I’m looking forward to finishing my move, rolling up my sleeves and helping change that.

  • http://twitter.com/GabrielaDow Gabriela Dow

    Good summary of an interesting debate that Brant sparked online, echoing what many have been discussing for months… The good thing is that there is a vibrant startup / entrepreneur community in San Diego having these debates and discussions.

    Even more promising is the fact that the talk is expanding in terms of location (events tied to San Diego in Tijuana and Los Angeles with increased movement throughout an entire region), in topic (multiple industries represented– software, e-health, biotech, manufacturing, services, retail, food, MMI, drone/robotics, etc…) and of course in terms of who is engaged in the conversation.

    The diversity is exciting and promising. The debate is getting personal but I believe it is well-intentioned. There is more to celebrate and reflect on than to attack, and either way the work to meet San Diego’s potential and improve our competitiveness is never ending. As it should be.

    I have been involved in the launch of multiple businesses here in San Diego and remember the energy and passion around town in 2000 when we were launching GovPartner. More than a decade later I have re-engaged with groups like StartupCircle, Plug & Play, Ansir, and am seeing this same energy among some of the older players (like myself, I suppose!) and in the fresh, relentless talent coming out of our universities or migrating to San Diego from other states and abroad.

    Our region was once described as a sleepy, sunny, culdesac but we are reawakening to the excitement and power of actually being on the edge.

  • observer

    Seems to me that the local establishment to supposedly enhance entrepreneurship is just cashing rather large paychecks (as if they were actual CEOs) and obfuscating their lack of impact.

    Full agreement with the writer. Something needs to be done about this for the benefit of the community.