Building an Entrepreneurial Pipeline in Santa Cruz

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the Project for Innovation and Entrepreneurship, or PIE. According to Lipscomb, many of the companies participating in the program hire their student interns full-time after they graduate.

The internship programs, showcases, and entrepreneurship courses reach about 100 students per year, in Haddad’s estimation, and so far they haven’t given birth to any actual startups. “It’s taken a couple of years to get to the point where we have the curriculum, we have the mentors and the network and the students who are excited about this and willing to sign up,” he says. “So now it’s really about building that culture of entrepreneurship.”

Comparisons to Stanford, while understandable, are premature. Stanford students—with a startup haven like Palo Alto on their doorstep, Sand Hill Road as a virtual private bank, and success stories like Google’s to entice them—live in what amounts to the world’s largest, richest, and most effective technology incubator. It’s no longer surprising when 20 of them drop out en masse to join a digital payments startup founded by a 19-year-old wunderkind (I’m talking about Clinkle).

That kind of thing won’t happen in Santa Cruz anytime soon. “Stanford and Silicon Valley were 100 years in the making,” Neuner observes. “We are just starting the process, and it will take time for those relationships and those well-worn pathways to emerge.”

The Three-Pound Joint: A Battle of Perceptions

Even as Santa Cruz develops answers to Fogelsong’s three questions, it has a few more hurdles to overcome. For one thing, there are still political divisions in the city over the right way to pursue business growth—or whether to pursue it at all. On top of that, Santa Cruz has a largely self-inflicted reputation as a haven for beach bums and pot smokers, and was the scene earlier this year of a disturbing crime wave. That’s not exactly the image you want to project if you’re trying to attract serious, fast-growing new enterprises.

From one point of view, Santa Cruz is saddled with many of the same kinds of cultural, political, and social challenges as nearby San Francisco, just on one-tenth the scale. Jason Hoppin, a writer at the Santa Cruz Sentinel, put this well in a March essay entitled “The Cost of Keeping Santa Cruz Weird”:

Since the countercultural revolution half a century ago, Santa Cruz has drawn more than its share of freaks, hippies, surf rats, pothead programmers, environmental hardliners, lefties, cultists, druggies, punks and dropouts. Together, they established Santa Cruz’s reputation for tolerance and free-thinking. But there has always been a dark side. From 1970s serial killers to an ongoing, seemingly intractable homelessness problem, Santa Cruz has never been the idyll it appears at first glance.

That’s certainly been true this year. A series of assaults and fatal and non-fatal shootings involving local residents and university students climaxed in February with the executions of two Santa Cruz Police Department detectives; the suspected shooter in that case, an alleged sex offender who had worked in a Santa Cruz coffee shop, was later gunned down by police. The episodes stunned residents, and local politicians are now forced to combat perceptions that the city is unsafe. “We have some significant public safety challenges we have been facing, that play into that image,” says Santa Cruz Mayor Hilary Bryant. “There is not a day that goes by that I am not working in some way, shape, or form to address those challenges and problems.”

On a milder level, Santa Cruz is dogged by its history of tolerance for marijuana usage. In 2006, by a margin of nearly two to one, voters approved Measure K, which instructs the local police to make enforcement of marijuana laws their lowest priority. And every April, the UC Santa Cruz campus is the scene of one of the country’s largest “420” events, where hundreds of students gather in a meadow to light up. The students usually face no official opposition, but this year police confiscated a gargantuan joint weighing nearly 3 pounds.

“I don’t think we do ourselves any favors when the 420 thing happens at UC Santa Cruz,” Neuner says. “That’s one of those headline-grabbing things that only reinforces the idea that we are nothing more than a bunch of stoners. It plays right into the hands of people who want to dismiss the town and all the great things happening here.”

In other words, it’s easy to caricature Santa Cruz as a place to hang out, go to the beach and the boardwalk, and maybe smoke a bowl, while all the serious work gets done in Silicon Valley. “There is an unfortunate perception out there in the marketplace that we are all a bunch of pot-smoking flakes down here,” says attorney Jason Book. But worse than that, according to Erodr CEO Andy Halliday, there’s a common bias among venture capitalists—the people holding the purse-strings—that “if you are living in Santa Cruz, you are prioritizing lifestyle over success.”

And there may be a small kernel of truth to that sentiment. There’s a lingering anti-business feeling in the city—a fear that too much commerce and development will destroy the town’s … Next Page »

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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