Why San Diego Is Better than Silicon Valley for AI Startups

Opinion

Xconomy recently gathered some of the region’s leading minds in brain research and artificial intelligence for a discussion about research on the brain, and emerging areas of neurotechnology innovation . It was a mix of investors, academics, and entrepreneurs. Leading our discussion was UC San Diego Professor Ralph Greenspan, who helped advise President Obama to create the federal BRAIN Initiative. Grenspan also serves as co-director of the state’s Cal-BRAIN initiative.

The conversation followed a predictable path when someone asked, “What do we need to do to make San Diego the global center of brain research and artificial intelligence?”

The usual complaints ensued about the shortage of local early-stage capital, the isolation of UC San Diego resources, and the paucity of technical talent. A few years ago, I would have agreed with these grumblings. But not now. Like the rest of the world, San Diego has changed. And we are the beneficiaries. I am not a brain researcher but I am a serial entrepreneur.

I believe there is no better place to start a high-tech company than San Diego – especially if you are in artificial intelligence.

I’ve started two AI companies in the past seven years. My first was sold to ai-one in 2011. My current company, Englue, recently beat Palantir and IBM Watson to win a Lockheed Martin contract for the US Navy.

Englue uses AI to generate sales leads for B2B marketers and salespeople. In the past two years, more than 11,000 small- and medium-sized businesses have signed up to use Englue’s technology to find their next Federal contract. Our flagship product, LeadCrunch, finds high-precision leads just like your best customers.

Generating new business leads might not seem as sexy as building artificial brains for robots. But it is far more important: Every business in America depends upon their ability to find and win customers. The highest calling for artificial intelligence is to improve the lives of humans. So a great place to start is to empower people to achieve the American dream by building great companies—one delighted customer at a time.

Englue has overcome many of the shortcomings for startups in San Diego. How did we do it? We took advantage of the strengths of San Diego and traveled to compensate for the weaknesses. We focused on people first, technology second. Three of our five full-time team went to graduate school at UCSD. We were fortunate to attract the attention of the Rady School of Business, which provides free office space and mentoring through its StartR accelerator.

We enlisted the help of scientists, business, and community leaders who would never give us the time of day if we were in San Francisco or New York. From them we got advice in three critical areas: Market, product, and technology.

One of the first to help was Marv Langston who was the first chief information officer of the U.S. Navy. He also held senior positions at DARPA and the Defense Department in a civilian rank equivalent to a three-star admiral. After chasing numerous government contracts, Marv gave us honest, tough-love advice more valuable than gold: Focus on commercial success. “The government,” he said, “has nothing but time on their hands to meet with anyone and everyone. Go find customers who need your technology so badly that they can’t live without it.”

So we talked to hundreds of companies to find out why they registered to use our technology. We found all of them were dissatisfied with their ability to identify new customers. Along the way, we met Michael McCafferty, who invented customer relationship (CRM) software in the 1980’s (it was called TeleMagic). Mike’s advice helped confirm radical new ideas that differentiate us from our competitors, such as our two-minute signup process and (ironically) no requirement for a CRM.

To win in a competitive market, we knew we need great technology. San Diego gave us many unfair advantages. For starters, we have unfettered access to the phenomenal talent pool at UCSD. We soon met David Fogel, one of the world’s leading experts in artificial intelligence. He’s authored more than 200 peer-reviewed papers and is a pioneer in the field of evolutionary computation. This approach enables machines to evolve knowledge through a process of trial and error—similar to the way children learn.

It works so well that Fogel has started three companies: Natural Selection solves problems for the military, pharmaceutical industry, and even pro sports; NS Financial trades stocks; and Effect Check (my favorite) predicts how language will affect an audience. For a good laugh, consider the profound differences between the announcements to run for President by Gov. Jeb Bush and Donald Trump. Yes, Fogel’s analysis shows Bush has more class.

It’s true that San Diego suffers a dire shortage of early-stage venture capital (so-called seed or angel funding). This is ironic since … Next Page »

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Olin Hyde is the founder and CEO of Englue, a San Diego-based artificial intelligence software company focused on business-to-business lead generation and national security markets. He wrote his first line of code at age 12 on a home-built computer, and has started eight companies since then. Follow @olinhyde

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