There’s some soul-searching happening now about what San Diego’s startup tech scene needs – and about what could stifle tech entrepreneurship here.

The needs are echoed throughout the sector: Savvy mentorship. Money. Community.

One local company founder, Adriana Herrera, is writing a blog for The New York Times about her experience straddling two startup communities, in San Diego and Santa Monica. She and her co-founder would rather be here full-time, she said, but she’s found advisers, help and inspiration farther north that she said she can’t ignore.

And in April, a local startup aficionado and author, Brant Cooper, instigated a wave of conversation about the places he thinks the pipeline is broken in San Diego. In a widely circulated post known around town as “Brant’s rant,” he laid into big industry organizations begun decades ago to foster entrepreneurship and innovation in San Diego. The post was inflammatory, and Cooper later revised some of his sharp criticism.


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The post itself generated nearly 100 lengthy comments from entrepreneurs and others. Many praised Cooper for calling out things they agreed with. Others leaped to the defense of the big institutions, who state the same goals Cooper espouses.

Martha Dennis, a longtime local entrepreneur and venture capitalist who serves on boards for local startups and industry organizations, took public exception to some of Cooper’s points. But Dennis said the conversation highlights a trend she welcomes.

“What’s new is that it’s the entrepreneurs themselves who have gotten innovative about helping themselves,” she said. “Not only is it the infrastructure, or the old folks, as Brant Cooper calls us. Everyone is trying to pull together.”

Indeed, perhaps the biggest impact of the conversation so far has been an epiphany for entrepreneurs. These are the very people who see a problem or a gap in the economy, in the market and come up with creative ways to solve it. They’re starting innovative businesses that guide consumers toward sustainable clothing and connect beer lovers. But they’re also innovating ways to improve the business culture in which they exist, in San Diego.

Photo courtesy of CommNexus
Photo courtesy of CommNexus/EvoNexus
The EvoNexus startup incubator opened a downtown branch in 2012 in space donated by the Irvine Company.

There’s some momentum.

A tech nonprofit launched a business incubator, EvoNexus, which opened its downtown branch in 2012 and nearly a couple dozen teams have spent rent-free months there. The proliferation of networking meet-up groups and speaker nights at co-working spaces reveals the niche’s depth. San Diego Tech Week in July will feature a handful of startups pitching their ideas.

“We got 40-plus submissions of startups I’d never heard of before,” said Melani Gordon, co-founder of Tap Hunter, a company that built an app to help consumers find their favorite beers on tap, and helps restaurants and bars connect with their craft-beer-loving base. “It’s absolutely so exciting to see that.”

But establishing stable ground from which to grow San Diego’s startup scene is still difficult. Those needs for space, money, mentorship and community are huge.

Still, many local entrepreneurs say, some of those problems are slowly being addressed.

COMMUNITY: ‘It Was Just Pretty Stale’

Cooper and others talk about the “density” of startups being a crucial piece – the idea that you could be stopping for coffee and run into an investor or a tech person or another startup founder. Cooper lamented the county’s disconnected pockets of activity.

But that density is beginning to show up, in giant offices where multiple companies share space downtown, and in Wednesday morning shop-talk sessions at Del Mar’s Pannikin café.

Steven Cox is CEO of an online hub for connecting music students with teachers willing to give lessons. He co-founded his company, TakeLessons, in 2006. It employs about 75 people, he said, out of offices that overlook Petco Park.

“When we started, there was no ecosystem to speak of. There were a couple startups doing something,” Cox said. “Today there is. We are literally at least five to 10 (times) better than where we were.”

Al Bsharah looked around entrepreneur mixers several years ago and saw “the usual suspects,” he said. “Same people, same everything. It was just pretty stale.”

Now, there’s some new energy, he said. Bsharah co-founded Embarke, a service to help find the best time to target customers with messages. A former electrical engineer for Chrysler in Detroit, he moved to San Diego 15 years ago and has been involved in startups ever since. Their business hit a new level late last year when they were whisked to Seattle for three months for TechStars, a well-regarded startup accelerator. Now they’re hiring.

“This is home for us. I live here. I want San Diego to be a startup mecca,” Bsharah said. “I want to be part of making that happen.”

But the fledgling community still drives some founders to leave, or at least split their time.

Herrera started Fashioning Change, an e-commerce startup meant to guide consumers toward environmentally friendly clothes not manufactured in sweatshops. Herrera and her co-founder, Kevin Ball, want to be in San Diego.

But they’ve also rented a house in Santa Monica to be near that city’s bustling hub of startup activity, mentors and funders. She wrote about that tension in her blog for the Times.

“As time passed, I couldn’t shake the feeling that we needed a more permanent presence in Santa Monica,” she wrote. “It’s a feeling I fought and struggled with for personal reasons. I didn’t want to turn my back on my city.”

MONEY: ‘A Stake Downtown’

Part of this is a question about how to stop startup businesses from launching in a basement here, getting acquired and being yanked to some other tech hub just as it begins to flourish.

“San Diego has always been the place where incredible innovation happens, and we get very few corporate headquarters in the end, because it gets acquired out of town,” said Dennis. “That’s our nature.”

The venture capital pool is not very deep here compared with other cities in California and elsewhere, Dennis said. Several hubs around the country – Silicon Valley, Boston, Seattle – eye the ideas of San Diego companies, and try to coax them to move.

“What’s happened in the last 10 years is there has been less and less capital available for San Diego innovation to get that innovation going,” Dennis said.

Workspace costs money.

The Irvine Company, a massive commercial real estate company, wants startups like Herrera’s to stay in San Diego – to grow here, hire lots of people and sign big leases one day. So the company gutted a floor in the middle of downtown and built out the space to host EvoNexus for free.

And it connected with other startups to find ways to set them up with spaces. It rents month to month for some, by-the-desk for others.

“Those of us who have a stake downtown, it’s important to help foster that,” said Nelson Ackerly, an Irvine Company leasing director for San Diego.

Companies like Irvine have risen to the challenge to find flexible spaces for startups to grow, Dennis said.

“What we still have to do is doing more mentoring,” she said. “So that our companies are moving along more quickly.”

MENTORING: ‘It’s Better for Us to Pay for Space’

When EvoNexus started a downtown branch last year, it invited 10 startups to set up shop there, no strings attached, for six months.

Turns out some of those startups wanted strings. They craved insights from more established company founders, needed help raising money and wanted guidance on their business strategy. So EvoNexus added more programming and structure for the next group of companies to set up shop in the incubator.

“We didn’t start it because we had the answer,” said Michele Yoshioka, EvoNexus’s director of programs. “We started it because we had the problem.”

Herrera and Fashioning Change were in on that first round, and invited to stay for the second, more structured program.

But Herrera left EvoNexus about six weeks ago. They moved down the street to join Bsharah and Gordon’s company, Tap Hunter, in another Broadway office building owned by The Irvine Company.

 

Photo by Justin Bridle
Photo by Justin Bridle
Melani Gordon, left, is part of a group of local entrepreneurs leading San Diego's tech startup community.

It’s difficult to tell what all went into the separation between incubator and incubatee. Both say they wish each other well.

Herrera said a rigorous push from EvoNexus leaders to raise $1 million in funding wasn’t what her other advisers recommended. “It’s better for us to pay for space than to get free space and deal with the bureaucracy,” she said.

Yoshioka said the most common goal for the hosted companies is to raise a large round of venture capital funding. But, she said, the companies in EvoNexus can change their benchmarks. “Startups pivot all the time,” she said. “We’re used to people changing them.”

The EvoNexus program is itself still new.

“Much like any other startup they’re trying to figure out who they are, what their people need,” Bsharah said. “They’re now doing some really interesting things. Asking what is it that would make our program better.”

Meanwhile, Gordon said the rise in interesting programs and seminars is coaxing some hidden experts – and funding – from the woodwork. Intuit and Qualcomm, two of the region’s largest technology and telecommunications companies, are full of career businesspeople carrying decades of experience growing a business.

“We are starting to find those guys who had no idea there was a scene here,” she said.

But, she said, the task now is to vet the willing mentors to find the ones who really understand the finer points of building web-based or modern businesses.

People, perhaps, like Cooper, who grew up in San Diego and spent 18 years in the Bay Area working for tech startups and studying effective entrepreneurs before moving back in 2007.

Even though he pointed fingers recently, he’s launched a series of speakers, networking sessions and “office hours” for startup founders who need help.

“I had an epiphany: You have to go do it yourself,” he said.

This is part of our Quest to find out more about the innovation economy in San Diego. Here’s a good overview of what we wanted to find out, and check out these highlights from the series.

    This article relates to: Economy, News, Quest: Innovation Economy, Share, Technology

    Written by Kelly Bennett

    Kelly Bennett is a freelance contributor to Voice of San Diego. You can reach her directly at kelly@vosd.org.

    10 comments
    Julie Wright
    Julie Wright

    Kelly - I am so glad that you are focusing on the innovation series. It's important that San Diego appreciate what it has, and nurture it. Given what my friend Martha Dennis said, I would rebut that I'd rather have entrepreneurial startups that too often get acquired by out-of-towners than I would legal industry headquarters -- or even some of the bigger players who themselves get acquired or consolidate operations. San Diego's success in leading the innovation end of several industries has, in fact, attracted some of the big players. I hope that in your series you focus on the importance of the dense concentration of research institutes -- numbering more than 50, where a fit person can literally visit most without getting in a car! I hope that you will also focus on the pipeline of talent, often the number one issue for companies, where San Diego's K-12 system needs to pump out more college-ready students with an interest in STEM. Our higher-education institutions typically have first-rate undergraduate and graduate programs, many designed in concert with industry. Finally, and given my current focus on state policy issues, we need a state government with a clear understanding of the high-value industries with which we are blessed and a focus on ensuring our competitiveness for their investment. One incredibly valuable state organization I support is the California Council on Science & Technology, which has just selected their fifth year of Science & Technology Fellows for the California legislature, one way we are trying to improve that understanding. In the early 90s AT Kearny did a study of young people in Silicon Valley and found that most did not appreciate the industries/jobs that drove their region. Imagine what San Diego's numbers would be!

    Julie Wright
    Julie Wright subscribermember

    Kelly - I am so glad that you are focusing on the innovation series. It's important that San Diego appreciate what it has, and nurture it. Given what my friend Martha Dennis said, I would rebut that I'd rather have entrepreneurial startups that too often get acquired by out-of-towners than I would legal industry headquarters -- or even some of the bigger players who themselves get acquired or consolidate operations. San Diego's success in leading the innovation end of several industries has, in fact, attracted some of the big players. I hope that in your series you focus on the importance of the dense concentration of research institutes -- numbering more than 50, where a fit person can literally visit most without getting in a car! I hope that you will also focus on the pipeline of talent, often the number one issue for companies, where San Diego's K-12 system needs to pump out more college-ready students with an interest in STEM. Our higher-education institutions typically have first-rate undergraduate and graduate programs, many designed in concert with industry. Finally, and given my current focus on state policy issues, we need a state government with a clear understanding of the high-value industries with which we are blessed and a focus on ensuring our competitiveness for their investment. One incredibly valuable state organization I support is the California Council on Science & Technology, which has just selected their fifth year of Science & Technology Fellows for the California legislature, one way we are trying to improve that understanding. In the early 90s AT Kearny did a study of young people in Silicon Valley and found that most did not appreciate the industries/jobs that drove their region. Imagine what San Diego's numbers would be!

    Darrius Thompson
    Darrius Thompson

    Appreciate your recent articles on Startups, Innovation and San Diego. I'm a local serial entrepreneur . Currently a founder and CEO of a 5 year old company back by investors such as Google Venture and Intel Capital, etc. http://www.sweetlabs.com The previous company I co-founded, DivX, became public in the mid 2000's. Your article points out the continued need/vacuum in helping other entrepreneurs increase the probability of building a successful company. I think part of the challenge is organizations who are helping where "intent" may be misaligned or where those helping may not have relevant or recent experience. The ideal scenario is one where there is great alignment or matching between the need of an entrepreneur and an outsider with experience yet without the "internal startups kool-aid" to help. I've been asked a number of times over the past few years to start a local mentor program. Your article along with a few recent chats with frustrated entrepreneurs has pushed me over the edge. A kick in the ass to get involved. Impactful/Meaningful. Thanks for nudging me over the edge. Just posted this page to get things started. http://startupsd.tumblr.comSweetLabs, Inc. - http://www.sweetlabs.com© Copyright, 2013 SweetLabs, Inc. | All rights reserved.startupsd - http://startupsd.tumblr.comThere has been a growing desire from local entrepreneurs to find other local entrepreneurs with experience they believe they can leverage. A common them of, "I want to find entrepreneurs who have been there and done that AND are still "doing it".

    Don Wood
    Don Wood

    Apple has a TV ad out that says "designed by Apple in California". I look forward to the day when the ad says "designed and manufactured by Apple in California". Too often companies come up with a new drug or other product, then immediately outsource the manufacture of that product overseas chasing slave wages. Companies need to figure out that simply chasing low wages is not a long term business plan, and start making their products in the USA, preferably in the San Diego area.

    Don Wood
    Don Wood subscriber

    Apple has a TV ad out that says "designed by Apple in California". I look forward to the day when the ad says "designed and manufactured by Apple in California". Too often companies come up with a new drug or other product, then immediately outsource the manufacture of that product overseas chasing slave wages. Companies need to figure out that simply chasing low wages is not a long term business plan, and start making their products in the USA, preferably in the San Diego area.

    Kelly Bennett
    Kelly Bennett memberauthor

    Thanks, Chris! Nice to meet you the other day. While not purely startup/tech, I am focusing a whole series on SD's innovation economy at the moment. If you're interested, you can keep track of those stories here: Voice of San Diego " Quest: Innovation Economy - http://voiceofsandiego.org/category/innovation-economy/Many local entrepreneurial gurus say comparing the San Diego startup scene to its more powerful, famous northern counterpart is misguided. We have to get back to innovative work, train our workforce accordingly and stop trying to live in comfort beyo...

    Chris Corriveau
    Chris Corriveau

    Kelly, thanks for the write up. Besides the money, mentoring, space and community we need writers like yourself and publishers like the Voice to constantly write about the interesting innovations and things the startups in San Diego are doing. This is a great start to making people more aware. Would be great to have more consistant posts even a section for startups or tech.

    Kelly Bennett
    Kelly Bennett

    Thanks, Chris! Nice to meet you the other day. While not purely startup/tech, I am focusing a whole series on SD's innovation economy at the moment. If you're interested, you can keep track of those stories here: Voice of San Diego " Quest: Innovation Economy - http://voiceofsandiego.org/category/innovation-economy/Many local entrepreneurial gurus say comparing the San Diego startup scene to its more powerful, famous northern counterpart is misguided. We have to get back to innovative work, train our workforce accordingly and stop trying to live in comfort beyo...

    Sam Ollinger
    Sam Ollinger

    Thank you for this writeup, I really enjoyed it and learned a great deal. Regardless of my focus on the NPO that is taking up much of my time lately, my goals include connecting and collaborating with the tech sector because the vision I have includes a sort of collaborative effort that could make the work I do that much more transformative. Both my husband and I are software developers (my skills being a little stale right now) and we've been envious of some of the hubs being created in downtown San Francisco, Santa Monica, Seattle, Chicago and New York City to bring the brightest ideas together to spark new creativity. We've talked about moving there because we really value being in walkable communities where a sort of impromptu and casual networking opportunity can occur at any time. Here I feel very stuck because of how terrible the transportation is.: it's either drive or spend eons in traffic (in bus or bike) so I make do with what I can either via social media or just online browsing. I have a sort of passive resentment that the tech sector here are in these car-centric communities and have felt somewhat comforted to learn that the software developers I interact with also do want an environment that can spark collaboration outside of a freeway-encircled community. I have been observing EvoNexus with much interest and I hope it is the seed of new beginnings to come in San Diego. Thank you also for the introduction to Fashioning Change. I have been looking for something like it for a long while

    Sam Ollinger
    Sam Ollinger subscriber

    Thank you for this writeup, I really enjoyed it and learned a great deal. Regardless of my focus on the NPO that is taking up much of my time lately, my goals include connecting and collaborating with the tech sector because the vision I have includes a sort of collaborative effort that could make the work I do that much more transformative. Both my husband and I are software developers (my skills being a little stale right now) and we've been envious of some of the hubs being created in downtown San Francisco, Santa Monica, Seattle, Chicago and New York City to bring the brightest ideas together to spark new creativity. We've talked about moving there because we really value being in walkable communities where a sort of impromptu and casual networking opportunity can occur at any time. Here I feel very stuck because of how terrible the transportation is.: it's either drive or spend eons in traffic (in bus or bike) so I make do with what I can either via social media or just online browsing. I have a sort of passive resentment that the tech sector here are in these car-centric communities and have felt somewhat comforted to learn that the software developers I interact with also do want an environment that can spark collaboration outside of a freeway-encircled community. I have been observing EvoNexus with much interest and I hope it is the seed of new beginnings to come in San Diego. Thank you also for the introduction to Fashioning Change. I have been looking for something like it for a long while