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Many local entrepreneurial gurus say comparing the San Diego startup scene to its more powerful, famous northern counterpart is misguided.
There’s a powerful magnet up the road.
As San Diego’s startup tech scene goes through some soul-searching, some of the motivation is to keep companies from being picked up and moved up to the Bay Area, a hotbed of technological advancement, company launches and acquisitions.
As longtime entrepreneur and venture capitalist Martha Dennis put it in my story Thursday:
“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. That’s our nature.”
Steven Cox, CEO of a local company called TakeLessons, said more than one-third of the companies his team has talked to about financing has asked if they would move.
“We’ve been turned down because we were in San Diego,” he said. “Can you find talent? Can you really build a tech company? We’ve heard that over and over and over again.”
He said those questions came up often earlier in the company’s growth, but by the time they started TakeLessons already had about 20 employees. (It now has roughly 75 in its Petco Park-adjacent headquarters.) “If we were three or four people, if we weren’t tethered, I think we would’ve entertained that option,” he said.
The Silicon Valley comparison emerged over and over as I met and talked with several people who’ve been part of the technology startup scene. The entrepreneurs who told me about their biggest needs – money, community and savvy mentorship – weren’t pulling those characteristics out of thin air. They typify hubs like the Bay Area, Seattle, Boston and Boulder, Colo.
But trying to emulate Silicon Valley is the wrong idea, say entrepreneurial gurus like Brad Feld, the Boulder-based co-founder of a well-known tech startup accelerator called TechStars. Here’s Feld in a Forbes post earlier this month:
Silicon Valley has been developing as a startup community for over 60-70 years. This notion that you can create something in two or five years is foolish. So, recognizing that it takes a long time, you have to go on that kind of journey. There’s a long list of strengths, but Silicon Valley has some weaknesses too. It’s important to understand the dynamics between that and how it applies to your own city, rather than simply trying to be like it.
Bruce Bigelow left his job as a business reporter at the Union-Tribune in 2008 to join Xconomy, itself a startup media organization. He’s been watching this scene for years.
“There’s a lot of kvetching in San Diego that it’s not as active here as it is in Silicon Valley,” Bigelow said. “But occasionally I run into people in Silicon Valley who wish they were in San Diego. An environment that’s a little less intense and competitive.”
Moreover, the pace here might be a good safeguard for market sobriety in an age when some web startups sell for a billion dollars.
“The market in San Diego is just not as irrationally exuberant as it is in the Bay Area,” Bigelow said. “The volume is just down from what it’s at in the Bay Area. I’m not sure San Diego is extended as far off the cliff.”
Bigelow said it’s important to stay open-minded about what a successful scene looks like. A lot of little successes for local startups may turn out to be better than if one big one blows up.
“They could proliferate but it may not be headline-grabbing deals. You may not see Facebook-like valuations,” he said. “Is this a good place to try to make a living doing this? Yeah. Are you going to become a billionaire? Probably not.”