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What It's Like Building A Startup In San Diego

What It's Like Building A Startup In San Diego
San Diego is best known for it's beaches, craft beer, biotech, and Qualcomm, but there's something brewing here besides double IPAs.

Three years ago I published "Reasons to Move From Silicon Valley to LA". In the article I used Uber Black & UberX to illustrate the classic niche vs. wedge startup strategy. The general concept is to launch a startup with the focus of a niche, but with the opportunity to wedge out into a broader market. In 2015, when I moved from San Francisco to LA after years at Box, I considered LA to be a wedge opportunity for launching my career as a founder.

By developing my first tech startup, Gatsby, in a smaller ecosystem, I was able to build my network & reputation faster and with more authenticity, than if I had been one-of-a-million up in the bay.

However, it's 3 years later now and I find myself even further down the coast, in a burgeoning tech community along the 101 from Carlsbad to Little Italy. I moved here 6 months ago as a test, unsure of what to expect, and how it would impact my business.

However, Gatsby is a SaaS startup that sells to ecommerce brands anywhere in the world, so I decided to experiment with the move. I committed merely to a month-to-month lease, didn't lay any roots, and made a concerted effort to get to know the people and opportunities down here. 6 months in, and I've found that there is a lot more going on for tech than I expected.

Now I've heard the arguments against San Diego tech (aka any tech ecosystem besides Silicon Valley), and they all tend to lean on a single metric: the amount of Venture Capital investments by region. According to citylab.com, which used data from the National Venture Capital Association, San Diego startups received just 2.26% of VC money in 2016.

I agree, that's not a great stat in favor of San Diego. If concentration of VC dollars is the most important thing you look for when starting your company, then great, you have nothing to even think about. Stick with SF or NYC.

(Note, in just the last few weeks, San Diego has seen 5 deals close worth over $3M, with Kneron closing an $18M Series A)

However, I think about those VC numbers as just part of the equation. There are a number of other arguments in favor of starting a tech company in San Diego, like: cost-of-living, life-balance, and access to your target customer (if applicable). But there's also a sense of community, and the benefits that come from that.

My #1 Observation of San Diego Tech
In the valley, it's easier to focus only on yourself and your business, because the market is established and you're just trying to carve out your piece of it. While there's nothing wrong with that, I believe there is a stronger sense of community down here. Everyone in SD tech is working together to build up the infrastructure, the brand. We recognize that the better the San Diego brand becomes, the bigger the talent pool grows. And the bigger the talent pool, the more creative the ideas. And the more creative the ideas, the easier it is to access capital. 

This team mentality in San Diego drives real collaboration and a genuine interest to help one another.

Other Observations:

  1. While there is a lot of biotech, there is also a lot of non-biotech
  2. There is significant interest in AI technology and machine learning
  3. San Diego Venture Group, Startup San Diego, and Tech Coast Angels are the backbone
  4. You can name-drop using just first names
  5. Yes, we have Bird scooters down here too

Now since I'm just the new guy, I've sat down with some local tech leaders and asked them to chime in on a) what they felt was the best part about San Diego tech, b) what makes it unique, and c) how it's changed over recent years. 

These local tech leaders are just some of the people who have been grinding day-and-night to not only build their new technology or fund, but to build an entire ecosystem here in San Diego. I'm proud to get to know them, and share excerpts from their responses:

Gary Benitt, GP at Social Leverage:
"I've started to see companies recruit real talent to San Diego from the Bay Area. We still need more scaled companies for that next job opportunity, but the first shift is definitely happening."

"Over the past year, I've seen some incredible events put on by the likes of Mike Krenn @ SDVG, Neal Bloom @ Startup San Diego and Ashok Kamal and team @ TCA...there is a new vibrancy in the air."

Neal Bloom, Chairman at Startup San Diego
"San Diego is an incredibly collaborative community. The different tech communities of software, defense/cybersecurity, craft beverage, TJ/Baja, and biotech all work together to learn from each other and further the region's domain expertise."

"The technology being worked on is life changing. Whether it is cybersecurity software to secure medical devices, or using blockchain to allow individuals to own their genomic data, we work on ground breaking technology applications."

"With acquisitions like Nervana Systems, GreatCall, Paylease, and Lymber, the acquirers are growing the companies locally, bringing further resources to the community."

"Biotech and tech worlds are starting to merge. Genomics, medical device, healthcare IT, and diagnostics companies are employing large quantities of software developers and data scientists which brings skilled software talent to the region and allows for biotech capital to now help flow into software companies."

Cliff Boro, GP at Simplexity
"The best part of San Diego Tech is that there isn’t a sense of entitlement – entrepreneurs here know that they have to work harder, and do more with less."

"While San Diego still has too many “wantrapreneurs” – the quality and capacity of capable entrepreneurs has never been higher”. Valley investors are attracted to the scrappiness of our founders and they appreciate that San Diego is a terrific place to execute and build businesses with real value."

Etienne de Bruin, Founder & CEO at 7CTOs
"Since San Diego has a smaller tech scene compared to our friendly neighbors to the North, there tend to be less options for mentorship and help that VCs would typically provide to their portfolio companies. This hasn't stopped the San Diego scene from self-organizing to provide an open, intentional, and caring community of entrepreneurs ready to be of service to one another."

"We may not always see the cold hard entrepreneurial drive that characterizes other cities, but at the same time, there is a level of shared outdoor activities that foster strong personal and business relationships."

Shad Vaugn, Founder & CEO at Park Connect
The San Diego Tech ecosystem is like a family with a "pay it forward" mentality. From knowledge sharing to facilitating introductions, we want everyone to have the opportunity to succeed. Overall, it's only the beginning for San Diego Tech, and the future looks very promising!

Ashok Kamal, Exec. Director at Tech Coast Angels
"Compared to other tech ecosystems I've been part of (Boston, NYC, Bay Area), San Diego has a more collaborative attitude. I think it stems from the recent growth and understanding that we're all better off by supporting each other on the way up. The San Diego startup community is in an excellent "Goldilocks" position; it's intimate enough to work together yet big enough to make an impact, both locally and globally."

Emily Rotolo, Founder & CEO at Simple Forms
"There are really experienced people here that WANT to genuinely help startups. Either they've retired, exited their companies, or just take general interest in the ecosystem, there is more of a community cohesiveness."

Tim Ryan, COO Lab Fellows, Co-Founder at San Diego Startup Week
"SD Tech is just starting to come into it's own. We have several legitimate potential unicorns, which was unthinkable just 5 years ago." 

"It has a diversity of major industries headquartered in the region, and shares an international border. This will become of greater significance as more startups build solutions that cross multiple industries."

"5 years ago the tech community was fractured, with few outside investors looking at SD. Organizations such as StartupSD, SDVG, and TCA have really helped bring the community together. I feel we are about to enter the next phase with significant exits and growth." 

Brett Murphy, Owner of La Jolla Sports Club
"San Diego is a hot bed for testing fitness concepts and new technologies.  The wellness community is using tech to analyze and find the perfect combination so we do not over or under train our bodies.  We think of the weather, food and community as a stimulant to a healthy lifestyle; however, the tech movement towards our city is creating a wonderful collaboration for groundbreaking efficiencies for human health."

In Conclusion:
There are pros and cons in every decision, but building a startup in San Diego is proving to have more benefits than I originally expected. I'm proud to call Del Mar my home, and the colleagues above, my friends. There is something significant brewing down here. We're hard at work making it happen.


-Brett Bernstein, Gatsby