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A message from Mark Cafferty
If you ask most U.S. sports fans to identify the fiercest rivalry in professional sports, many would quickly say, “Yankees and Red Sox.” Fans for both teams are incredibly loyal, united both in their regional pride and mutual distaste for the competition. But when you look closer at the actual numbers, it isn’t really a rivalry at all…in the past century, New York has clenched 27 World Series compared to four for Boston.
As a native Bostonian (side note: he now considers himself a proud San Diegan), Mark made it clear today at a breakfast forum hosted by the San Diego Press Club that this is very similar to California’s “rivalry” with Texas. In this scenario, California is the New York of job creation. Although both sides may have loyal contenders, when you look at the success Texas has had poaching jobs from the Golden State, there is no comparison. The numbers speak for themselves. California is leading the nation in private sector job creation. It is No. 1 in biotech, agriculture, high tech, entertainment and tourism.
As California and San Diego continue to face criticism from out-of-state politicians, the press and others for its “anti-business” policies, we must remember one critical fact. Time and time again, studies have shown that short-term economic incentives do nothing for long-term job growth. Yes, it’s fair to say that California could benefit from more business-friendly policies, but in San Diego, our traded economies –– military, tourism and innovation – are anchors for our growing economy.
All of that said, Mark told s crowd of about 40 local business leaders today, it’s not Gov. Perry’s $24K media buy that worries us, but some actual reforms/legislation (or lack thereof) that does:
● TMD controversy— Removing ourselves from the legal side of this battle, we are looking at the sheer importance of these dollars for regional economic development. San Diego’s tourism industry is responsible for $18.3 billion in economic impact and employs 160,000 San Diegans. In 1993, Colorado eliminated its TMD, resulting in a 30 percent drop in its share of the U.S. travel market over four years.
● Enterprise Zone Reforms—Although poaching jobs from other states and grandiose economic incentives don’t help long term growth, the EZ is a powerful growth tool for California helping companies like Soitec and the Wheat Group.
● Sequestration/ Military Cuts—With the highest concentration of military in the world and 60 percent of California’s military assets, sequestration will be a devastating blow to San Diego’s economy, with approximately 30,000 jobs at stake. Many people also don’t realize the impact it would have on the high-tech and life sciences industries as well.
As Mark told the Press Club at the New School of Architecture + Design, at San Diego Regional EDC, our job is to attract, retain and expand businesses in the region. Everything we do, whether it’s advocating for certain policies or implementing strategic programs, is to grow jobs across the region.
And create jobs we do! In 2012, San Diego Regional EDC worked on 175 projects, creating 8,550 jobs in the region.
In addition to releasing the job numbers today, Mark stressed that San Diego needs to do more promoting and less comparing. Too often, San Diegans get caught up in comparisons with New York, Chicago, San Francisco and other great cities instead of focusing on the fact that San Diego is one of the very best places in the world for families and businesses.
He closed with one wish for San Diego: “gaining a little bit of confidence and whole lot of swagger.”
Mayor Bob Filner was the SD Press Club's first Newsmaker of 2013; Mark Cafferty will be its second. Join the San Diego business and journalism community for a breakfast this Thursday, Feb. 28 at 7:30 a.m. Mark will provide new EDC updates including the recent successes the organization has had generating and maintaining jobs throughout the region. He also will tell you how he really feels about attempts to lure businesses from California to Texas, and you'll get the latest update on efforts in Washington to curtail across-the-board budget cuts (known as Sequestration) scheduled to take effect Friday. You won't want to miss it.
Everyone is welcome! Please find more details and RSVP here.
San Diego Venture Group gathered a diverse panel of San Diego-based venture capitalists recently to talk about their focus, how they spend their time, and what they recognize as red flags for prospective investments.
Jason Brown of Thomas McNerney & Partners made the first meeting/first date comparison with the comment that the venture investor/company relationship is like a marriage of sorts, except that you don’t want it to last … Compatibility is important when you’re going to spend so much time together. Brown concentrates on life sciences investing which carries huge risks and costs. “Getting to ‘yes’ is difficult. The elements of risk have to be achievable,” Brown said, “We have to look at clinical risk, scientific risk, regulatory risk, commercial and competitive risk.” Later, when a question came up about healthcare reform, he added reimbursement risk to the list. Despite these daunting odds, Brown said he spends as much as 50 percent of his time looking at new investments.
Steve Hamerslag of TVC Capital invests in software and software services. TVC Capital looks for investments where there is already $2 - $10 million in revenues and the company has reached a point where it is time to professionalize the organization. Hamerslag said TVC invests anywhere from $4 - $10 million in each company and expects to take an active mentoring role. Red flags for Steve? Issues with bad management or trust and inconsistent answers to questions about the business. He spends about 20 – 25 percent of his time looking at new deals and said that a recommendation from a trusted source really helps a company get his attention.
Afif Khoury of Scatter Ventures invests in many different areas. A quick look at the firm’s portfolio shows everything from farming to pharma. He spends about 20 percent of his time looking at new investments and will probably make two new investments in the next 12 months. Red flags for Afif? Too rosy an outlook and overselling. When asked what was most important – team, idea or opportunity, he answered that all are important. While he made it clear that Scatter invests in people, they’re looking for markets as well as management.
David Wise of Qualcomm Labs invests both internally (Qualcomm Life, Qualcomm’s wireless health subsidiary, originated in Qualcomm Labs) and externally with a focus on platforms that will drive new business for Qualcomm technologies. Wise spoke about their venture with EvoNexus, an incubator program within CommNexus where Qualcomm Labs @ EvoNexus has funded three companies. Wise says creating companies outside the walls of Qualcomm gives small start-ups more freedom while still having access to Qualcomm’s business and technology resources. Wise estimates he spends 30 – 40 percent of his time looking at new investments.
San Diego Venture Group and San Diego Regional EDC share office space. It’s great to have someone as knowledgeable as Dave Titus, SDVG’s President, within easy reach. Access to capital is a key requirement to maintaining and growing an innovation economy. Dave’s insight and connections within the industry help us work more effectively with entrepreneurs.
As a provocative speaker and evangelist for building innovation economies, Rules of the Rainforest author Greg Horowitt asks questions, lots of questions. Horowitt was back with the EDC board recently and came with a list of questions that demand to be asked and answered if we aspire to take the regional economy to the next level of prosperity and raise awareness of San Diego as a global player. Here is the first question:
It’s a good group to ask about leadership. Depending on what you read, you might look around to find the “San Diego 20,” as a Voice of San Diego article quoted someone calling them. If you’re a fan of Jim Clifton’s book “The Coming Jobs War,” you might see San Diego’s “tribal leaders.” Representatives of San Diego’s trade associations and the venerable CONNECT in attendance personify what economic competitiveness guru Michael Porter calls the “informal networks” that make San Diego’s innovation economy work.
Assuming that – by any definition – many of the region’s leaders were present, how can we describe their characteristics and effectiveness? As a long-time observer of San Diego’s civic organizations and institutions, I offer these primary traits of San Diego’s leaders:
They are open – here’s how Hank Nordhoff put it in a recent UT San Diego article: … "there’s an informality and unpretentiousness about San Diego. People will welcome you to these various boards, and you can have an impact almost immediately…” Nordhoff is the former CEO of Gen-Probe (now Hologic Gen-Probe) and current executive chairman of Banyan Biomarkers. He is also a past chairman of EDC. But at one time he was a new guy in town and he clearly never forgot the warm welcome.
They get along – In the last year, EDC, San Diego Regional Chamber of Commerce and CONNECT, along with other partner trade organizations, convened a coalition of senior business leaders from their boards of directors and key contributors to focus on the global competitiveness of the region. They also defined their terms so that everyone is speaking in the same language about the economy. The groups agreed on four fundamental pillars of our economy—Military, Innovation, Tourism, and Local. Just having a common vocabulary has made communicating the strengths of our region more effective.
They are curious – Why else would they ask Greg Horowitt to come back a second time? They want to understand what’s working and they really want to understand what’s not. Being curious means looking at barriers and judging how high to jump, not how fast you can stop. Being curious gives you the confidence to engage in self-reflection without the baggage of doubt.
Posted by Andrea Moser. How would you describe San Diego’s civic leadership? We’re open to feedback. Tweet us @SDRegionalEDC and let us know.
Many people recognize the importance of the defense sector in protecting us internationally, but fail to recognize that it also protects the local economy. From Qualcomm to essential innovation research, the defense sector has been instrumental in jump-starting many economic facets that make us proud to call San Diego home.
Not only do recent DoD cuts mean thousands of jobs at stake in various industries in the local economy, but also mean that this ‘quality of life’ that we have worked so hard to build is in jeopardy.
Please read Mark’s column in the U-T to learn about some of the steps EDC and regional partners are taking to defend this vital facet of our economy.
San Diego's nonstop flight to Tokyo has resumed service with an alternate aircraft, a Boeing 777. Japan Airlines (JAL) has announced they are resuming Mon/Wed/Fri service through February 17. Schedules thereafter will be announced as soon as they are confirmed. Additional information can be found at http://www.ar.jal.com/arl/cms/contents/en/special_news_003178.html.
San Diego venture capitalist and entrepreneur Greg Horowitt took the EDC board of directors on a virtual zip line tour of his new book “The Rainforest: The Secret to Building the Next Silicon Valley” at a recent meeting. San Diego has served as a living lab for Horowitt, who is one of the founders of Global CONNECT, a San Diego-based network committed to growing new technology clusters worldwide.
Horowitt asks a provocative question: Can we engineer serendipity through design? The answer is yes – if we are designing a culture and a system for innovation. Using the contrast between a plantation and a rainforest, he illustrates the prized attributes of a plantation: order, precision, accuracy, productivity, and (to make the comparison work) no weeds. Then imagine a rainforest: it mixes diverse elements together that encourage the development of new species and allows weeds to grow unchecked.
In San Diego, we talk about an ecosystem of innovation. According to Horowitt, the roots of an ecosystem are smart policies, supportive infrastructure, flexible but strong intellectual property frameworks, enterprise and entrepreneurial support, and a robust capital “food chain.” It also includes an informed and engaged private sector, proactive innovation leadership development, responsive and responsible workforce development that includes skill-building initiatives, active youth engagement, and university – industry linkages. A quick scan of the San Diego innovation landscape reveals that, as a region, many of these roots are well established and are growing branches that expand our economy and prosperity.
Horowitt’s Rules of the Rainforest are straightforward and time-tested:
Rule #1: Break rules and dream.
Rule #2: Open doors and listen.
Rule #3: Trust and be trustworthy.
Rule #4: Experiment and iterate together.
Rule #5: Seek fairness, not advantage.
Rule #6: Err, fail, and persist.
Rule #7: Pay it forward.
The living lab of San Diego has given Horowitt insights that he and his Rainforest co-author Victor Hwang hope will lead to a focus on the development of innovation systems rather than the more traditional emphasis on innovation at the micro level of individuals and teams. Horowitt and Hwang have given San Diego a thoughtful, well-researched look at what it takes to build innovation capacity.