By William Moore
As the New Year begins, San Diego has opportunities to continue its recent economic successes. In the most recent quarter, year over year, the unemployment rate in San Diego plummeted by 1.5 percent, with overall economic growth at 3.5 percent. Even in the face of challenging headlines like drought, notoriously high utility expenses and the recent Qualcomm layoffs, San Diego keeps going. Why? It’s the people.
The most important driver of regional success is not capital or the companies or even the infrastructure or regulations –– it’s the talent. Firms and capital go where the talented people are. Regions that attract talented people and keep them through the occasional hiccup are historically the most successful.
Last year, San Diego faced a small crisis. Qualcomm, considered by many the region’s flagship tech company, laid off a significant number of very talented people. Those people are starting the New Year evaluating their options. It is imperative to San Diego that it keep as many of these people as possible here.
Workers affected by the layoffs who want to stay in San Diego have two basic paths. Most of them will get picked up by other local companies that would be ecstatic to bring on these skilled people. But a determined minority have been dreaming of doing it on their own for years, and will decide the time is right.
I have seen many successful companies start this way. Those startups make up a more important share of the economy than any one large company. Fifty-seven percent of San Diego’s companies have one to four employees. Only one percent of the region’s companies report more than 250 workers.
Shortly after Texas Instruments closed its San Diego mobile division in 2008, a group of just-laid-off engineers came into my office. Since a few of them had been laid off at the same time, they were able to quickly form an entire team that already knew each other. They started a new business called IPG, and started developing cellular base-station chipsets.
It worked beautifully. Within three years, larger companies were clamoring to bring them in, paying not only to hire the team, but also to purchase the intellectual property that they had developed. The team ended up doing better over those three years than they would have if they’d just kept their jobs at Texas Instruments. Plus, they didn’t have to relocate, pull their kids out of school or find their spouses new jobs. They did it right here in San Diego, and they’re still here today.
San Diego provides an excellent ecosystem for keeping talent local. The local community colleges and UCSD Extension provide training opportunities that can translate exceptional talent from one domain to another. The Service Corps of Retired Executives provides both classes and one-on-one mentoring for those new CEOs. Anybody who is looking to embark on a new business has a great opportunity to do so here.
This is a chance for the rest of us to help as well.
- Wireless and tech associations can intensify their support for the formation of startups through expanded incubator programs, building mentorship connections and intensifying educational sessions to encourage entrepreneurship;
- Supporting businesses, (lawyers, accountants, etc.) can formulate ways to accommodate the needs of these unique startups;
- Tech companies that have thrived under the shadow of big brother Qualcomm can acquire local talent –– both as employees and as contractors;
- Angels who might have some money stashed in limited partnerships in out of town VCs can turn their attention to the attractive opportunities in San Diego.
San Diego is growing. And it will keep growing if we keep our best people in town. If we can make San Diego a fertile place for people’s businesses and their lives, San Diego’s economy can continue to do great things.
––William Moore is a business lawyer in San Diego and founder of The Moore Firm. He has extensive experience in a variety of cases and growing industries such as wireless communications and clean tech and focuses on serving entrepreneurs.
