San Diego’s been noticed recently for the growth of our startup community, prompting Forbes to name San Diego the No. 1 city to be a startup. The intellectual capital coming from our three top universities and our 16 business incubators have helped nurture this growth. Overall, business innovation is thriving in San Diego.
Given our innovative business culture, skilled graduates and nurturing startup community, why don’t more fledgling companies stay? The San Diego Regional Economic Development Corp., has been exploring how to retain San Diego startups into their high growth phase and attract large growth companies. Last May, the EDC spoke with local startup founders revealing that many businesses that launch in San Diego left as they began to scale. Barnanna, a company started by SDSU Entrepreneur Society students selling potassium rich energy bars, began in San Diego but left to open its first office in Santa Monica in early 2014 to follow funding. LifeProof, making waterproof iPhone cases, began in San Diego but left when purchased by Otterbox Products LLC.
The EDC also asked other startup founders why they chose to stay and how to attract others. Beyond our weather, people mentioned San Diego’s lifestyle — its sense of community, the variety of cultural and leisure experiences and the ability to have your voice heard in the larger political conversation. Perhaps San Diego’s small-town feel, juxtaposed next to its thriving cultural institutions, and natural scenic beauty are its secret sauce.
A recent study commissioned by the San Diego Tourism Authority of 5,000 people in six international cities also found that San Diego’s image is one of creative, optimistic, open-minded, authentic people. This study lends evidence to the value of our cultural capital.
While San Diego clearly supports new companies, the Small Business Friendliness survey of more than 12,000 entrepreneurs rated San Diego as one of the lowest cities in the country for small business this July. California’s high tax base hurt all cities statewide, yet one interesting finding noted that in spite of San Diego’s highly skilled graduates, companies found it challenging to fill entry-level positions. San Diego’s high cost of living, makes this critique credible. Our highly skilled grads are great assets for our life science industry hub, however a wider variety of entry-level employee skill levels would help small business.
Today, San Diego is home to only a handful of Fortune 500 companies and the economic stimulus that comes with them. Big businesses provide a wide variety of jobs for workers at all skill levels and infuse money into our economy that can be re-invested back into new business.
One strategy for attracting big business to San Diego may involve our high number of millennial’s entering the workforce. Our large numbers of highly skilled grads and our high quality of life make us a great fit for millennials, many of whom prioritize work life balance — the main ingredient in San Diego’s secret sauce. San Diego was also the only U.S. city to be included in the upcoming National Geographic “Smart Cities” documentary, garnering more evidence that its lifestyle and intellectual capital may be what propels it into its next stage of growth.
Many local organizations give millennials the training and skills necessary to grow professionally. OurGenY, brings millennial professionals and business together in annual events around a different industry theme to promote more cross pollination of ideas and opportunities. The EDC and the Equinox Center have built a program that prepares millennials to serve on boards, and the Policy Leadership Institute nurtures our next generation of leaders who may consider running for public office. All of these programs make San Diego a top region for young professionals.
If enough top millennials choose to stay, or relocate in San Diego, then Fortune 500 companies may just have follow.
Andrea Yoder Clark is Chief Data Analytics Officer of Full House Analytics.
Mark Cafferty is CEO of the San Diego Regional Economic Development Corporation.
Joe Terzi is CEO of the San Diego Tourism Authority.