Jason Mendelson, the Elvis of Innovation, Offers Some Lessons for San Diego’s Tech Sector

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Padres-Giants game just after Labor Day. He founded TVC Capital as a boutique private equity fund that specializes in software investments, and he’s familiar with the local tech sector.

As I’ve previously reported, San Diego’s software industry accounts for the biggest workforce of any local technology sector, and more than a third of San Diego’s 5,900 private technology companies develop software.

Yet there is no center to San Diego’s software industry. We have a lot of companies in this region that are doing analytics and data mining—big data-crunching jobs for big customers. There are thousands of programmers developing embedded software systems for San Diego-based Qualcomm (NASDAQ: QCOM) and other hardware makers. And a lot of software engineers here work for Intuit (NASDAQ: INTU), and for dozens of government contractors like SAIC (NYSE: SAI), providing specialized IT services for intelligence and defense agencies like SPAWAR, the U.S. Navy’s Space and Naval Warfare Systems Command.

But software in San Diego is a scattered and disassociated industry. There is no critical mass, no synergy. For the software community, there is no here here.

As Spencer pointed out, the evaporation of San Diego’s rainmakers has only worsened the situation. With the exception of Avalon Ventures (also a Zynga investor), which raised $200 million for its ninth fund earlier this year, San Diego’s homegrown venture funds, including Enterprise Partners Venture Capital, Mission Ventures, and Shepherd Ventures, have largely depleted their tech funds.

Spencer’s TVC Capital specializes in software deals, but he’s focused on a specialized niche—small software companies with a mature, but under-valued business. JMI Equity, which ranks as San Diego’s biggest private equity fund (JMI raised $875 million for its seventh fund last November), has a similar narrow focus on even later-stage companies, often making substantial investments in well-established software companies with strong prospects for global expansion.

So it should come as no surprise that the young entrepreneurs who have started Web 2.0 and mobile app companies in San Diego have been operating mostly outside the region’s innovation establishment. They don’t see much point in … Next Page »

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Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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12 responses to “Jason Mendelson, the Elvis of Innovation, Offers Some Lessons for San Diego’s Tech Sector”

  1. Am I the young, good looking Elvis, or the old, fat one?

  2. Hah! I guess Bryan Abrams of Men Colored Badd would have been more apt. But readers would go “who?” And to tell you the truth, I had never heard of Men Colored Badd before your parody. Then I was thinking Justin Timberlake… but Nah…

  3. Nik Souris says:

    Good meeting you this evening and thanks to you and Jeb for sharing the San Diego landscape while bringing some outside perspective.

    Getting those people in a room would be interesting for sure.

    To me there is something about the SD landscape / culture / mindset possibly the water or people that gravitate here that keep those ingredients of big tech companies like Intuit/Qualcomm/HNC, great Universities and great wealth from forging a reputation for San Diego as a tech destination.

    Perhaps it is an inherent defense of the City from congestion and talent wars. Interestingly, despite the perceived absence of unbiased mentors or Tech Stars or Y-Combinator or Plug-n-play or VCs – internet companies do start and grow here – in several cases reaching that “ultimate” investor exit like internet dot-bomb survivors Provide Commerce and Active Network.

    For me tonight’s get together at Flud exemplifies SD – quiet, casual, reserved, friendly, mindful of its own business, “how can we help you”. It wasn’t Disrupt or Demo Days or Deal Pitch and I am certain the “excitement” will be self-contained to the folks that participated.

    More importantly, I believe tonight’s crew left with a great feeling about themselves, what they have and where they’re at – part of San Diego’s technology sector – not necessarily missing those tech start-up wizards, and most definitely not about to let that keep them from succeeding.

    So did Mendelson respond to you? FYI, Boulder has over 300 sunny days per year more San Diego or Miami :)

  4. Nik, it was great meeting you as well, and thanks for this thoughtful comment. As you might guess, Jason describes his schedule as “a wreck,” but we’re workin’ on it.

  5. Tom says:

    > FYI, Boulder has over 300 sunny days per year more San Diego or Miami

    Let’s see, it’s January: partly cloudy and 70 degrees or sunny and 15 degrees… which do I choose?

  6. 300 Sunny days, 70 degrees in January, and a truly international marketplace. Jason is welcome in Miami for his next concert.