An Xconomy Analysis: Five Ideas to Boost San Diego’s Software Sector

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companies (both large and small) that are focused on genome sequencing, diagnostics, RNA therapeutics, stem cell therapeutics, and various other biomedical breakthroughs.

But getting to the hard problems in high tech is another matter, especially with the ascendance of software as the crucial ingredient in a far-reaching technological and economic shift. As Marc Andreesen put it, “Software is eating the world”—and the depth of San Diego’s bench—or rather, the lack of depth—is problematic.

The importance of software to the innovation economy cannot be overstated, yet the nonprofit software industry group in San Diego is adrift and unfocused. Software is everywhere. It is critical to innovation across a range of industries—as important in analyzing whole genome sequencing at Illumina (NASDAQ: ILMN) as it is for next-generation wireless technologies at Qualcomm (NASDAQ: [[TICKER:QCOM]]). Yet San Diego’s industry has fragmented into groups interested only in specific areas like cybersecurity and analytics.

Meanwhile, economic forces and rival interests have been undermining San Diego’s software sector.

Exhibit No. 1 is the departure of three of San Diego’s biggest software-dependant companies over the past year. The Active Network, Websense, and Omnitracs have all relocated most, if not all, of their operations to Texas. Local news coverage has focused chiefly on the economic impact, which includes the loss of about 1,200 jobs. But a more subtle factor may be even more important.

According to a private equity investor who oversees a $1 billion fund focused solely on software deals, the most critical deficiency in San Diego’s software sector is the dearth of 40-year-old executives who spent their previous 15 years at Web companies like PayPal and Salesforce.com. These are the people with the experience and credibility that investors look for in startup CEOs.

In this way, executives like Bruce Hansen, Russ Mann, and Krishna Gopinathan, who all earned their stripes at San Diego’s HNC Software, went on to help found ID Analytics, Covario, and Global Analytics, respectively. Fred Luddy, who was the chief technology officer at San Diego’s Peregrine Systems (now part of HP), went on to start ServiceNow.

Of course, many new software startups are springing up in San Diego, and incubators like EvoNexus play a … 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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4 responses to “An Xconomy Analysis: Five Ideas to Boost San Diego’s Software Sector”

  1. Tony Maniaci says:

    The three companies moved to Texas because they received money to move there. I can understand moving to the Bay Area but why Texas unless it is reduce costs, or as usually happens, they are paid to go. Vista is based in Austin.

    • Yes, I thought we had put to rest the idea that the 3 companies leaving San Diego had anything to do with San Diego, per se. It’s an easy way to make an argument, I guess. The companies didn’t just up and leave, they were *acquired* by a private equity company. Private equity typically seeks out companies with flat revenues, reduces their operating costs while while searching for new growth, in order to flip them.

  2. Bruce, we totally agree with you that providing solid tech talent is really an important part of helping more companies grow and stay in San Diego. Thank you very much for the shout out. LEARN, Notch8’s bootcamp is starting its first class January 5th and we’ve already secured enough desire for interns to fill several classes worth. There is absolutely no doubt in my mind that there is serious unmet demand here.

  3. Bruce, we totally agree with you that providing solid tech talent is really an important part of helping more companies grow and stay in San Diego. Thank you very much for the shout out. LEARN, Notch8’s bootcamp is starting its first class January 5th and we’ve already secured enough desire for interns to fill several classes worth. There is absolutely no doubt in my mind that there is serious unmet demand here.