Why Comma.ai, Maker of Self-Driving Tech, is Moving to San Diego

Tech salaries may not be as high outside of Silicon Valley, but neither is the cost of operating a business—or the cost of living.

San Diego’s startup community has rejoiced in recent months as massive companies that employ thousands of engineers—including Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and the tech arm of Walmart (NYSE: WMT)—have announced expansions in the region.

Local entrepreneurs hope that investment will make other tech businesses, including early-stage companies, more comfortable settling in the region, where concerns about talent recruitment are long-standing. One Palo Alto-based startup has already made the move, announcing last week it will be relocating from the Bay Area to San Diego’s Little Italy neighborhood.

Comma.ai makes a system that outfits a number of cars produced by a range of automakers—among them, cars made by Chevy, Honda, and Toyota—with self-driving software and hardware. Comma has open sourced the software, which it intends to be used with hardware that it sells.

Whether Comma would be able to bring on top talent in San Diego as the company continues to grow was a consideration in the decision to move, said Comma’s CEO Riccardo Biasini, but the news of big companies that are expanding in the region played a role in ameliorating that worry. Biasini spoke on the phone with Xconomy on Monday from San Diego International Airport, as he waited to board a Bay Area-bound flight after a weekend with other Comma employees checking out their new office and scouting for housing.

Comma was founded in 2015 by George Hotz, who is perhaps best known for being, at age 17, the first person to “jailbreak” the iPhone, hacking it so it could used outside of the network of AT&T (NYSE: T), with which Apple (NASDAQ: AAPL) had partnered exclusively on the device’s release. Hotz now leads Comma’s research team. Last year he abdicated the top role at Comma to Biasini, its then-vice president of quality, who had previously joined the company after five years with Tesla.

Unlike some young companies, Comma has a product. It also has customers. About 1,500 people use its $499 Eon Dashcam DevKit, hardware that drivers can use for “passive” assistance, or notifications of potential hazards, Biasini says. But it’s really meant for use with Openpilot, the self-driving software Comma has developed for “active” assistance, such as keeping a car within lane lines. Comma once intended to the sell the software, but decided to open source it and sell only the hardware after a warning from the National Highway Traffic Safety Administration that it would block sales without proof of its safety, according to news reports at the time.

Biasini says Comma is looking to partner with automakers and providers of driver assistance systems to expand its reach. (It’s on the radar of at least one carmaker: Tesla took issue with a Bloomberg profile of Hotz and Comma written in 2015 by Ashlee Vance, who took a ride with Hotz in an Acura he had outfitted with a self-driving system. That year Vance published a best-selling biography of Elon Musk, the first with which the mercurial serial entrepreneur cooperated.)

While Tesla and others talk of self-driving cars, the Comma team sees a major opportunity to make driving safer today by getting some autonomous features to human drivers in the years before, perhaps, all vehicles gain autonomous navigation abilities. Comma obtains data from its users (if they give the OK), which uses it to improve the software, Biasini said. So far it has data from more than 8 million miles of driving.

“We [are trying] to make a sustainable business, which means making money based not purely on VC monies purely, but, after the initial investment, making a viable business by selling products,” Biasini says. “By moving to San Diego, we are reducing the expenses of the company.”

Moving away from of the San Francisco Bay Area, the epicenter of VC funding in the U.S. and a rich entrepreneurial environment, wasn’t something Comma seriously considered prior to this year, primarily over worries that its employees wouldn’t make the move, Biasini says. The loss of even a small number of workers from its team of 12 could hamper the entire company.

“You think about it, but you don’t get too serious about it because you think not everybody is going to follow,” Biasini says. “But then, the same reason you’re thinking about moving the company out of Silicon Valley is actually the same reason why people and individuals would be happy to move out of Silicon Valley.”

Read: expenses, especially rent.

Comma has selected an office in Little Italy with space to accommodate the company for the next two years (yes, it’s hiring). Its employees have already started the process of relocating to the San Diego area.

And while some believe the best recruits come from Silicon Valley, many of the 25-odd people who have worked at Comma since its founding have been recruited from outside the region, Biasini says.

“Of course [Silicon Valley] is a good place to hire people from, but it’s insignificant compared to the pool of people you have around the world,” he says. And, hiring there means competing with the established tech companies that can pay much more. Plus, people who can afford to move to or who already live in the Bay may not be interested in the lower salaries that come with the startup life, he says.

San Diego’s airport makes the city accessible and it has a “rising tech scene,” including the presence of chipmaking behemoth Qualcomm (NASDAQ: QCOM), Biasini says. There’s the parks and beaches, too.

Mike Krenn, executive director of the San Diego Venture Group, has in recent years been touting the potential of the region as an upgrade for Bay Area startups, using some rather unorthodox tactics in addition to the usual business development standards.

In 2017, SDVG set up an office in one of the WeWork co-working spaces in San Francisco for use by traveling San Diego startups. It also put up an ad on a digital billboard along U.S. 101 in Palo Alto that posed cheeky questions to the engineers driving by. (Think: “Enjoying traffic?” and “Did you check the surf report this morning?”)

While Krenn readily admits Comma’s move isn’t part of any sort of mass exodus from Northern California to its sunnier counterpart in the south, he also believes it isn’t a one-off instance of a Bay Area startup seeing the benefits of San Diego’s ecosystem.

In Krenn’s eyes, it’s part of a growing body of evidence that San Diego has joined the list of locations, such Austin, Denver, and Seattle, that are obvious landing spots for Silicon Valley companies looking to leave.

Plus, every relocation of a VC-backed company to San Diego means another investor is gaining increased familiarity with the region, he adds.

Talk in town of Silicon Valley eyes turning toward San Diego isn’t new: About two years ago, Bizness Apps’s founder Andrew Gazdecki followed the path Comma is now traversing.

The thought process behind the move, which he detailed in an article on TechCrunch, caused another entrepreneur to post a response critical of San Diego as a startup scene, which was then, in turn, the subject of a missive by Ashok Kamal, now executive director of the region’s Tech Coast Angels chapter.

Gazdecki sold the company for an undisclosed amount to Austin-based private equity firm Think3 last year.

The broader notion of increasing investment outside of the U.S.’s traditional tech hubs has been a topic of discussion in entrepreneurial circles for some time. AOL co-founder Steve Case launched a $150 million “Rise of the Rest” seed fund to invest outside of places like Silicon Valley and Boston in late 2017.

A report published in October by the Center for American Entrepreneurship, a research organization in Washington, D.C., placed San Diego in the second tier of startup cities globally, a group of 13 that includes Austin, Chicago, and Seattle in the U.S. Its authors looked at more than 100,000 venture capital deals made in about 300 places across the world between 2005 and 2017 to make the determination.

Together, the second tier of cities accounted for 18 percent of global venture capital investment from 2005 to 2017. (The report identified the San Francisco Bay Area, Beijing, Boston, London, Los Angeles, and New York as the world’s top tier regions for entrepreneurial activity, together accounting for more than half of all VC funding in that time.)

Most of that money has traditionally gone to the life sciences, rather than high-tech companies. Software startups have been gaining traction of late, though. (Read more about how the region’s tech reputation is changing here.)

Comma has raised outside funding of about $8 million in two rounds: $3 million in a round led by VC stalwart Andreesen Horowitz in 2016 and a new infusion of $5 million last year. The company isn’t disclosing the source of the 2018 financing round.

But Biasini says the company is trying to make it on its own at this point.

“If we succeed according to our plan, we might not need to raise money from VCs again,” Biasini wrote in a March 13 post on Medium detailing the rationale for the relocation. “And if we need to, Silicon Valley is only a one-hour flight away.”

Of course, nothing’s a sure bet in startup land.

“Did we make the right choice by moving to San Diego?” Biasini wrote. “Time will tell, but for now we are all very excited and we can’t wait to start working at our new home.”

Sarah de Crescenzo is an Xconomy editor based in San Diego. You can reach her at sdecrescenzo@xconomy.com. Follow @sarahdc

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