It is conventional wisdom that if you want to launch a startup, Silicon Valley is the place to be. The funding, talent and resources are available in spades there. So people have flocked there hoping to become the next Facebook or Google, and some have succeeded.
We made a different choice. For us, San Diego was a smarter choice to launch our two businesses, Zeeto Media, an online media company, and TrustEgg, a simple venue to start online trust accounts for kids. The weather was certainly a seductive draw. It’s hard to ignore the climate and laid-back lifestyle of this Southern California city, but that is not why we are here.
Our businesses are very different and we have different startup needs. But we both have found the necessary resources and atmosphere here in San Diego. For TrustEgg, it was the home of our co-founder and the opportunity to be part of a community that is so willing to put all available resources they have behind startups like ours. For Zeeto, it was finding a place where we, two young co-founders, could afford to live and start a small business with little resources while still enjoying the social culture and livability of a vibrant downtown.
Forbes recently named San Diego the No. 1 city in America in which to start a business. San Diego topped most of the categories of by social media adoption and usage as well being small-business friendly. Additionally, Inc.com just featured San Diego as one of the most innovative cities across the nation, dominating the market in patents relating to recreational activities.
But in terms of launching a new business, we felt like there were additional benefits to San Diego that weren’t drawn out by the criteria. First, it is still a relatively “small pond” compared to the Bay Area. There is a lot going on here, but not so much that you have to compete for the help you need.
San Diego still very much considers itself a small beach town, so it is easy for a successful company to get noticed and get access to resources. There is a great pool of talent here already and it is relatively easy to entice people from other parts of the country to San Diego.
TrustEgg’s need was funding and guidance. Most of our funding comes from San Diego Angel investors such as Harvard Business School Angels and Tech Coast Angels. Most of these investors are engaged and offer help and advice on a regular basis. And as any startup knows, the best funding also comes with the expertise and connections you need and can’t get elsewhere.
Zeeto has thrived without any external funding and our rapidly growing business has gone from three to 50 employees in three years. This would have been an even more expensive and risky proposition in the Bay Area.
Here in San Diego, because the cost of living is significantly lower than in Palo Alto, we can pay our talent at or above market prices and still continue to grow the business. We also offer our employees all of the great cultural features of working at a Silicon Valley startup (or giant) in a town with the lifestyle of Southern California built around things they care about, such as the outdoors, active sports communities and beer (we even brew our own at the Zeeto office).
In any other city, it would be hard to get all of these great benefits in one place, but that’s not to say that San Diego is perfect. There are always areas for improvement. The city is still working to perfect its startup culture. We could use a few more venture banks that understand startup business models. And our community of accelerators and incubators could work more collaboratively and take better advantage of the many business expertise that exists in San Diego.
While there is funding here, as TrustEgg has shown, overall there is a need to get more investors looking at San Diego and more San Diego investors keeping their money here. This is already happening with some of the younger and newer venture funders such as Andrew Canter of Canter Capital leading the way.
It would also be nice to find more available office space that fits the needs of a tech company — more open concept, fewer cubicles. There is not enough organic infrastructure to create an atmosphere of collaboration. We want to be able to show up at a random bar on any given night — not just at a “tech happy hour” — and potentially meet a new business partner. You can do that in San Francisco, but not yet in San Diego.
We need more companies and entrepreneurs to establish an environment where like minds can be brought together. This kind of infrastructure exists for larger, more established companies in the tech and biotech sectors, but not for the larger entrepreneurial community.
These are all things that will naturally improve as this startup community grows. In the meantime, this ranking is definitely a well-deserved tip of the hat to San Diego and we hope it brings more entrepreneurs our way. San Diego was no question a great choice for us to launch our businesses, and writing this while wearing shorts and flip-flops in early April doesn’t hurt either.
Goss is CEO of Zeeto Media and is involved in several civic organizations promoting San Diego’s tech startup community. Brice is CEO of TrustEgg.