Regional Technology


December 2, 2002


Defining the landscape in 2003

Wherever I go these days, people ask me (with great hope in their eyes) what I think the new year holds for San Diego. It's clear that we are still waiting for the other shoe to drop -- or the axe to fall -- but eager to hear that things will turn around soon.

Looking into my crystal ball, however, the picture is only clear for a short distance, and this unpredictable landscape keeps business in a zone of discomfort.

A waiting game

It's unfortunate, but I suspect that some folks, especially younger tech workers who have not experienced the full peak-to-valley cycle of business, are waiting for the markets to "return to normal." But their expectations are based on 1999 levels of uncharacteristic valuations and frenetic market hype. No matter how long they wait -- and how Wall Street continues to tease us -- I am sure that those heady days of the late '90s are not returning anytime soon (at least not until we have forgotten the painful lessons learned).

The horizon is rolling

But we do have short-term vision and most industries can see the horizon, even if it seems to be rolling out in 30-60 day increments. This makes planning revenue, products and resources a real challenge and makes it nearly impossible to accurately assess risk. Veteran CEOs are hoping for the best but preparing for the worst. Clearly, this is not a fun process, but as a survival strategy it is reasonably solid.

What does seem clear

What I do see, though, are two somewhat positive phenomena. First, there is evidence, both in employment statistics and venture investments, that San Diego has been less devastated than many other emerging tech sectors nationwide.

And second, there are a lot of companies taking advantage of this lull in competitive activity to patiently and quietly build value while their over-hyped competitors are losing ground and burning the last of their investor's capital.

Those firms successfully navigating through the current market crisis have found a business model -- either initially or by re-purposing their core technology -- that addresses major problems or real distress points for their prospective customers.

Smart survivor companies are morphing and are attempting to position themselves to address projected market pain -- that is, problems which have not yet become fully apparent but which are likely to accompany a continuing downturn or a period of stagnation.

And while the concept of providing a "painkiller" rather than a "vitamin" is nothing new in the tech sector, it is clear that those companies that successfully help customers reduce costs, increase sales or otherwise keep their businesses afloat will ultimately triumph. Companies with solid value propositions that are highly targeted and customer focused, with a generous dose of resourcefulness, are likely to emerge as San Diego's backbone firms when the downturn subsides.

Small companies -- and we have many in this town -- can be sufficiently nimble to correct quickly as markets evolve. But the winners will be those ventures that can keep their radar operating, even while they have their heads down and their noses to the proverbial grindstone.

At our core, San Diego is a community of entrepreneurs. And entrepreneurs are touted for their optimism, for seeing the glass half full. But lest you think that I'm a Pollyanna, my real assessment of the landscape for the start of 2003 is much more practical than that. In the words of Nietzsche: "What does not destroy me makes me stronger."

Orion is president and CEO of the San Diego Regional Technology Alliance. He can be reached at


December 2, 2002