My Journey in Radical Transparency

What are you the best at that you enjoy doing the most?

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San Diego nExT: Part 4 of 5- What’s nExT

{OPENING THOUGHT: This post was the first San Diego nExT post I wrote back on February 21, 2016. Obviously it’s taken me way too long to get these out and many things have changed since then. Just keep this in mind as you read through the post. We’ve come a long way in the past year.}

n Entrepreneurs x Technology = Startup Ecosystem

How can we get this done? San Diego nExT- A catalyst organization that works with other active groups to foster the growth of the entrepreneurial spirit in San Diego. We can maximize the impact by coordinating efforts with groups like Seed San Diego, San Diego Venture Group, UC San Diego, Connect, EvoNexus, Startup Leadership Program and Startup San Diego. This will catalyze the rest of the ecosystem and provide opportunities for others to get involve in whatever way that’s most meaningful to them. Mentor, adviser, team member, syndicate investor, angel investor, founder, we’ll work to connect them all.

Each program will be created by entrepreneurs to develop methods to support other entrepreneurs in testing ideas and build companies. The initial program will be an idea accelerator focused on helping entrepreneurs understand how to measure the size of the problem they’d like to solve. They’ll learn to run test to better understand if this is the opportunity that’s worth pursuing further. From there they’ll have an opportunity to present their findings and apply for the accelerator stage of the program to help put the idea into action.

This can be facilitated through an early stage life cycle fund. The fund will work with entrepreneurs to develop programs to support other entrepreneurs in testing ideas and build companies. The full cycle fund has the ability to support a select number of companies all the way to their series A. All along the way it will catalyze the rest of the ecosystem and provide opportunities for others to get involve in whatever way is most meaningful to them. Mentor, advisor, team member, syndicate investor, angel investor, program manager, etc…

Here’s an example of how this could be done. First, we create a regional seed fund that funds programs to help grow the earliest stages of company development. The primary goal is to fund companies that can not raise traditional venture capital. We consider these independent companies.

Historically it’s been very challenging to create a venture fund that only focuses on one particular region. The biggest challenge is primarily deal flow. The paradox comes from a limited number of regional deals vs the need to deploy the fund in a timely manner. Of course there are exceptions to this rule and we have an industry here that is one of them. There is a high enough concentration of Biotech and Life Science companies here that we can focus a fund primarily in this vertical and secondarily on the region. However, this doesn’t exist for other industries.

The first way to address this is to start with funding even earlier stage teams. This creates stronger ecosystem with a solid foundation for building higher quality and greater quantity of deals for later stage funds. The second thing to do is work with the right local limited partners. We’ll need to make sure interests are aligned and that you don’t have institutional pressure to invest the funds before it’s in the best interest of the entrepreneur and the startup.

San Diego nExT will participate in the creation of several new programs. The first program will be an independent idea accelerator. This program will help individual entrepreneur’s better define their idea and within a very short amount of time be able to conclude whether or not this is something that they should pursue. The program’s goal is to give entrepreneurs their first bit of outside money that provides an incentive for them to focus on their idea. They learn the techniques required to test an idea so they can understand why they should continue working on this idea or why they should move on to a new one. They’ll now have the skills required to understand if that idea is worth pursuing and what to do if not.

The second program will be a life cycle accelerator program. This program will work with the individual entrepreneur’s with ideas that are worth pursuing and help them build companies. We’ll cover team building, business model, finances, and customer development. The goal for this program is to help the entrepreneur determine their idea’s product market fit. In addition to providing some initial funding we’ll also match the teams with mentors and train them with the skills they need to build a great business. The structure of the investment will allow us to have aligned interested even if the company doesn’t end up having an exit or raising additional outside funds.

Imagine what our ecosystem would look like if we could rally our resources around the creation of 100 home grown $50mm companies instead of hoping we can attract 5 unicorns.

{CLOSING THOUGHT: Now that I’ve waited so long to post these I already have an idea of what this looks like in action. Part 5 will talk about some of the results we’ve seen over the past year.}

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San Diego nExT: Part 3 of 5- The Solution

We need to be bold and make the unimaginable a reality. The scope will focus on what could happen in the next 20 years and making it happen in the next 5. The concepts need to be audacious and story worthy. How can our community work together to become San Diego Next?

We have all the elements required to create the next great age.
Platform, Sensors, Data collection, Information generation, Knowledge creation, Wisdom

These concepts apply to everything from Medical Devices, Robotics, Nanotech, Internet of Everything, Genomics, Cyber Security and everything Big Data. San Diego has an amazing set of existing infrastructure to utilize as a launch platform for what’s to come. However, we must do a better job of working together to accelerate the growth. If the current course continues of each industry remaining siloed, growth will be slowed due to redundant resources use to discover the same results. Many of the greatest innovations come from applying the technology from one industry to another.

This is all maximized through a dense growing population. Each time a community doubles it’s population the total productivity increased by 15%. This is for both input and output, efficiency and performance. We work better together.

These are easy concepts to understand but very difficult to execute. We can increase our opportunity for success by applying proven models in innovative ways. The end result will be uniquely San Diego and take us to what’s next.

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San Diego nExT: Part 2 of 5- The Challenge

As with any situation, for there to be opportunity there must be challenges that are worth addressing. I’ve focused my attention on those affecting our startup ecosystem. It’s very difficult to identify a single root cause for any of these challenges. However, we can work together to create a positive set of outcomes that lead to more progress.

Education

Throughout school we’ve been taught to study for the test and by answering the questions correct you succeed. The problem is that’s not the way most things work in life. Rarely do you get a manual that tells you the right decision so you can recall it at some point in the future. The ironic part of all this is that our education starts off in the right way. As babies we’re constantly experimenting and learning from running tests. As we get older this tends to get extracted from the process in an attempt to make things more efficient.

We find this happening all the way through college where students come out with a degree but they’re not equipped with all the skills needed to immediately contribute to an organization. Concepts and theories are very important to understand and can be helpful. However, they’re no replacement for practical implementation and the ability to adapt. It’s never been more important to continuously learn.

How can we measure our success based on our ability to learn?

Business

I consistently hear the same thing from investors. First, there are only 4 or 5 investable tech companies that come out of San Diego each year. This comment makes me wonder “who’s responsibility is it to create more investable companies?” The answer I hear is “Good entrepreneurs will find a way to make it happen.” Second, capital is efficient and will get to the best opportunities. Yet, when you look at the cap tables of some of the best up and coming companies the majority of their funding has come from out of the area.

Both of these statement have merit however, using this as an excuse to not participate in the earliest stages of our ecosystem is short sighted and detrimental. The missing facts are:

1) Good entrepreneurs will also go to where they think they have the best opportunity to succeed.

2) Outside capital doesn’t get redeployed in the ecosystem after a successful outcome. This makes for a very challenging startup environment.

3) Exits are not the only way for companies to add value to a community.

From entrepreneurs the two things we hear are. First, there’s not enough local investment dollars to go around. Second, it’s hard to find good talent here. There’s a second job syndrome that prevents someone from taking a good job offer because of concerns that there are limited opportunities in the area if things don’t work out.

Again, good merit to both statements. However, we know that there are some active investors in the community and capital is efficient. Right? We also have the military bases and a top computer science programs right in our back yard. Where’s the talent all go? The most common answer is “back home.” .

How can we measure the success of our ecosystem based on the quality of support for entrepreneurs?

Government

Politics get in the way of governing. It’s impossible for any one politician to know everything there is about their district. They must rely on others to help them understand as well as rely on the support of others to help them get elected. The programs created to resolve the issues of the past don’t fit in the world of constant rapid change. We need to find ways to be more versatile and still keep the accountability and measurable outcomes required to promote the outcomes to constituents.

Applying the old solution to a new problem in a different way isn’t going to solve the current problem. The greatest challenge is that our government officials have a set of solutions that have been applied in a certain way so they know it’s OK to use them. Changing the way those work opens up an all new set of questions that can be hard to address. They want to help, it’s tough to know the best way given the current set of tools at their disposal. If you want to be innovative and the first question you ask is “Where has this successfully been done before?” you’ve missed the point!

How can we create an environment where testing new combinations of innovative ideas is valued and celebrated?

Health

There’s a negative connotation around San Diego for being known as the place that people go when they’re tired of working so hard. There’s a lot of talk about having a good work/life balance. The challenge is this implies the two concepts are opposites that need to be balanced. Why can’t we just live? More and more we understand that they’re both important and that our ability to have experience throughout is key to a positive lifestyle. With today’s focus on healthy living, a cleaner environment, and working well together the current workforce values quality of life at both home and work.

How can we create a positive message around living life?

Art

In a recent talk Dr. Don Norman from the UC San Diego Design Lab said “San Diego isn’t known for great creativity and innovation even though we’re full of it.” Really great things are happening, this highlights the need to celebrate and share our creative community. It’s strange to walk around an urban environment and have most of the public art only on display in tourist areas. With so many blank walls on the sides of buildings, open courtyards, and bland lobbies it’s a wonder anyone thinks of us as being creative.

There’s also a significant divide between the creative and entrepreneurial communities. This is particularly frustrating considering all the different ways the two group could gain value by working together.

How can we be creative and build more interactivity and engagement in our community?

nExT: Part 3 of 5- The Solution

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San Diego nExT: Part 1 of 5- The Opportunity

Since arriving in San Diego, I’ve often been asked to share my view of the startup ecosystem here. I’ve been waiting to talk broadly about it until I’d had a chance to discover things for myself. I’m happy to say, the time has come to share. Now some may think this is Brant’s Rant too. It’s not.

My verdict? There’s a tremendous amount of opportunity in San Diego. If I thought otherwise, I wouldn’t have chosen to stay. The question then becomes how I came to that conclusion.

When evaluating a community it helps to use a framework that creates a common language. My initial review is focused on the five primary pillars of a community:

  • Education
  • Business
  • Government
  • Health
  • Art

In many communities at least one of these has significant issues and becomes the topic of local scorn. You tend to hear, “If only X were better, then we could be great.” Here’s what I’ve discovered in San Diego, so far.

Education

There’s a fantastic educational infrastructure in place here in San Diego. From primary through postsecondary there are many areas to celebrate. The most notable of these (in today’s economy) is the university system’s ability to do research and educate software engineers. This is the envy of many startup ecosystems around the world.

Business

San Diego also has very strong business growth in a variety of sectors. From the outside, the most notable industries are Biotech, Semiconductors and Tourism. Once here, you realize there’s much more to the story. You can find companies in everything from cyber security, digital marketing, hardware, fitness tech, big data and more.

Government

The local and regional political leaders in San Diego are interested in helping. They continue to stay engaged and listen to the requests of their constituents. Knowing the best way to help, given the resources available, is not always easy or straightforward. That said, having leaders that are taking steps to make a difference is much better than the inaction you sometimes find elsewhere.

Health

Another incredible strength of San Diego is health. From the top ranked hospitals and primary care to the safety in the city, this is a very strong pillar. The peace of mind this provides can’t be underestimated.

Art

Last, but certainly not least, San Diego is home to an amazing arts scene. From fine art galleries and artists to the theaters and musicians, this city has great variety to offer. This also merges into the applied arts of makers, architects and builders and the product of all this can be found in every neighborhood throughout the city. This is just the beginning of our development through design thinking and fostering creativity.

As you can see, I believe San Diego has five strong pillars that make it the amazing ecosystem it has become. If that weren’t enough, these traditional pillars are complemented by the military presence here and the bi-national culture in the area. These additional two pillar are only available in a few key areas and are rarely seen in a single community. This is a major differentiator for the region.

From a high level view San Diego has it all, plus some. Why would you want to be anywhere else?

Of course, this is just one opinion. I’m always interested in discussing other views. What aspects of each community pillar do you like the most?

nExT Up: Part 2- The Challenge