Tech Coast
Like a teenager anxious to become an adult, Southern California’s high-tech industry is impatient to join the big leagues.
With a substantial presence in computers, software, biotechnology, telecommunications, medical devices and new media, the Tech Coast is seeking a place in the limelight alongside Silicon Valley--let alone such regional technology hubs as Seattle, Boston, New York, Raleigh-Durham, N.C., and Austin, Texas.
To get there, local tech leaders say, companies from San Diego to Santa Barbara to the Inland Empire will have to pool their resources--and their clout--to form the kinds of business networks that helped their northern neighbor grow into a multibillion-dollar industrial center.
Two initiatives are already underway to gather the region’s 19,000 dizzyingly varied technology companies under one very big tent. The idea is to facilitate essential community-building and attract the capital, skilled workers and respect needed to propel the Southland into tech’s top tier.
After all, despite its success in nurturing small and medium-sized businesses, Southern California has yet to produce a home-grown role model for striking it big, as Silicon Valley did with Intel and Hewlett-Packard.
“There’s not a single extraordinary example of a successful company, like Lotus [Development] or Digital Equipment Corp. in Boston or Dell or Compaq in Texas,” said Bobby Kotick, chief executive of Activision, a Santa Monica-based video-game developer. “In Los Angeles, who’s the big success?”
But doubts are surfacing over whether an area encompassing nearly 41,000 square miles and employing more than 400,000 technology workers can be unified under a single high-tech banner--or should be.
Companies throughout Southern California say this is already a good place to be in the technology business. Downsizing in the defense industry blessed the region with thousands of talented and available engineers, and local universities--including five UC campuses, USC, Caltech and Harvey Mudd College (the engineering school that is one of the renowned Claremont Colleges)--produce a steady stream of fresh talent. Once hired, tech workers here tend to stay put far longer than their counterparts in Silicon Valley, where job hopping is common.
For tech firms doing substantial business with Asia and Latin America, a Southland address is ideal, local executives say. Hollywood provides a boost to companies involved in developing Internet content, digital television and satellite broadcasting. Predominantly sunny weather and other salubrious factors add to the region’s allure.
“We have everything we need here,” said Mal Hollombe, vice president for sales and marketing at Monrovia-based IVS Inc., which produces interactive voice-navigation products for cars.
But that doesn’t keep local tech leaders from wishing for more.
Start with money. Although Southland firms raised $956 million in venture capital last year, companies in Silicon Valley raised three times as much, according to the accounting firm Coopers & Lybrand. Technology executives lament that so-called “angel” capital for early-stage companies--that is, venture capital raised from wealthy individuals rather than institutional funds--is particularly difficult to come by in Southern California.
“The biggest single problem we have in the Southland is the absence of a well-structured capital system,” said Matt Walton, vice president of marketing and strategy at Illusion, a Westlake Village firm that builds local-area wireless networks and simulation rides. “It’s not just venture capital. It’s also merchant banking and major investment-banking resources to provide the monetary raw materials to really fuel growth.”
Illusion’s senior-management team had to make eight trips to the East Coast in less than two months to drum up venture funding, Walton said. Having top executives away from the company three or four days a week for eight weeks put a severe strain on the company.
Recruiting talent from outside the region is also surprisingly difficult.
“The perception among workers is that if they go to Silicon Valley and that job doesn’t work out, they have a choice of literally hundreds of other job opportunities,” said Bob Cooper, executive director of the Ventura County Economic Development Collaborative. “But they don’t see Southern California as being a hotbed of high-tech jobs. It’s too much of a risk and they don’t take it.”
Much of the blame can be traced to outsiders’ misperceptions of Southern California as a place where “everybody’s a flake, no one gets anything done and everybody ‘does lunch,’ ” said Jim Jonassen, a high-tech recruiter in Santa Monica and the founder of LAwNMoweR, the Los Angeles New Media Roundtable. “The reality is we’re all so busy we don’t have time to promote ourselves.”
Los Angeles Mayor Richard Riordan is hoping to change that image by dubbing the collection of entertainment, multimedia and Internet firms the Digital Coast. The name will be promoted in a marketing campaign designed to garner more respect for the local new-media industry, especially vis-a-vis New York’s Silicon Alley and San Francisco’s Multimedia Gulch.
There is also a push for the region’s diverse tech industries to present a common face to bankers, government bureaucrats and lawmakers.
“We all have very common needs in terms of infrastructure, capital, labor, taxes and zoning,” said Bob Davis, vice president of marketing at Santa Monica-based utility-software maker CyberMedia and a member of the New Media Roundtable. “Our coming together as a community moves us all forward.”
The greatest impetus on this score comes from Orange County, home to 20% more developed commercial space than exists in all of Silicon Valley, according to a study commissioned by the Irvine Co. (which developed a large share of it, including the Irvine Spectrum business park at the juncture of Interstate 5 and the San Diego Freeway).
The Orange County Business Council is working with partners in Los Angeles, Ventura, San Diego and the Inland Empire to coordinate activities that will benefit technology companies throughout the Southland.
Separately, a pair of Orange County businessmen have spent the last nine months building the Tech Coast Alliance, a nonprofit umbrella organization for promoting the region from San Diego to Santa Barbara.
“We’re basically facilitators,” said Phil Bruce, president of the Alliance. His goal is to help companies network in their industry sector, whether they make software, medical devices or telecommunications gear.
He and Chip Parker, the Alliance’s chairman and chief executive, have drawn up plans for a bimonthly Tech Coast magazine and launched a Web site--https://www.techcoast.com--with a consolidated calendar to help tie the community together. The pair of marketers from DeltaNet, an Anaheim-based Internet service provider, also expect to create brochures and interactive multimedia presentations that show off the region’s high-tech industry.
“If we band together and start networking, it will help bring other tech companies into this area,” said Garner Holt, president of Garner Holt Productions, a 20-year-old animatronics firm in San Bernardino. “I think this will really help us help the economy and the community to grow.”
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But others worry that the Tech Coast will become a high-tech laughingstock if the efforts fail to live up to their promise.
“We’re raising the bar and we’re going to have to work really hard to meet those expectations,” said Joe Raguso, executive director of the San Diego Regional Technology Alliance. “Otherwise we’ve just sloganized what is really of value.”
Geographic differences, for example, could scuttle the unity campaigns--especially if they are seen as being driven by dominant Los Angeles and Orange counties.
Emitte Scruggs, director of corporate staffing at Science Applications International in San Diego, said recruiters in her area would probably hesitate to tie their fortunes to counties to the north because they are associated with “earthquakes and gangs, which is a drawback. They would worry that it would taint what we are pushing, which is the quality of life here.”
Some industries may refuse to buy in as well. David Gollaher, president of the California Healthcare Institute, a San Diego-based trade group, doubts that many biotech firms will be interested in the umbrella organization.
“There’s been an awful lot of psychological investment by people in the biomedical businesses of being in a unique industry,” Gollaher said.
Some companies and business groups believe local and regional governments also need to be more energetic.
Local governments could help spur the growth of tech companies by setting up incubators and small business parks, said Lee Hanson, an associate professor of management at Cal State San Bernardino and a member of the Inland Empire Technology Entrepreneurs, an advocacy group for the region’s high-tech industry.
Cities could also help companies sell their wares overseas by organizing export centers staffed by representatives of the California Department of Trade and Commerce, the U.S. Commerce Department and the Export-Import Bank of the United States, said Jon Slater, president and chief executive of Optivus Technology, a San Bernardino firm that produces medical equipment used in fighting cancer.
In San Diego, the Regional Technology Alliance conducts “gap analysis” to find out what kind of skilled technical workers local firms anticipate hiring six, 12 and 18 months down the road. Then the RTA works with community colleges to develop training programs to create that work force. That function could be replicated in other counties, Raguso said.
Several tech leaders called on universities throughout the Tech Coast to step up their licensing efforts transferring technology to the private sector, especially start-up firms.
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It may be years before the Tech Coast gets any of the things on its wish list. But Southern California’s technology elite emphasizes that Silicon Valley wasn’t built in a day. They express confidence that the Southland will one day take its place alongside its intrastate rival.
“Regardless of whether the Tech Coast flies or not, Southern California is and will be a high-tech center for the U.S.,” said the RTA’s Raguso. “Unless there’s an earthquake or the state does something really stupid, I can’t imagine that really changing.”
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Times staff writers Elizabeth Douglass, P.J. Huffstutter, Barbara Marsh and Jennifer Oldham contributed to this report.
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Tech Coast
1. SANTA BARBARA: It’s been dubbed “Silicon beach,” and with good reason. The area’s economy is riding a wave of Internet-driven tech successes fomented by boutique software and telecommunications firms.
2. VENTURA COUNTY/SAN FERNANDO VALLEY: The region’s “Tech Corridor” straddles the 101 Freeway from the Los Angeles city border weaving west toward Santa Barbara. Ventura is the home of Amgen, the nation’s biggest biotech firm. Interactive TV flourishes here, thanks to GTE.
3. LOS ANGELES: Hollywood is in the spotlight, but the real marquee names belong to the high-tech industry. The “Digital Coast” is home to everything from Web site designers to satellite builders to special-effects magicians to computer component manufacturing.
4. ORANGE COUNTY: As the heart of Southern California’s medical manufacturing empire, the area is home to the Food and Drug Administration’s Los Angeles regional office. Irvine Spectrum and its 5,000-acre campus pull together both start-ups and big boys alike. Along the coast, video and computer game developers thrive in garages and at established firms.
5. SAN DIEGO: Two words say it all: “telecommunications” and “biotechnology.” The red-hot “Wireless Valley” is led by Sony and stadium namesake Qualcomm. The region’s huge biotech base thrives in concert with research at UC San Diego, the Salk Institute for Biological Studies and Scripps Research Institute.
6. INLAND EMPIRE: This region is developing as a niche for agricultural technology and mapping systems. With support from the area’s 10 universities, the area from Pomona to Redlandsis hoping to create more success stories like Environmental Systems Research Institute and Kelly Space & Technology.
