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The Alliance for Southern California Innovation nonprofit organization has hit the ground running, seeking to develop and fortify the region’s technology and startup prowess into a bastion similar to (dare they say it?) Silicon Valley, Northern California’s Holy Grail of high-tech startups. And with the NorCal folk pushing housing prices and the cost of living seemingly to the brink, the Alliance thinks the market saturation there can bring billions in untapped potential to the sunny south, a geographical footprint that extends from Santa Barbara to San Diego. Southern California, in its entirety, is widely recognized as a territory of some 10,000 square miles, 20 million people and a $1.3 trillion economy, the 15th largest in the world.
That might make the Alliance’s mission a challenge, but one that Executive Director Andy Wilson eagerly accepts. The Pasadena city councilman, apart from representing District 7, relishes launching problem-solving startups and bringing people together.
“Every great entrepreneurial venture starts with a crazy idea. Our crazy idea is we’re going to make a difference in a $1.3 trillion economy with 20 million people and we’re going to do it by finding that first great product that will make a difference,” said Wilson, who, with a systems engineering background, has created or co-created about six ventures previously.
“The timing for SoCal is very good right now. Timing is very important. Things have been lining themselves up for the last decade, and I think, hand in hand with the fact that Silicon Valley has reached some saturation, this is the period when it’s time to pull all the pieces together and move our stature to more closely align with the potential of the region.”
Wilson sat down to discuss the Alliance at one of his favorite meeting spots, Jones Coffee, frequently pausing to shake hands and nod hellos to familiar faces. “You’ll find that caffeine is the undercurrent of tech junkies,” he joked, introducing a colleague who fit that bill — Minnie Ingersoll, partner in the TenOneTen venture capital firm.
Ingersoll, a former Google product manager turned entrepreneur turned venture capitalist, recently moved locally from the Bay Area, partly so she could reside in Pasadena with her three kids “and a house with a yard,” she said. She admitted that Wilson had waged a persistent campaign to get her into the area.
Together, the two spoke excitedly about the potential of SoCal as a Silicon-style technology hub and the possibilities in optimizing conditions for the region’s innovators to bring breakthroughs to the world at large, which is the Alliance’s mission.
“I love Southern California and I also love cool stuff happening around me, so that vibrancy is really what makes SoCal interesting,” Wilson noted. “It’s great to have incredible problem-solvers building incredible companies, and I think we’re just on the precipice of seeing that happen.”
The Alliance teamed with the Boston Consulting Group to take a fresh look at SoCal as a magnet for a new generation of tech innovators. They found, among other things, that the region claims the largest concentration of research universities, is No. 1 for tech Ph.D.s and No. 2 for engineering graduates. The area also saw 1,000 patents issued in 2017, is the home of more than 80 Nobel Prize winners and boasts more tech-based employment than any other comparable area. Meanwhile, the cost of launching a startup in Silicon Valley has doubled in the last five years.
“It’s fun to be a part of something that’s growing, and SoCal feels like this very fun, collaborative ecosystem. … There’s very much this feeling of ‘a rising tide lifts all boats,’” added Ingersoll.
There is also a keystone problem emerging in Silicon Valley, Wilson emphasized: With tech titans like Facebook, Google and Apple consuming the lion’s share of employee talent and resources, NorCal is facing a “monoculture of thought.”
Which highlights one of SoCal’s biggest advantages — its singular diversity, and not just socioeconomic or ethnic or racial diversity, although those matter too, Wilson said. That diversity empowers the research institutes and cities with their own brands of tech, ranging from agriculture technology innovation at UC Riverside, cyber security and medical technology at UC Irvine, or AI, robotics and machine learning at Caltech in Pasadena.
The diversity in thought and innovation creates the building blocks of an important ecosystem, which the Alliance wants to sort and analyze. So far, it has broken the region into 14 distinct innovation hubs.
“What’s cool is they each have their own unique product DNA, so it’s not just one homogenous place but a network. … All their stories are complementary and diverse; we think of that diversity as the glue that holds all of SoCal together, whether it’s diversity of perspective, culture, technology or innovation,” Wilson said. “I like to think of it as one giant constellation where they all add up to something bigger than their pieces. So standing up communities and empowering them to tell their piece of the narrative is a really important part of our job.”
The nonprofit has joined forces with leaders at some of the top research universities, including Caltech, which looks to groups like the Alliance to help commercialize the institution’s research, according to Caltech Chief Innovation and Corporate Partnerships Officer Fred Farina.
“We are continuing to add to our capability to turn our great science into successful companies and will be launching new programs to support early stage startups,” said Farina, adding that Caltech already oversees the spinoff of 10-12 new companies every year. “However, Caltech cannot do it alone — we’re excited to be working with the Alliance and other top SoCal research universities to create a powerful innovation network that allows the incredible potential of the region to be more fully realized.
“Effective collaboration both locally and regionally are vital to Caltech fully realizing its potential as an engine of innovation producing breakthrough new products, successful startup companies and more high-quality jobs in the local economy.”
Creating those high-quality jobs across Pasadena and SoCal is another long-term goal for the Alliance. Currently, only about 28% of talent produced here stays local, Wilson noted, whereas in NorCal, about 66% of the talent remains local.
About six years ago, Wilson helped to create a smaller prototype of the Alliance, a nonprofit called Innovate Pasadena, which has created a community platform to leverage the city into a more transparent nucleus of high-tech innovation and collaboration.
“These companies can create high-quality jobs — this is a very expensive place to live — so ultimately we think of this as an economic job development creation play. We have the critical ingredients to pull it off,” Wilson added.
Sean Moriarty, CEO of Leaf Group, also was involved in founding Innovate Pasadena. Now, as head of a public consumer internet company that builds brands based on L.A.’s Westside, he sees the value in creating a more regional collaboration.
“Innovation and entrepreneurship are the lifeblood of progress, and they only thrive in connected and supportive communities,” Moriarty said. “I was thrilled to see the Alliance working across the entire region. I have been building tech companies in SoCal for two decades, and the time is ripe for us to break out and become a global leader. We are excited to be working with the Alliance to take advantage of this timing and allow SoCal to realize its full potential.”
Helping research institutes connect and collaborate increases the interest of SoCal business leaders and possible venture capital funds, Wilson said. Leaders at Goldman Sachs, Warner Bros., Qualcomm, Disney and Kaiser Permanente have supported the Alliance.
Julie Miller-Phipps, a Kaiser Permanente regional president, sits on the Alliance Advisory Council.
“The Alliance for SoCal Innovation’s efforts to energize and unify the diverse innovation assets here in Southern California, including right here in Pasadena and the Greater L.A. area, are just the boost that our region needs to establish itself as a critical hub for innovation,” Miller-Phipps said. Kaiser “is continuously thinking about and planning for the future of health care, and organizations like the Alliance allow us to participate in the vital dialogue between tech visionaries, academic minds and industry leaders as we shape the future of innovation in our region.”
Going forward, the Alliance wants to connect the SoCal nodes and increase startup density, and ultimately guide angel investor groups and venture capitalists like Ingersoll to the right project. Statistics show that SoCal imports about 80% of investors from outside the region, Wilson noted, with the region consuming about $8 billion worth of venture capital in 2018.
Silicon Valley, by comparison, consumed about $60 billion last year, meaning “we have a little gap to close,” he joked, adding that local investors mean local checks, lending critical early support to an innovative idea.
Venture capitalists will give more when they trust and believe in both the creator and the product, he said. That means that if investors can visit four to five innovations in one day, the faster they can take decisions and get the money flowing.
“Having more capital here locally really allows entrepreneurs to get the critical capital support more easily and earlier, especially in that mid-stage development. If you don’t know that person, the standards an investor holds them to are a lot higher and they start looking at metrics [how many clients, etc.], but a personal relationship helps access that capital earlier,” Wilson said.
He is eager to raise the bar for all those innovators and investors alike.
“All these small to medium-sized businesses, they’ve been constrained; they’ve been scaling their expectations,” Wilson noted. “We need people to be bold and encourage them to shoot for the moon.”