Building a SoCal Superstar Region for Innovation
We were thrilled to see San Diego included in the top five superstar metropolitan areas in The Brookings Institution’s new report The Case for Growth Centers. The study calls attention to five superstar metro areas — Boston, San Francisco, San Jose, Seattle, and San Diego — that are capturing a greater national share of innovation sector jobs. Metro areas like San Diego have reason to celebrate — innovation sectors create high paying jobs and provide economic benefits to their metros, including additional tax revenue.
At the Alliance we seek to nurture and accelerate the growth of a vibrant entrepreneurial ecosystem across Southern California and San Diego’s success is our region’s success. At the same time many of us were surprised to see the Los Angeles superstar metro area, which also encompasses half of Orange County, rank so poorly in the Brookings report. The combined region accounted for the largest percentage decline of innovation related jobs out of the top 100 metropolitan areas (see Appendix A). The report does not sufficiently explain their methodology or give much insight into the contributing factors behind the changes in innovation sector jobs for any of the cities over the 12 year measurement period. Assuming the Brookings report is accurate, it doesn’t change the larger story about SoCal’s innovation potential as a superstar region!
SoCal produces enough tech talent to be a top hub for US innovation and a significant generator of innovation related jobs. If you combine the tech talent from San Diego, Los Angeles, and Orange County (ranked 18th, 23rd, and 26th respectively in CBRE’s 2019 Scoring Tech Talent) you get a total of 286,000 tech related jobs. This combined figure vaults SoCal into the number two slot just ahead of New York and just behind the aggregated SF Bay Area, which includes the San Francisco, Oakland, and Silicon Valley metros.
The CBRE study also illuminates the dramatic and recent growth of tech jobs in the SoCal region that the Brookings study misses, perhaps due to its longer measurement period that stretches back to 2005. The SoCal tech workforce garnered a growth rate of 15% across the region between 2013 and 2018. The CBRE study also specifically calls out the surges in both San Diego and Los Angeles’ tech workforce with a 10.2% and 4.2% momentum change respectively from the previous two year period (CBRE, p17). CBRE’s findings are also consistent with the work the Alliance conducted in partnership with BCG, which highlighted SoCal’s leadership in producing more tech Ph.Ds than anywhere else in the country.
Another key indicator of SoCal’s growing innovation growth potential are the investments landed by local unicorns and the high profile exits by companies-based in SoCal. A recent piece by PitchBook highlights some of the massive exits that local SoCal companies have received. These include Honey’s acquisition by PayPal for $4B, Snap’s $19.7B IPO, NantKwest’s $2B IPO, NantHealth’s $1.7B IPO, Cylance $1.4B acquisition by Blackberry, Greendot’s $1.4B IPO, Leaf Group’s $1.4B IPO, Beyond Meat’s $1.5B IPO, Dollar Shave Club’s $1B acquisition by Unilever, and Telogis’s $900M acquisition by Verizon. The Pitchbook piece missed last week’s announcement by La Jolla-based startup Synthorx’s sale for $2.5 billion to Sanofi. Collectively, these liquidity events will help seed SoCal’s next round of innovation companies.
The recent assessments by CBRE and PitchBook reflect a maturing and accelerating SoCal innovation ecosystem. The Alliance and our regional network of partners share a commitment to unlock SoCal’s innovation potential and we are enjoying unprecedented unity and coordination across the region. Our regional gathering of SoCal Innovation leaders last month was our most recent effort to galvanize and accelerate this momentum in our region. To be sure, there is much that still needs to be done and we are working with our partners to develop the catalytic projects that can move our region forward and help translate our potential into impactful results. Please get in touch if you would like to be part of the journey.