An Xconomy Analysis: Five Ideas to Boost San Diego’s Software Sector

companies (both large and small) that are focused on genome sequencing, diagnostics, RNA therapeutics, stem cell therapeutics, and various other biomedical breakthroughs.

But getting to the hard problems in high tech is another matter, especially with the ascendance of software as the crucial ingredient in a far-reaching technological and economic shift. As Marc Andreesen put it, “Software is eating the world”—and the depth of San Diego’s bench—or rather, the lack of depth—is problematic.

The importance of software to the innovation economy cannot be overstated, yet the nonprofit software industry group in San Diego is adrift and unfocused. Software is everywhere. It is critical to innovation across a range of industries—as important in analyzing whole genome sequencing at Illumina (NASDAQ: [[ticker:ILMN]]) as it is for next-generation wireless technologies at Qualcomm (NASDAQ: [[TICKER:QCOM]]). Yet San Diego’s industry has fragmented into groups interested only in specific areas like cybersecurity and analytics.

Meanwhile, economic forces and rival interests have been undermining San Diego’s software sector.

Exhibit No. 1 is the departure of three of San Diego’s biggest software-dependant companies over the past year. The Active Network, Websense, and Omnitracs have all relocated most, if not all, of their operations to Texas. Local news coverage has focused chiefly on the economic impact, which includes the loss of about 1,200 jobs. But a more subtle factor may be even more important.

According to a private equity investor who oversees a $1 billion fund focused solely on software deals, the most critical deficiency in San Diego’s software sector is the dearth of 40-year-old executives who spent their previous 15 years at Web companies like PayPal and Salesforce.com. These are the people with the experience and credibility that investors look for in startup CEOs.

In this way, executives like Bruce Hansen, Russ Mann, and Krishna Gopinathan, who all earned their stripes at San Diego’s HNC Software, went on to help found ID Analytics, Covario, and Global Analytics, respectively. Fred Luddy, who was the chief technology officer at San Diego’s Peregrine Systems (now part of HP), went on to start ServiceNow.

Of course, many new software startups are springing up in San Diego, and incubators like EvoNexus play a

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.