San Diego success stories become a challenge for the Midwest

The Madison-area technology business community has received a challenge to grow beyond itself.

Mary Walshok, an associate vice chancellor with the University of California at San Diego, thinks the area has limitations that lie not with its resources or industry, but with cultural barriers that encourage a low profile.

By:
Les Chappell
Wisconsin Technology Network

http://www.nasvf.org/web/allpress.nsf/pages/9603

In Southern California, billions of dollars have been invested over the past twenty years in a booming technology and life science industry. UCSD is a major player in these efforts, facilitating connections among the region’s business, investment, research and entrepreneurial communities.

Midwestern firms have become commercially successful and continue to expand. But Walshok said there is a cultural divide.

"It’s in the Midwestern culture — in Wisconsin they want to know what the result’s going to be," Walshok said. "In California there are all these permeable barriers … you have faith something’s going to happen."

A great deal of the San Diego region’s success has been attributed to a program called USCD CONNECT, an outreach effort founded to connect the region’s public and private sectors. Since its inception in 1985, it has grown to include more than 1,000 companies and been a major player in the industry’s collaborative efforts.

Walshok, a founding member of USCD CONNECT, visited Wisconsin last week and delivered a presentation at Accelerate Madison’s monthly meeting, where she discussed the natural and economic resources San Diego has employed, and what obstacles keep Wisconsin from reaching similar heights.

Separation from the coast

When UCSD CONNECT was founded in the 1980s, San Diego — like California as a whole — was in an economic downturn. The defense contracts the state relied on had had started to dry up, shutting down or contracting outside the area after the Vietnam war. Another major source of revenue, conventions and tourism were not up to picking up the slack.

These traditional revenue sources were gradually lowering, but there was a new "organic platform" coming to light, based on the atmosphere of health and fitness that had drawn many people in. Resourceful individuals, both from the university and business climates, were looking at established research centers such as the Salk Institute for Biological Studies and the Scripps Research Center, and deciding to take a chance.

One success story Walshok related was that of Ivor Royston, a member of USCD’s medical school in the 1970s. When he found himself unable to acquire cells for his research into monoclonal antibodies, he made calls to people he knew in Silicon Valley and began to share ideas. Putting together a team of researchers and investors, Royston founded a cell production company called Hybritech.

While it remained a generally unknown company in the industry, Hybritech grew to more than a thousand employees and was sold for $400 million dollars in the mid-1980s.

According to Walshok, it was stories like this that spurred the founding of UCSD CONNNECT: "Local yokels" and "corporate refugees" were making a fortune but not creating any notice.

"We decided to create a program that brought the life science guys together with the IT guys, put them in a room with the business people." Walshok said. "We held events where we said, ‘Come meet the guys who just sold a $400 million dollar company,’ and people said ‘We have a $400 million dollar company?’ Hundreds of people came."

Getting it

Walshok credited the success of UCSD not just to the dedication of its workers, but the enthusiasm that exists in the climate as a whole. Walshok said California has an an atmosphere that encourages change and innovation, much of which stems from a ‘pioneer spirit’ that people who moved out west brought with them — a desire to make fresh start. This exists as a contrast to Wisconsin, an older, more insular society that doesn’t encourage as much innovation.

Small businesses that ‘cluster’ together are also a factor in California’s success, since they are more nimble in a competitive environment. It also provides employees and investors with more freedom, because if one investment or job fails there is one literally right across the street. In the Midwest, where the view is focused on larger companies, it is harder to work up the courage to move on when only one opportunity appears to be available.

"They don’t get that here — that having ten small companies is better than having one John Deere," Walshok said. "Risk calculation is based on collections of enterprises, not single individuals."

At her Accelerate Madison speech, Walshok touched on many of these ideas, but pointed out that there was considerable potential for change. Walshok said she envied Wisconsin in some ways — lots of private wealth and successful companies are already present — but these things need to be accessed through personal involvement, cluster building both inside and outside the state, and governmental funding rather than management.

"There’s wealth, but you don’t put it in tech," Walshok noted. "It’s there, waiting to be tapped."

Walshok cautioned that Wisconsin shouldn’t be satisfied or fully supported on its current base of resources, saying it would be better to look at what people need rather than what they have.

"The tradition of family-owned, natural-resource-based companies in Wisconsin means … you may not get the turnout that you would get if you were to roll out competencies more relevant to new industry," Walshok said. "I have a feeling sometimes people don’t always know what they think they know."

Rimas Buinevicius, CEO of Sonic Foundry and a discussion panel member, agreed with Walshok that there was a cultural divide working against Wisconsin. "It’s a wealthy community, but it likes to hide its wealth…we have a small network and no-one wants to travel outside the boundaries."

Other attendees found inspiration in Walshok’s words, saying she reminded them of just how much potential is really available.

"She was living proof that you can start from ground zero and get to where they are today," said Laurie Benson, president of Inacom Information Systems. "We have so many assets in our community, in our region, and our state … she seemed to understand our community and give us good suggestions so we can be proactive."