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May 28th
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Economic slowdown, then innovation

tom_honig_sConsidering that Santa Cruz is suffering through economic hardship right along with the rest of the country, it’s surprising that there’s so much energy by so many entrepreneurs.

More than 400 motivated listeners streamed into the Del Mar Theatre a week ago to listen to Reed Hastings, founder of Netflix and a Santa Cruz resident, as he discussed his path to success. A businessman? Selling out Santa Cruz? I wouldn’t have believed it.

The most surprising thing that Hastings said had to do with Santa Cruz. “The economy here is more diversified,” he said in comparison to Silicon Valley, which is Netflix’s home base.

I hadn’t really thought of Santa Cruz as economically diverse, but then some other recent events made me realize that he’s right. The most exciting thing about Santa Cruz is its business innovation; it’s just not that recognizable yet, at least to the general population.

Several days before Hastings’ talk, nearly 200 freelance business folks—budding entrepreneurs—gathered at the Museum of Art & History for the Freelance Camp. It’s a kind of conference—they call it an “un-conference,” actually, because there are no big names or well-known speakers. Instead, attendees gather in the morning, brainstorm session ideas and then break up into groups, basically, to help each other. The best description I saw on its Twitter feed was “collaborative entrepreneurialism.” And in its aftermath there are already nearly 300 people listed as “fans” on its Facebook page.

True, all this is evidence of energy from startups. Someone in this crowd will make it big; most won’t. But that doesn’t mean that the energy should be ignored. In fact, the word “innovation” is probably the most-used word in the local business community.

Where is innovation coming from?

Look no further than UC Santa Cruz. Yeah, that UC Santa Cruz.

Some of us caught in a time warp remember when UCSC produced, in large part, political activists.  Your average UCSC student was—in legend more than fact—a budding community organizer learning at the shoulder of some older elected official.

That’s not your UC Santa Cruz of today. Quietly and slowly, new programs at UC are spawning more entrepreneurs than they are political activists. Times are changing.

Take a look at some of the campus’ new programs:

n The Project for Innovation and Entrepreneurship, in collaboration with the city of Santa Cruz. The program places up to 25 “highly motivated and talented students” into local startups.

n The Center for Entrepreneurship (C4E). This program compares itself to a “teaching hospital,” in which students learn theory in the class, and then go out and help operate a real startup.

n Games@UCSC. This one might be my favorite. More than 40 percent of video game employment is in California, and this is the ultimate training ground for computer engineers looking to land in the industry. Think it’s not serious? Professor Michael Mateas  was one of only 12 innovators to win the 2010 Knight News Challenge, a contest that funds the best news-technology ideas that will shape the future of media.

What about Hastings’ “diverse economy” comment? Do these programs mean that innovation is only happening in high-tech? Hardly. Don’t forget the local active sports community—skateboarding, sailing, surfing, biking. Or farming—Santa Cruz County is a national leader in organic farming and the locavore movement.

Even one of the county’s oldest businesses—Big Creek Lumber—is in the forefront of the sustainable timber industry. What was once seen as a destroyer of the environment, the timber industry, is moving in a new direction—one that was pioneered by Big Creek. Owned by the McCrary family since its founding in 1946, Big Creek today continues its stewardship of forests—and just last week hosted dozens of students in the groundbreaking educational program called “The Forestry Challenge.”

Still, times remain tough for many local businesses. Retail and restaurants continue to battle a lower demand, and unemployment remains in double digits. But, as local Chamber of Commerce executive director Bill Tyselling says, “Innovation begins with a problem, which is how it’s different from research and invention.”

One innovation that rose directly out of Freelance Camp is a new hosted website called “santacruziscool.com.” It’s a work in progress, but it was developed in mere hours by a local startup founder by the name of Chris Miller. He describes it as a way to drive home the point that Santa Cruz is, yes, cool and innovative.


Contact Tom Honig at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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