Xconomy Commentary: False San Diego Startup Statistics

New statistics were released featuring San Diego startups from Connect, the nonprofit group for technology and entrepreneurship. Xconomy reported these statistics and provided an interesting and overly positive spin. We have tried to discern between true indicators and false indicators, which paint a very different picture. Listed below are the statistics that Xconomy highlighted followed by Gray Suit Marketing’s analysis.

• San Diego became one of the state’s top innovation economies, based on federal grants received per capita with $42.5 million per 100,000 residents in 2010
• San Diego’s new tech companies created almost 200 jobs in the fourth quarter of 2010
• The $193 million from venture capital in Q4 was a 43 percent drop in dollars invested and a 25 percent decline in the number of deals compared with the fourth quarter of 2009

Here’s what’s false and real when it comes to startup statistics:

False

Federal funding is a false indicator because this money isn’t influenced by market based decisions. It’s influenced by politics and lobbying and just shows which city has a stronger presence in these arenas. It’s like measuring happiness by how many shots of tequila you’ve had. You seem happy, but you’re really not.

Xconomy’s excitement over “almost 200 jobs” is a spin to create positive economic headlines.  This may create a false hope that leads to more advertising sales for Xconomy, but it is thin gruel for real progress.  It’s not progress when more people showed up to a screening of the latest Katherine Heigl claptrap at AMC Mission Valley than are added to the ranks of the gainfully employed

Real

Now let’s talk about true indicators of progress: permanent job creation and VC funding.  The only drivers of these numbers are if they will create a return on investment. Is the confidence in a business, its management, and the business environment high enough to take the money from under a mattress and invest? These numbers are extremely weak and reflect continued uncertainty.

We all want false measures of progress to be true, but we aren’t well served by diluting negative statistics. Rather, by embracing reality, we come out stronger for it.