San Diego Tech News Weekly – September 10, 2021

Welcome everyone to an off nominal San Diego Tech news week. We usually do it Fridays, 12:30. We're recording this, giving you a heads up. The red dot means we're recording this because we turn these into a podcast and we're doing it on a Wednesday night. So hey all, you're going to hear us recording this and we thought let's jump on Clubhouse and give the people a little preview.

Let's do it. I like it. Yeah. Thanks for starting the room, Neil.

Absolutely. Power to the people. So, you know, for everyone here, you guys, I know specifically, you know me, but those listening to this recorded, I'm Neil Bloom of Fresh Brewed Tech and we have a tech blog, podcast and all the things about San Diego tech. And with me is Jonah Peaker.

What is up, everybody? Love in San Diego here. Almost 12 years, huge fan of operations, tech and everything startups. So happy to join in, Neil, to track some of the bigger tech stories that are going on in San Diego.

Yeah, and I'm an entrepreneur and angel investor and community builder. And let's dive into our top five stories here. This first one, Asian street food delivery service is flooding San Diego.

Wow.

Bow, let's go. Incoming. We love food tech. It's one of the best B2C kind of companies that we like to track, especially then when they come into San Diego. That and scooters. We love our scooters. But take us through a little bit about. Wow, Bao.

Yeah, this one's fun, actually. It's really interesting you point this out. So, you know, I did a little stint at Postmates, so kind of did the sort of in between, let's, let's go pick up from a restaurant. And at the time there was a lot of really interesting talk about ghost kitchens and so. Wow. That was actually taking that concept by storm, which is super cool. You won't really see them in San Diego in person. They are operating out of a ghost kitchen there in Miramasa, Claremont and Imperial. But let's not like really forget what they're doing. They're actually making some pretty awesome stuff. So think barbecue, Berkshire pork, steam buns, teriyaki chicken, spicy Mongolian beef pot stickers. That good stuff, the stuff that you know you want delivered. But they're actually kind of an older company. It's kind of cool. So they started in Chicago 2003, operating airports, concession stands, grocery lines. So they pop up in these different places. And this concept came out of sort of slower times. So think kind of like ice cream in the winter. I know San Diego, maybe We don't get that same sleep. Sort of, you know, drop in demand for ice cream. But, you know, in Chicago, you know, they're going to get some spikes. And so, you know, Covid rolls in and they said, hey, like, how do we sort of change this business model to accommodate the change and, you know, the rise of ghost kitchens. And they launched wow Bao. This came out in April. They actually exploded at 239 locations, 39 states. They are, they are all over. And they actually have three San Diego locations, which is super. You know, know, they're, they're, they're just, you know, finding their location, their office space, DoorDash, Uber Eats, Grubhub, those guys are doing the delivery for them. And what's interesting about Ghost kitchen model really is you have a lot of freedom. You can put your restaurant wherever you want. You don't have to think about storefront being competitive with others. Kind of managing customers in the location and out of the location. That can be a bit tricky. So. So they're kind of. They're launching into San Diego. So you most likely see them on one of the popular delivery apps under Wild Bow. Sometimes they show up as another brand, but ghost kitchens are growing like crazy. Another really cool business opportunity in theory. So I don't know. I'm hungry. I might just go on mute real quick and just put it in an order. So if you don't hear from me, that's where I'm at.

Yeah, these look amazing. Barbecue pork, steam buns, teraki chicken, spicy Mongolian beef, fried pot stickers, rice and noodle bowls. I am hungry right now, that's for sure.

You know what's really interesting about this that I forgot to mention was you. You now have a lot more control. So a quick anecdote from. From back in the day, I think in N out ended up suing every single delivery company with cease and desist, saying, hey, don't take our food away, because they were really hyper worried about quality. That is, French fries maybe don't travel super well, but when you create a ghost kitchen like this, you can curate sort of the entire portion of the menu that leaves the restaurant. And you don't have to worry about things traveling really poorly or having a horrible experience. You put your food into someone else's hands, which they are admittedly doing, but they know that things will travel well and they can actually control that. Pretty sweet.

Cool. All right, well, we'll keep a look I on the lookout, but we. So we won't find that brand around. You're saying but we will be able to order these foods.

You may it's hard to know. You know, it just depends depends on how they operate. But yeah, they do spring up in some ways and oftentimes the restaurants you'll see on the food delivery app, sometimes if you haven't heard of them, it's because they either don't exist in the person or they've spun up sort of a different restaurant that, that is sort of moonlighting as something else. So kind of kind of cool stuff. Anyways, you go on and on.

Yeah. No welcome either way. Welcome. Wow. About to the San Diego market. Always happy to have you have new players in the space. And speaking of players in the space, our next topic is about sand San Diego jobs. Where are they? Where have they gone? And man are more coming in a certain way. So we're going to talk through what San Diego jobs are expected to grow most and what's next for this economy. And so you know, we've talked about jobs a ton in a few veins. One venture capital leads to a ton of new job growth. We also talk about, you know, love people love to talk about AI and tech being job killer and we, we believe quite the opposite. But you know, San Diego is a bit of a has got struggled to get back to the same national average unemployment rate during COVID and there's a few reasons for that. One, got a high percentage of service jobs in the region and a higher percentage of people up leveling and looking for work. And our obviously our hospitality industry as well too has taken a huge hit which is a big part of the jobs place. Joanie, want to take us through some of the more details we got out of this recent UT report.

Yes, this is a cool report. There's also a couple of other things. I mean we have had slightly more restrictions than other markets, other cities and maybe there is some increased risk so people are applying at a different rate. But if you look at unemployment levels by city, we're number four. But LA 9.5%. New York is at 8, 7.4% for Houston and 7% for San Diego followed up by Philly and then it continues on. That's a pretty decent high number.

What's the national average?

The national average I believe was around three or four. Gosh, I need to, I need to jump back over and check that. But I know that we're, we're significantly higher.

Shoot.

Let me try to, let me try to pull that number really quickly. But take us through VC real quick. Let me see if I can get that national average. I think that's really interesting.

Yeah, just going to compare. You know, obviously a huge bright spot is the super high amount of venture capital coming to San Diego. I mean we're talking first of all last year almost 6 billion in funding, which is I believe almost 2 or 3x the previous year. So huge amount last year and this year we've already bypassed that $6 billion number just already in the first eight months. So a lot of new capital coming in town which admittedly goes towards jobs. Seriously, while a lot of it is biotech, that also goes towards jobs. Now they may have a little bit higher expenses in terms of lab space and equipment than tech, but still by and far VC capital we've seen goes towards jobs. So that is a bright spot. Meaning the jobs that are coming are high paying. Which also means though we need to be able to fill those jobs which most cities can, to be honest. And so during COVID you also want to make sure that those jobs are local and not always the scenario when a lot of the tech jobs have gone virtual and can be anywhere. So good things and bad things around the venture capital space, but still seeing more inflow of capital in San Diego absolutely is good.

Okay, we have a number just around 5% national average. Yes, it was pretty good gut guess there, but yeah, around 5%. So we are, you know, a bit higher, 2% higher.

So 7% unemployment in San Diego, 5% national average. And that tracks a little bit of how we're lagging to a certain regard because of those industries we mentioned. Some of the biggest pandemic job losses were in leisure. Like we mentioned hospitality, hotels and everything associated. This one was interesting. Government. 12% job loss in government. Where, I wonder where, where those jobs were.

Yeah, that's the question. I mean, I'm wondering, you know, you know, I've seen a lot of infrastructure so that, you know, seems to be these great times. You know, people are all home and off the roads. I've been seeing a lot of repairs. But it's a really good question, you know, like what are some of the government jobs that we're maybe not thinking about? I don't think teachers were in that bucket, you know, they were cruising through. But I want to dissect that one a little bit. You know, this is one of my favorite stats. You're not going to believe this. Mining and logging is down 25%. I didn't know we had that industry here.

Let's be real, it went from 400 jobs to 300 jobs. So 100 people lost their jobs in mining and logging. Yeah, I was surprised by this. I kind of thought, well, are we talking crypto mining? Maybe theoretically we should be gaining there because China's shutting that all down. But now they're all moving in Texas for cheap, cheap energy for crypto mining. No. This is interesting that we have 800 people mining and logging in San Diego county. But construction is growing. So that actually is a bright spot that construction jobs are growing. We've seen obviously a ton of housing and commercial is still growing as well too as industrial and biotech space is just booming. So overall non farm jobs, we see growth of 17.4%. Like when we see growing, I think that means in like job openings and need for that much. We just need the other industries that got hit hard in the pandemic like leisure government and logging and mining to offset that. So what are the other biggest areas for growth in terms of what we see job growth going in San Diego County?

Yeah, so this theme that we were pointing out earlier, these are, these are higher paying jobs that are, that are being listed in and filled it. So this is what's growing. And no surprise, nursing at the top of the list. I think we need a lot of that with pandemic. But in San Diego we're so med tech focused. I think that one makes a lot of sense. Staticians interesting. 43% there. We've talked about that. And data science being a really big factor for San Diego, which is awesome. Love to see that, you know, and then we kind of keep going down the list. So this really is, you know, med and health services, physician assistant, physical therapist. And then we got our vet techs 33% really excited about that. I mean we got to keep our pets healthy too. So you know, a lot of stuff in the, in these industries, you know, nursing, medical and keeping people healthy and doctor nutritions.

Yep. And the biggest thing that we love to talk about on here is where these people are going to come from and how can we organically train and grow our local talent pool to upskill and reskill so that they stay local into higher paying jobs. So it will be a constant theme that we talk about. But let's jump to our next story, which is another UT article from one of our favorites, Mike Freeman putting out the 10 highest paid CEOs in San Diego in 2020. So they did a deep dive. These are all public companies because that's how they're finding their data from disclosures that includes salary, bonus perks and stocks that either vested or were stock options that were exercised. So taxable compensation. And they use the realized framework for count salary. And they actually have a whole article about the two ways that you actually count and calculate salary. This method specifically is around the value of restricted stock only upon vesting, meaning when they are actually realized by the executives.

And really quick, I did want to point out all this information that Neil's reading came from the other article, not this one with the top 10 highest pay. Because I actually, I didn't share that one with them yet. I actually thought that would be really fun. If we look at this list, and I was hoping to ask you this in the form of quiz question. Neil, a couple of things. Who would you think top three companies that hit this list are based on your gut? Tell us who the top three are.

All right, so the top three compensated CEOs. I would go in my head, I'm going by market cap because we've seen these companies do really well during the pandemic and I just picture that they're compensated heavily by stock. So I think it's Qualcomm, illumina and Dexcom CEOs who were the top three highest paid people.

People.

All right, your two.

Two of three is not bad. The one that you missed, the very, very top. ResMed. ResMed is making, making the top of the list.

Ferrell.

Yeah, so that one, that one rounds it out and then, and then you were really close at Qualcomm, Dexcom and then down the list. You know, not, not to dig too, too much deeper, but how many female CEOs you think are on this list.

Of the top 10? I know we're a little light in San Diego, but I think three out of ten were women.

Man, I wish so far just one at least on this top ten list. Maybe if you go down the list, I hope that maybe we have more of a diverse group. But yeah, just one on this list.

We can do better. San Diego. And we will.

Okay, we'll have to look at the 11 through 20 or through 50. Yeah. Gosh, I hope we do better there. So one of 10. 10%.

Okay. CO.

So how many are biotech do you think? Top 10.

So I mean based on just these top three, two of three were, but I'm going to say of the top 10, 90% for biotech.

Good guess. 90%. I was, I was counting Dexcom and we come to 6 of 10. So 60%. We do have some, some non biotech. Pretty cool. Sempra and Access.

Let's Go through the top 10 real quick. Just companies. We can say the companies and say a few of their compensations and we'll kind of learn from there.

Yeah, we had the top three, you know, we had Resmed, Qualcomm and Dexcom. Resmed. Total comps 30 million, 30 and a half million. Bumping, that's serious. Bumping the shareholder return by almost 60%. Steve Malinkov, Qualcomm 23 and a half. Serious money. There go Steve.

Poor little out for the former CEO of Qualcomm because now it's Cristiano Aman. Let's hope he can level up to his predecessor.

Yeah, let's see if they can pull that off. Kevin Sayer, Mr. Kevin Dexcom, 21 and.

A half and bringing 70% shareholder value. Dexcom. And as a shareholder myself, I'm happy about that.

So yeah, get your pay, Kevin. Doing great things, Kevin. I think they're gonna, I think they're gonna only do, do better from here. Glossamer bio, this is Sheila, so 18, nothing to sneeze at there. And then we round it out, we go, you know, Illumina 18, Arena Pharmaceutical 16 and a half, Mirati Therapeutics 14, Sempra 12 and Legland Pharmaceuticals of 11 and Axios at 10. So I don't think anybody on this list is should be all that upset really. They're all doing pretty well. But I think the last thing that we do want to point out, 6 of 10 did have positive shareholder value, which is kind of how they're calculating all this, which means four did not. So you know, even sitting at the top of San Diego still have a hard job to do. So they are doing great but in some cases need to turn around.

Yeah, negative shareholder value but still making double digit millions salary. So you know, there's a lot more that goes into that obviously.

Right.

There's navigating the last 18 months for some of them gotta have been interesting and difficult. But hey, you know, I appreciate that the UT brings transparency to this and may us all make that kind of compensation in the future or you know, have shares in these companies where our leaders are compensated to bring us value in our stocks too.

Yeah, the ones with the positive value.

Let's jump into our fourth story. This one's about Amazon. We typically and even last week, if you listen to that podcast, we talk about Amazon in a positive light. Well, this one's going to be a little bit of a negative light about Amazon and we got to be able to talk the goods and the bads and this one's specifically about their brand new facility across the border right in, right across Tijuana. And there's some pretty strong viral tweets going out around this. This is what caught our eye specifically around jobs and the quality of jobs that's happening on both sides of the border.

Did you see that facility, sort of pristine facility in some of the more slum areas of Tijuana is getting a lot of pushback, which makes total sense. I mean, gosh, this facilities just, you know, as if they just unboxed it. And everybody around there, you know, as homes, you know, really just, you know, desperate in that area in many ways. But it's, it's crazy because this is sort of a story out of a legacy. Can I hear a legacy sort of trade war with China and basically how it's getting pretty expensive to import goods. And so what Amazon's actually doing here is they're using this facility to import goods from China to Mexico. And then what they're doing is they found a loophole from an Obama era law that says that you can actually bring goods across the border duty free if the value is under $800. And so what they're doing is they're using cheaper labor in Tijuana and they're disassembling goods, bringing them over in, in sort of smaller value bags and then reassembling them at the otay Mesa facility 3.3 miles away in the US and so kind of in, you know, in Amazon fashion, you know, they're using some ingenuity to get, you know, goods across the border using cheaper labor. But in some senses, I mean, you know, I don't think these are necessarily the best working conditions. In some cases it's mandatory ot 60 hours a week. And all of it really is to just kind of continue to, you know, to really just, you know, continue their stranglehold count in, in their words on, on the, on the market here. And so, you know, in some ways, you know, some people might argue out's clever, but in others it's kind of, there's a lot of negative pieces to the story. And you know, some might be tariff related, some might be labor related and you know, it's, it's pretty surprising to see. But what's your take on this, Neil? What do you kind of take away after reading the story?

And it's just such a big issue, a big topic and it's so dynamic for a number of reasons. One, China in general, let alone, let's take pandemic out of it. But just like China, which is where everything's made and yet is kind of our enemy in the United States per se, and then throw in volatility of Trump and the tariffs that he played on them, and then throw in pandemic and the super increase on E commerce on top of the supply chain disruption that happened there. So, so many dynamics there. Not surprising to me that an innovative company like Amazon finds its way, right? It finds another way to operate. And some of them are good, some of them are bad. That's just the nature of business, man. We've seen that in the history of business over hundreds of years, where sometimes it's the dirty side of capitalism. And what dirty means is that someone gains, someone loses. So it's on our side of the border. We got to take responsibility for it. Here in San Diego, we love to say that we are equal parts tj, Baja and San Diego in the tech ecosystem. And I think we got to own up for this. As much as we celebrate when Amazon comes to San Diego and hires a bunch of engineers, we got to also question to them and say, you know, hey, like, what are you doing down there? That.

That.

Is that the right thing for our region? Do we want to be known for that? So, you know, I think we, it's good that we can call this out and have this conversation. I think the conversation really is happening on Twitter in mass right now. So if you want to join in, look for. We'll put a, uh, we'll put a link to that thread that's happening in the show notes. Um, but yeah, I mean, companies gotta, gotta operate. And sometimes it's not in the best ways.

It's so complex. I mean, in, in many ways you kind of look at this and say, hey, like, tech companies are able to in many ways innovate faster than government can regulate. And I'm not saying either side is the one that should be in charge of this here, but, you know, Amazon with their ability to build a facility and build and structure a team to disassemble to get around, you know, certain tariffs is in one way extremely clever, you know, and in the other, you know, it's just. I guess I haven't been and I haven't seen the facility myself, but we are kind of following the story there and it's definitely more to come, I'm sure. Yep.

Let's end on a high note. Our friends at takelessons announced today that they've been acquired by Microsoft. So Stephen Cox and team, we salute you. We are friends for A long time. And we're excited for this new chapter for you. A little bit about tech lessons. They're founded in 2006, so one of the. One of the old schools in terms of tech companies in San Diego and they've almost entirely been downtown. Way before downtown was a tech hotspot, that's for sure. We recently interviewed Steven on the Tacos and Tech podcast. So there's a link in our show notes to go and listen to him talk about the founding story. There's. And the growth of it. Founded it as an apartment and all because he was, I think a guitar player and had a good, good friend who was a musician that was looking for some extra income and he built a site for him to be able to scale teaching music lessons. And it's something absolutely beautiful which is, you know, every kind of lesson you can think of is found on there. From sports, from language to art to everything in between. They've raised 19 million since their founding from companies like, from VCs like Crosslink, but they actually haven't raised since 2014. They've been kind of building and growing their marketplace and the pandemic just exploded the virtualization of online lessons, as you can imagine. And so they boomed from here. Uh, and since 2013 when San Jose Startup Week started, they were. They've always been one of the most popular and favorite stops on that startup crawl. So since the early days there, they've always had such a cool space to pop into over there in the NBC building. And we're really excited for them. So Microsoft's acquiring them, price unknown. But you know, for to them to make an announcement like this, I believe it was positive for everyone. So I'm happy for them in that regard. And they dedicated themselves to continuing to have a presence in San Diego, especially in downtown. So congrats everyone. They're really proud of that.

They were pretty euphoric. You say that. If you look on LinkedIn there's some pretty awesome posts. I'm pretty stoked for that team. One thing I did remember last week we talked about MVP raising their fourth fund there. Congrats to them. They were in on take lessons in the beginning so bringing some money back to San Diego. Neil, what have you been putting off to take some lessons on?

You know, I've wanted to do Spanish sessions for so long and I think.

I would love to do that as.

Well as piano lessons. 2. Two ones for sure that I have wanted to do and just haven't done and maybe now's the time now that it's top of mind for sure. But in general, like Stephen, Stephen Cox has been an amazing mentor to so many other entrepreneurs in San Diego. So we love to see that, that not only does he build a good business, but that there's a reward at the end as well. So congratulations. And then so many people actually have worked for Take lessons. If you look at a little bit of the Take Lessons mafia people went from tech lessons to then starting, you know, being first or second employee, San Diego employee of Uber or other companies like that too. So the takelessons mafia is super cool to see. Let's dive real quick into some fundings and acquisitions. We saw company named Tiled, they're doing content generation platform. There is a 13.7 million Series A. Congrats to the Tiled team on, on their growth because obviously content is continues to be king and they're riding that. Another company, Plantable Foods, which is a platform for developing plant based proteins they're not doing themselves, they've actually created a B2B platform for other plant based protein companies. They raised the 20 and a half million Series A. And as we which we can tell, we know plant based proteins are just booming right now. Girltex, which this is a Tech Coast Angels portfolio company, they're doing graphene production which if you don't know graphene, it's kind of a newer material that's being seen in a lot of biotech and chip manufacturing that can take either higher temperatures or just a material that hasn't been used before. Raised a $1.5 million note extension. Nanoselect did a $20 million raise. And this is a cell analysis platform. And to round out these recent ones, Power, which is in the solar installation space, they raised 3.7 million plus a pretty big crowdfunding round that we don't have the number on right in front of us. This is a big one. This company's booming, doing over 200 million in annual revenue right now. So they will be, if not already, a pretty next unicorn to watch in San Diego. And their CEO recently hosted a shareholder meeting and he rapped about his company and the industry ahead. And we linked the rap in the show notes here. It is pretty fun to see. We love raps, that's for sure.

I've tuned into plenty of these meetings where it's boring as hell. So I kind of stoked. Reminds me of like when Southwest started doing that. I can't wait to watch this again.

Yeah, yeah. Give it a watch, give it a share. Shout out to Dean Rosenberg over there at Power for sharing that with us and acquisitions. What we love to also by the way sharing in fundings and acquisitions is diversity of companies, of industries. We just mentioned content generation, proteins, graphene, cell based platform and solar. Look at that like how diversified that is of recent fundings and the same is on the acquisition side. Chosen Foods, many of you probably have eaten eaten some of them. Butterfly Equity PE did an acquisition there. Rev Colt which is a Salesforce ecosystem provider acquired by own backup and like we mentioned Takelessons acquired by Microsoft. So congrats to the companies there and as we always say, may your team stay local. And so so with the capital as well too.

I love it. Definitely got a call. Gotta call out Chosen Foods a huge fan. Avocado based mayo. Had to have regular mayo the other day. Not not happy about it. But maybe Butterfly can can help them really, you know, expand and restock that Costco aisle that we were hunting for. So proud of. Proud of them. They're really fun. You gotta try it. Love it.

Well, thanks everyone for joining us on this week's tech news. Like we said, we're usually on Fridays at 12:30pm Pacific on clubhouse. We did it a little early this week and you can find us on Twitter and LinkedIn, eelbloom and onah Peak and always find this news and more on freshbrewtech.com and Fresh Brewtech Social as well. So thanks everyone for joining us and we'll catch you soon.

See you. Have a nice week.