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“Authenticity is woven into the fabric of our being,” Socrates Rosenfeld says, describing the way his company operates. Rosenfeld, CEO and Co-founder of Jane Technologies, is speaking to his own company’s values and culture, but his statement encompasses a larger way of thinking and operating in the Santa Cruz tech sphere.

“You can’t get away with being inauthentic in this town,” Rosenfeld reflects. “That permeates across how we treat each other and how we treat our clients.”

Rosenfeld intentionally landed in Santa Cruz to launch the online cannabis marketplace in 2017 after working as a consultant in Palo Alto, serving in the United States Army, and growing up in Massachusetts. He decided to root himself, his family, and his business in Santa Cruz after asking himself some important questions: “Where do I want to live?” and “Where can I access really great tech talent?”

Santa Cruz is on the cusp of Silicon Valley, but is determinedly not Silicon Valley, separated first by mountains, then by culture. A small enough place to provide frontiers for pioneering enterprises, but close enough to the industry center to lovingly welcome its surf-loving expat engineers and its moneyed retirees-turned-VCs.

People, Place, Purpose

A few years ago, Colorado Governor John Hickenlooper latched onto the phrase “topophilia” when up-leveling Denver’s (and wider Colorado’s) reputation as a tech center. The idea is that love of a place will draw people to live there, and the joy they experience from being there inextricably transfers to their work.

Because of its geographically isolated yet epically beautiful situation, Santa Cruz has had a strong historical inclination toward entrepreneurship for centuries. Keith Holtaway, a business advisor and consultant who has been helping Santa Cruz entrepreneurs succeed for 20 years, says that Santa Cruz is “the best it’s ever been” in terms of engagement and people participating in their community.

Holtaway sees an economic ecosystem that’s just right for entrepreneurship. He notes that, even though Santa Cruz is one of the smallest counties (geographically) in the state, the Santa Cruz Small Business Development Center is one of the five top SBDCs in California with regards to the number of businesses served. Holtaway alone helped about 28 businesses launch in 2018, with several more in the pipeline.

Ross Baird of Entrepreneur Magazine and Co-Founder of Village Capital outlines a genius overview of why Denver has prospered as a start-up city: People, place, and purpose.

“Businesses prosper when locals band together. Where you are is intricately linked to who you know,” writes Baird.

And who you know, of course, is linked to what you do—and how well you do it.

Zac Carman, CEO of Consumer Affairs writes, “Being located in a smaller city gives you the opportunity to be a pioneer in the area of development, which can help you forge closer partnerships with other local business owners and remain at the forefront of your community’s development.”

Niches Galore

For Rosenfeld, the final, vital layer of his location decision was Santa Cruz’s rich cannabis culture and history—a particular aspect of Santa Cruz that is extremely unique to Rosenfeld’s business needs, but a notion that reflects one of Santa Cruz’s prominent characteristics.

The varied (or as some might say, eccentric) patchwork of Santa Cruz’s history and economy provides more opportunity for unique start-ups to take hold. Agriculture, environment, food, government and politics, education, fitness, skateboarding, genomics—the industries and cultural niches that existed in Santa Cruz well before the tech boom provide pockets of fertile ground for creative entrepreneurs.

Demographic diversity also plays an important role in an organization’s success, and while Santa Cruz has a long way to go in terms of racial and ethnic diversity, it’s leading the way on gender diversity and women in business. An analysis by nerdwallet.com using U.S. Census Bureau data ranks Santa Cruz fourth-best metro area in the country for women to start a business (San Francisco is seventh).

Keith Holtaway notes that at least 70% of his clients are women, many of whom have had years of corporate experience, ready to launch their own projects. Others are parents with or without a co-parent, looking for a good place to raise their children and fulfill their entrepreneurial dreams.

Collaboration and Resources

Long story short: Before she co-founded Claret Biotech, Kelly Harkins Kincaid was doing postdoctoral work at UCSC, where she connected with Paleogenomic Lab Co-director Ed Green, who would become Claret’s Co-founder. Not only did she organically find a Co-founder for her new company, Harkins Kincaid also linked up with genomics legend David Haussler, a key player in the groundbreaking Human Genome Project—who would become an advisor.

Claret’s story, while sort of a tech networking supernova, illustrates the kind of connection that inspires innovators in so many sectors to look for and find success in Santa Cruz; she calls the whole storyline of Claret “fortuitous.” Rosenfeld, too, emphasizes the impact of easily connecting with people like industry influencers and mentors.

Not so long ago, Santa Cruz New Tech Meetup was a casual little meetup.com-based get-together that sprouted into one of the biggest New Tech groups in the country. Suddenly, Doug couldn’t find a venue big enough to hold all the event attendees. The need for community in the local tech industry grew so strong that Santa Cruz Works was born in 2012, which inspired the creation of the Monterey Bay Economic Partnership in 2015.

Initiatives to support networking, partnerships, and funding like the Santa Cruz Works Business Accelerator, TechRaising, and CruzHacks continue to expand. Major players like the SBDC, Santa Cruz Economic Development, and the Santa Cruz County Office for Economic Development are revving in high gear to promote and assist the growth of local businesses, especially tech. Unlike Silicon Valley, Santa Cruz/Monterey Bay haven’t taken business development for granted. Government agencies have seen and responded to the need to be more amenable to development, says Holtaway.

Fertile Ground

According to Keith Holtaway, any city needs three pieces in order to grow successful new businesses: a supportive small business development center (check), strong relationships with government agencies (got it), and local funding opportunities (keep reading). Santa Cruz has all three, plus a major University that concentrates a young, talented, eager workforce, emphasizing programs to promote diversity and inclusion in tech.

Comparing Santa Cruz funding trends to Silicon Valley capital can be eye-widening, but Holtaway optimistically notes that there are plenty of VCs and other investors putting money into Santa Cruz County-based companies. For years, capital and mentoring has been coming from Central Coast Angels, South Swell Ventures, Pacific Community Ventures, and more. Perhaps even more exciting for Santa Cruz: Many of these have long been eager to invest in any sector, not just high tech.

As AOL co-founder Steve Case famously predicted, “In the 21st century, the capital will follow the people more than the people will follow the capital.”

Holtaway is part of the skilled advising team at the Santa Cruz Small Business Development Center located at Cabrillo College—a team whose diverse spread of expertise covers every area a business owner needs help with. Santa Cruz SBDC’s reputation as a powerhouse for local business know-how is well-earned. The SBDC team is incredibly accessible; their website provides direct links to each advisors LinkedIn profiles. Their new director, Brandon Napoli, launched an innovative new 2020 plan for the SBDC, including a focus on bringing relevant industry to Cabrillo College.

(Silicon Valley SBDC, by the way, doesn’t even provide a main email address on their Contact Us page. There is one single event listed on their calendar.)

“We have a population that supports local business,” Holtaway says.

And these local businesses support each other. Unlike Silicon Valley’s zero-sum-game attitude when it comes to collaboration, a sense of camaraderie and communication is what many feel defines the Santa Cruz marketplace, likely borne of the long-set lifestyle that was here long before tech.

In smaller communities, business leaders are more willing to help one another because they see it as an investment in collective growth. Talent retention rates tend to be higher in small cities because poaching is less likely and less common—although it’s true that, due to our proximity to Silicon Valley, Santa Cruz is in a much more poachable position than places like Denver. (Still—that mountain!)

Down to Earth

The small size and friendlier atmosphere of the Santa Cruz business community allow for partnerships, mentorship, referrals, and networking to blossom more naturally and effectively. Connections are more easily made. Follow-ups are quicker. Everybody knows somebody at that start-up you want to partner with, that co-working space you’re interested in, the local bank that’s lending to you.

While this seemingly casual way of living and doing business notoriously irritates some people who come here from, say, New York City, people like Rosenfeld and Holtaway understand it as an essential ingredient to Santa Cruz’s particular brand of tech culture.

“A lot of tech companies just chase the numbers,” Rosenfeld says. But the way the Jane Technologies team sees it, “behind every number is a customer.”

For Socrates Rosenfeld and many others, engaging with other executives, mentors, and even investors outside of what’s considered a traditionally professional atmosphere is crucial—taking a hike, having a surf session. It’s what creates meaningful, trust-worthy relationships.

Rosenfeld and Harkins Kincaid both emphasize that the ability to get into nature aids their business success more than a little. Harkins Kincaid, herself a mountain biker, describes how much happier she and her team are when they can go surfing or biking close to work.

“Being outdoors more, people are down to earth—literally,” Rosenfeld says.

The organic development of rich networks and meaningful relationships in Santa Cruz is a stark contrast to the Silicon Valley culture that many come to Santa Cruz to espace. And it may be the lynchpin of Santa Cruz’s particular style of success.

Part 1: Lifestyle + Business Sense

Part 2: Room to Grow: Office Space and Wages

Part 3: Housing and Homelessness

Part 4: A Unique Tech Ecosystem

Part 5: Where Do We Go from Here