Executive Summary: Raising the Curtain: The Technology Economy of Orange County

Presenting Sponsors: Grubb & Ellis, Stradling Yocca Carlson & Rauth

Supporting Sponsors: Comerica

Orange County California has been one of the most successful technology clusters ever developed, but the County is now hitting setbacks that may hinder its ability to build upon such success. The County's limitations are as much not related to technology (e.g., highways, housing, air transportation) as related to physical infrastructure (e.g., university technology transfer, executive talent). The innovation that is driven by the presence of successful technology is critical to sustained economic growth, but the success of the technology industry is so often dependent on issues that are not traditionally viewed as technology-related. In Orange County, economic growth through technological innovation depends on a broader infrastructure that is fertile and supportive. That infrastructure today, however, is not receiving the attention or care that it needs. Since Orange County has long been recognized as a flagship for post-suburban development, the challenges now faced by the County may well be a harbinger of things to come for other regions throughout the country.

In the eyes of many, Orange County has always lived in the shadows of its bustling neighbor, Los Angeles to the north more recently it's newly successful southern neighbor, San Diego. The County has historically had a difficult time establishing an independent identity for itself, as it has transformed from a promising suburb to a dynamic post-suburban center with its own economic, civic, and cultural heart. Today, the area has arguably come into its own.

The County's diverse technology economy includes electronics, computer hardware, bioscience, telecommunications, and computer software, and during the first few years of the 21st century, it has proven itself to be more stable and resilient than many other well-known technology regions, such as Silicon Valley. The County has become, in effect, its own somewhat "decentralized cluster" economy, with industries clustering in Irvine, the mid-county area near Fullerton, and most recently in the South County area near Lake Forest and Aliso Viejo.

This clustering has allowed for greater networking opportunities and more efficient sharing of resources, leading in turn to greater degrees of innovation and specialization. In addition, such clustering has given rise to unique educational partnerships involving collaboration between the business community and local universities for the development of new technologies and research. Low crime rates, low taxes, good schools, a high overall quality of life, and significant employment opportunities provided by research and development organizations have enabled the County to compete for skilled technology workers, not only with its larger neighbors in Southern California, but with other technology-focused regions around the country.

Past this first blush, however, presents a much more complex and nuanced picture than many assume. Commercial centers such as Irvine and Costa Mesa receive much of the visibility, but lesser known parts of Orange County still play a vital role in the health of its economy even as they struggle. The County faces challenges in its efforts to maintain the quality of the ecosystem that continues to nurture and grow technology companies and the supply of highly skilled workers they require. In order to ensure its continued economic vitality, and to support a diversity of growing industries and populations, the County must address basic issues of infrastructure, especially transportation and housing. In addition, the problems of an employment pool that is increasingly strained, the relative immaturity of venture capital, and the potentially greater role of academia needs to be addressed. The informed and active role of regional government is crucial to help sustain growth levels and to help maintain the County's position as a competitive player in the international technology economy. A collaborative effort by the business community, educational institutions, and government is required for the continued success of Orange County's technology-based economy.

This report is being published as the economic downturn spurred by the collapse of the so-called "tech" sector (but, in reality, mostly the telecom and computing parts of the technology industry) is raising questions about the long-term and sustained growth of the macro-economy. This report's argument, therefore, comes at a compelling time: true technology growth depends greatly on a broader, supportive infrastructure. As leaders look to macro-economic issues, a macro view of what sustains innovation itself is unavoidable. In researching this report, Larta gathered data from numerous sources, conducted interviews with over two dozen leaders of the Orange County technology industry, and aggregated information from a significant body of research done on the County's broader economy. As a leading model for technology clusters, Orange County lies on the threshold of becoming a long-term technology powerhouse. This report, while assessing Orange County's strengths and weaknesses, more importantly explores ideas for maintaining the County's
success.

By the Staff of Larta:

Rohit K. Shukla
Victor W. Hwang
Ketaki Sood
Allison Joe
Wendy Hall
Joseph Deato

Orange County Report Launch Event

Wednesday September 18,
Conexant Systems, Newport Beach
5 - 9 p.m.

This event marks the official launch of Larta's 2002 Orange County Report, Raising the Curtain: The Technology Economy of Orange County. The event will also be a networking opportunity for corporate executives, university administration, service professionals, entrepreneurs, and other key players in the region (and those affected by the region).
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