Tech companies thriving in San Diego–Tijuana border zone

SAN DIEGO/TIJUANA — Six small gray plastic propellers whirred into action as flight test engineers Brad Golding, 34, and Grant Lieberman, 24, powered up the four-pound Y6 drone for a morning spin. The status lights blinked green, indicating the autopilot was initialized, and the three-armed vehicle lifted into the air and zipped off toward a pallet of shrink-wrapped supply boxes.

Outside the 3D Robotics office in San Diego the air was hot and still, with downtown Tijuana visible across the border with Mexico. It’s there — a 4-mile drone flight away (if the FAA allowed it) — where 3D Robotics has its manufacturing facility, and dozens of 20-something “associates” in blue lab coats, jeans and sneakers were busy printing circuit boards, testing autopilots and assembling 3D’s IRIS drone, sold online for $750.

Like a growing number of tech companies in the region, 3D Robotics is a binational startup happy to leverage its unique location along the U.S.-Mexico border. On the one side is orderly San Diego, which Forbes named the No. 1 place to launch a startup in 2014. On the other is chaotic Tijuana, which offers low-cost labor but also a growing number of talented engineers of its own. According to entrepreneurs on both sides, the Cali-Baja mega-region is poised to become its own Silicon Valley.

Too often conversation around the U.S.-Mexico border focuses on security and immigration, making what some see as a seam instead become a symbol of division. But businesses like 3D Robotics see the border as an advantage and an opportunity.

“If you want to build 10,000 of something a month and it’s the exact same product and it doesn’t change, that’s an easy thing to do in China,” said Tim McConnell, 3D Robotics’ director of engineering. But if you want to build only 100, make some changes and build 100 more, McConnell said, you’re better off “nearshoring” in Mexico.

“To be able to drive down there with your engineers, talk to the manufacturing folks, give feedback back and forth,” he said, results in fast turnaround on design changes and prototypes.

3D Robotics, a five-year old, venture-funded company, is the largest personal drone maker in North America. Many of its current customers are film hobbyists: for example, the skateboarder who wants to have a drone-driven camera capture his kickflips and ollies.

But the company also has “enterprise” customers with specialized needs, and McConnell said the potential uses are unlimited: a farmer who wants to map terrain to see where land is distressed, a conservationist who wants to scan an African grassland for rhino hunters, a disaster team that needs to test air quality in a nuclear zone too dangerous for humans to enter.

“China will beat at mass volume. We will beat at mass customization,” said Guillermo Romero, 28, general manager of the 3D Robotics facility in Tijuana.

The 3D Robotics model represents another important shift happening in the complicated post-NAFTA trade relationship between the United States and Mexico.

Juan Vázquez, manufacturing manager at 3D Robotics, wears a graph-paper-patterned lab coat that signifies his seniority over the associates (in blue) and quality control team (in red). He has worked in Tijuana’s manufacturing industry for 20 years, furnishing his résumé with big employers like Foxconn, Mitsubishi and Sony. The difference at startups like 3D Robotics, he said, is that his team has a say in product proposals, modifications and improvements.

For decades the infamous Avenida de la Revolución, Tijuana’s seedy main strip, catered to “$1 tourists” searching for cheap booze, sex and curios. Numerous businesses closed during the explosion of narco-violence that terrorized the city from 2008 to 2010. Many of the storefronts remain vacant today.

The old Mexicoach bus terminal, built in 1983 with an iconic stained-glass ceiling, is no longer one of them.

It reopened two months ago as Hub Stn (“Hub Station”), billed as the country’s first binational working space. Small glass-front shoebox offices are rented out to various startup tenants including the taxi app Uber, which soft-launched in Tijuana in June. Individual Hub Stn members can pay hourly or monthly fees to bring their laptops and work in the Wi-Fi-enabled common spaces, which are also used to host lectures, pitch nights and hackathons.

“This whole district was conceived for shady bars, selling alcohol, the whole TJ cliché. So we offer space that offers the complete opposite of that,” said Miguel Buenrostro, the force behind Reactivando Espacios, a project to revive historic (for a 125-year-old city, anyway) spaces in Tijuana (“TJ” to locals) that were abandoned during the violence.

The old bus terminal is a truly binational space, Buenrostro said. The bus just over the border to San Ysidro, California, still stops out front, although these days it transports a few hundred people a week compared with the 20,000 a week of past years. On a Thursday afternoon, an episode of “The Simpsons” aired in Spanish on an old color TV in the corner of the waiting area.

Whereas a decade ago Tijuana’s engineering grads sought long-term, stable jobs in the city’s infamous maquiladoras (foreign-owned factories that manufacture high-tech electronics, autos, medical supplies and aerospace technology), today they want to build a startup.

“2011–2012 is when startups started to become sexy in Tijuana,” said Adriana Eguia, who heads the Endeavor Baja California business accelerator. “Before, there wasn’t support. Now we have different sectors trying to help entrepreneurs to grow.”

One of the first arrivals on the TJ scene was MIND Hub, a tech accelerator started in 2011 to support and fund, according to its website, “new technology business opportunities and startups in the Cali-Baja mega-region.”

In 2016, Tijuana and San Diego will jointly host the World Forum for Foreign Direct Investment, which takes place in a different country each year and promotes the host city as an attractive place for international investment. It will be the forum’s first binational location.

“It’s a huge boom over here,” said Miguel Zavala, 27, a senior developer who five months ago moved nearly 3,000 miles from Cancún to Tijuana to be closer to the tech action. “It’s a good place to start your career as an engineer here.”

Zavala works at Sonata Services, where the vibe is far from the multinational sweatshops long associated with Tijuana, in which workers toil long hours in poor conditions for a few dollars. Stencils and a framed picture of John Coltrane adorn the walls; Starbucks coffee and a bowl of Skittles are set on the conference table. There’s the requisite foosball table when you walk through the door.

According to Felipe Fernández, CEO of Sonata Services MX, Tijuana lures young developers with what he calls “jumper jobs,” which are steppingstones to working for a large American tech company.

“If all my employees graduate to Google, I’m a happy camper,” he said. “In that gap, there’s still a huge market.”

Not only does being in Tijuana get budding engineers closer to the tech big leagues, they get the chance to work with U.S. companies to build software people will actually use worldwide — the holy grail of most coders.

“I came down here because I can’t find enough good engineers in San Diego, and I pay a third as much [for them],” said David Turner, CEO of mobile technology company Parallel 6, who has contracted a team in Mexico. He said the going rate for an engineer contracted through Sonata is about $3,500 a month. “For me, my option is to go way offshore, or nearshore in Tijuana. And every single week I find great talent [here].”

For vendors like Turner, it’s about not just skill but speed. “That engineer that would take me 10 months to find in San Diego I would have sitting in his seat in two to three weeks in Mexico.”

Culture is the other advantage. Compared with his experience with engineers in India and China, Turner said, it’s easier to explain a business case to a group of Mexican engineers and have them solve it.

“The Chinese are very analytical,” he said. “They will require a little more thought and design before they finish a project. The Indians are very good software programmers, especially if you’re programming like they’ve done in the past. What I found with the Mexican engineers is they’re a little more creative. Maybe it’s the language, maybe it’s in this hemisphere.”

However, he is quick to concede that “the best and brightest” engineers are in California, and Mexican universities are far from being able to attract top teaching talent.

Still, he believes Baja California has much to offer and will soon become a tier-two tech center similar to Austin, Texas, or Boston.

“I think Tijuana and San Diego is going to be a blend, one technological region offering different services between the two,” Turner said. “There’ll be a blurred line between the two cities.”