3 reasons for the rise of L.A.'s Silicon Beach tech scene
From The Orange County Register, Jennifer Wang, April 28, 2014:
Experts say the area is cheaper than Silicon Valley, and the entrepreneurial spirit, in Hollywood’s shadow, is booming.
Snapchat. Tinder. SpaceX. Riot Games, creator of League of Legends.
These companies are part of the reason Southern California’s tech ecosystem is drawing some attention away from Silicon Valley. Much of that attention is concentrated on a stretch from Venice up to Santa Monica known colloquially as Silicon Beach, where Google and Twitter have set down L.A. roots.
“The tech scene seemed to explode during the last three years with the rapid emergence of accelerators, incubators and co-working environments on the West Side,” said Scott MacKinnon, vice president of operations at Technical Connections, an L.A.-based IT staffing firm founded in 1984, long before the Internet took off. “Suddenly you had scores of companies springing up every 90 days, looking for tech talent. Some have made it big, and some are gone, but the entrepreneurial bug had bit.”
Case in point: New York City-based men’s lifestyle magazine Details and online retailer Mr. Porter brought their annual “Digital Mavericks” celebration to 41 Ocean in Santa Monica on April 16.
“When you think of L.A., you think of Hollywood. But we look to introduce our readers to cultural happenings, ideas and people that might not be on their radar, and as we entered into discussion about the growth in the area, it made perfect sense to focus on Silicon Beach,” said Dan Peres, Details’ editor-in-chief.
The Register asked some of the up-and-coming players at the Details event to explain what sets Silicon Beach apart from its better-known namesake to the north.
“If we were to start this company in New York or San Francisco, we never would have made it,” said Rob Salvatore, CEO of Tongal, a video crowdsourcing company that conducts campaigns including Super Bowl ads for brands such as McDonald’s, NASA and Procter & Gamble. “We’d have had to raise so much money to afford to operate, and give up more of the company early on, and you never know how that will play out.”
Earlier this year, technology media site The Information tallied startup costs in different cities around the world. San Francisco topped the list, at nearly $390,000 for a couple of engineers, a designer and leasing 1,000 square feet. Los Angeles’ price tag was closer to $300,000, coming in below Palo Alto, Washington, D.C., and New York.
Even along the main drag of Silicon Beach, Tongal could be bootstrapped. Rather than the average $102,000 annual lease paid by San Francisco startups, Salvatore and co-founders James DeJulio and Mark Burrell scored a low-rent “handshake agreement” with the landlord for a small office a few blocks from the water. Rents are rising, of course, but there are still deals to be had.
A SURPRISING STARTUP SPIRIT
“Locals might not know much about Silicon Beach because it’s overshadowed by the entertainment industry, but you’ll find that L.A. is a very entrepreneurial city,” said Wilton Risenhoover, chief technology officer of Tuition.io, a student debt-management platform handling more than $1billion in loans. “We have great university programs at UCLA, and I’ve heard there are more entrepreneurs in L.A. than in any other city in the U.S.”
Well, almost. The Kauffman Foundation released its annual report on entrepreneurial activity earlier this month, and this year, L.A. placed second among large metro areas in the share of individuals who start businesses (490 per 100,000 adults), behind San Francisco (570 per 100,000 adults).
Risenhoover, who lived in San Francisco for eight years during the first dot-com boom and was part of the founding team at Craigslist, added that L.A. startups are more content and e-commerce driven – and one could argue, more revenue driven, since the local investment community is wary of long, drawn-out investments.
PEOPLE HERE HAVE LIVES
“People who are here and doing tech are here for a reason, whether it’s family or lifestyle. I’m not in the Bay because I’ve always stayed close to music, and the industry is here,” said digital music pioneer Ian Rogers, CEO of music streaming app Beats Music. (Nine Inch Nails frontman Trent Reznor is the chief creative officer.) “There are so many different kinds of startups in the area,” he added, such as apparel, biotech, gaming, aerospace and entertainment, which reflects the diversity of the region.
And as a lifelong skater, Rogers doesn’t see the point in providing perks to keep employees in the office. After all, the beach calls.
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