Field Notes from Los Angeles

When I came up with the idea for OATV’s Field Trip Series I had our early experience with the NYC startup community as a backdrop. Stepping off the plane at LAX last week, I had no idea how relevant that context was for the week I was about to experience.

Like most who visit LA, I was drawn to the beach and chose to stay in Santa Monica. I wouldn’t say that was a mistake, but it did teach me early on in my trip that Santa Monica is NOT LA. In fact, the greater Los Angeles area, and specifically it’s startup community can not be pigeonholed as beach bumming founders in board shorts. What became clear throughout my stay was that there is a tremendous amount of diversity in the area’s startups and startup cultures depending on which part of LA they were based.

Similar to NYC, LA’s high rent neighborhoods tend to attract the capital and well funded startups. If you’re looking for a comparable to Union Square, look no further than Santa Monica. If you’re looking for SoHo, try Venice. If you want Meatpacking, try Hollywood. And If you want Brooklyn, try downtown LA. I’m taking the liberty of applying a fairly broad brush with those neighborhood pairings but the attitudes and ethos’ of each seem to match up. LA Represent, created by @tara, @abenzer and @seanbonner, can give you a visual sense of how the city’s startup community lays out (related- sourcecode for makeing your own Represent map is available on github).

Another similarity, which may seem less obvious at first blush, is Google. I don’t think Google gets enough credit for the role they’ve played in the recent rise of the NYC startup community. Shortly after my first visit ro NYC in 2005, Google purchased an entire city block in Chelsea and proceeded to fill it with engineers. This was a massive departure from the traditional Bay Area playbook. Up to that point, NYC served primarily is as outpost for Sales and Marketing functions. Google’s move to make NYC an engineering hub not only supplied NYC startups with a massive talent pool to fish from, but provided would be founders a fall back plan in the event their startups failed. 

It’s worth noting here that Google has recently opened 100,000 sq ft. of space in Venice and is aggressively filling it with engineering talent. This is on top of the 50,000 sq ft. YouTube Production Studio they opened last year.

OK, enough about LA/NYC parallels.

The majority of my time was spent hopping between Santa Monica and Venice. This was partly a function of where I was staying, but partly a function of one trait of LA’s startup community I hadn’t fully appreciated until I experienced it- LA is an accelerator town. 

These two beach towns are home to the four horsemen of LA’s accelerators. The one grabbing headlines these days is SCIENCE. But Launchpad LA, Amplify and Mucker Lab are each providing fertile soil for some notable companies to begin to take root.

Several observations fall out of LA’s current accelerator/incubator approach to startups. First, these programs are providing a highly valuable service to local founders. As was relayed to me multiple times, they’re attracting many first time founders who find the programatic approach and shared work spaces a more appealing setting for breaking out of the corporate or agency world which, I believe, is a plus. Interestingly, these accelerators are also proving to be a magnet for bringing outside talent to LA. Tho this may prove to be adverse selection over time (“we didn’t get into YC, so we may as well go to the beach”). I think these programs are serving a real and current opportunity in LA.

But they’re creating other opportunities which don’t appear to be getting filled locally. Despite the rise of the accelerators and an active local angel community, there are very few active local venture funds who can write a $2-$5M Series A check. GRP is a clear exception. But, when pressed, most founders were slow to pinpoint a second. 

As an outsider, I can see this as a real opportunity to cherry pick some of the best things coming out of the city. But, to have a sustainable local startup ecosystem, there needs to be active local funds who are participating in the winners coming out of the city. Having all your cities best companies funded by Sand Hill Rd. firms may not seem like a big deal, but it’s a very difficult story for regional funds to explain to current and prospective LPs when they’re trying to raise money.

One last thought on LA startups. The website for SCIENCE reveals a prevailing attitude i heard throughout my trip. As noted on their homepage, they exist to build companies that “Solve Real Problems”. This theme of “solving real problems” as opposed to the pixie dust blowing hippies in the bay area was a real badge of honor. Rather than discussing downloads or MAUs, LA startups were far more interested in ARPU and month over month sales numbers. There was a dismissiveness for the “get big and we’ll figure out revenue later”model for growth. It was explained to me on multiple occasions that this was a town that understood SEO and SEO in all its various shades of gray and was not afraid to push some ethical limits to generate cash. To be fair, this wasn’t every company I met but a lot of them.

As my week in Santa Monica and Venice wore on it became clearer and clearer that the concentration of founders and funders is beginning to create some of the serendipitous moments that have become a hallmark for me in NYC. Case in point, while grabbing lunch at a new restaurant funded by several in the LA tech set, 41 Ocean, I ran into a startup friend who just happend to be in town and heard whispers of which early employees from hauteLook, yammer and facebook were eating at the next table over. Whispers turned to chatter as intros were made and contact info exchanged. 

Tho this concentration is critical for enabling moments like these, it is clearly creating a rift in LA. Eastsiders vs. Westsiders (with the 405 being the dividing line). We’re not talking Bloods and Crips type of rifts, but Eastsiders are very quick to point out that Santa Monica is NOT actually LA and that many of them are, somewhat, resentfully working for companies on the Westside simply because there just aren’t as many interesting or technically challenging opportunities in downtown or in Hollywood. I think this dynamic is a fascinating one. It’s this kind of creative tensions and hunger for diversity that lay a foundation for a healthy startup ecosystem. On my next trip I plan to stay on the Eastside to get a better feel for what’s happening there (spoiler alert- I’ll be back).

What was a bit surprising to me was how little leverage the LA startup community is getting out of their proximity and access to Hollywood and the scads of talent there. When asked how the two co-exist, most were quick to point towards new YouTube networks as the answer. Frankly, I think that sells such a unique assest short. Content feels like only one small element that Hollywood could add to the startup mix. When pressed most relayed that some founders and most out of town VCs were far more interested in partying with celebs than finding ways to build businesses with them.

All in all I was really blown away with the scene I see emerging in LA. The startup community there was extremely warm and welcoming. The diversity of cultures and ideas seems to be creating a genuine environment for ideas to flourish. CoWorking and Maker spaces are popping up around different parts of the city giving founders and creatives places to meet and collaborate. And with Google attracting new talent to the region, I can see LA really stepping into it’s own over the next few years.

And we’d love to be a part of helping that happen.