Last night the good people over at Dealmaker Media L.A. hosted the latest installment of their strategy & mixer series last night at the William Morris offices in Beverly Hills. The event centered around a panel discussion moderated by Rich Wolpert, Managing Director of The Mailroom Fund discussing the similarities and differences between the start up and investment communities in Silicon Valley and Los Angeles. The panel was a good mix of investors (both angel and institutional) and entrepreneurs -- Mike Jones, newly minted COO of MySpace and former CEO of Tsavo Media, Joey Carson, President & CEO of Hollywood Interactive Group, Jason Oberfest, SVP, Business Development at MySpace and Mark Suster, Partner at GRP Partners.
Here are some of my take-aways from the event:
* In general, L.A.-based start ups are more monetization oriented while Silicon Valley start ups tend to place more emphasis on product development and technology.
* Due in part to geographical differences between the two areas, the L.A. start up and venture scene is more disparate and, save for Santa Monica, has no real nerve center (a la Sand Hill Road up north). And as an extension of this reality, there is also a common perception that L.A. does not have the depth and breadth of technology talent that Silicon Valley has, although there are members of the L.A. community (including the L.A. CTO Forum) that are actively working to change this perception.
* Those working in the start up community in Silicon Valley are much more pre-occupied with the equity portion of compensation packages than those in L.A., with one theory being that so many of them know and/or have heard of many others in their position making millions of dollars off of their options - which in turn leads to something along the lines of a sense of entitlement.
The topic of this event was of particular interest to me because I've spent the greater part of the last few months traveling to and from Silicon Valley and L.A. meeting with countless start ups and venture capitalists in both cities - in large part to get a sense of the general business and investment climate in both areas as I try and figure out what I want to do when I grow up. The main difference that I've noticed so far is that Silicon Valley operates in a micro-climate "bubble" environment that almost doesn't care or pay attention to the macro conditions that exist in the world (in this case the horrid economy). Entrepreneurship, progress and innovation are embedded in the fabric of the Valley - and that fabric is extremely strong and resilient.
While that's not to say that some of that doesn't exist here in L.A., the reality is that much of the climate is driven by the entertainment & media industry. And that industry is very much aware of, and adversely impacted by, the current economic conditions, not to mention the ongoing struggles many media companies are still having with figuring out how they are going to thrive in this new digital media ecosystem. And that fear and trepidation can't help but trickle down to the start ups and investors in the area, especially those whose businesses and investments are based in and around content. And from what I've heard from my friends and colleagues on the East Coast, this same dynamic exists between New York and Boston -- so at least we're not alone!
The good news is that L.A., despite its geographical challenges and ties to the entertainment industry tides, has a ton of great people across the business spectrum -- entrepreneurs, technologists, monetization experts and investors, and the sentiment coming out of last night is that the gap between L.A. and Silicon Valley - real or perceived - is closing every day.
Wednesday, May 13, 2009
SILICON VALLEY & L.A. -- A TALE OF TWO (START-UP) CITIES?
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So at the end of the day, who has the right idea? If you had to pick a place to raise money would you do it in LA or Silicon Valley?ReplyDelete
Interesting line of thought Chris. I've spent the last four years working for tech start ups in the Valley & SF (while living in LA) and the best part of the past 10 years networking tech (SF/Valley) to media (LA/NY).ReplyDelete
Huge generalization here but LA/NY is all about monetizing and building a financially viable business as soon as possible. The Valley is all about the integrity of product at all costs & it's associated "bells and whistles". In my experience, in the Valley, the financial side, short to medium term is not that important (because if you succeed your pay-off will come and be huge). It's a massive philosophical difference in priorities. Engineers & innovation rule in the Valley while being able to quickly identify and access revenue is king down here.
Ed - to respond to your comment, in my opinion it's very important to be close in proximity to one or all of your investors, particularly those who are on the board. There are so many advantages to being able to call on those folks for counsel, and not only have them in the same time zone, but also have them nearby so that you can interact with them in person.ReplyDelete
On a related note, there is a certain line of thinking that still says Silicon Valley is the place to go for money, if for no other reason than there are more firms and funds there than anywhere else. And while L.A. is only an hour plane ride from the Valley, if I ended up raising money up there I would probably base the company there as well.
johnb -- thanks for your expert post. Your line of thinking is definitely in line with what was discussed last night -- monetization vs. product development seems to be the most glaring distinction between the two hotbeds in California.ReplyDelete