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La La Land: City of Angels (& Investors)

I finally had the chance to watch Oscar-winning – well, sort of – La La Land on a recent flight. It’s poignant move to watch personally; I was born not far from the Hollywood sign. Growing up in Southern California, there were a lot of constants: having summer weather year round (except “June gloom”); rainy days warranting a special report on news; earthquake drills every school year; car chases; traffic on the 405; traffic on the 5; traffic on the 101; referring to freeways with “the”. But absent from that list in Los Angeles, the “city of angels,” was anything around entrepreneurship.

What is now “Silicon Beach” used to be dominated by industries like media and real estate. Over the past 5 years, however, the daily flights between LAX and SFO seem to have become filled with as many up-and-coming techies as up-and-coming actors; Represent LA currently cites over 1000+ startups.

What is driving this growth? Some of this was driven by established tech companies building their presence in the area – Electronic Arts, Google, Facebook and others have meaningful presence – drawing local and distant talent to the area. Separate but related is that many leading tech companies from across the Pacific (like Japan, China, and Korea) built their first and sometimes largest Americas hubs in the (relatively) convenient destination. Also the area is home to some of the top schools in the region, including UCLA, University of Southern California, and Cal Tech. When an increasing number of VCs and incubators finally also broke ground there, an ecosystem of educated talent, hubs for talent syndication, and capital was ready – an ecosystem operating at a fraction of the cost of SF’s. And on a more qualitative level, I think of Los Angeles is an exceptionally diverse place across nearly every dimension – culturally, socioeconomically, etc – and its nature as a microcosm of the world makes it a great “petri dish” for identifying and learning from many user segments.

To that last point, many (though not all) of these startups are in the B2C space (not unlike the sectoral domination of healthcare in the Boston area). One of the first breakouts was BeachMint, a suite of celebrity-endorsed shopping and lifestyle brands. Dollar Shave Club became an overnight smash with its simple offering, low price point, and quirky / viral marketing videos. The infamous Whisper app, the recovery-fueling Liquid IV, and recently-IPOd Snap are all locals.

My good friend Ivka Adam founded Iconery, which aims to disrupt the luxury jewelry industry by offering a less formal, more fun (and more affordable) shopping experience; in addition to their own pieces, they’ve featured celebrity design collaborations with the likes of Michelle Branch and Rashida Jones. Indeed, perhaps unique to (or at least more prevalent in) LA is the involvement of local celebrities in these ventures, and why not: they have capital, connections, and what they may lack in technical or sectoral knowledge they have the opportunity to make up for with the brand clout and marketing potential by virtue of attaching themselves to a company. Jessica Alba’s Honest Company is often noted as a best practice example where a celebrity is investing themselves only in name and capital but also taking a hands-on leadership involvement in operational and product functions.

In La La Land Sebastian says “This is the dream.. and it’s very, very exciting!” He’s referring to jazz, but I think a similar sentiment can be used to describe entrepreneurship in LA. While certainly not yet at the scale of SF and NY (and although I am completely biased given my native Angeleno status :)), I do believe that “Silicon Beach” truly is the dream – a real-life example that you can have a vibrant and high-performing startup community that has firmly nestled among morning surf sessions and evening movie premiers.

02 April 2017

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