The news of Snapchat’s bold rebuff of Facebook’s $3 billion dollar offer, which broke the day before the LA Tech Summit, was a great way to kick off an event showcasing the LA tech community’s increasing momentum.
The day-long LA Tech Summit, which drew 900 attendees and panel members such as Tinder CEO Sean Rad, made it clear that right now Silicon Beach is really hitting its stride. Mark Suster of Upfront Ventures summed up the feeling best: “Something you’re hearing more and more is, ‘What is going on in LA!?’”
“We are at a point in LA when entrepreneurs are no longer afraid to come here,” Suster said.
What’s more, according to Built in LA’s latest funding report, within the first half of 2013, 92 Los Angeles startups raised just over $500 million and eight companies were acquired for a total of $153 million plus. Numbers which justify Los Angeles’ 2012 ranking as the 4th best city globally for startups. (Startup Ecosystem Report)
Clearly the success of consumer-facing firms like Snapchat, which in September claimed to process 350 million photos per day (roughly the same as Facebook), has emboldened the community. “That is lightning in a bottle,” Idealab CEO Bill Gross said.
“If I could rate our ecosystem now it’s an A minus up from the C minus it was 10 or 15 years ago,” said Gross. “There are incredible ideas coming out of this area.”
During the LA Tech Summit, speakers repeatedly referenced Los Angeles’ advantages such as its natural ability to spawn media companies and the relatively cheap software developer market.
Though developers are in high demand, within Los Angeles you are “able to get people at lower costs” relative to the Bay Area, Miller said, because prices are not being driven up by incessant competition. What’s more, without relentless talent poaching “we are able to stay focused” and build better companies, Miller said.
However, despite the buzzing enthusiasm there was still a sober understanding throughout the day that the Los Angeles ecosystem has many hurdles to clear ahead. A frequent attendee at tech events, Mayor Eric Garcetti pointed out though Los Angeles graduates large numbers of engineers we lose over half of them to other cities after they are done with school. “To many of our ideas come out of UCLA, Cal Tech and USC and go somewhere else,” said Garcetti.
Los Angeles companies are already dealing with this problem by breaking out the creativity. In addition to enticing engineering students to stay local with new and attractive summer internships, companies such as Factual and Cornerstone OnDemand are hiring based on perceived potential and later bringing new employees to the level they need via internal training programs.
Cornerstone OnDemand is further demonstrating this resourcefulness with the launch of an incubator and an innovation fund, two ventures that the company just announced at the LA Tech Summit yesterday and is now accepting inquiries. According to Cornerstone’s press release, the innovation fund will focus on a “few strategic investments each year, with each individual investment ranging from $250,000 to $1 million in size” and will be “made alongside select leading venture capital firms.” The incubator, which will be located inside Cornerstone’s Santa Monica office, is aimed to give developing companies “direct access to the experience and expertise of the Cornerstone OnDemand team.”
With Cornerstone’s big announcement, Facebook’s $3 billion dollar Snapchat offer, a slew of new tech events like the LA Tech Summit and Techweek LA just around the corner it is clear that Los Angeles tech is kicking up its pace. As Cornerstone OnDemand CEO Adam Miller asked in his keynote address: “you can start a company anywhere- why not do it somewhere beautiful?”
Lessons from the Valley - Panel Discussion
From Left to Right: Moderator - Leena Rao, Senior Editor of TechCrunch; Byron Deeter - Partner, Bessemer Venture Partners; Kevin Efrusy - General Partner, Accel Partners; Stacey Bishop - Partner, Scale Venture Partners; Rob Ward - Managing Director, Meritech Venture Partners
The Future of LA Tech - Fireside Chat
Adam Miller, CEO of Cornerstone OnDemand, discusses with Los Angeles Mayor Eric Garcetti