When Lee Schneider moved from New York to Los Angeles, he admits he had a snobby perception of his new city. But after years of working in the city, teaching at USC, and conducting research for his book, Chronicle of a Startup Town: LA, he uncovered a layer of the city he did not expect.
“This has made me think about the history of what is going on here. It's not coming out of nowhere. It started with Howard Hughes and with Myspace. You can dig pretty far back and see that there has been a history of tech innovation here.”
As chronicled in the book, the city began with a handful of successful tech companies including Shopzilla, MySpace, and Priceline, but it wasn’t until the Coloft working space in 2010 and the accelerator movement in 2012 that a real tech culture began to develop. And to make matters worse, Los Angeles did not have a government interested in bolstering startups until Mayor Garcetti in 2013.
Despite its constant comparisons to its neighbor to the north, LA has taken a drastically different path towards its technology industry, a path paved with a long history of innovation and Hollywood production.
Schneider sat down with us to define the four characteristics that have come to define the LA startup scene:
Beginning with the railroad barons concocting stories to draw in Midwestern settlers, to Hollywood’s never-ending creative machine, storytelling has been an integral part of LA culture and thus the LA startup scene. As Lee wrote in the book:
“The work of storytelling certainly continues in gaming, in micro-narratives deployed by Snapchat, in the plethora of video platforms, in targeted advertising, and in the meta-stories that people tell themselves about their desire to start a startup in LA.”
In the world of online development, adopting a storytelling mentality is important for drawing in customers to experience the product themselves. So whether it’s a pitch to a VC or to a customer, LA’s flare for the dramatic has gone a long way in it’s companies' success.
Unlike Silicon Valley, LA avoids dreaded tech bubbles through the cultural diversity of its ecosystem. The different startups emerging in the city are as vast and various as its sprawling neighborhoods, creating a patchwork of startups and industries that can feed off each other’s ideas.
“People told me over and over in interviews for the book, what distinguishes LA is diversity of people, intent and industry,” Schneider said. “We have the movies, we also have fashion, we have medical tech, aviation, and these are all equal, there is no dominant. It’s hard to pin it down to a single thing, which is its strength — that kind of diversity.“
“Here we have a remarkably messy collection of interests and what’s interesting now is that it is starting to gel. It's starting to come together as some kind of intersection that is more than content, more than entertainment, and a bit to do with metrics and stats and big data. They’re finding a way to look at an incumbent market, something that’s been around for a while, and blow it up and reassemble it.”
Like all things LA, tech is entertainment first. A lot of emphasis in Silicon Valley development has to do with its tech solution first and a user experience second, but as Lee explains in his book, LA flips that:
“Startup companies in LA... are trying to deliver an entertaining experience to users, rather than focusing on applying the most advanced technologies at the expense of a good user experience. This attention to entertaining user experience is what differentiates a Snapchat from a Facebook, or the YouTube video production companies from the video technology platform itself. Entertainment is first; technology, for its own sake, second.”
Like any industry, the LA tech scene needed to build on a base. In this case, Hollywood provided a base that constantly called for innovation, allowing the startup world to plant firm roots and flourish within it.
And in a world where most successful tech entrepreneurs are treated as rockstars, it is only fitting that Los Angeles starts producing them.
As Schneider explains, when Howard Hughes unveiled the Spruce Goose in 1947, it was the largest aircraft to ever take the sky at the time. It flew only once and didn’t come close to turning a profit, making it an ideal metaphor for most startups. But Hughes continued to move forward, showing the same kind of tenacity that has become inherent in Los Angeles. A startup ecosystem relies on the hustle of a few committed individuals. Without that, it can never take hold of a city.
“Since we don’t have Sand Hill Road or a centralized place where we can pitch, people really have to hustle here,” explained Schneider. “You have to show user-adoption, you have to show domain expertise, we don’t have that many people here who just had an idea one day and were suddenly billionaires.”
Despite the world’s perception of LA as a laid-back place, the reality is that the city thrives on internal competition and it is within this competition that truly great individuals and companies can arise.
What lies ahead....
The future of the LA tech scene is — understandably — hard to gauge. With so many different tech industries in play it's impossible to determine which one has the potential to rise above the rest. Schneider believes it will take one human behavior-altering company, like a Facebook or an Uber, to change the way people live in order to propel LA tech to the next level.
“There is something going on here that is changing the perception of LA as an entertainment center. People are starting to see LA as more than content development and more than entertainment to be this place where ideas are born.”
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