LA is gaining momentum as a second Silicon Valley

Krystal Peak · May 30, 2012 · Short URL: https://vator.tv/n/271a

With Vator Splash LA just around the corner, here is a look at how LA is blossoming as a tech hub

When people think about tech startups, they immediately conjure up the image of Silicon Valley 20-somethings or the hustle of San Francisco penthouse suites filled with VCs. What they don't usually think of is the sprawling spread of Los Angeles with its freeways shuffling some 10 million odd people around, but the case is that Los Angeles is becoming its own tech community, just an hour flight away from the campus centers of Facebook and Google.

With Vator Splash LA just a week away, I wanted to get a read on just what LA is doing in the tech sector, and how the city is bringing more talent and startups into its ecosphere. (Editor's note: Get tickets now before they jump up next week. Register here.) 

In the Vator Splash LA startup companies competiting to present at the event, that is voted and judged by tech peers, 11 of the top 20 are headquartered between Santa Barbara and San Diego -- and most of them are consumer-facing services or social networks.

But with LA outside the usual CalTrain or BART trip from most of the VCs offices in Northern California, I wanted to better understand how the SoCal startups standout and get the attention of businesses, customers and investors. I caught up with a couple of VCs that stay in-tune with the LA tech atmosphere to see just how they think the startups to the south are fairing now.

How the tech sector is changing in LA

Just five years ago tech companies wouldn't even dream of looking to LA as a viable headquarters. All of the rival companies, talent and VCs were all in Silicon Valley, but over the last few years with the success of BeachMint, ShoeDazzle, Zaarly and TrueCar, Los Angeles has become a place where tech companies with a strong business plan have come out of the gate swinging. 

Some entrepreneurs like Co-Chair of the accelerator Start Engine, Howard Marks, believes that Los Angeles provides the kind of environment that forces a company to be more scrappy and thoughtful in their execution. 

"People have always come to LA with a lot of ambition and a desire to prove themselves," Marks said. "But the tech world is often filled with companies that are floating by on all this capital that they don't get a chance to really see what works."

Since many of the LA startups are forced to really flesh out a business model beforehand, Marks thinks this leads to a smaller, stronger tech community. 

Areas of tech that are strong in LA

While Silicon Valley is filled with every type of tech company one can imagine, LA startups seem to be focused more in the areas of e-commerce, advertising and media, and consumer facing social interaction. 

A lot of this could be due to the previous point, that they need a viable business model to get out there and stay alive, but some of it also could be thanks to the Los Angeles environment and talent. LA is filled with fashion, design, advertising and networking already. You need look no further than Hollywood and what keeps that industry alive to see that those areas have a lot of power and some deep pockets.

Advantages of being in LA

While NorCal residents get in their shots about the problems with LA, we often do so because we are really jealous that they get all the great weather and can actually dip their toes in the ocean without physical pain. LA obviously can be a great place to work. 

When I caught up with Alex Gurevich, Principal at Javelin Venture Partners, he said that you need to look no further than the diverse population and affordable living to see what makes starting a company in LA desirable.

"The weather and environment is great and unlike a few years ago, there is a lot of great talent to pick up," Gurevich explained. "As opposed to San Francisco, all the recent graduates from LA colleges are easier to pickup here and they tend to have greater loyalty, less turnover for the talent because there is less competition."

But, even though things are shifting, you just can't beat Silicon Valley when it comes to density of VCs, talent, and community. LA is working on building more of a community of entrepreneurs and investors but it just is not there yet. 

What is around the corner for LA startups?

As the LA tech sector matures, more opportunities will open up for entrepreneurs south of San Jose. 

David Cremin, founder and managing director at DFJ Frontier believes that the change has already started.

"Great places have opened doors for entrepreneurs," Cremin said. " LaunchPad has been here for several years and has been a leader.  Now we have Science, Mucker Labs, Amplify, and idealab has been here since the late 90’s.  There is a lot going on, more than people outside the region realize.  It’s a matter of time before some more big companies are hatched here."

With just a few more days left to vote for the 10 startups that will present at Vator Splash LA, VCs and entrepreneurs everywhere should keep an eye on these young companies from the SoCal world: Credential Protection, LeadFerret, Xfluential, Calenjoy, AllowanceTree, Loyalty Dice, Flipgigs, Mergelocal, POP-AUT, MoPix, and DogVacay.

Personally I can't wait to get back down to LA to see just what has blossomed in the start-up world down there -- if you are interested in learning more about LA's tech scene, check out the Vator Splash LA event being held at the Santa Monica Fairmont on June 7 -- tickets are still on sale.

 

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Profitability - Loyalty Dice is the first loyalty program whose #1 focus is on increasing participating merchants profitability.

 

Flipgigs

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While everthing else seems to have gone social including shopping and online dating, one thing that has been stuck in the past is the way students find odd jobs and gigs. Believe me. When it comes to odd jobs students still  have to knock on doors, ask their parents network or school officials. That's what we had to do many many decades back.  Enter Flipgigs. Flipgigs is a talent based student skill sharing social network connecting savvy consumers and businesses with a motivated, affordable , scrappy network of students in High Schools & Colleges eager  to find gigs and jobs. Our website,  http://www.flipgigs.com.

Students also get to build a portfolio of work that can showcase their passion and commitment to prospective colleges and employers. There is not a single site that creates these connections and creates these opportunities. Flipgigs has the potential to be the LinkedIn for students

 

 

Flipgigs is currently in Private Beta and is growing virally locally and in communities across the US.

 

According to a recent post on Forbes, Flipgigs is the top 5 most promising social sites for students and has the potential to be a very large company.

http://www.forbes.com/sites/shelisrael/2012/05/05/5-promising-social-sites-for-students/

Flipgigs has also been declared Winner of The Best Startup award at  The Startup Conference in Mountain View on May 2, 2012. Flipgigs was unanimously voted by a panel of investors consisting of Dave McClure of 500 Startups, Thomas Korte of Angel Pad , Joyce Chung of Garage Ventures, Manu Kumar of K9 and a few others.

http://thestartupconference.com/startup-competition/

 

Formidable Target Market Size : About 28.2 million College Students + 16 million High Schoolers in US . 75% of them work part-time.  By the time they are in College they represent about $60 billion in buying power . Something needs to feed that buying power besides the bank of mom and dad.

 

Flipgigs is the only innovative platform that taps into student talent and provides a solution to the most vexing problems faced by many. If you are looking for cheap affordable scrappy services - maybe you just bought a new Macbook but don't know much about the Mac OS, maybe you need a Math Tutor for your kid and can't pay exorbitant fees, a music mentor or a Varsity Sports Instructor, you have to check out this amazing service.

 

Unlike some other players in this space that targets retired people or homemakers to run errands, we are less into errand outsourcing and more into top 5-7 kickass student services mainly academic tutoring, music mentoring, sports instruction, babysitting, social media marketing, blogging , translations etc.

At Flipgigs we hope to socially revolutionize the student short and part -time employment market. So far we have been very well received by investors and the greater entrepreneur community and are actively seeking funding.

Calenjoy

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Calenjoy (www.calenjoy.com) is a social calendar that automatically organizes the events in your life.

We believe that how people choose to spend their time reflects what they value, what matters to them, what drives them, what they love...what they live for. 

Our mission is to leverage this knowledge through a social calendar that truly helps users live their lives better. 

Calenjoy integrates across your social networks and then intelligently (and automatically) displays your life’s schedule and events in a beautiful, easy-to-use application. 

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Jay Samit - http://www.linkedin.com/in/jaysamit

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DogVacay.com is a community marketplace that addresses the $5B market for dog-boarding and pet-sitting. Instead of paying for a crowded and overpriced kennel, our users book with experienced hosts who watch dogs in their own homes. In two months since launch the we have gained national coverage with thousands of approved hosts. 

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POP-AUT

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POP-AUT || automatically PAY THE ARTIST+    

POP-AUT is automatic, collaborator-validated payments for creative work such as film, music, games and art.

 

WHO

 POP-AUT comes from the experiences of its founder KamranV. Kamran simultaneously managed an internationally-touring band and honed his talent in New Media at Interscope Records as its head of production and business development. His work at Interscope was the beginnings of what is now social media; building tools and platforms allowing artist and fans to communicate directly. In this time, KamranV also served as producer for DVD-Audio (surround sound) releases of albums from Sting, Nine Inch Nails, and Beck. 

 With no additional staff or funding, he started Interscope's mobile business in collaboration with Universal Music's eLabs. This project generated $12 million in its first year. In its second year, KamranV co-founded Universal Music Mobile U.S.A. as its head of Marketing. That year UMM posted $40 Million before his exit in 2006 to start the Spaceland Recordings live concert record label. 

 

WHY

Budgets for creative works continue to shrink however the output of collaborative work is more than ever in history. As a result, creative projects have become mostly speculative business relationships, pooling everyone's collective resources in the hopes that the project will create long-term benefit for all involved. Sadly, even with the best of intentions by all parties and the most clear, fair contract, processing royalties quickly becomes expensive and inaccurate.  Too often creative projects fail due to the ineffectiveness of paying its creators. In the age of online banking and digital media distribution with companies like PayPal, iTunes, YouTube and Square as cornerstones, there are few excuses. Enter POP-AUT for transparent, accurate, inexpensive, simple and automatic distributions and reports for all involved. POP-AUT is:

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  2.  Removing the Business from Creativity - once the projects/deals are set up, POP-AUT takes care of the back office on behalf of all parties equally. Creators stay focused on creation.

 

THE CHALLENGE

  •  With the rise of the creative class and its thirst for constant creation and sharing, the high overhead of every creator having their own royalty police doesn’t work.
    •  PRODUCTION costs have come down, making Apps, Film and Music less expensive to make.
    •  DISTRIBUTION costs have come down, allowing anyone to distribute products globally.
    •  MARKETING costs have come down, making finding customers easier and less expensive.
    •  However, the cost of PAYING EVERYONE involved in a work has gone UP. There are dozens of points of distribution and parties to pay in every creative project. Paying people costs money.
  •  CREATORS and necessary COLLABORATORS have not yet been able to make direct, transparent, inexpensive and timely payments to collaborators. Without this, the creative economy is broken.

 

THE POP-AUT SOLUTIONPOP-AUT simplifies the entire payment process and solves this at any point in the payment food-chain, staying flexible to achieve broad adoption quickly.

  •  Self-Service: Creatives confirm relationships between themselves by simply using the POP-AUT MANAGER of Relationships (PAM-R).
  •  Transparent Accounting: open programming and meta data standards to tag and track media consumption and transactions available to all parties involved in a creative work.
  •  Direct Payments: royalties are paid quickly and directly. Anyone can have a POP-AUT account and be paid directly.
  •  Feels FREE: POP-AUT is has no upfront costs. POP-AUT doesn’t make money unless the creator does. Minimal fees with a cap.
  •  Lead by Example: to market our concept POP-AUT will produce/fund/partner on collaborative, low-cost projects such as concert films that make creatives money. Live our concept: By Artists for Artists.

 

STATUS

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Summary:
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Our founders have already built several successful companies in this space over the past 10 years, our core team has already been working together for 4-10 years, and LeadFerret came into the market already possessing a B2B database of voer 20 million records, easily worth over $5 million dollars. 

More Details:
LeadFerret provides free information on millions of business contacts to sales people, recruiters, small business owners, etc. who typically don't have access to such information and/or don't have the budget to purchase it, and certainly don't have time to spend hours searching online for partial information.
 
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40 billion dollars a year is spent on business information, so the industry is huge, and our free model is totally unique.  Most of the players in this industry target only the marketers who want massive amounts of data.  We are uniquely positioned in that we also make the data available to the 35 million + sales people and other end users that need this information to do their jobs on a daily basis, but typically do not get access to information like this or have any control over it.
 
In about 9 months we have grown to over 200,000 unique users, and we plan to reach 1 million users by the end of 2012.  
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AllowanceTree.com

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On AllowanceTree, kids and teenagers manage and grow their real money in a fun, interactive, and parent supervised platform that mirrors the real world. They learn financial literacy and healthy money habits by doing, with their own money. They can save, invest (in their grades), give charity, diversify, take out loans (from their parents) and learn to avoid debt. Ages 9-17.

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Alex Gurevich

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Principal at Javelin Venture Partners. Investor in Thumbtack, WellnessFX, and Prismatic. Board observer at Skytree, PowerCloud, and AppFirst. Previously first employee at ooma and Principal at DFJ.
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Howard Marks

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co-founder Activision, CEO Acclaim Games, Managing Partner of StartEngine.
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David Cremin

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