Five years ago, local investors always debated about the local ecosystem and the long term process it would take to transform the vast and diverse Los Angeles entrepreneurial economy. I joined in the debate and periodically complained about the lack of local start-up talent and culture. Over lunch on Thursday with another local VC, it hit me. Southern California has arrived.
For the past century, Los Angles has been the epicenter for entertainment media including film, TV, and music. During industrialization, Southern California became the hedquarters of numerous defense companies such as Hughes, Raytheon, Rockwell and Litton. These companies employed large numbers of knowledge workers in engineering and science and also funded research in the fields of communications and device innovation at institutes such as UCLA, Caltech, Jet Propulsion Laboratory, USC, UCSB, UCSD, Harvey Mudd College, and UCI. As a result, very talented scientists collected here and the area subsequently spawned numerous leading companies in communications, networking and semi-conductors. The result - Broadcom, Qualcomm, Conexant (and Skyworks), Qlogic, Emulex, Vitesse, AMCC, DirecTV, Ortel/Lucent, Titan, and Western Digital to name just a few.
Now, that we have arrived at the convergence of media and technology, Southern California is positioned to create the next wave of leading technology companies.
You have to look no further than the recent M&A news. On Monday, News Corp. announced the $580 million acquisition of Intermix Media (MIX), including its crown jewel Myspace.com. It didn't get much more local for me - my partner Bill Woodward was on the board, Myspace is about 50 yards from my office, and I knew the company quite well.
This was only the most recent of the local "run" - Scripps buying Shopzilla for $525 million, Experian buying Lowermybills.com for $330 million, and eBay buying Rent.com for $400 million, all in the past 7 months. Add to that, the recent IPOs of Jamdat and Fastclick, as well as the numerous other media and internet success stories - Yahoo buying Overture and Launch.com, Autobytel, the IACI empire including Citysearch, HSN, et al., Earthlink, ValueClick/Commission Junction, and the Idealab family - Netzero/United Online, eToys, Cooking.com, Carsdirect/Internet Brands, et al. Don't forget the numerous interactive game companies such as Activision, THQ, Take Two, the former Vivendi/Blizzard, and EA Studios.
As the internet becomes mass media, and as digital technology collides with entertainment, Southern California is in a position to capitalize. We don't need to debate any longer the merits of the talent or culture, SoCal will prosper over the next 20 years.
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