LOS ANGELES — California's Silicon Valley, near San Francisco, is world famous as a haven for technology companies, including giants like Google and Facebook. Many young entrepreneurs are bypassing Silicon Valley, though, to start their companies in an area called Silicon Beach.
On the west side of Los Angeles, people from around the world come for the beach, year-round sunshine and warm weather. This also is where Gregg Spiridellis and his brother operate the online comedy and e-card company, JibJab.
“We are two blocks from the beach. It’s 72 degrees [i.e., about 22 degrees Celsius] and sunny every single day,” said Spiridellis.
Tech companies crop up
Spiridellis moved his company 10 years ago from New York to the beach in Los Angeles, after the dot.com crash almost wiped out his company. The move gave new life to his business.
“When we first moved out to L.A., there was no technology community. We did not move to Los Angeles for technology in 2002; we moved to artists for creative talent,” he said.
About four years ago, new technology companies started popping up, especially around Los Angeles beach neighborhoods, says University of Southern California engineering professor Ashish Soni.
“Definitely the unemployment and the economy in 2008-2009 did entice a lot of people to move from the traditional corporate path and to try and take a stab at their own venture,” said Soni.
Since then, the number of start-up technology firms in the area has exploded, with a large majority of them based along a five-kilometer stretch between the beach neighborhoods of Santa Monica and Venice - an area some in the industry call “Silicon Beach.”
Large pool talent available
Many people in the local technology community, including Soni, say the beach lifestyle and mild weather are reasons they bypassed the Silicon Valley and choose to work in Silicon Beach.
"It’s definitely becoming part of the everyday vernacular in the tech community here," said Soni.
But JibJab's Spiridellis said he does not like the name Silicon Beach.
"The only kind of silicon you see here on the beach is typically a part of someone’s body. I don’t really understand the need for a new brand," he said.
Venture capital firm Rustic Canyon is based here in Santa Monica. Managing Partner Nate Redmond says the Los Angeles region is unique and should not be likened to Silicon Valley to the north.
"While it’s understandable, I believe ultimately it doesn’t do justice or isn’t really fair to the entrepreneurs who are here building a community and building an ecosystem, which truly is much more native to the region and not an off-shoot from Silicon Valley per se," said Redmond.
Location is key
Entrepreneurs say another reason they prefer Silicon Beach over Silicon Valley is its proximity to Hollywood. Venice, where most of the special effects for movies are created, also is nearby.
Brett O’Brien is founder and chief executive officer of the technology company Viddy, which developed an application that helps users capture, enhance and share video.
“So the most talented production effects people in the world, from movie directors to cinematographers -- they're based here in Venice,” said O’Brien.
Viddy has attracted 38 million users in a little more than a year. O'Brien says the celebrities who use Viddy and their fans have fueled the company's success.
“There is certainly a benefit to having the access to influential users, famous talented people at every level. And for the types of businesses we create here in southern California, it’s a real competitive advantage,” said O’Brien.
Growing trend gains momentum
Rustic Canyon's Nate Redmond said people from around the world, including Silicon Valley, are coming to Los Angeles to work or start their own technology companies. He said that even venture capital firms in Silicon Valley are starting to take notice.
“The dollars invested in early stage companies within the L.A. region in 2011 last year was higher than any of the prior 10 years,” said Redmond.
Redmond said the most significant shift occurred 18 months ago, and it has accelerated since January. He said e-commerce firms also are drawing from the manufacturing industry in Los Angeles and the two major sea ports in the region. There also are engineers here who are creating online marketing and data analysis firms.
Analysts say that although Silicon Valley continues to be a leader in high technology, they expect the industry to grow and mature in Los Angeles.