California Summit—Honing California’s Edge in Technology and Entertainment

December 08, 2015

Silicon Beach vies with Silicon Valley for the digital world’s best minds

Locked in a rivalry for the digital world’s best and brightest, Southern California’s entertainment-focused Silicon Beach often loses out to Silicon Valley, where engineers and programmers—not actors—are the celebrities.

“In Silicon Valley the engineers are the stars, and here in L.A. they are the extras,” Chris Williams, chief audience officer at online content developer Maker Studios, said during the “Honing California’s Edge in Technology and Entertainment” event at the California Summit. “This has always been a challenging environment vis-à-vis Northern California.”

Many young people who aspire to careers in digital technology have been weaned on stories of companies, such as Facebook, that rose from tiny startups to become global giants with 12-figure market caps. Breaking the allure of joining one of them can be difficult.

“I don’t think we have the same level of talent yet. Culture is a big part of it,” said Jason Kirk, executive vice president of business development and strategy at Zefr, a Venice, Calif., company that helps film studios and other content owners maximize revenue by tracking the video use across social media platforms.

However, the growing nexus between entertainment and technology is enhancing the appeal of Silicon Beach, according to Williams and fellow panelists. Seeking more and better content for their platforms, Silicon Valley colossi such as Google, Yahoo and Facebook are expanding or building facilities in Southern California to strengthen their ties to Hollywood studios and the region’s creative talent. Their arrival has helped build momentum and allure for the region as a whole, said John Bolton, vice president of business development at Flipagram, whose storytelling app makes it easy to create and distribute videos. In July, the Los Angeles-based company raised $70 million in a funding round led by Silicon Valley-based Sequoia Capital. Zefr also has raised money in Silicon Valley, Kirk said.

“We’re definitely on an upward trajectory,” Bolton said of the growing presence of big Valley players in Southern California. “I think those are great signs of progress in Los Angeles.”

Maker Studios’ initial investment came from the Hollywood community, including actor Robert Downey Jr. and “Avatar” co-producer Jon Landau. Later funding rounds attracted media companies, including Time Warner Inc., Williams said. The company sold itself to Walt Disney Co. in 2014 for $500 million, giving Disney CEO Robert Iger a way to expand the brand’s following. Maker develops popular, niche-focused Web shows, such as “PewDiePie & Friends” and the “The Mom’s View.” Most of it is initially developed by hobbyists who, after gaining fans on social media, partner with Maker to develop more professional shows.

Despite a bias among many tech investors for, well, technology, the added element of artistic creativity has its own appeal, said Beatriz Acevedo, founder and president of Mitu, a maker and distributor of Web content created largely by Latino American millennials for their peers. Most of Mitu’s programming is in English, she added, designed to offer young Latinos an alternative to traditional Spanish-language television networks dominated by telenovelas and soccer.

“There’s still that part that is magic,” Acevedo said. “There’s the science and the magic. For our investors, it helps that you’re both content and technology.”

The company’s ethnic focus sets it apart when it comes to recruiting, she said. “The mix of entertainment and diversity is very important to us,” she said. “We’re able to give a lot of opportunities to people who maybe have never had the opportunity. They’re Latinos, they’re women. In our company, they have the opportunity to really shine.”

Each executive on the panel represented a young company that is still building its following. Kirk, who was general manager for MySpace, once a megastar of social media, warned that early success can quickly evaporate. One of the first sites that enabled users to establish a personal Web identity, MySpace was acquired by News Corp. in 2005 for $580 million but was quickly supplanted by Facebook. News Corp. sold MySpace in 2011 for a meager $35 million.

“You have to be focused on the user,” Kirk said. “We focused on the business too soon and never really solidified our place.” The task was made difficult by an overly aggressive drive for   profitability in a short time frame. If Facebook or YouTube had been required to do the same, he said, “they might not be here now.”