The right place to start a successful high tech business is surprisingly not the Bay Area or Silicon Valley anymore, but actually Los Angeles! In recent years, more and more companies have settled – and stayed – in LA.
Playa Vista, still under construction, is becoming the Southern Silicon Valley. Social network leaders, Facebook and YouTube, initiated the trend, and Microsoft and Google followed suit. Google recently purchased 12 acres in Playa Vista to expand its presence in Los Angeles and Yahoo signed onto a long-term lease at the new Collective Campus for the massive expanse of a 130,000 square foot office space.
Michael Pachter, a tech analyst at Wedbush Securities in Los Angeles, states that “there’s a herd mentality to the tech industry, so when one guy does something, everyone else follows”. The latter is sure to attract “more like-minded companies” and people. In fact, the model of the Silicon Beach is to gather creative people to bring about more productivity. “Having a creative, vibrant community is critical for our success, and it’s heartening to see that grow in the last couple of years. »
For years, the Los Angeles Mayor, Eric Garcetti, has been enticing companies of technology to settle down in his city over Santa Monica, thanks to significant benefits. His goal has been to make LA a tech-entertainment hub to attract companies. Last November, the mayor offered incentives and resources, including a three-year business tax exemption and “white glove service”. The aim is to develop and quickly set up the companies on the new campus and to “elevate LA as a tech leader, retaining quality engineers and attract and grow local funding sources”. Finally, the main goal of the project is to compete with the hub of San Francisco and to create a great campus in the middle of Los Angeles.
The location has played a major role. First, dynamic companies chose the undeveloped area because of its proximity to the entertainment hub, the major freeways, LAX, and a nice and peaceful environment with the beach. Above all, Playa Vista covers a vast unoccupied area, a rarity in Southern California and an advantage that tech companies are actively seeking. Besides, it can enable tech companies to think about potential expansions in the future. Big companies like YouTube look for large facilities and new offices that better match the requirements of companies. “Santa Monica doesn’t have the space like Playa Vista to accommodate large concentrations of workers”.
Second, the growth of Playa Vista attracts a young community of dynamic employees. The rapid transformation of the area could host more than 6,500 residents with new housing, restaurants and companies.
Finally, it offers new prospects for other companies as many start-ups have also settled there. Venture capitalists saw great opportunity in this new project. According to Dow Jones VentureSource, “the total amount of equity financings for venture-backed companies jumped sharply last year, up to 44% to $2.3 billion across 146 deals.”
The technology sector is developing in the Los Angeles area, both in LA and Santa Monica. According to the Los Angeles County Economic Development Corp., this area includes more high tech jobs than Boston-Cambridge, Santa Clara County, and New-York City. Thanks to the high tech labor force, the LA technology sector grossed a total of $32 billion in wages in 2013. One of the most important reasons for the prominence of Los Angeles as a tech hub is its affordable price compared to the San Francisco Bay and the Silicon Valley. « Anything that diversifies the economy is great for L.A., anything that creates high-paying jobs is great for L.A. and anything that hires educated people is great for L.A. »
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