At LA Tech Week, the only thing built was buzz
Hello, and welcome to Pipeline. I’m Veronica Irwin, and I drank more pressed juice than I have in a lifetime this week.
This week in the startup world: the popularity contest at LA Tech Week, a16z’s biggest investment yet, and how a risky credit environment is changing buyout strategies.
A16z claimed to move its HQ “to the cloud” in July, but that really meant opening up offices in more cities. The buzziest new hub for the venture capital firm is Los Angeles, and just as Founders Fund has embraced Miami, Andreessen Horowitz has become LA tech’s biggest cheerleader — with Erewhon-fueled buffets, beachfront soirees and celebrity-attended parties in the Hollywood Hills to rally the local scenesters.
This past week, a16z hosted LA Tech Week with the slogan “Time to Build.” There wasn’t much building, but there was a lot of branding of the Los Angeles vibe. Thousands of venture capitalists and founders descended upon the City of Angels for a week to attend networking meetups that included surfing lessons, beach walks and sound baths. Some wrote checks, others established new partnerships — and everyone came away with sunlit selfies and hangovers.
LA Tech Week ran on FOMO. Acquainted with the chaos of sniffing out the hottest parties at SXSW or Miami Tech Week? LA Tech Week made getting into events at those conventions look like a breeze, attendees groused.
Organizers said any exclusivity was unintentional. But they also argued it was an indicator of the event’s success. TenOneTen partner Minnie Ingersoll, a member of the WhatsApp group where investors planned the event, said that adding events so that everyone who flew in could attend at least something was a top priority. “If there were 1,000 slots, 14,000 people RSVP’d,” she said, with the caveat that those were rough numbers.
Entrepreneur and angel investor Jon Romero hosted an unofficial event for LA Tech Week “rejects.” Attendees told me they felt that VCs and out-of-towners were having better luck getting into events than founders and LA locals. Romero told me he threw the event because founders “don’t need any more gatekeeping.”
Others were keen to point out how the geography of the event did not welcome all of LA’s techies. Nearly all events were held on the Westside, a particularly affluent region that can be difficult to reach from the San Fernando Valley or downtown, especially in rush-hour traffic. Carolyn Jones, a program director at Grid110, pointed out that the week’s events were particularly difficult to reach for the incubator’s south Los Angeles-based founders, most of whom are people of color.
If you could get in the door, the pressure was off. Getting into LA Tech Week events may have been stressful, but the events themselves were all about casual vibes. As one partier told me, in Los Angeles it’s “take shots with me today, we’ll have the business meeting tomorrow.”
Passersby may not have known that several gatherings were even networking events. Imagine beautiful people in beautiful clothes talking about their hobbies, vacation plans and perspectives on life between sips of Instagrammable cocktails. The point wasn’t a frenzy of deal-making, but getting to know each other and celebrating SoCal tech culture.
For some, that’s what Los Angeles business is all about. Ingersoll, for example, pointed out that a female founders meetup was held at Hermes’ Rodeo Drive location, a glamorous destination but also one that made sense for business. The luxury brand has plans to invest in businesses that help make the supply chain and manufacturing more efficient. In LA, it’s all about “cross-pollination,” she said.
Wellness-minded events, too, weren’t just a silly gimmick to highlight Angelenos’ love for pressed juices and matching workout sets. The LA startup scene is more about work-life balance than celebrating hustle-culture adherents who work 13-hour days and sleep under their desk, SoCal-native attendees repeatedly pointed out.
But not everyone buys the pitch. “If you think success is going to happen because you’re networking at LA Tech Week, you’re wrong,” Grant LaFontaine, CEO of LA marketplace startup Whatnot, told Protocol. “You need to build a really good business, and I do that by spending all of my time on building.”
The irony is that LA’s best attribute for founders may be how close Silicon Valley is. Ask a founder or VC why they chose to establish their headquarters in the city, and they’ll likely tell you that it’s because they wanted to live in a warm, sunny location that’s also a short flight from San Francisco. The shift to remote work over the past two years has only made migrating south easier.
As Katie Roof pointed out on Twitter, a lot of the partners who have moved south haven’t updated their LinkedIn bios to indicate the change in location. I asked several why, and the answers I got ranged from being “too cool” to remember to update their pages and wanting to still appear in searches for “investors in Silicon Valley.”
Eva Ho, a partner at Fika Ventures, has been in Los Angeles for over five years and said the city’s attractiveness as a tech hub is growing. Engineers graduating from the greater Los Angeles area’s strong engineering schools — UCLA, USC and Harvey Mudd College, to name just a few — are staying in the city now that there are more tech companies there and they can fetch salaries comparable to those in the Bay Area. For reference, the average base salary for a software engineer in Los Angeles is about $103,000 according to Indeed, versus about $115,000 in San Francisco.
LaFontaine said that there’s more and more entry-level talent in Los Angeles, but not a lot of senior talent yet. Because of this, he hired his lead engineer out of San Francisco.
“Let’s collab!” LA is a sprawling, economically and ideologically diverse city, meaning all sorts of companies can gain a foothold. But some of the city’s unique assets are its thriving entertainment and manufacturing industries, creating special opportunities for tech companies that serve those sectors.
“LA is known for consumer,” Bain Capital Ventures partner Sarah Hinkfuss told Protocol. Many of the companies finding luck in Los Angeles serve creators, sell consumer tech that benefits from celebrity sponsorship or lie at the intersection of the entertainment and tech industries.
For example, Whatnot created a lot of buzz in the Magic: The Gathering community through a campaign with Post Malone, and touts YouTuber Logan Paul as an investor. ReCharge, an LA fintech unicorn, works with a lot of ecommerce brands shipping out of the Port of Los Angeles, the nation’s largest container port.
Many in Los Angeles venture and startups draw inspiration from the entertainment industry. Andreessen Horowitz’s approach to venture is based in part on the full-service talent agency model. And the inspiration goes both ways: Filmmaker Sofia Stefou told Protocol that she was interested in working with Web3 innovators on NFT-based games that could serve as a companion piece to her movies, while Cinapse co-founder Greg Kufera said he drew on his experiences as an actor, producer and mathematician to come up with the idea for his full-service TV production app.
Angelenos specialize in building hype — I know, I’m from there. A party with a long line out front is assumed to be good, a red carpet where anyone can walk is automatically lame. A16z didn’t invent gatekeeping, but it did play off the exclusivity effect for LA Tech Week, and likely to its benefit. Search #LATechWeek on Twitter, LinkedIn and Instagram and you’ll find tons of photos with captions thanking a16z for sponsoring the event. Never mind the paucity of checks written at the event: At LA Tech Week, people couldn’t stop talking about LA Tech Week. And maybe that was the point all along.
Protocol link: https://www.protocol.com/newsletters/pipeline/la-tech-week