Benjamin Kuo’s Blog

I was talking to Duke Bristow, who teaches entrepreneurship and engineering courses at both USC and UCLA (yes, apparently you can work for both schools at the same time), about companies who had told me they are having difficulty finding developers. He tells me he has lots of graduating engineerings students–both undergrad and graduate–who are looking for positions. Contact me if you’d like to connect with Duke. I find that too many companies here overlook the huge wealth of engineering graduates from schools here.

In fact companies like Intel, IBM, Google, HP, Yahoo, etc. recruit heavily out of the schools here for their employees, pulling a great deal of engineering talent out of Southern California up into Silicon Valley and elsewhere. Having graduated from USC with a Electrical Engineering degree myself, I think the vast majority of people I went to school with in engineering are now working for companies up north.

I ran across a blog posting recently from Jason Caplain, a VC in North Carolina, talking about an entrepeneur’s complaint of developers leaving the region for Silicon Valley. Jason, while talking about NC,  had a few good points which he uses to rebut the entrepreneur–a few of which could equally apply to Southern California.

The great entrepreneurs, with the great ideas and the ones that are willing to part with the right amount of equity shouldn’t have a hard time attracting development talent. There is a ton of tech talent here with the local universities (NC State, UNC and Duke) and larger companies like Cisco, Red Hat, IBM and SAS right in our backyard.

Here, of course, there is Caltech, USC, UCLA, UCSD, UC Irvine, Harvey Mudd, not to mention a slew of other schools with strong engineering and technology programs. Plus, a huge developer base of technical and business talent at the more established local companies here (Broadcom, Qualcomm, Overture, etc.).

There is a huge cost of living advantage to being here in NC compared to Silicon Valley.

While we are much more expensive than NC in terms of cost of living, housing and cost of living in Southern California is more affordable than Silicon Valley.

More importantly, the cost for development talent here in NC is a lot cheaper than Silicon Valley. What this means is that it can be cheaper to build a company here.

I believe this is somewhat true in Southern California as well; from my experience, developer costs and salaries are definitely lower here in Southern California versus the extreme competition for talent in Silicon Valley. For the employees, it actually works out pretty well–salaries might be lower, but so is cost of living, and the quality of life (sun, surf, sand, etc.) more than makes up for the differential.

In any case, it’s interesting to see the perspectives from another high tech region.

Entretech, one of the organizations in Los Angeles which is focused on helping out high tech entrepreneurs and other high tech companies here, has just invited technology companies to apply for their Fifth Annual Entrepreneurship Awards. The awards deadline is November 29th.

The parameters behind the awards, according to Entretech:

This years’ awards will honor leading-edge companies in three categories based on annual revenue: 1) Start-up - under $1 million; 2) Emerging - between $1 million and $8 million; and 3) Growth – over $8 million.

Companies may self nominate or be proposed by a third party or organization.  Applicants must demonstrate a significant market potential for their product or service and a strong likelihood for achieving that potential.  Likely winners will be:

*     technology companies, owning and developing proprietary technology

*     in business 2-10 years

*     located in the Greater Los Angeles six counties region (Santa Barbara, Los Angeles, Orange County, San Bernardino, Riverside and Ventura)

The award is sponsored by PricewaterhouseCoopers (which is also a sponsor of socalTECH). Prior award winners include LegalZoom, Snap.com, Prolacta Bioscience, NextAce Corporation, Guidance Software and Evolution Robotics. The awards also go hand in hand with Entretech’s “Hot Companies Breakfast” in January, when the finalists will be announced; the winners are announced in March.

There’s actually a lot of opportunities for Southern California companies to get recognition for their efforts; there’s a broad range of organizations who are doing their best to get the word out about the successful companies in the region.  Among the other groups with their own awards events: The Los Angeles Venture Association (LAVA); the Technology Council of Southern California; Ernst & Young’s Entrepreneur of the Year program (OC, San Diego, and Los Angeles); several programs from the AeA, including a program in Orange County/Inland Empire and one in San Diego.

(disclaimer: I’m on the board of directors of Entretech, and often help out with several of the other awards listed above…)

It’s interesting, in the last few months I’ve noticed an increase in the number of dual-headquartered companies where one of the legs is in the Southern California area. The combinations I am seeing most seem to be Los Angeles / New York City (particularly in the media and content space); Los Angeles / London (Internet and computer gaming companies); and Irvine or San Diego / Tel Aviv (Hardware and software companies).

It’s clear why these companies are co-locating here; in the case of the LA/NYC deals, it looks like companies are finding it beneficial to be linked to both the Los Angeles and New York community (Madison Avenue, etc.). In the case of Los Angels and London, it looks like some of the connections are due to the Hollywood and computer gaming industry; finally, in the Irvine and San Diego (and sometimes LA) linkage to Israel, it’s the strong ties to Israel via the Jewish population and ex-Israelis living here, plus relationships with hardware and semiconductor firms here.

It’s quite common to see this with Silicon Valley companies (particularly in the case of Israeli companies), but until recently I hadn’t noticed as much of this down here.

NPR today ran a great piece on the passing of Robert Shields, an 89-year old former English teacher and pastor, who maintained a minute-by-minute diary of his life since 1972. Shields documented every 5 minutes of his life, every day, for years. Listening to NPR’s coverage in the car today, I couldn’t help but think of all of the twitter addicts /twitterholics — those who can’t help but use the twitter service to give everyone a constant, often minute-by-minute update on what they are doing and thinking.

It’s quite interesting, I’ve noticed recently where we’ve been finding out about local venture fundings, but the companies have been very eager to keep it quiet. I’m always mystified by the “hush-hush” around it, but, a few weeks or months later, I find out the companies have gotten funding from a Silicon Valley VC who only funded the firm if they promised to move the company to somewhere in Silicon Valley (usually Palo Alto or Sunnyvale). The announcement usually is hyped up in the Silicon Valley press corp and no mention that the firm started here in Southern California ever shows up anywhere. I’ve noticed the same thing with companies (particularly those with R&D operations in Israel or China) who do the same thing. I think there’s some sense of “Silicon Valley” envy.

On the other hand, I do hear from lots of (very successful) CEOs and founders of companies who tell me their “war stories” about convincing their VCs that Southern California is a better place for starting a business. They go on to build great businesses here, anyway. I think if you’re more worried about having the “cachet” of Silicon Valley on your firm than making your business successful, you’re less likely to actually focus in on the true factors behind making your company work…

I’ve noticed recently that there have been a lot of content-focused, and retail businesses making the rounds here looking for venture capital or angel investment. In fact, it seems like there are more content or retail startups in the past few months here in Southern California then more of the “traditional” technology startups. However, it’s interesting because, if you look at the track record of most of the venture firms here in Southern California (notwithstanding GRP Partners, the firm in Los Angeles which backed Costco, Starbucks, and P.F. Chang’s), the firms here almost always shy away from retail deals, and only reluctantly invest in content/Hollywood-ish companies.

Just glancing at the content deals it’s almost entirely out-of-the-area VCs investing (examples: JibJab, with Polaris; DECA with Mayfield, General Catalyst and Atomico). The only recent one with some local involvement was Okapi in My Damn Channel.

Dan Lyons, aka “Fake Steve Jobs”, spoke at lunch at Forbes MEET today. He’s as hilarious in person as he is in his blog. For those who aren’t familiar with Fake Steve Jobs, Lyons runs a blog which “channels” Apple CEO Steve Jobs, and is a witty and usually hilarious commentator on Silicon Valley (recent entries: Oh snap! Faceberg raises another $500 million, and You can’t make this stuff up).

Rafat Ali at Paidcontent has the details here, dug up from an 8K filing. Movielink is the video-on-demand joint venture from MGM, Paramount, Sony, Universal, and WB. The studios have invested an amazing $148M in the venture, and according to the financials they are losing a spectacular $10M on not even $2M in revenues for the six months ended June 30, 2007.