Intersection between Hollywood and Silicon Valley growing
The bond between Ryan Seacrest and Kevin Systrom is a friendship forged in food. The “American Idol” host met the founder of Instagram last year at a catered lunch in a cafeteria at the Menlo Park, Calif., headquarters of Facebook. An avid social-media user and tech investor in his own right, Seacrest was curious to learn more about Instagram, which Systrom sold to Facebook in 2012 for $1 billion.
Though they shared interests in technology, that wasn’t what made them fast friends. They both happen to love cooking, which is something of a hobby for both men. Systrom visits Los Angeles frequently, trying to better understand how Hollywood is using Instagram. “Having Ryan give me feedback on the platform, it’s extremely helpful,” he said. “We’re really both helping each other understand the other’s world,” he said.
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Seacrest agrees. “The dialogue between the two worlds is so valuable,” he said. “I’ve been in the business of talking, and now I’m listening.”
The distance between Hollywood and Silicon Valley is being bridged by people like Seacrest and Systrom, who are emblematic of an ongoing cross-pollination between these two worlds. Though it’s the friction between the entertainment and technology fi elds that gets the most attention, mutual interest unites them.
Nowhere is this dialogue more evident than in Los Angeles, where a technology-driven startup community is coming of age in the backyard of the world’s entertainment mecca. Collectively known by some as Silicon Beach, it’s not just a group of tech companies but rather an ecosystem complete with mentorship programs, entrepreneurial education and near-nightly events to call its own. Though it’s largely clustered around the beachside locales of Santa Monica and Venice, its tentacles stretch across the city, from Pasadena to Downtown to Beverly Hills to West Hollywood.
It’s a community that started to blossom in 2011, but has roots going back to the 1990s, when companies like Shopzilla and eHarmony launched, followed by a second wave of more media-minded firms like MySpace and Demand Media.
“Now we’re in a third wave,” said Paul Bricault, former executive vice president at William Morris and founder of Venice-based tech-accelerator Amplify. “The growth happened over time, because before now, there hasn’t been a foundation for startups.”
In Los Angeles, there are now more than 30 co-working spaces, more than two dozen incubators and accelerators (though some are larger than others), and by some counts better than 700 startups in various stages of development.
This thriving tech hub is dependent on educational support from local universities; benefi cial policy set at the government level, including the mayor’s office, which is shining a light on the tech community; larger companies doing business with the newbies; and increased venture funding.
But there’s a bigger idea at stake here. It’s not just about tech in Los Angeles, but rather tech with Los Angeles, capitalizing on the global brand the city already possesses: Hollywood.
One larger vision is entertainment and technology joining forces, making global exports more powerful than ever before. The merger of the two worlds has the potential to re-create film distribution, enhance moviegoing experiences, bring content to consumers in new ways on multiple screens, change the way we discover music, and reshape the way we experience the Internet altogether.
“My message to every studio is: If we disrupt Hollywood in this town by Hollywood giving business development partnerships to people, by Hollywood taking equity stakes in people, by Hollywood’s staff leaving to (go to startups), then the next generation of Hollywood will exist in this town,” said Mark Suster, founder of tech accelerator Launchpad, and managing partner at Upfront Ventures (formerly GRP).
For all of Los Angeles’ potential as a new tech hub, the companies that are forged by the city’s creative fires will be different in focus and scope than their Northern California counterparts. And while not every entity in this bustling scene is focusing its energies on the entertainment biz, enough of them are that their influence has significant implications.
“Disruption happens no matter what. So is it going to be disrupted in L.A. or disrupted in NorCal? Would you rather YouTube be based in NorCal or in SoCal?” Suster added. “ We have the opportunity to lead the disruption, and you can be a part of it.”
Some studios are already making these bets.
DreamWorks Animation reached out to an early-stage startup in AwesomenessTV, buying the teen- and tween-focused YouTube channel for $33 million in cash, with incentives that could push the deal far higher.
“We think YouTube — as both a platform for user-generated content and a platform for shortform content — has tremendous opportunity going forward,” said DWA CEO Jeffrey Katzenberg.
DWA chief technology officer Lincoln Wallen maintained that Los Angeles startups tend to grasp what audiences want. “The entrepreneurial spirit in L.A. is generally connected to the end user,” he said. “That connection then drives them to deliver compelling media — it’s a product of understanding both the consumer and the technology.”
DWA itself has been on the cutting edge of technological trends and changes, incorporating cloud computing and digital tool creation into its work. “It’s all about risk-taking to help move our own business forward,” Wallen said.
Connecting studios with movie fans
Early success in partnerships between startups and Hollywood can also be found in newbies Zefr and Maker Studios. Venice-based Zefr (formerly MovieClips) creates back-end technology for tagging YouTube clips and then monetizing them for the original content creators; they generally aim to connect fans with franchises, and were more or less the first startup to teach Hollywood that fan-uploaded content indicated passion, not necessarily piracy. They have built partnerships with Warner Bros., Universal, Sony Music, Columbia, Lionsgate, Miramax and Paramount, among many others.
Maker Studios, a multichannel network built on YouTube that reps a new kind of studio for up-and-coming video talent, found a partner in Time Warner, when the conglomerate led a $36 million round of funding for the startup in 2012. Maker has experienced rapid growth — with 3.4 billion video views and 250 million subscribers.
Where content companies go, you can be sure talent agencies follow. UTA, which incubated AwesomenessTV prior to its DWA sale, was exploring the converging areas of technology and media more than a decade ago, according to Brent Weinstein, head of digital media at the agency, at a time when others were shying away after the fi rst dot-com bubble burst.
“We don’t see it as being separate sides anymore — technology on this side, and Hollywood on the other,” Weinstein said. “There are very few media companies today that aren’t also tech companies, or rapidly becoming so.”
There has been talk that Los Angeles will be the next Silicon Valley. Based on the flurry of early-stage technology being built in the city, the presence of expendable capital and a creative desire to remake the world, it’s not just a pipe dream .
There are also high hopes that a new tech industry will give birth to a new crop of jobs in the region. Among the many priorities for new mayor Eric Garcetti is keeping his city hospitable to the tech community and fostering economic development in every way, from streamlining paperwork to reducing business taxes.
“The startups of today are the Fortune 500 companies of tomorrow,” Garcetti said. “If we’re going to compete, L.A. has to be a low-cost and low-red-tape place to do business, and our neighborhoods must be attractive places for entrepreneurs to live.
“So much of the content produced in Hollywood is now being consumed online, and that’s only going to increase. We have to be aggressive and perceptive about a changing marketplace,” he said.
While Los Angeles’ technology sector is still growing, there are already high-tech powerhouses in the city, namely NASA’s Jet Propulsion Lab at Caltech, and SpaceX. There are also new companies being built in the city that aim to reimagine the Internet completely, such as Factual, a location-based mobile data supplier. Or Gravity, which tracks a user’s clicks and helps content providers tap into consumer interests to deliver personalized content and ads.
Content, and startups that aim to improve content experiences, will likely be a hallmark of Los Angeles tech. Many say the city is collectively searching for, and could define, the future of digital media itself.
The Web has become more visual, with Instagram, Vine and Snapchat seeing early success, and online video becoming a robust force. Much of that variety of content falls in L.A.’s wheelhouse of expertise, whether it’s video, photos, film, TV or even animatics (animated storyboards). Whether content is delivered on mobile phones, tablets, online, TV or on the bigscreen is of no concern to the average consumer, who just wants to be entertained wherever they want, whenever they feel like it.
“The convergence is really that people with a message — whether it’s your new movie or a new song — need a way to reach the largest audience and get your message out,” Systrom said. “It’s about exploring ways to reach audiences and fans in more scalable ways than ever before. And visuals are a natural way to broadcast your message.”
Other verticals that Los Angeles tech is exploring include games and e-commerce, as well as new and various forms of social media and mobile.
“There are a lot of synergies between the two communities (Hollywood and technology),” Seacrest said. “The two have creative processes, and both are interested in trying new and different things, and bringing ideas to life.”
The city has entered an era in which content creatives and tech creators are starting to merge their skills to bring about better, never- before-seen entertainment experiences capable of producing more revenue than ever before.
One hundred years from now, in L.A.’s reliquary, maybe there will be a golden Oscar statuette, a tuft of red carpet and an app that can tell you who handed out that Oscar and who stood on that carpet — showing that big stars were made here out of both pizzazz and pixels.