Earlier today at the Variety Venture Capital and New Media Summit, Los Angeles mayor Antonio Villaraigosa announced a new initiative called the “Mayor’s Council on Innovation and Industry” (LAMCII). The council, which ismade up of 25 Los Angeles entrepreneurs, venture capitalists, and business leaders, was created to change the narrative around innovation in Los Angeles.
This is good news given my discussion a few weeks ago cautioning against the prevailing attitude across the tech ecosystem considering politics to be a dirty word. That said, the jury is out the council’s goals and their ability to drive real change.
LAMCII’s mission is divided into four objectives: 1.) Rebranding LA; 2.) Improving workforce development; 3.) Increasing Access to Capital; and 4.) Building networks among local innovators. The question is, what kind of impact can they have in each of these areas?
“The Council isn’t about answering a question or problem, but about bringing together resources and attention to momentum that already exists,” says council member Zack Zalon, who is a VC with Elevator Labs and CEO of Wilshire Media Group.
In approximately six to eight weeks, the council will deliver to the Mayor a slate of “specific actionable recommendations” for achieving the above objectives. The group is currently working to gather and distill data both from members of the local innovation community, as well as similar initiatives in other cities, looking for what has worked and what has not.
The cities and administrations receiving the most attention are New York’s Bloomberg administration and San Francisco under Ed Lee. While Bloomberg gets a great deal of credit for the burgeoning early stage tech community in his city, it would seem that he has done little more than advocate on its behalf and stay out of the way. One the other end of the spectrum, Lee has on several occasions found himself at odds with the tech community regarding city taxes and real estate regulations among other issues – in many ways it seems the ecosystem has thrived despite his administration.
The first, and most heavily emphasized of the council’s objectives is rebranding LA. The group hopes to raise awareness about the innovation already happening in the city and the tradition of such innovation that has long-existed here. The mayor and the members of his counsel feel that the outside perception of LA is outdated and incomplete. “We have a great story to tell, but we’re not telling it effectively,” says Villaraigosa.
As far as objectives go, this seems like selling the council a bit short. There’s only so much that a PR campaign can do. Successful companies and large exits will do more to attract investors and talent to LA than new slogans or a slew of well-placed advertisements. While the strategy worked to an extent in New York, that city owns the advantage of having among the highest concentrations of capital and investors anywhere in the world.
LA has a lot of wealth, but it is largely directed to the entertainment industry as well as big overleveraged houses and fancy cars. What LA does have, despite suggestions to the contrary, is one of the highest concentrations of engineering and research universities in the world. Aside from possibly Boston, there aren’t many cities that can compete with UCLA, USC, and CalTech (not to mention Harvey Mudd and UCI). Stanford and Cal Berkley, while prolific at creating entrepreneurs, don’t measure up in shear quantity of technical graduates.
The council’s greatest challenge then may be to first keep this wealth of talent in the Los Angeles community and then to create a culture of social acceptability for them to pursue entrepreneurship. According to Zalon, approximately 75 percent of graduates leave immediately after graduation.
Both the business community and the mayor’s office arrived at the idea for the council simultaneously, says Zalon. To the extent that this is accurate, it makes the initiative far more organic and should be a strong predictor of cooperation among the various parties. Zalon calls the 25 members of the council “high drive, low ego individuals” as illustrated by the fact that all are interested in arriving at fact-based recommendations rather than suggesting that they “know the answer.”
“LAMCII represents an organic effort of leaders in the Greater Los Angeles growth community to work together to promote the huge growth story that is Los Angeles,” says council member David Hernand, whp is Co-Chair of Media, Entertainment and Technology at Gibson, Dunn & Crutcher, LLP. “LAMCII members have a shared vision that Internet services, new media, ecommerce, clean tech, cloud computing and other forms of innovation are key drivers of current and future economic growth in Greater Los Angeles, and Los Angeles has all the elements to be the leading entrepreneurial environment in the country.”
There’s no question that LA is growing up as a tech hub. a dozen incubators and increasing capital flows from both local and outside investors represent all the necessary factors to create a healthy and viable long-term tech ecosystem. PwC’s 2011 Cities of Opportunity Report ranks Los Angeles 6th for intellectual capital and innovation, 5th for demographics and livability, 2nd for work/life cost, and names it the best city for entrepreneurial environment. Additionally, 851 companies Los Angeles companies have received venture capital investment and 652 companies were involved in merger and acquisition transactions since 2005.
One factor that is out of the council’s hands is that Mayor Villaraigosa’s is on his second term and is ineligible to run again in 2013. As a result, the city is guaranteed a new administration with unknown policy agenda just over one year from today. Zalon says, “We are an a-political council. Our goal is to advance the LA ecosystem. We’re happy to do that regardless of who’s in office. That said, we feel that Mayor Villaraigosa has been a tremendous champion of business and entrepreneurship.”
For the council to be considered a success, it will have to be more than feel good sound bites and mutual back patting. The city is at a unique moment in its evolution from a leader traditional content and fashion to now an emerging leader in new media, ecommerce, and advertising technology. The council has outlined the right goals in its efforts to improve capitalization and retain talent within the ecosystem.
It will likely be years before we can declare a verdict on their efforts. In the meantime, entrepreneurs will keep building. If all goes well, it will be the too-loud-to-ignore success stories that will drive the narrative more than anything done by well-meaning politicians.