Explaining Southern California's economy

The possibly meaningless LA startup map that everyone is talking about

Represent-LA

Welcome to Los Angeles! The land of startups!

The interactive map above, which lives at represent.la, has been the talk of the Twitters and the L.A. startup community for a week now. One of the companies on the map, Ebyline, actually generated a blog post about what it all means. Peter Beller was the author, and I thought his take was pretty fresh.

So I checked in with him. I should have known that a former Forbes writer who did a presitigious Knight-Bagehot Fellowship at Columbia University and then stuck around Morningside Heights to get his MBA would go the extra mile: he cranked out a spreadsheet on VC funding in Silicon Valley, New York, and L.A.

When he isn't doing this type of thing, Beller is the Director of Content at Ebyline, an L.A. startup that has built a platform to provide primarily daily newspapers with a steady stream of high-caliber freelance journalists. It is not a content farm. (I've actually worked for a content farm, and Ebyline definitely isn't one, although in fairness not all so-called content farms deserve all the bad press they've received.)

"We pitch the business by letting potential clients know that we can save you money, automate your freelance operations and give you insight in which sections are spending how much on which stories," Beller told me.

Ebyline takes an 8 percent cut of the subsequent billings. Since 2010, the company has received two rounds of funding from E.W. Scripps, the newspaper company that also has a ventures arm. Ebyline was founded in 2009 by Bill Momary and Allen Narcisse, who came from the ad and operations side of the L.A. Times. Oh, and did I say that this isn't a content farm? In fact, its business model is the categorical opposite of a content farm's:

"Want to recruit a critical mass of great journalists from the U.S. and around the world," Beller said. And he should say that — because it's his job!

Here's what he wrote about the Represent LA map:

What’s interesting about this map? A few things—even if you live far away from Southern California.

For one, it provides some vivid evidence of the boom in LA-based startups that’s the talk of the tech and investment worlds (Ebyliner Lori Kozlowski is chronicling it for Forbes here) and the subject of some poo-pooing by San Franciscans and New Yorkers. It also hints strongly that tech—really, media—is at the heart of the vast majority of startups.

But back to Beller's spreadsheet, which he has now conveniently turned into a blog post. He cooked it up in curious response to my suggestion that these startup maps — they're been done for New York as well — are essentially a form of cheerleading. Silicon Valley probably doesn't need to tout maps about itself to let the world know that it's the heart of the heart of tech startup country. You swing a wet sock in Palo Alto, you hit the next Google.

Beller's numbers, from the National Venture Capital Association, bear that out. From 2001-2011, each region's share of VC funding had remained basically flat. LA/Orange County and NY Metro have together routinely accounted for around 25-30 percent, while Silicon Valley gets everything else. L.A. has been in the number three position for ten years. But New York hasn't really pulled any closer to the Valley. 

And this is in a funding environment that has declined by a three-region average of 13 percent over ten years.

So where's L.A.'s alleged startup boom? The numbers say that New York is where the action is, sort of, with a 21 percent increase in VC funding over the past five years, versus L.A.'s...um, 1 percent.

For what it's worth — Mark Suster, an L.A. VC at the biggest firm in town, GRP Partners — recently suggested that the Big Apple might be moving ahead of the City of Angels.

Beller somewhat agreed. "New York feels more energetic, period," he said. "There's a critical mass of humanity there."

But L.A. still feels lively. "The events I've been to here have been packed," he said. "Standing room only — and people were psyched." However, if there is a knock on startup scene in L.A., according to Beller, it's due to that other industry we have in town. "When people think of weighty technology, they think of other places. Here, they think about startups that are in entertainment and gaming and stuff like [sales] lead generation."

So the startup map that Represent LA created really is just boosterism, right?

Not entirely. "It's visually arresting," Beller said. The L.A. startup scene is also, like L.A. itself, sprawling. "We gotta find each other. I'm going to spend some time looking at that map. I mean, I didn't know there were startups in Silver Lake."

The real issue is that when people think startups, they continue to think "Silicon Valley." Every place else is a pretender to the throne. Sure, we've had Myspace and Shopzilla. "But people are waiting for the Facebook here, the one big startup company that legitimizes L.A.," Beller said.

"They say they aren't waiting for the next Twitter. But that just means that they are." 

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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