Explaining Southern California's economy

LA startups: Tech makes all the difference

Gaikai Screen Shot

Gaikai, an L.A.-based gaming startup, just sold to Sony. It was engineering talent that made the company successful.

Nate Redmond, the managing director of L.A.'s Rustic Canyon, an early stage venture capital firm, had a must-read piece at TechCrunch over the weekend. Taking as his jumping-off point Sony’s purchase of of gaming startup Gaikai for $380 million (Rustic Canyon was an investor), he makes a case that something important is happening on the Los Angles startup scene:

LA has once again become a hotbed for technical leadership, as indicated by the flurry of investment activity. Entrepreneurs in the LA region attracted $567 million in venture capital in the first quarter of this year, 50% greater than the NY Metro area in the first quarter of the year, according to PriceWaterhouseCooper’s Money Tree report. Between the outstanding technical talent and the passion and vision of great founders, those dollars are being invested into technology-driven companies that break the stereotype of startups in LA.

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How to save America: Build better cities

Expo Park/USC Station

Courtesy of the Los Angeles County Metropolitan Transportation Authority

Expo Park/USC Station.

Felix Salmon has an interesting post today about how China has managed to keep it together depsite very trying economic times. The bottom line? Healthy investment in urban infrastructure. Which has fueled a boom in the creation of service-related jobs — just what you want if you need to think long-term about moving your economy away from agriculture and manufacturing. 

Cities, therefore, are good. Of course, China can do fine with a mix of agricultural and manufacturing labor at its core, with services a distant dream. The U.S., on the other hand, needs to push for service employment, as that's where the high incomes are. And we need high-income jobs to define America's future. Felix offers his formulation for how to get them:

How do you create service-industry jobs? By investing in cities and inter-city infrastructure like smart grids and high-speed rail. Services flourish where people are close together and can interact easily with the maximum number of people. If we want to create jobs in America, we should look to services, rather than the manufacturing sector. And while it’s hard to create those jobs directly, you can definitely try to do it indirectly, by building the platforms on which those jobs are built. They’re called cities. And America is, sadly, very bad at keeping its cities modern and flourishing. 1950s-era suburbia won’t cut it any more. But who in government is going to embrace our urban future?

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Watch out, Southern California! New York wants to do biotech, too

The guy in the video above is Fred Wilson, a venture capitalist and a partner at Union Square Ventures in New York. (He also a very active and disciplined blogger.) I've blogged about Fred and his thoughts a few times here at DeBordReport.

Watch the whole thing to get a sense of his views on engineering, startups, VC — and where New York might be headed in terms of developing a more diverse startup community.

One of the things that means is biotech.

Biotech is a startup industry that Southern Californian already does and does well. Biotech is our version of Silicon Valley and information technology. And that's good, because biotech could be the next big thing. I went down to Orange County earlier this week to find out how and dropped by a new biotech incubator, TechPortal Orange, at the UC Irvine Medical Center.

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Tweet of the Day: Income inequality in New York...and Los Angeles!

Today's Tweet of the Day comes from @TheEconomist and refers to this post, which analyzes a metric of inequality known as the Gini coefficient as it relates to income distribution in the U.S.

That sounds technical, the but the upshot is that if you are close to zero on your Gini, you're very equal, whereas the closer you get to 1, the more unequal you are.

The most unequal place in the U.S., in terms of  income, is the New York area, at 0.501 (tied with Santa Fe, NM, but representing a much larger population, obviously). That's why Occupy Wall Street picked Lower Manhattan as its first protest site. Although you could also say that they picked it because...well, that's where, you know, Wall Street is.

I know, I know, you're shocked. But wait! LA is also pretty unequal — and not too far behind New York, at 0.483. The point is that the worst places in the U.S. for inequality are also the best places to make a lot of money. The question is, Are the populations in the these regions becoming hoplessly divided into haves and have-nots? And is there really anything that we can or want to do about it?

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Visual Aid: The food truck business, NYC edition

I have a bit of an attitude about food trucks. Living in LA, I tend to take them for granted and also tend to focus on the basics: taco trucks. I am in fact the Foursquare mayor of my favorite truck, where I can get a ceviche tostada or a plate of tacos and a Jarritos soda for less than $5. High-end food trucks have of course become a big deal in LA, but given that we live in America's most spread-out metropolis, they seem to be able to operate without too much trouble.

Down deep, New York has serious LA envy, so in the last few years, food trucks have become thick on the streets there. New Yorkers are competitive eaters (unlike Angelenos, who are basically happy to subsist on a diet of burgers, tacos, sushi, steak and the occasional cleansing bowl of arugula), so of course they can't just emulate LA food-truck culture, they have to transform it into something that might be worthy of a Harvard Business School case study.

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