Source: DIGIDAY

‘People are following ideas, not funding’: Why Los Angeles is emerging as an ad tech hotbed

For Gil Elbaz, Los Angeles is the best city to start an ad tech company. There, he set up his first startup Applied Semantics, which was acquired by Google in 2003 and later became Google’s LA office. Elbaz then started another tech company, Factual, in LA. Now, he is seeing more ad tech firms moving to the city.

“In 1998, nobody was leaving the Bay Area for LA to start a company, but I was drawn to LA because people were following ideas versus following funding,” said Elbaz, who is also Factual’s CEO. “LA always had the right ingredients to grow a fantastic startup scene. The reason why we didn’t see an influx until the last five years was because LA is so close to Silicon Valley, making it easy for companies up north to acquire companies down south.”

Like Elbaz, a growing number of tech entrepreneurs — including Snap’s Evan Spiegel and Rubicon Project’s Frank Addante — are choosing LA as their headquarters to take advantage of the nice weather, the beach lifestyle, as well as the lower cost of living and running a business than New York City or Silicon Valley. Plus, they can hire local engineering talent from the likes of California Institute of Technology, University of Southern California and UCLA.

“LA offers great tech talent in three baskets: The first group is from other tech firms; the second group is from consumer-facing companies like Dollar Shave Club; and the third group is from aerospace and entertainment — I don’t think you can find those people in New York City,” said Frank Addante, founder and chairman of Rubicon Project. “Most people didn’t realize that before because LA is geographically spread out.”

John Matthews, managing director for investment bank DeSilva+Phillips, added that the LA city government is also offering startups incentives to set up there, and the increasing emphasis on tech meeting creative is driving this trend, too. “If LA is about anything, it is about movie production, content studios and creative lifestyles,” he said.

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