Building a business in LA

Lessons learned building a tech startup in the City of Transplants.

Published on 30th June 2015 by Jonathan Ginn

Last Thursday morning at Silicon Beach Fest, I attended the Building a business in LA panel. Both the subject and members of the panel looked really interesting. This was my second day in LA and I was keen to learn more about what really made LA tick from a start-up perspective.

Omar Shamout moderated the panel, which consisted of:

Joel Simkhai, Founder of Grindr

Grindr is the mobile app for finding guys. With over 2 million users with 100k a day, it’s huge. Joel is the founder of Grindr.

Matt Arevalo, Co-Founder of Loot Crate

Loot Crate provide a subscription service for $20 a month, shipping ‘Loot Crates’ out to members full of unique geeky goods. They’ve got 500k subscriptions in 12 countries shipping every month, with 200 employees in LA, and $10m-$20m revenue per month.

Beatriz Acevado – Co-Founder, Mitu Network

Mitu Network are a hispanic content company, connecting content creators and consumers. It’s an exploding market, with the hispanic community watching online and sharing more on average than other communities.

Ross Resnick – Founder, Roaming Hunger

Roaming Hunger’s mission is to bring people together through food, food trucks, and food locators. They’re a team of 38 in West Hollywood.


Why LA?

The first and most obvious question was to ask the panel why they built their business in LA. According to MattĀ Arevalo, it provided a great base to chat to gaming/geek companies and source materials. The combination of pop culture, tech, and entertainment in Los Angeles combine to provide a perfect base for Loot Crate. Matt’s seen the LA tech scene grow, and the caliber of creative people is high.

Ross’s views were similar – it provided a great base for his company. LA pioneers food, public policies, and trends – and from LA, you can make predictions for the broader United States.

At it’s core is creativity, says Beatriz – people understand their culture. Most importantly for Mitu, it’s a bilingual city which provides a solid community base to grow their audience nationally.

Joel echoed the other’s views, and added that LA has a balance of beauty, smart people, talent and weather – and importantly for him, it’s not a complete rat race. He enjoyed avoiding the conventional wisdom of Silicon Valley and avoided being ‘seduced by Venture Capitalists’. Grindr is bootstrapped, and grounded in the real world.

Building a core team

Much of the panel agreed it was fairly difficult to recruit a core team. They recommended working with friends that you’ve worked with before and that you have a rapport with, so they can understand your goal.

Matt met his co-founder at LA Startup Week. LootCrate was his co-founder’s idea, and they worked together over the weekend. By the end of the weekend they were generating revenue.

Beatriz said to find the smartest friend you know and make them co-founder. Find a complement between Analytics/Business and Creative. Mitu acqui-hired developers by purchasing another company.

LA VC scene

Broadly speaking, the Venture Capitalist scene in LA is small, but only because it seems dwarfed by Silicon Valley just up the coast.

Joel says he’s always been keen to stay bootstrapped, and avoiding VC funding was great. There’s a lot of pressure in LA to raise capital – there’s a level of self-validation in finding capital. Don’t do it if you don’t need it – there’s a lot of cons.

Beatriz says Mitu bootstrapped for a year until they needed money. They went to VCs in LA and found the money they needed to keep operating.

Finding talent

The panel also agreed it was difficult to find the talent to make up your business.

Loot Crate have a unique office with a mix of CoD tournaments, a film studio, and a whole host of other geeky activities. Because of their position as a geeky merchandise company they follow that up by giving themselves a great place to work. They engage heavily in the community, working with their customers and inviting them along to Comic-cons.

Joel simply said that finding talent is difficult. He didn’t know an easy way to find people.

Ross’s biggest problem came in hiring technical people when he himself wasn’t technical.

Building a business as a non-LAer

The question was asked about difficulties in building a business in LA while being from elsewhere.

Matt suggested that keeping things casual was key, to try and find locals who want to build in LA and contribute to the culture of LA. Build something different – LA gets a bad rap for being self absorbed but there’s a deeper side of passion.

Ross is originally from Orange Country and said that coming into LA he sought out likeminded people. Set yourself up in a co-working space and ingrain yourself.

The key outcome for me was that LA is a city of transplants. No one judges you for not being from here, because it’s a city made up of people not from here. In the past few days I can see that – people have come from all over to be involved in the tech scene.

Since 1849, California has been a place of outsiders coming to settle, live, and become part of the culture. The tech scene reflects that, and in the past few days I’ve chatted to people from Belgium, Australia, and elsewhere, who came to live in LA years ago and wouldn’t dream of moving anywhere else. It’s easy to see why. The friendly attitude and sharing culture is a core part of LA, and that was reflected in the honest, open attitude held by the panel.

At it’s core, it’s a city of creative people, all incredible friendly, but all keen to do business and grow.

Published on 30th June 2015

Developer Evangelist

Jonathan Ginn