You’ve been hosting the Montgomery Summit now for over a decade. In that time, what’s the biggest change you’ve seen in the startup ecosystem of Los Angeles?
The breadth and velocity of company creation have dramatically increased in Southern California. Companies can be rapidly formed and built at less than a tenth the cost of a decade ago utilizing cloud architecture and leveraging mobile platforms. These trends benefit a market like Los Angeles that has creative and design talent that can leverage these platforms.
The conference is often compared to a South by Southwest for Southern California. Last year, you even had the likes of Deepak Chopra and Edward Sharpe and the Magnetic Zeroes. What is your vision for the conference’s future?
We will continue to highlight and celebrate creativity, innovation and entrepreneurship. Our vision is to do something that others can’t or won’t do by creating a highly curated, invite-only, impactful 48 hours. The magic is the alchemy of talent and interests of our guests and our program. We will likely never be the size of SXSW, but we hope to be unique and incredibly impactful.
You’ve had the opportunity to attend the USC Viterbi Startup Garage Demo Day and other activities. What have been your impressions of the school’s role in that L.A. startup ecosystem?
The startup ecosystem is rapidly evolving, and there is a huge opportunity for Viterbi to lead just as Stanford does in the Bay Area. Los Angeles has the largest number of engineering graduates of any region in the country — 10,000-plus annually, which is 30 percent higher than either the Bay Area or Boston. USC should be at the center of this community in providing entrepreneurs, engineers, management and capital [through its endowment]. This market will look real different in 10 years, and I hope that USC looks back and feels very positive about their investments in programs, facilities, ventures and their people — faculty and students.
The Los Angeles Times noted recently that in the last three years Hollywood has become the “most powerful magnet attracting technology entrepreneurs to set up in the Southland.” Do you agree?
There are a lot of reasons to be a technology entrepreneur in Southern California — the creative environment, the availability of talent, climate, lifestyle and great universities like USC. Los Angeles is the design center of the world. Design is extremely important in technology and will be a major factor in our long-term success. However, Hollywood plays its role. In terms of “stars,” we have invited Gwyneth Paltrow’s company, Goop, Zooey Deschanel’s company, Hello Giggles, and Jessica Alba’s company, Honest Company, to participate this year at the conference. There are some great new content companies and business models emerging, but we should not undersell the other reasons why great companies are being built here.
Southern California saw the fastest rate of startup creation of any major U.S. region in the first half of 2014. What is fueling that growth, and where is the trend going?
Southern California reminds me of New York City a few years ago, just coming into its own. The growth is fueled by a few successes, availability of seed capital, a creative environment, availability of talent both technical and business, and a business-friendly mayor [Eric Garcetti]. There is no question that he will be as important to Los Angeles as Mayor Michael Bloomberg was to New York. This might be our moment in the sun — let’s make sure we don’t screw it up!
If you’re talking to a local startup in Santa Monica, how do you make the case to embrace the “Beach” versus the “Valley”?
Our goal as a venture investor is to lead locally and compete nationally. We want our portfolio companies to be world class so it is not an either/or choice for them. If this is home for them, we will do everything possible to make them successful. L.A. is no longer a hard sell — there are enough proof points.
I know you have an economics background, but I’m curious to get your views on engineers. Thirty-three percent of S&P 500 CEOS were engineering majors, compared to only 11 percent in business administration (the next largest cohort). As leaders, what unique value proposition do you think engineers bring to the table?
It is natural and should be expected that 33 percent of S&P 500 CEOs were engineering majors. Approximately 40 percent of the S&P 500 is comprised of information technology, industrials and energy companies. The career path typically entails program and project management, as these sectors have large capital expenditure programs with a lot of technology risks. The engineering discipline is critical to their decision making. The number may actually be too low — the percentage of engineering majors running major corporations is probably higher in France, Germany, Japan and China. We work with much smaller companies and there are always engineers on the founding team. Our challenge is to find a product and market match. Without the product we have nothing to work with. We need USC Viterbi! Keep up the great work!