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Silicon Beach Startups Spawn From the Ashes of MySpace

timothy posted about 7 months ago | from the yeah-but-the-weather dept.

Businesses 44

McGruber writes "The NY Times reports how the alumni of distant also-ran social network Myspace have created an impressive number of spinoff internet companies. These companies have so significantly changed the Los Angeles area's tech scene that the area has been dubbed the 'Silicon Beach.' The article also provides details about the demise of Myspace under the ownership of Rupert Murdoch's News Corporation. When YouTube launched in February 2005, many at Myspace wanted to introduce a similar feature. Travis Katz, who had joined Myspace as general manager of international business just after the acquisition, said he remembered telling News Corporation representatives that they would need to hire 40 developers immediately and 200 the next year. 'That was much faster than anything they were accustomed to,' Mr. Katz said. 'They said, "We're going to do a hiring freeze for six months and take a deep breath and determine then what we really need." But we couldn't wait six months. In six months, YouTube went from two million to 80 million users.'"

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44 comments

Silicon Noun (5, Funny)

Anonymous Coward | about 7 months ago | (#44791121)

Remember when that stood for chip manufacturing? Me neither.

Re:Silicon Noun (1)

tanujt (1909206) | about 7 months ago | (#44791707)

What, you didn't know that the cloud is made out of silicon and the social interconnectivity of the quantum network is made optimal by use of organic solar cells and other such buzzwords?

Re:Silicon Noun (2, Interesting)

Anonymous Coward | about 7 months ago | (#44791729)

Silicon Beach ... just sounds redundant, unless your beach isn't made of sand...

Re: Silicon Noun (2)

mrbester (200927) | about 7 months ago | (#44791885)

Brighton, UK has had that nickname for over a decade. The M4 corridor has been known as Silicon Fen for even longer. Just sayin'.

Re: Silicon Noun (1)

OolimPhon (1120895) | about 7 months ago | (#44795609)

The M4 corridor has been known as Silicon Fen for even longer. Just sayin'.

Er, no. Silicon Fen would be the area around Cambridge, East Anglia, which just happens to be full of fens.

Re:Silicon Noun (1)

smooth wombat (796938) | about 7 months ago | (#44796697)

You've never seen some British beaches, have you?

When I went away for my last two years of college, the beach behind my building was effectively all rocks.

Re:Silicon Noun (1)

McGruber (1417641) | about 7 months ago | (#44792287)

Remember when that stood for chip manufacturing? Me neither.

I do, but I am ancient enough to also remember when "Silicon Beach" meant implants in bikinis.

Re:Silicon Noun (1)

Anonymous Coward | about 7 months ago | (#44794023)

Remember when that stood for chip manufacturing? Me neither.

I do, but I am ancient enough to also remember when "Silicon Beach" meant implants in bikinis.

Just for the sake of nit picking, it was meant to be and usually referred to as silicone beach.

Re:Silicon Noun (0)

Anonymous Coward | about 7 months ago | (#44793991)

Remember when that stood for chip manufacturing? Me neither.

Does anyone remember when Silicon Valley was an alliterative riff from Santa Clara Valley? The original idea seems to have been forgotten and morphed into being the unimaginative knee-jerk oh-so-cool description of their location's industry. Los Angeles and Manhattan! Please try harder.

Intangibles (5, Insightful)

wrackspurt (3028771) | about 7 months ago | (#44791197)

Look at all the resources something like Rupert Murdoch's News Corporation has and the momentum Myspace had. If you go with the hypothesis the big guys never loose because they have all the resources this flies in the face of that idea. Contingency and intangibles still play a part. Big organizations that can't react fast to changing markets are vulnerable in other ways compared to small, fast to react start ups. It's good to see talent and innovation can still come out on top.

Re:Intangibles (0)

Anonymous Coward | about 7 months ago | (#44791757)

the big guys never loose

Loose what? A one-cheek-sneak? Seriously... [theoatmeal.com]

Re:Intangibles (0)

Anonymous Coward | about 7 months ago | (#44797869)

talent and innovation can still come out on

Only to see that same talent and innovation become the same as those big corps. Who do you think invests in Youtube? Same guys that invest in News Corp.

Tough to sustain innovation after an acquisition (0)

Anonymous Coward | about 7 months ago | (#44791229)

I've been there many times. Key people leave. Those who remain take the opportunity to recharge their personal lives, and politics increases along with the attention from the parent company.

Re:Tough to sustain innovation after an acquisitio (5, Insightful)

NoNonAlphaCharsHere (2201864) | about 7 months ago | (#44791297)

No, it's the influx of upper (and middle) management who just don't "get it". The very things that made the company an attractive acquisition are the things that the new management has the most difficulty staying out of the way of. They don't understand the product, the methods and philosophy that led to this point. They just can't help themselves from tweaking and adding their personal touch to everything. The interference (or new, added, inertia) is what keeps the shark from moving forward fast enough to stay alive.

Re:Tough to sustain innovation after an acquisitio (0)

Anonymous Coward | about 7 months ago | (#44791363)

It won't matter what you and the OP said, because soon you will be going to war for Israel. Forward, MARCH!

Re:Tough to sustain innovation after an acquisitio (0)

Anonymous Coward | about 7 months ago | (#44791621)

I don't mind, I only exist to make the bankers richer.

Re:Tough to sustain innovation after an acquisitio (0)

Anonymous Coward | about 7 months ago | (#44791855)

It is the classic goose that laid the golden egg fable, and I have seen this happen with a number of startups that were bought by a larger company.

Invariably something along these lines happen:

1: You start seeing offices of people who you have no idea what the hell they do. They are not dev, ops, or obvious managers, and they tend to be furtive about what their position is.

2: The big company will prevent a release cycle. Customers will get mad, revenue goes down, which gives more excuse for the owning corporation to send more of its muckety-mucks in to "fix" things. This cycle sends companies from successful to dead.

3: The real people, the people who made things happen leave or get fired. This is the handwriting on the wall. In startups, you sometimes get the smelly head dev who refuses to use soap, but knows the build tree by heart, almost able to recite every item by rote. He gets fired, and moves on. In his place come a troupe of offshored programmers who decide to rewrite his code, and turn 1000 lines of well-written functions into 20,000 lines of spaghetti.

4: After things start imploding, the layoffs start... By this time, things are too late.

Re:Tough to sustain innovation after an acquisitio (0)

Anonymous Coward | about 7 months ago | (#44793171)

The management assumed those idiot kids were lucky to make it that far but now the adults were in charge and were going to save them from screwing it all up. And that's exactly how it turned out. I think. I didn't rtfa

Re:Tough to sustain innovation after an acquisitio (1)

doccus (2020662) | about 7 months ago | (#44798965)

The management assumed those idiot kids were lucky to make it that far but now the adults were in charge and were going to save them from screwing it all up. And that's exactly how it turned out. I think. I didn't rtfa

Oh y'mean something like Apple in the 80's?

silicon this silicon that (0)

Anonymous Coward | about 7 months ago | (#44791253)

these days every shit hole with a couple blogs calls itself silicon something, who cares.

This is news, how? (4, Funny)

girlintraining (1395911) | about 7 months ago | (#44791287)

This just in: Throwing a ridiculous amount of money into a tiny geographical area may cause the money to remain in that area for longer than the momentary stupidity that brought it there.

Okay.... In other news, "Silicon beach"... the first thing that crossed my mind after hearing that was, ... you guys DO know where silicon comes from, right? Sand. So you're basically calling it something like Water Lake.

Re:This is news, how? (0)

oodaloop (1229816) | about 7 months ago | (#44791351)

Yeah, that's kinda why it's funny. Or did you think you're the only person who knows what sand is?

Re:This is news, how? (1)

Teun (17872) | about 7 months ago | (#44791509)

-- Dice Holdings, Inc: You suck. Kindof a lot. (Make Tor work again, losers)

And what makes you think Dice Holdings is immune to NSA orders?

Or do you want the likes of timothy to get locked up forever?

Re:This is news, how? (1)

Anonymous Coward | about 7 months ago | (#44793323)

"Or do you want the likes of timothy to get locked up forever?"

Yes. Please god yes. Timothy should pay for his crimes against humanity...

Re:This is news, how? (0)

Anonymous Coward | about 7 months ago | (#44793151)

Oh right I read silicone beach but I figured that was all of L.A. already

Not surprising... (1)

wbr1 (2538558) | about 7 months ago | (#44791471)

As much as I dislike Murdoch, that is a fairly sizable investment. Their analysis of the market, which was almost entirely unknown came up wanting, or they wanted more time. By then it was too late. Happens in business all the time [see Microsoft and pmps/phones/tablets].

The road is littered with ideas that fail, and some that succeed. They simply decided not to risk it, I don't see that as news.

Re:Not surprising... (0)

Anonymous Coward | about 7 months ago | (#44793307)

I think Murdoch hoped he was buying a mature thing that had turned into mostly a pure profit generator.

I'm guessing that Murcock would be a hell of a poker shark in a $10,000-buy-in poker tournament, because that kind of money is pocket cash to him. But in this case, he bought into a $billion-buy-in poker tournament, and...well... that's a dollar amount that is more meaningful to him, and he freaked at the prospects of going all-in on like his 2nd or 3rd hand just to stay in the game.

Asking for too much. (1)

achacha (139424) | about 7 months ago | (#44791745)

If he asked for 6 good developers (the key work here is good which people at his level can't tell apart from the janitor) to get it built up as a prototype and prove it as s concept and then hire whatever more is needed (30-50 keyboard monkey), it may have been received a lot better. This Katz guy seems quite out of touch with the development process.

MySpace facelift (2)

Reliable Windmill (2932227) | about 7 months ago | (#44791747)

Don't know about any ashes... MySpace has gotten a very nice facelift recently. It's certainly looking interesting and attractive.

Re:MySpace facelift (1)

ArcadeMan (2766669) | about 7 months ago | (#44791933)

Rename it MySpaceBook and we're on our way to replace Facebook. We're tired of hating the same one day after day, we need a new nemesis.

Re:MySpace facelift (3, Funny)

Anonymous Coward | about 7 months ago | (#44794157)

You're quite right. It's the prettiest ghost town in all the land.

Summary misleading (2)

spitzak (4019) | about 7 months ago | (#44791951)

Silicon Beach is due to media companies such as special effects primarily, not due to MySpace as the summary implies. The Times article also says that MySpace was a "portion" of Silicon Beach, so it is the summary that gets this wrong.

The key fact here is "When YouTube launched..." (0)

Anonymous Coward | about 7 months ago | (#44792037)

They wanted to introduce a similar feature..... which probably would have taken a few months, to get the storage space provisioned right, the network in shape for uploading and serving video, lawyers consulted over legal issues, and the user interface developed and the whole thing tested, even if they had thrown a lot of really talented developers at the problem (I am assuming here that you have read "The Mythical Man Month" or at least understand its central premise).

So, essentially, even a Me-Too copy of someone else's idea would have left you in the same position anyway at that point in time.

(Even discounting the stupid dinosaur accountants whose attitude was laughable for having such a poor understanding of the sector they were now operating in).

SuperPaint, SuperCard, and Dark Castle (2)

stargrazer (958042) | about 7 months ago | (#44792335)

Silicon Beach started this whole wave way back in 1984 with some fun Mac products.

When I first started reading the headline to this I almost got a resurrected Silicone MacWoody!
Almost.

Now back to my lawn...

MySpace fail (0)

Anonymous Coward | about 7 months ago | (#44792817)

How lucky we are Rupert/MySpace failed. Can you imagine how awesome their YouTube like service would have been? NOT.

These all sound like loser companies. (0)

Anonymous Coward | about 7 months ago | (#44794441)

Is it me? I did not have a positive reaction to any of the descriptions of companies in this article. I thought the San Francisco crowd was getting a bit bullshit-heavy, but these people are doing what exactly? I would not want to work at any of them.

Oops, they forgot one (1)

slashmydots (2189826) | about 7 months ago | (#44794655)

I just can't ignore this one. One of the founders of myspace created Demand Media. They bombed hard when Google basically delisted them for complaints about unbelievably bad quality content at ehow.com. I should know, I was a former moderator and top writer for them. Then, guess what else Demand Media owns. Yep, LiveStrong.com in association with Lance Armstrong. That douchebag CEO picks winners like Helen Keller at a horse track. So yeah, not every myspace remnant is some divine startup machine. Some are just overdressed Californian assholes who have no business being a CEO.

Re:Oops, they forgot one (1)

hondo77 (324058) | about 7 months ago | (#44799143)

And SodaHead [sodahead.com], founded by someone who worked at MySpace when people still used it. They're in Sherman Oaks, last I heard. No, there is no reason for you to have heard of SodaHead.

Los Angeles, Doing What It Does Best (Publicity) (5, Interesting)

Epicaxia (2773451) | about 7 months ago | (#44794683)

As an engineer who lives practically next door to one of the hubs of so-called 'Silicon Beach', let me tell you that there is more publicity than business behind this concept. Don't get me wrong--there are legitimate reasons for considering the Los Angeles area a decent tech hub. A number of my favorite companies (Dreamhost! [dreamhost.com], and others) are located here, typically somewhere between the downtown area and Santa Monica. One of the biggest benefits is the thriving venture capital communities in the downtown and Pasadena areas, which is an understated-but-critical component to any truly substantial claim to 'Silicon [noun]'. (Strong venture capital communities also come with excellent startup support, commonly in some form of incubator [wikipedia.org].) You also get some great synergies between the educational institutions in the area (USC, UCLA, CalTech, Claremont colleges...), ongoing technology business efforts, and the parallel (not-as-mighty-as-it-once-was-but-still-substantial) aerospace community. We're fortunate to have a new (at least moderately) technically literate mayor [latimes.com], who's been pushing this 'Silicon Beach' idea quite a bit.

But that's the end of the good news. Here's why the TFA totally misses the mark, and (most likely unintentionally) buys into one of the latest political fads here in southern California.

First, the MySpace influence is strongly overrated. Businesses fail and shrink all the time, and--surprise--when they do, talented engineers will go off and do other things. The article paints a picture that implies that MySpace was this huge supergiant of a tech star, which went nova and whose subsequent remnants collected to spawn a whole new constellation of stars. In reality, MySpace was never really that big of a tech phenomenon or local influence. It's nowhere near as substantial as the unprecedented collapse of the southern California aerospace community [laedc.org] (a PDF--page 11 is most interesting) after the Cold War. If you don't want to click the link, here's a summary: southern California employed 271,700 aerospace jobs in 1990; that number dropped by 57% by 2000, and continues to plummet (88,4000 in 2011). It really makes MySpace look like a drop of piss in a thunderstorm.

Second, it's easy to underestimate the fact that southern California--even just 'Los Angeles'--is a really, really big place. The Silicon Valley is ~46km long (I'm measuring from San Mateo to downtown San Jose--the width, of course, is mere miles), and Wikipedia puts the population between 3.5 and 4 million. By comparison, Los Angeles county alone is 76km (Santa Clarita to Long Beach) by 74km (Santa Monica to Claremont), with a population of 10 million souls. Why is that relevant? It shouldn't be a surprise that, in a really big area, there are going to be a few winning tech companies. Few people can even agree what 'Silicon Beach' constitutes. Is it supposed to be Playa Vista, with the new Fox technical studios (a la MySpace), Electronic Arts offices, and a few new offices in newly-remodeled air hangers? It is sort of the west side in general, where Google has recently consolidated a new office [google.com] (in Venice Beach), and Activision-Blizzard is headquartered (Santa Monica)? Is it the general downtown vicinity, including North Hollywood and other light industrial areas, where established tech businesses have high-rise offices and new startups are renting out old movie studios for a steal of a rate? Is it the city of Los Angeles in general, with a new tech-friendly mayor, or the county, including tech-friendly Pasadena (CalTech and JPL, plus a lot of venture capital organizations)? Or does it also include Orange County, host of a whole slew of tech-sector ecosystems centered around U.C. Irvine (including the Blizzard campus itself)?

In my opinion, one of the biggest reasons Los Angeles (let's say we're talking about the county here) will never really be a serious competitor to Silicon Valley is the cost of living. Yes, it's expensive in Silicon Valley communities--even more so than most places in Los Angeles. But in L.A., cost of living is very inelastic. If you don't mind living in the hood (and I mean the Real Honest-to-God Hood), with bars on your windows and regular gunshots across the street, you might be able to rent an apartment for a reasonable rate. However, if you're working in one of the west-side or downtown tech businesses, aren't already a millionaire, and have aversions to hood housing (perhaps you have kids for whom you need to consider safety and schooling), your options are extremely limited. You either suck it up and shell out $2000+/month for a family apartment, or you live in your car--and I guarantee you that L.A. freeways (and L.A. public transit options) are worse that you have heard or imagined. In comparison, places like San Diego (which is historically also a high cost-of-living area) at least have flexibility and choices that don't involve risking your life, and effective ways to get around.

Another factor, which is less quantifiable, is the lack of a true tech startup culture. In short, this means that finance sources are highly aggressive in performance expectations and unrealistic returns on their investment (think Hollywood--spend $20M for a summer blockbuster that rakes $40M despite dismal cliches and poor reviews.) In a culture where new business are expected to let concepts thrive and grow before proving or justifying their technologies, you have more patient expectations. You also don't have a geek-dominant business culture or social climate in Los Angeles, which translates to a strong lack of facilitators that are taken for granted in established environments like Silicon Valley (think workforce expectations, technological infrastructure, resource availability, etc.)

In my experience, what the 'Silicon Beach' concept really comes down to is political marketing. This isn't a bad thing in and of itself, but it should be recognized in order to properly consider and evaluate statements like those in TFA. As previously mentioned, we have a new tech-friendly mayor [latimes.com] who's very eager to capitalize on the relative advantages of southern California business and living when compared to Silicon Valley. There's also concern about the flight of California businesses to more business-friendly climates like Texas, and pointing out the spurts of growth here and there is one way to counter that narrative. This is also a way for a new mayoral administration to rally constituents around a platform plank that involves new jobs, future-oriented growth, shiny business opportunities, and (hopefully) new tax revenue down the road.

I'm probably coming off as overly cynical. I should point out that there is another claimant to the 'Silicon Beach' title, which shares very few of the aforementioned disadvantages: San Diego. There's a strong and thriving biotech sector, with plenty of engineers from the shrinking defense industry looking for new opportunities. There's also a thriving tech/software/developer background, including communities and a small number of tech incubators. Probably the biggest shortfall is the lack of an established, sizable, and experienced venture capital community, but that could easily change with the advent of perceived opportunities. It's not a sure thing, but I know I'd much rather be working at a startup in San Diego than here in Los Angeles. Of course, the grass is always greener on the other side!

Re:Los Angeles, Doing What It Does Best (Publicity (0)

Anonymous Coward | about 7 months ago | (#44797471)

What is this new Fox technical studios you mentioned?

Re:Los Angeles, Doing What It Does Best (Publicity (0)

Anonymous Coward | about 7 months ago | (#44797849)

I call bull on the "$2000+/month."After living in LA for more than a decade, I have observed plenty of affordable housing in reasonable commuting range to the West side where safety isn't an issue. You could live in Palms, Culver City, or some of the northern parts of South Bay and have a tolerable commute. Depending where you are, you could even ride the bike path most of the way there. I do not perceive renting costs as being an issue. I do believe that home purchasing could be a stretch. But there again, home purchasing iswithin the range of $100k households, and it's been my experience that LA tech jobs pay within that range.

Re:Los Angeles, Doing What It Does Best (Publicity (2)

hondo77 (324058) | about 7 months ago | (#44798925)

Few people can even agree what 'Silicon Beach' constitutes.

It's the whole westside, where recruiters keep wanting me to work but I tell them that if I had to commute there on a regular basis, I would become a serial killer by the end of the first week. West L.A./Brentwood to LAX, the 405 to the ocean. They're always hiring over there because so many people don't want to commute to a place that gridlocks by 3pm.

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