Is Los Angeles poised to overtake Silicon valley?

Tyler Cowen thinks it could happen. He cites the weather, no shortage of talent from Caltech, UCLA, and USC, and the fact several prominent startups (Snap, SpaceX, Tinder) have already made LA their home.

Yet, LA’s success seems dependent on SF’s failures. Cowen believes Los Angeles can replace Silicon Valley as a tech hub only if San Francisco’s rents continue to rise, the homeless population swells, and its behemoths (Apple, Facebook, Google) stop innovating. In fact, he says one of LA’s main advantages is that it is close to SF, poised to pluck talent from the bay as it slowly implodes.

I’m bullish about LA. Clearly, I’m biased, but I agree with Cowen that it stands to benefit  as the tech world looks for another home base. However, I think there are two main obstacles the city needs to overcome if it wants to be a serious contender.

1. Intellectual culture

Cowen mentioned this. San Francisco has a rich history of free thought and rebellion that has contributed to its innovative culture. LA currently has little of that. Young people have been political and idealistic in the past, but those tendencies have faded. There is still a concern among the UCLA student body, at least, for minority rights and ethnic representation, but they ride the contemporary tide of political correctness and don’t get more than tacit support from the majority of apolitical students. Any free and just society shows equal respect to minorities as other citizens, but this is not the type of activism I see contributing to a creative startup culture. It is necessary for our democracy and an open society, but the economic benefits seem less direct to me.

There’s also less ideology behind startups here as there might be in San Francisco. Hearing again and again how b2b SAAS is going to “change the world” might be nauseating, but the assumption you can make the world a better place through private enterprise infuses the startup culture with a kind of zealoutry you don’t find in LA. Students I’ve talked to here see startups as corporate with more freedom, or talk about how they’re more fascinated with product or software than with “impact.” Students don’t normally start companies directly after college, so they can become more ideological as time progresses, but the general population of undergraduates do not see their relationship with startups in terms beyond general employment.

2. Money

I met a guy in one of my philosophy classes who dropped out of University of Michigan last semester and moved to LA to work on a company. He’s doing VR/AR and came here specifically because of the entertainment industry (like Cowen predicted). However, he’s leaving after the summer for SF because that’s where the money is. He feels like he has a much better chance of getting funded if he moves to SF, which is probably true.

Screen Shot 2019-06-28 at 10.13.08 AM.png
Source: Bloomberg

The chart above tracks the total value of all VC deals done in a single metro area. Less money has been injected into startups in SF since 2015, but it’s still clearly on top. NYC looks like a likely competitor  in terms of total deal value, but once we consider nearly half of the $13 billion its companies recieved went to WeWork, it seems not much has changed. LA’s numbers look the most worrying, as startups here recieved nearly $1 billion less than they did in 2015. Snap’s funding history is gated, but they no doubt contributed to a large portion of the 2015 figures, meaning most of the decline is probably attributable to a single major player.

Still, LA has about a fifth of the VC money flowing into it as the SF/San Jose area does. If LA entrepreneurs believe they’re going to have a harder time getting funded here than if they went to SF or NY, that could weigh heavily in their decision making. This slideshow created by a VC at Amplify.LA provides a more optimistic look at the LA funding landscape, but fails to acknowledge the extent we are still dwarfed by San Francisco.


LA’s lucky. People love to hate it (especially in Portland) but it still has the opportunity to capture a thriving industry. If LA solves the two issues mentioned above and SF doesn’t get its act together, prepare for Silicon Beach rather than Silicon Valley.

 

Insight from Paul Graham

This is a short essay on his website. Because it’s so brief, I figured I would reproduce it here in its entirety.

People who are powerful but uncharismatic will tend to be disliked. Their power makes them a target for criticism that they don’t have the charisma to disarm. That was Hillary Clinton’s problem. It also tends to be a problem for any CEO who is more of a builder than a schmoozer. And yet the builder-type CEO is (like Hillary) probably the best person for the job.

I don’t think there is any solution to this problem. It’s human nature. The best we can do is to recognize that it’s happening, and to understand that being a magnet for criticism is sometimes a sign not that someone is the wrong person for a job, but that they’re the right one.

He couldn’t have said it better.

Links

https://www.mcsweeneys.net/articles/i-support-strong-women-of-color-unless-they-are-politically-to-my-left

https://www.mcsweeneys.net/articles/i-dont-actually-have-to-sell-this-war-with-iran-do-i

Old article on how people are defacing birds. I used to be squarely pro-bird, but after being nearly hit a couple times, my opinions are changing.

USC’s school of social work is in free fall after partnering with an edtech startup and offering online degrees. – This looks like the worst case scenario for universities trying to increase revenue by offering online programs. This was a surprise to me as I believed USC had no problem with finances and would be unswayed by the large enrollment numbers in digital graduate programs. I was wrong. The article implies the budget crunch in the department is the result of a poor deal signed with 2U (the edtech company), but it hints at characteristic misbehavior (the former dean of the social work school is under a criminal investigation regarding a donation from a politician) from Trojans.

Identity Elements

In math, there’s the concept of an identity element. Basically, it’s an object that, when used in an operation on another object, leaves the latter object unchanged. In subtraction and addition, for example, the identity element is 0, as adding 0 to anything leaves does not alter the original number. In multiplication it’s 1, as  x*1=x for all x, and with matrices it would be the identity matrix. In logic (and I hadn’t thought about this before doing a little research) an identity element is “truth” with the “and” operation, and “falsity” with the “or” operation, which is really interesting.

Identity elements can even be nontrivial. For example, a matrix that rotates a vector 360 degrees about the origin in R^2 is an identity element even though the general transformation that it performs (a rotation) can substantially change a vector. To be clear, a rotation of 360 degrees would just turn out to be the identity matrix:

but I think being an identity element is a property an object has, rather than the object somehow being identical to the identity element. Both the rotation matrix and the “standard” identity matrix have a similar form that contains certain properties, but they are distinct. The rotation matrix describes a rotation of x degrees about the origin, while the identity matrix as it stands has no geometric interpretation.

There are tons of identity elements spanning all of mathematics and I don’t know much about them. Yet, the idea is interesting to me. Intuitively, most operations have some type of effect on an object. It seems like applying an operation in a substantive sense to any thing is guaranteed to engender some type of change, or else you haven’t really applied an operation. Yet, if we generalize the idea of identity elements beyond math and into day-to-day living, they’re much more common than you’d think.

Let’s think of a non-mathematical identity element in a personal context as an object that invokes no change in an individual (person) when used with an operation. For example, a bowl of cereal when paired with the operation “eating” can be an identity element, as eating a bowl of cereal may satiate hunger, but doesn’t alter the individual in a substantial way. However, the object “God” when paired with the operation “contemplating” in most cases does not qualify as an identity element. Seriously reflecting on the divine is likely to change a person.

I’ll be the first to say generalizing from numbers to people is a terrible move. People are messy and complicated and don’t have any of the nice clean properties that numbers have. Is the element “work” when coupled with the operation “going to” count as an identity element? Heading to the office on the average day doesn’t change you, but the accumulation of each day over many years will certainly make you different. It’s a classic example of the sorites problem, but I’m going to table the issue for now. Even if we don’t have a clear idea of when a person is different in an important way from who they were a little bit ago, we can still draw parallels between identity elements in math and elements that might have a similar property when applied to people. Broadly speaking, some element operation combos leave people the same more often than not and others don’t.

Acknowledging the existence of identity-type elements that affect you (the person) is interesting. It means you’re aware that some actions elements and operations have the potential to change you in a certain way, and it’s incumbent on you to identify which changes are desirable and seek out the corresponding action. I’d hope most people like themselves and are comfortable with who they are, but I think an essential part of something important and true about living well is deliberately trying to be a better person. I also believe that “being a better person” doesn’t mean cultivating a specific set of skills like kindness or empathy that are exercised when needed, but is a result of fundamental changes that happen to you and not necessarily what you can and can’t do. If you believe this, then non-identity element-operation pairs are essential. They’re how you realize change.

I see this idea (if correct) as a tool of aspiration. If we’re seriously committed to “being a better person,” then we better take stock of all of the operations and elements around us and see whether they are nudging us in a direction we want to go. It forces us to consider what things will change us, and choose things that will. How will majoring in statistics vs engineering change you? Anthropology vs English? Living in one area vs another? How would you feel if some of these are identity elements after all, and leave you the same?

Links

Circle Games

Interesting take on recent behavior by the women’s national team

The making of a youtube radical – A great piece. Living with a couple of college-aged boys that consume a lot of youtube, it’s easy to see how they can get sucked in to radical content.

Opportunity Atlas – This came out a bit ago, but I think it’s worth linking to for people who haven’t seen it. Raj Chetty and his team linked census and tax data over thirty years to identify how well people growing up in certain neighborhoods did later in life. Give it a look. Check out your neighborhood.