Michael Lynton Gets 'A Little Controversial' Talking Snap, Sony Hack, and L.A. Tech
Tami Abdollah is dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.
On a late afternoon, after a long, drawn-out game of phone tag, Michael Lynton put off his family dinner for just a while longer to talk. The former CEO of Sony Pictures has been notoriously press shy since hackers calling themselves "Guardians of Peace" leaked a trove of confidential -- and sometimes embarrassing -- data plucked from the studio's servers.
And, since taking over in 2016 as chairman of Santa Monica-based Snap Inc., he's chosen to stay mostly out of the media's glare. In his first wide-ranging interview in years, Lynton did not hold back: "I will be a little controversial here."
Snap chairman Michael Lynton opens up about the future of the local startup scene and why its a force to be reckoned with compared to Silicon Valley.
Lynton, 60, said as recently as five years ago, Los Angeles could not have conceivably become the undercover tech town it is today. But now, L.A. - not San Francisco - is the place to be. He also weighed in on how and why the Sony hack, which was attributed by the U.S. to North Korea, resonates still today.
Of course, on all these things, Lynton is a tad biased. He was an early backer of Snap, an anchor tenant in the L.A. tech scene. The camera and social media giant was co-founded by 26-year-old CEO Evan Spiegel. Snap's stock has rebounded in the last year, from a 52-week low of $5.65 to $18.37 on Friday, despite an early rocky ride since its May 2017 IPO.
Lynton declined to answer questions about why he left Sony*, but was happy to delve into the L.A. tech scene and how it compares to its often more respected sibling in the valley up north.
Speaking by phone from his home in New York, where he has now lived for roughly 3 ½ years, noted that he is "very involved with Snap." He comes back to Los Angeles about once a month.
So what are your thoughts on L.A.'s tech ecosystem?
Lynton: I will be a little bit controversial here. L.A. is an extraordinary place for the tech community to take a perch. Five or seven years ago, it wasn't conceivable that Los Angeles would be a place where you would find major technology companies playing a role. But I think all of that has now played out to demonstrate that indeed they are, and that's a function of a number of different things.
I think Snap plays a huge role in that, clearly because of Evan's vision and his insistence we base the company in Los Angeles. It became a sort of anchor tenant or a place where people said, 'OK, it's actually possible to build a significant technology company in Los Angeles.' And why not? Because you have extraordinary talent based on all the universities and the engineering community here. But it was counterintuitive at the time. The other odd coincidence was that there was this moment when Silicon Valley and the entertainment community intersected, and as a result you have everybody from Apple to Netflix to Amazon, you name it, saying and demonstrating that they need to have a presence in Los Angeles. In part, to have access to the entertainment community, but then once they had done that they had to build a base around that, an infrastructure around it, and you see that happening in Culver City, it's happening in Venice, in Santa Monica and elsewhere.
Does this include all the direct to consumer companies that have sprouted up?
I think Los Angeles has always been a place which is oriented in a cutting-edge way toward marketing to the consumer, whether that's part of the movie business or television business, we've seen this play out in a number of different ways. The most notable was when the car companies determined they all needed to have a presence in Los Angeles. General Motors famously came all the way to the West Coast as did other car companies, partially (because) often culture or popular taste is established in California, especially Southern California. Marketing at the cutting edge is oftentimes at the forefront in Southern California. The (Mazda) Miata was famously created in L.A. There are countless examples in the automobile industry, not just because of its automobile culture but because Los Angeles sits at its edge.
Do you find the definition of technology has changed?
I think as technology has become more a part of not just the general corporate ecosystem but more part of our lives, it's no longer put in a little cubicle to say, 'this is the tech space.' But rather, it needs to integrate itself more broadly with other aspects of business, whether creative content, marketing or all sorts of other things. I think that's where it has to be.
Did you consider Sony a technology company or was it an entertainment company?
Sony was completely a technology company. I'll say something more controversial. I think one of the reasons why it's so appealing in my personal opinion for technology companies to establish themselves in Los Angeles. And why? You'd have to interview people like Jeff Bezos to find out why he's taken a home there, (its) because when you look at the state of California, the major city of California is Los Angeles. The city which has the most diverse, cosmopolitan broad array of business, culture, academics, you name it, it's in L.A. Just the size of the city alone makes it, if you're interested in being in a city landscape and living in California, Los Angeles is the logical place to live.
How about San Francisco?
The difference is, for one thing, size. It's a fraction of the size of L.A. The other thing is diversity, not just from the cultural aspect but diversity broadly speaking, in all aspects of cultural life. The focus of San Francisco now -- at least from the popular point of view -- is around technology. Technology is very important in the Los Angeles landscape, but you have all these other things, you have entertainment, fashion, aerospace, a big government enterprise, the list goes on and on in L.A. You have a city of that size, you have a gigantic port, and so if you want to sit in an environment which has many facets to it and you want to live in the state of California, L.A. would be your choice.
Well, L.A. is often treated like Silicon Valley's little brother or sister.
It's early days for L.A. It has all the things you'd rely on it for, it has a fantastic university industry around it, incredibly talented people, the one thing it suffers from is how to get around.
Why do you think the 2014 hack of Sony Pictures had such a large impact and looms so large in peoples' minds, even years later and after so many other hacks?
I think because it was a crazy confluence of events. It was one of those moments where you had everybody participating in it, obviously most of them not on a voluntary basis. You had a foreign power, North Korea, the federal government, celebrities, the movie business, a studio, Sony. There were so many things that came together and they all had profile. Because of all of that, it really brought to light for the first time that this could happen to you. It's one thing for a hack to happen, there was a huge, terrible hack that happened to Lockheed (in 2011) and the only reason I know that is because I was on the phone with the CEO of Lockheed. Lockheed is a complicated aerospace company where it is difficult for people to identify what's going on (unlike) Sony, the movies, TV shows and all the rest.
Has this impacted the broader L.A. tech scene?
The only thing I know, since going on Signal 1 ½ years ago, is all the people who have popped up on Signal, most of them from the entertainment industry.
Do you think there would be more collegiality and support after a cyber attack today?
I think you're referencing, at the time, a quote in The New York Times where I said nobody took it seriously, nobody was supportive, the people in the entertainment community weren't supportive, government officials weren't supportive, the media behaved almost the worst of all. You break a window and they come in and loot the place. I don't know what would happen today if in fact there was another incident. The North Koreans now have become more of a clear and present danger, but then they were considered to be folks who wore odd funny uniforms.
How have you carried the lessons from the Sony hack forward?
The No. 1 lesson is that no matter how hard you protect your systems and everything else, you're going to get hacked. So what is actually the lesson? The lesson is what you put on the network is eventually going to get hacked, so don't put it on the network. Don't put stuff as it relates to healthcare, don't put personal information. All these things that companies do all the time, whether it's in email form or file form...particularly when dealing with organizations with remote workforces.
Have you taken that lesson with you to Snap?
That was lesson 101.
I've been with Evan and Bobby since it was six or seven of them working out of Evan's dad's house living room. I've seen it grow since and I'm in awe. In the not so distant future, you will hold your phone up to an object and it'll tell you what the object is and give you the context around it, and that's sort of an extraordinary thing.
Do you have any parting comments?
Los Angeles is one of those extraordinary places, and I'm going to seem very trite, where people have always imagined the future, much more so than San Francisco in a weird way. Part of that comes from the movie business imagining the future, and part from the aerospace industry imagining the future.
Well, how do you feel about the name Silicon Beach?
I never thought about it. But the weather is a lot better. If I want to go to the beach I definitely want to go to the beach in L.A. and not in San Francisco.
*Updated at 4 p.m. Feb. 3: Lynton called back on Monday to say that he's happy to talk about why he left Sony. "After 13, 14 years in the job I thought it was time to move on and do something else _ and that was to chair Snap."
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Though Silicon Valley is still very much the capital of venture capital, Los Angeles is home to plenty of VCs who have made their mark – investing in successful startups early and reaping colossal returns for their limited partners.
Who stands out? We thought there may be no better judge than their peers, so we asked 28 of L.A.'s top VCs who impresses them the most.
Mark Mullen, Bonfire Ventures<p>Mark Mullen is a founding partner of Bonfire Ventures. He is also founder and the largest investor in Mull Capital and Double M Partners, LP I and II. A common theme in these funds is a focus on business-to-business media and communications infrastructures.</p><p>In the past, Mullen has served as the chief operating officer at the city of Los Angeles' Economic Office and a senior advisor to former Mayor Villaraigosa, overseeing several of the city's assets including Los Angeles International Airport and the Los Angeles Convention Center. Prior to that, he was a partner at Daniels & Associates, a senior banker when the firm sold to RBC Capital Markets in 2007.</p>
Dana Settle, Greycroft<p>Dana Settle is a founding partner of Greycroft, heading the West Coast office in Los Angeles. She currently manages the firm's stakes in Anine Bing, AppAnnie, Bird, Clique, Comparably, Goop, Happiest Baby, Seed, Thrive Market, Versed and WideOrbit, and is known for backing female-founded companies.</p><p>"The real change takes place when female founders build bigger, independent companies, like Stitchfix, TheRealReal," she said this time last year in <a href="https://www.businessinsider.com/greycrofts-dana-settle-on-closing-funding-gap-for-female-founders-2019-12" target="_blank" rel="noopener noreferrer">an interview with Business Insider</a>. "They're creating more wealth across their cap tables and the cap tables tend to be more diverse, so that gives more people opportunity to become an angel investor." Prior to founding Greycroft, she was a venture capitalist and startup advisor in the Bay Area.</p>
Erik Rannala, Mucker Capital<p>Erik Rannala is a founding partner at Mucker Capital, which he created with William Hsu in 2011. Before founding Mucker, Rannala was vice president of global product strategy and development at TripAdvisor and a group manager at eBay, overseeing its premium features business.</p><p>"As an investor, I root for startups. It pains me to see great teams and ideas collapse under the pressure that sometimes follows fundraising. If you've raised money and you're not sure what comes next, that's fine – I don't always know either," Rannala wrote in <a href="https://www.mucker.com/more-funding-wont-magically-fix-your-startup/" target="_blank" rel="noopener noreferrer">a blog post for Mucker</a>. </p><p>Mucker has a portfolio of 61 companies, including Los Angeles-based Honey and Santa Monica-based HMBradley.</p>
William Hsu, Mucker Capital<p>William Hsu is a founding partner at the Santa Monica-based fund Mucker Capital. He started his career as a founder, creating BuildPoint, a provider of workflow management solutions for the commercial construction industry not long after graduating from Stanford. </p> <p><a href="https://www.fastcompany.com/3048173/the-unexpected-and-hard-earned-lessons-from-a-dot-com-flame-out" target="_blank" rel="noopener noreferrer">In an interview with Fast Company</a>, he shared what he learned in the years following, as he led product teams at eBay, Green Dot and Spot Runner, eventually becoming the SVP and Chief Product Officer of At&T Interactive: "Building a company is about hiring correctly, adhering to a timeline, and rigorously valuing opportunity. It's turning something from inspiration and creative movement into process and rigor."</p> <p>These are the values he looks for in founders in addition to creativity. "I like to see the possibility of each and every idea, and being imaginative makes me a passionate investor."</p>
Jim Andelman, Bonfire Ventures<p>Jim Andelman is a founding partner of Bonfire Ventures, a fund that focuses on seed rounds for business software founders. Andelman has been in venture capital for 20 years, previously founding Rincon Venture Partners and leading software investing at Broadview Capital Partners.<br><br>He's no stranger to enterprise software — he also was a member of the Technology Investment Banking Group at Alex. Brown & Sons and worked at Symmetrix, a consulting firm focusing on technology application for businesses.</p> <p><a href="https://dot.la/la-venture-podcast-jim-andelman-of-bonfire-ventures-2648143780.html" target="_self">In a podcast with LA Venture's Minnie Ingersoll</a> earlier this year, he spoke on the hesitations people have about choosing to start a company.</p>"It's two very different things: Should I coach someone to be a VC or should I coach someone to enter the startup ecosystem? On the latter question, my answer is 'hell yeah!'"
Josh Diamond, Walkabout Ventures<p>Josh Diamond founded Walkabout Ventures, a seed fund that primarily focuses on financial service startups. The firm raised a $10 million fund in 2019 and is preparing for its second fund. Among its 19 portfolio companies is HMBradley, which Diamond helped seed and recently <a href="https://dot.la/hm-bradley-2649022900.html" target="_self">raised $18 in a Series A</a> round.</p><p>"The whole reason I started this is that I saw there was a gap in the funding for early stage, financial service startups," he said. As consumers demand more digital access and transparency, he said the market for financial services is transforming — and Los Angeles is quickly becoming a hub for fintech companies. Before founding Walkabout, he was a principal for Clocktower Technology Ventures, another Los Angeles-based fund with a similar focus.</p>
Kara Nortman, Upfront Ventures<p>Kara Nortman was recently promoted to managing partner at Upfront Ventures, making her one of the few women – along with Settle – to ascend to the highest ranks of a major VC firm.</p><p>Though<a href="https://upfront.com/thoughts/announcing-upfronts-new-co-managing-partner" target="_blank" rel="noopener noreferrer"> Upfront had attempted to recruit her</a> before she joined in 2014, she had declined in order to start her own company, Moonfrye, a children's ecommerce company that rebranded to P.S. XO and merged with Seedling. Upfront invested in the combination, and shortly after, Nortman joined the Upfront team.</p><p>Before founding Moonfrye, she was the SVP and General Manager of Urbanspoon and Citysearch at IAC after co-heading IAC's M&A group.</p><p><a href="https://dot.la/moving-from-the-passenger-seat-to-the-drivers-seat-upfronts-kara-nortman-named-managing-partner-2648493740.html" target="_self">In an interview with dot.LA earlier this year</a>, she spoke on how a focus for her as a VC is to continue to open doors for founders and funders of diverse backgrounds.<br></p><p>"Once you're a woman or a person of color in a VC firm, it is making sure other talented people like you get hired, but also hiring people who are not totally like you. You have to make room for different kinds of people. And how do you empower those people?"<br></p>
Brett Brewer, Crosscut Ventures<p>Brett Brewer is a co-founder and managing director of Crosscut Ventures. He has a long history in entrepreneurship, starting a "pencil selling business in 4th grade." In 1998, he co-founded Intermix Media. Under their umbrella were online businesses like Myspace.com and Skilljam.com. After selling Intermix in 2005, he became president of Adknowledge.com.</p><p>Brewer founded Santa Monica-based Crosscut in 2008 alongside Rick Smith and Brian Garrett. His advice to founders <a href="https://crosscut.vc/team/" target="_blank">on Crosscut's website</a> reflects his experience: "Founders have to be prepared to pivot, restart, expect the unexpected, and make tough choices quickly... all in the same week! It's not for the faint of heart, but after doing this for 20 years, you can spot the fire (and desire) from a mile away (or not)."</p>
Eva Ho, Fika Ventures<p>Eva Ho is a founding partner of Fika Ventures, a boutique seed fund, which focuses on data and artificial intelligence-enabled technologies. Prior to founding Fika, she was a founding partner at San Francisco-based Susa Ventures, another seed-stage fund with a similar focus. She is also a serial entrepreneur, most recently co-founding an L.A. location data provider, Factual. She also co-founded Navigating Cancer, a health startup, and is a founding member of All Raise, a nonprofit that supports and provides resources to female founders and funders.</p><p><a href="https://medium.com/@John_Livesay/when-google-bought-my-startup-81f1ee21488c" target="_blank" rel="noopener noreferrer">In an interview with John Livesay</a> shortly before founding Fika, Ho spoke to how her experience at Factual helped focus what she looks for in founders. "I always look for the why. A lot of people have the skills and the confidence and the experience, but they can't convince me that they're truly passionate about this. That's the hard part — you can't fake passion."</p>
Brian Lee, BAM Ventures<p>Brian Lee is a co-founder and managing director of BAM Ventures, an early-stage consumer-focused fund. <a href="https://dot.la/brian-lee-los-angeles-venture-capital-2645125301.html" target="_self">In an interview with dot.LA earlier this year</a>, Lee shared that he ended up being the first investor in Honey, which was bought by PayPal for $4 billion, through investing in founders and understanding their "vibe."</p> <p>"There's certain criteria that we look for in founders, a proprietary kind of checklist that we go through to determine whether or not these are the founders that we want to back…. [Honey's founders] knew exactly what they were building, and how they were going to get there."</p> <p>His eye for the right vibe in a founder is one gleaned from experience. Lee is a serial entrepreneur, founding LegalZoom.com, ShoeDazzle.com and The Honest Company.</p>
Alex Rubalcava, Stage Venture Partners<p>Alex Rubalcava is a founding partner of Stage Venture Partners, a seed venture capital firm that invests in emerging software technology for B2B markets. Prior to joining, he was an analyst at Santa Monica-based Anthem Venture Partners, an investor in early stage technology companies. It was his first job after graduating from Harvard, and during his time at Anthem the fund was part of Series A in companies like MySpace, TrueCar and Android.</p><p>He has served as a board member in several Los Angeles nonprofits and organizations like KIPP LA Schools and South Central Scholars.</p> <p>"Warren Buffett says that he's a better businessman because he's an investor, and he's a better investor because he's a businessman. I feel the same way about VC and value investing. Being good at value investing can make you good at venture capital, and vice versa," Rubalcava said in <a href="https://moiglobal.com/alex-rubalcava-interview/" target="_blank" rel="noopener noreferrer">an interview with Shai Dardashti of MOI Global</a>.</p>
Mark Suster, Upfront Ventures<p>Mark Suster, managing partner at Upfront Ventures, is arguably L.A.'s most visible VC, frequently posting on Twitter and on his <a href="https://bothsidesofthetable.com/" target="_blank" rel="noopener noreferrer">blog</a>, not only about investing but also more personal topics like weight loss. In more normal years, he presides over LA's biggest gathering of tech titans, the Upfront Summit. Before Upfront, he was the founder and chief executive officer of two software companies, BuildOnline and Koral, which was acquired by Salesforce. Upfront backed both of his companies, and eventually he joined their team in 2007.</p><p>In a piece for his blog, "Both Sides of the Table," <a href="https://bothsidesofthetable.com/finding-an-investor-who-is-in-love-with-you-d0badf1a3998" target="_blank" rel="noopener noreferrer">Suster wrote about the importance of passion</a> — not just for entrepreneurs and their businesses, but for the VCs that fund them as well.<br></p><p>"On reflection of the role that I want to play as a VC it is clearly in the camp of passion. I really want to start my journeys only with people with whom I want to work closely with for the next 5–7 years or more. I only want to work on projects in which I believe can produce truly amazing change in an industry or in the world."</p>
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