Jamie Montgomery couldn't sleep for several nights as he weighed whether to move ahead with his annual two-day venture capital-fest in Santa Monica. This week's conference is billed as an all-star lineup of business leaders that includes the likes of bond king Michael Milken.
But, Montgomery — the founder and managing director of Los Angeles-based March Capital Partners — found himself slammed by reports of other major conferences shuttering due to concerns about coronavirus. Facebook yanked its annual F8 developer meeting in May, the Game Developers Conference scheduled in San Francisco for later this month was canceled, and the YPO Edge summit planned for March was dropped.
Ultimately, he gave it a green light.
<p>The annual convention that draws a thousand attendees from venture capitalists to entrepreneurs is on. "There's been a lot of anxiety around this," Montgomery told dot.LA. "We made the right decision for us."</p><p>The influential summit will be. held at the Fairmont Miramar Hotel & Bungalows in Santa Monica, where 140 private companies will pitch their startups attracts at an event attended by more than 1,000 founders, top-flight investors, entrepreneurs, and executives.<br/></p><p>A meeting Montgomery held with a health expert on Saturday — he wouldn't say. who he met with — solidified his decision. Among the factors is a view among some that coronaviruses as a group are considered cold-weather viruses, and that only 5% of the attendees were coming from overseas – where the bulk of outbreaks have been. Montgomery has also been consulting with local health officials.</p><p>So far, there are about 90,000 novel coronavirus cases worldwide. More than 100 of them have been reported in the U.S. and there have been nine deaths recorded as of Tuesday. To slow the spread of COVID-19, the Center for Disease Control said schools, events and business may have to be interrupted.</p><p>But in Los Angeles, considered the U.S. gateway to Asia, there's been no known outbreak and health officials have said the risk is still low. Big venues such as the city's convention center haven't had any major cancellations.</p><p>"We really respect everyone's decision as to whether to attend," Montgomery said. "I am not going to encourage you, whether it's you or your staff. It's a personal decision. You may have family concerns about a loved one or someone that's in a health state."</p><p>To offset any potential spread of the virus, conference planners are placing hand sanitizer in every room and the cleaning staff will be wiping down common surfaces with antiseptic wipes hourly. Attendees are encouraged to wash their hands frequently and to refrain from shaking hands. There will also be a physician on hand. Anyone showing symptoms of a cold or flu will be asked to leave the summit and those exhibiting signs of COVID-19, which include a fever and difficulty breathing, will be isolated and tested further at a medical facility.</p><p>"What they have proposed makes a lot of sense," said Jeffrey Klausner, an infectious disease expert at UCLA's Fielding School of Public Health.</p><p>Klausner added that while social gatherings pose a risk in increasing transmission, there's no evidence that this is the case when attendees practice good hygiene. He said there's no evidence of ongoing transmission in Southern California. That could change; COVID-19 symptoms take up to two weeks to appear.</p><p>Unlike airborne influenza, which spreads quickly and can infect individuals multiple times, Klausner said people build an immunity to coronavirus, which is spread through respiratory droplets. All that tends to make outbreaks more localized. When cases do appear, Klausner said, most people will be either asymptomatic or exhibit mild symptoms. Less than 20% of confirmed cases have been severe, and just 2% have been fatal.</p><p>"The overall risk to the general U.S. population is still very low," he said.</p><p>Peter Pham, co-founder of venture capital firm Science Inc. isn't too worried.</p><p>"I'm an optimistic person and I also follow data," Pham said. "As of last (Sunday) night, the risk for younger folks is really, really low," he said.</p><p>Pham holds an exclusive dinner at Gjelina in Venice during the conference for some of the biggest names in Los Angeles' venture capital. Every year, you can count on at least one high-profile attendee. This year, it's Honey, who recently notched LA.'s biggest exit, with a $4 billion sale to Paypal. Dinner talk, he expects, will be much more focused on the city's next newsmaker rather than fears of the virus, as attendees focus on connecting with big money investors.</p><p>Hopefully, he said, someone will score a big check. In the meantime, "I will remind everyone to wash their hands, we are in a post-handshake world. Let's go with the elbow bumps and fist bumps."</p><p>At the conference, Montgomery said he won't be shying away from the topic. "Coronavirus is top of mind," he said. "We have a session on that on day two to talk about its public health and the economic impact this year."</p><div class="horizontal-rule"></div><p><em><strong>Editor's note</strong>: Shortly after this story was published, Kaiser Permanente confirmed that they were treating a new case of coronavirus in Los Angeles County. The patient is in in self-isolation and being treated on an outpatient basis. </em></p>
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From the moment the Silicon Beach moniker first appeared, it has been disliked and even despised by those in the place it's supposed to describe as too derivative, too playful, and too limiting for a tech scene that now stretches well beyond the sand and rarely involves silicon.
Just as Los Angeles writ large is still mocked as a vapid wasteland of botox, juice cleanses, and influencers, Silicon Beach conjures up images of flip flop-wearing tech bros playing ping pong at The Bungalow and bronzing at the Little Beach House Malibu.
<p>In reality, during the past decade the area's tech scene – propelled by multi billion dollar acquisitions like Honey and IPO's like Snap – has matured considerably. Venture investment in the greater L.A. area skyrocketed from $1.6 billion in 2010 to $7.8 billion last year, according to data from PWC. </p><p>But Silicon Beach can't manage to shake its childhood nickname.</p><p>"I do feel really strongly that using that term is really not doing a service to L.A. and is misleading and we should aspire to do better," said Kara Nortman, partner at Upfront Ventures. "The word 'beach' evokes a particular image which is fun and happy and playful but does not represent a majority of what L.A. has become. I think we're so much more than the beach."</p><p>Despite a revulsion for the name, it has endured because if not Silicon Beach, what should L.A.'s tech scene be called? No one has managed to come up with anything better even though this is an industry brimming with marketing talent that has to invent catchy new names and slogans everyday. </p><p>And it is not as if the phrase is only now facing a backlash. It has been reviled for years, likened to a "poor man's Silicon Valley" as early as 2011. </p><p>When Mark Suster, managing partner at Upfront Ventures, <a href="https://www.vox.com/2014/6/10/11627758/party-boys-and-fighting-words-the-battle-over-silicon-beach" target="_blank">was asked by a Recode reporter about Silicon Beach in 2014</a> he did not respond kindly. "If you even publish those words, it will make me scream and pull out my hair and scratch my fingers on the chalkboard," he said. "No serious professional — no serious professional in L.A. — talks about 'Silicon Beach.' There are a bunch of early-stage young inexperienced party-boy-type people who promoted the nickname. And let me say this to you: The most successful L.A. startups have all been founded east of the 405 freeway."</p>
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjgxODgxNC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxMzQyMzIwMH0.gpCvi3et3grRVprfsvf0DViAvydyEm8P5qhV3Ic_JLc/image.jpg?width=980" id="f7b9e" class="rm-shortcode" data-rm-shortcode-id="30fbef2e8c6b371e5185c864f501507b" data-rm-shortcode-name="rebelmouse-image" alt="The Bungalow" />
<p>Suster's outburst was prompted by a meeting he was invited to of prominent VCs and founders in Culver City organized by the Los Angeles County Economic Development Corporation. The sole purpose of the gathering was to abolish the phrase Silicon Beach.<br/></p><p>The effort was remarkably unsuccessful. Today there is Silicon Beach Fest, Silicon Beach Professionals, Silicon Beach Talent, Silicon Beach Homes, Silicon Beach Magazine, and when it all gets to be too much there's even a <a href="https://siliconbeachtx.com/" target="_blank">Silicon Beach Treatment Center.</a> When The New York Times or The Wall Street Journal describe L.A. tech, the preferred moniker is Silicon Beach. Fortune Magazine <a href="https://fortune.com/2016/03/06/silicon-beach-surfers-club/" target="_blank">writes about the "Silicon Beach Surfers." </a></p><p><strong>Where did 'Silicon Beach' Come From?</strong> </p><p>What few people realize is that Silicon Beach has only been used to describe the Santa Monica/Venice/Marina del Rey area relatively recently in its transitory lifespan. </p><p>The name initially described an area in South Florida in the early 1980s where IBM Corp. launched its personal computer in 1981. A quick Lexis-Nexis search reveals the first time it appeared in print referring to Southern California was in a San Diego Union-Tribune article about a San Diego computer expo trade show in 1985 with this lede: "The city with the fourth-highest concentration of high-tech firms in the nation — was well represented at the sixth annual COMDEX. Our version of Silicon Valley (Silicon Beach, perhaps?)"</p><p>The article included this improvident quote from Edward Savarese, president of Personal Computer Products Inc, who said the computer market had grown oversaturated: "Venture capital for high-tech start-ups is gone, it's history."</p><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
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</p><p>Three years later, civic boosters in Irvine started to adopt the phrase to attract more tech companies to Orange County. By the 1990s, Santa Barbara co opted the term. Some in L.A. wanted it for themselves, but they discovered the name was already taken, much to the amusement of techies up North.<br/></p><p>"As L.A. drives into the Information Age, what it really seeks is a nickname with the cachet and punch of a term like 'Silicon Valley,' sneered the San Jose Mercury News in 1998. "Unfortunately, that's been taken. As has pretty much Silicon Everything-Else. And that's the problem that has stumped a committee of industry leaders and city officials, chaired by L.A. Mayor Richard Riordan. The committee is trying to come up with a nickname that would advertise the city's growing number of high-tech companies."</p><p>Much like the 2014 Culver City meeting, Riordan's committee never came up with anything better. More than a decade later – as the South Florida, San Diego, Irvine, and Santa Barbara tech scenes were eclipsed – Silicon Beach took hold again, this time in its current iteration.</p><p>"The city is earning a wholly different nickname as startups like Hooky, and social networking and other tech firms vie for the city's sunlit offices and creative campuses, wrote the Los Angeles Business Journal in 2011. "That new nickname? Silicon Beach."</p><p><strong>In search of a better name</strong></p><p>Silicon Beach's usage seems to have peaked some time ago. </p><p>"There was a bit of a movement five to seven years ago when it got used a bunch but I don't hear it much anymore," said Dustin Rosen, managing partner at Wonder Ventures. </p><p>When the phrase is uttered, it's more often said by those from out of town.</p><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGd2lraXBlZGlhJTJGY29tbW9ucyUyRjYlMkY2NyUyRlNuYXBjaGF0X1ZlbmRpbmdfbWFjaGluZV9pbl9CZXJsaW5faW5fSnVuZV8yMDE3XzAxXyUyOGNyb3BwZWQlMjkuanBnJmhvPWh0dHBzJTNBJTJGJTJGdXBsb2FkLndpa2ltZWRpYS5vcmcmcz05NiZoPWU0ODhhMzA3YzM0NWMwYjE1ZDU5ZDMyZTc1YTIwYTUwMTc3NGUwMjA4YWE3YWU2MmI4OGY2M2JjZWUxZjBiY2Imc2l6ZT05ODB4JmM9MTgzNDQ0NjExOCIsImV4cGlyZXNfYXQiOjE2MTg2Mjk4OTV9.TG8l3VV9IpegYSq33ejkEk_pG2dasseX3qH0MPaUOaw/img.jpg" id="8a3d7" class="rm-shortcode" data-rm-shortcode-id="a4d58af12802780afa859b13dcc64c1c" alt="Snapchat Spectacles Vending Machine" />
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</p><p>"You'll hear Silicon Beach from people from the Bay Area talking about L.A. but people from L.A. rarely refer to themselves as Silicon Beach," said Amanda Groves, partner at PLUS Capital.<br/></p><p>But if not Silicon Beach, what should L.A.'s tech community be called? </p><p>"L.A. tech works for me," said Nortman, who also uses #LongLA, which she prefers because it connotes someone who is not just a carpetbagger. "It's come to mean you're investing in the long term of L.A. and you believe in it."</p><p>Rosen says he uses "L.A. tech ecosystem" or "L.A. tech community." </p><p>Then, a few minutes later he lowers his voice and makes a grave confession: He still uses Silicon Beach occasionally.</p><p>"I start from a place that if people are referring to tech activity in L.A. in a positive light then I'm not going to judge what terminology they're using," he said. </p>From Your Site Articles
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Fed up with Chest-Thumping Culture of Tech, Garrett Wants to Reengineer Himself and Crosscut
Feb 24 2020
In 2018, Brian Garrett, burned out from a decade running Crosscut Ventures, embarked on a month-long summer road trip. He packed up his old minivan with nothing but a mattress, some golf clubs and a fly fishing pole. He had just turned 45 years old and felt he was halfway through life. This was his vision quest.
It was the first time Garrett had stopped to contemplate his own mortality and the seed fund's future, and he decided he needed to make drastic changes to improve himself and his company.
<p>"The realization I had was what got me here may not serve me well in the next half of my life and what got Crosscut here may not serve us well as a firm, so let's re engineer everything," Garrett told dot.LA.</p><p>Today, as Garrett and his partners deploy $125 million in its fourth fund, the firm is taking on wellness. Crosscut will commit 1% or more of all capital invested in their portfolio companies toward programs for team and individual coaching and development.</p><p>Garrett realizes this gentler approach might seem too touchy feely for some founders, but he's ok with that. </p><p>"There will be a self selection," Garrett said. "The people who are interested in health and wellness will self select Crosscut."</p><p> Sitting in a sunny conference room in Crosscut's Main Street Santa Monica office, Garrett was candid about his new approach to life and business. He also opens up about his own wakeup call, and how his job has gotten much harder than when he first started Crosscut 12 years ago.</p><p><strong>Why do you feel that this wellness initiative is something you wanted to do?</strong></p><p>It was really watching the chest-thumping "I'm killing it" culture of tech, the way certain people were behaving in the venture industry, the way certain entrepreneurs were thinking that a round of financing was the success milestone, as opposed to just a chance to keep proving that their ideas were worthy. But what I was always blind to was my own frameworks and methodology. There's always something else to do. it was always late nights and there was always one more LP to communicate with and always one more deal to review. I wasn't able to see how that was impacting the way I was received by others in the ecosystem. So I came off a little too distracted or aloof. I came off a little too transactional walking into an event or meeting with entrepreneurs, and that's not good. That's not a positive for Crosscut's brand. </p><p><strong>How did you realize that?</strong> </p><p>We do surveys across the ecosystem and we get feedback from entrepreneurs. When you hear that, and you know how you want to be experienced in the world, it's a wake-up call. The way I want to experience the world is to be open hearted, and to have deep connections with people. That's how I live my personal life or try to live my personal life, but I wasn't doing that in my work because I was so overwhelmed and there was so much to do. And I think it led to some flat experiences with me, which is my own fault. </p><p><strong>It's interesting because it seems like this is very much about your own personal well being, but also the firm's performance. And you see this as very intertwined?</strong></p><p>For sure. The realization I had is when we were here from 2008 to 2012 the market was so nascent that we could see everything that L.A. was doing. Because we were the only seed fund in the market (and) we had leverage. If you look at where the market has moved, there are 25 to 30 funds all chasing deals in L.A. now and there is a ton of Silicon Valley money down here hunting. To think that we could just sit in our office and still see everything is a foolish notion. So then how do we re-engineer our firm to be more competitive and to have a stronger brand and reputation to compete for the entrepreneurs that we think are worthy of backing?</p><p><strong>It sounds like your job is a lot harder now than it was when you started?</strong></p><p>For sure. It was much easier to generate multiples on a $5 million fund than it is to generate multiples on $100 million-plus fund. We have a pretty clear point of view around small checks, small ownership investing and what doesn't work. If you're managing institutional money it has to be high conviction, high ownership. And then you have to get lucky. You have to end up being in a Honey and own a material amount of that business to generate the types of returns that come from those exits. What I'm confident about is that L.A. is going to start producing more and more of those types of deals.</p><p><strong>What percentage of your founders have wanted to go through the program?</strong></p><p>We just rolled it out and we haven't closed a lot of deals in the last four months. We were sort of cautious at the end of the year, so we're working it into a deal that we're doing diligence on right now and using it as a differentiator of our capital. If you really look at the game of venture, we are salesmen of capital in a very competitive ecosystem with a lot of really good funds that are raising more capital and chasing opportunities. We have to go out there and use our brand and reputation and constantly defend that brand and reputation as ideally being better faster, etc. So we have to continue to look at different programmatic services and things that we can offer up to differentiate our capital from everybody else.</p><p><strong>So this is part of your pitch to differentiate you?</strong></p><p>Ideally, yeah. I think there are a set of entrepreneurs that gravitate towards big ego, capital sources and big-branded names that think give them gravitas. Our approach has always been to treat the entrepreneur fairly and support them in their journey and try to win with a nice set of partners that do the right thing and act the right way and really support you both personally and professionally.</p><p><strong>But this is an industry where you hear about Elon Musk sleeping in his office every night and VCs wanting to squeeze out every last drop…</strong></p><p>I don't believe that's healthy in the long term. I think there's a time and a place and I've certainly put in my nights. But I think what I've experienced is that a little bit of balance goes a long way towards actually working smarter and making better decisions. I used to work until two or three in the morning every night. There's always something to do when you're running a venture firm. But eventually you get to a place where you burn out and realize you have to work smarter, not harder. I want to bring that dialogue to the table right out of the gate. I want to arm the entrepreneurs that we back with the mindset and the tools that better enable them to realize there's a finite period of time that you're able to sustain that kind of effort, but it's not something that you can keep doing for the long term and it's never to the advantage of the business long term. </p><p><strong>Do look back now and see instances where you rode your founders too hard?</strong></p><p>We as a firm have never needed to ride our founders hard because they're self motivated. I just think what's happened in our industry is that there's almost a fear of speaking candidly and telling the truth to your investor set for fear of disappointment and fear of failure, and not wanting to let them see that you're struggling. I want to change that dynamic in our ecosystem here in L.A. because I don't think that's a healthy dynamic. You have to have real transparency at the inception of the relationship. We want to be your first text when good or bad happens to the business. We're patient and we'll help you navigate through the problems, we're not going to lose our shit, and we're here to help you build business. No one setback is going to make us waver in our commitment to helping you succeed.</p><p><strong>It seems like this is easier for you to do as someone who's now on their fourth fund and been doing this a long time. It would be harder for someone who wasn't established because there's probably more pressure to show that you can work 24 hours and not admit your mistakes.</strong></p><p>Yeah, I think that's the way our entrepreneurial culture has been trained but it doesn't mean it's right. I'm willing to stick my neck out there now and say it doesn't matter how experienced you are, it is not the right path to success – the burnout mindset. I wish I had known what I know now, and I'm happy to bring that framework into younger entrepreneurs that are enthusiastic and high energy and have been trained to believe that it's got to be 24/7. And by the way, there will be a set of entrepreneurs that believe that and they won't be interested in Crosscut. That's okay. I think as venture capitalists in this industry we have to act and behave in the way that we want to see our entrepreneurs to behave. </p><p><strong>You said earlier you were making fewer deals at the end of last year. Is that because you're not able to find as many attractive deals at valuations that you find reasonable?</strong></p><p>We have an ebb and flow to our business over any 12-18 month period. Whether you're distracted with things happening in your portfolio or whether you're fundraising, those are all things that impact a partnerships ability to move quickly and find things they have conviction around. I wouldn't read too much into anything that happened at the tail end of last year. We're writing checks now. We finished our LP meeting in January. The entire team is oriented towards finding the last four or five deals in this fund and making them meaningful ones. So I think we just happen to be slightly cautious about what's coming in 2020. For us, it's high conviction, high ownership, strong syndicates, and maybe over-capitalize a little bit to protect ourselves if there's a downturn and the next round capital is hard to find. That's the approach that we take when we're headed into uncertainty.</p>
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