kotkin/aug9/mark1st/dp2nd

On a day that Net stocks are taking a beating and Santa Monica is clouded in gloom, Richard Rosenblatt seems remarkably sunny. At 30, Rosenblatt has reason to be happy he just sold his Internet company, iMall, for some $425 million.

You might not have heard of Rosenblatt, or perhaps iMall, which was launched in 1994, back in the Jurassic era of the Internet. "There was nothing out there then," Rosenblatt recalls over a chicken sandwich. "There were about one-hundred sites and virtually no commerce. But I saw an opportunity there."

Unlike many of the Internet's more illustrious, or at least well-sung, companies, iMall labored in obscurity, building a network of some 2,000 merchants that they displayed on the Net. Even as the company grew, iMall and Rosenblatt received virtually no coverage in the national press.

In many ways, iMall's predicament is common to L.A.-based Internet firms. Companies based in New York or the Bay Area benefit from a network of investment bankers, venture capitalists and their media lackeys, who consider promoting local Internet companies as a kind of civic duty.

"Most of the industry media players aren't here, they are in New York or San Francisco. It's all a question of whose hyping your IPO," Rosenblatt explains. "If you're not high-profile you don't get coverage."

Indeed, Los Angeles has been the Rodney Dangerfield of the Internet. Even companies that eventually emerge Geocities, eToys, CitySearch generally do so more slowly than if they had been located elsewhere. Major national media seems unable to locate Southern California in "cyberspace." While numbers compiled by Ross DeVol at the Milken Institute show Los Angeles at the very top of high-tech regions behind only Silicon Valley and ahead of New York and Boston few national reporters bother to cover either place as a high-tech center.

Orange County, ranked eleventh in total high-tech output, outpaces highly hyped Raleigh-Durham and Austin by roughly 50 percent. Even in high-tech services, L.A. beats New York hands down, with over 80,000 more jobs.

Yet whatever the reality, Southern California firms, like iMall, continue to be largely ignored. This is not a matter simply of pride; it has real effects on the progress of the region's high-tech firms, whether in software, e-commerce or hardware. Meanwhile dubious firms such as Earthweb and TheGlobe.Com receive lavish national cover stories thanks to massive help from New York media and see their stocks soar. iMall has enjoyed modest success and virtually no exposure.

"Without publicity, it is harder be taken seriously and raise money," Rosenblatt explained. "You have to work harder."

But that's something that comes naturally to the workaholic Rosenblatt. He decided to do something many Web "stars" don't seem to care about: building a real business. Working first from Studio City before moving this year to Santa Monica, Rosenblatt built his technology and roster of merchants. He pursued and eventually lined up big name partners like IBM, First Data and Verio. They saw through the lack of hype, and opted to link with the network of merchants, the e-commerce services and sales team that Rosenblatt had methodically built.

Even so, Rosenblatt remained an obscure figure in the cyber-scene. This was in part because he never joined the insiders club venture capitalists, investment bankers and national media who feel it is their God-given right to delineate "winners" and "losers" on the Web. Yet by this spring, some professionals in the business were beginning to notice. In May, after the IBM alliance, iMall moved up from the small cap to the Nasdaq National Market System.

Finally, on July 13, the big money arrived. The company was purchased by Redwood City-based Excite@home, exactly the kind of Bay Area player that, for years, wouldn't have wanted Rosenblatt around the water cooler.

For someone who has followed iMall's progress, and that of the Southern California Internet industry, the sale provokes mixed feelings. One has to be glad for Rosenblatt and the company's 40 L.A.-based employees who now have deep pockets and the prospect of long-term employment by the beach. It's nice to see a pioneering entrepreneur become a serious millionaire; he's a nice guy, his wife is expecting a second child and they're building a new home in Pacific Palisades.

Yet you can't help developing a sinking feeling about iMall's purchase. Southern California firms just don't seem to be able to go the distance. Virtually all our most promising high-tech players Packard Bell, AST, Knowledge Adventure, Davidson, Geocities got swallowed, absorbed, or somehow removed from the public consciousness. Only a handful of companies of national note remain, notably Broadcom, eToys, CitySearch and Activision, none of which can yet be described as top-tier players on the level of a Dell, Yahoo or Sun.

To be sure, this lack of big-time players has not crippled Southern California's technological industry. There are still lots of people out there, like Richard Rosenblatt, creating jobs and opportunities.

But lack or recognition clearly has slowed the region's emergence as a globally acknowledged high-tech center, impeded the flow of capital, and perhaps made recruitment of skilled professionals more difficult. You still sense that some companies locate here instead of Silicon Valley or even over-hyped "Silicon Alley" because of the region's existential isolation.

How to address this problem? Rosenblatt is interested in reaching out to the core of other Internet pioneers and visionaries already here such as Idealab's Bill Gross and Earthlink's Sky Dayton to pursue a more ambitious marketing of the region's technology industry.

But the biggest problems are not necessarily those from the outside. Until Southern California recognizes the grassroots energy and work to cultivate it, the region will remain under-recognized, unappreciated, and far from achieving its true potential.

Joel Kotkin is a senior fellow with the Pepperdine Institute for Public Policy and a research fellow at the Reason Public Policy Institute.

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