For years Mimi Grant and Bob Kelley were Orange County's ultimate high-tech duo. Yet in the past year the peripatetic networkers and consultants have been spending an increasing amount of their time commuting north up the 405.
This represents a sea-change from the experience of the 1980s and early 1990s when Kelley and Grant, then running the high-tech networking group called Socalten, shifted that organization's headquarters from its original home in Brentwood to Tustin. At the time it seemed that most of the emerging big players in the Southern California tech community such as AST Research and Western Digital were coming from the periphery, while Los Angeles seemed hopelessly mired in the massive deconstruction of the defense industry.
After the 1992 riots, although Orange County was suffering through its own fiscal turmoil, there were even hopes that some of Los Angeles' key companies including large segments of the entertainment industry would migrate behind the Orange Curtain. Some even saw Los Angeles becoming much like Detroit, a burnt-out afterthought, surrounded by bustling peripheral communities.
Balance of power shifts
But now, with the defense build-down largely over, things have changed. The reason, the couple suggests, has to do with a broad shift in the high-tech balance of power, one that has made Los Angeles again the epicenter of the Tech Coast. It is a shift that, to a large extent, reflects the growth of the Internet and other content-oriented sectors of the information technology business.
Kelley says this move back to the city has a lot to do with L.A.'s appeal to the younger, hipper types who tend to prefer the funkier areas of the Westside and Pasadena to the prefabricated efficiency of places like Irvine.
"The dot-coms mostly started as kitchen-table businesses and there were more of them on the Westside than in Orange County," says Kelley, now CEO of Adaptive Business Leaders, which conducts roundtables for high-tech executives. "They are coming from more of an entertainment perspective how to build a site that holds attention."
This shift is more than perceptual. Most of the region's hottest Internet-related firms come from the Westside or Pasadena. Venture capital flows, as reported earlier in this column, have shifted heavily from an Orange County orientation to Los Angeles. Most of the critical incubator action from eCompanies and Idealab to USC's innovative in-house effort remains firmly concentrated far north of Orange County, which Kelley says has largely been an also-ran in the Internet world. This explains why ABL's first two Internet roundtables are located on the Westside, he says.
Even the job-growth numbers, compiled by the region's two top high-tech economists, the Milken Institute's Ross DeVol and scholar David Friedman, show that L.A.'s growth has been stronger than its southern cousin. This is even more remarkable because Orange County's overall job growth was more robust roughly twice as fast in the late 1990s, but most of it was concentrated in services, manufacturing and construction.
Move to urban areas
Key to this shift has been the software sector, the one most closely tied to the burgeoning Internet economy. Since 1983 software and computer programming jobs grew by 85 percent in Los Angeles compared to 24 percent in Orange County. Recent trends in the dot-com world are likely to accelerate this differential even more.
The change is not unique to Southern California. In regions as diverse as Boston, New York, Chicago and Dallas, an increasing amount of the Internet action has been taking place in urban areas. This is as much a product of aesthetics, demography and culture as anything else: the under-30s who represent the cutting edge of this industry seem to prefer urban places to the traditional nerdistans.
"Los Angeles has interesting neighborhoods that are safe and that have wonderful warehouse space it's an open-air kind of environment," notes Mimi Grant. "There's something to be said for concrete floors, exposed beams that you find in an older place like Los Angeles."
Despite these trends, Grant and Kelley have hardly given up on Orange County. They note efforts to develop new incubators that can compete with those in Los Angeles, and they themselves have set up an Internet roundtable there. A tougher nut, however, will be creating interesting space and places that might appeal to those under 30, or even older folks with a bit of idiosyncratic flair.
But local developers, some Orange County insiders complain, remain locked in an '80s-style plastic mindset that prevents them from looking at rehabilitating older funky space or creating the kind of physical environment designed by Disney or DreamWorks. Most unhappy are those connected with UC Irvine. They blame the lack of developer imagination for the relative lack of spinoffs from their meticulously planned campus.
Grant and Kelley say it will probably be local Orange County entrepreneurs and not the suits at traditional development firms who will have to push the ball forward, perhaps rehabilitating places like Santa Ana into creative places or building more progressive "campus" environments. If they do so, these areas could exploit Orange County's intrinsic advantages in such areas as infrastructure and better schools, particularly as aspiring dot-comers establish families.
But for the time being, Los Angeles gets to enjoy a moment as the center of the region's high-tech universe. It's been a while since you could say that.
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