Factual Inc., Gil Elbaz’s Century City location data company, just spent $1 million on lawyers and hundreds of man-hours to beat back claims by an inactive patent holder – a troll – that claimed Factual’s technology, which accesses location to trigger a notice on a mobile device, used its intellectual property. Founded in 2008, the Century City firm collects and sells location data to companies such as Facebook Inc. and Apple Inc. It received a $35 million Series B funding round in December. It’s Elbaz’s second successful company. His first, AdSense inventor Applied Semantics of Santa Monica, was sold to pre-IPO Google Inc. in 2003 in a cash-and-stock deal worth $102 million.
NAME: Gil Elbaz
HOMETOWN: San Antonio
COMPANY: Factual Inc.
TITLE: Chief executive
It might have been easier to pay the patent troll to go away. Why fight?
In part, the principle. It was something I worried would happen eventually as we gained more notoriety as an important company in the space. The principle we’re setting maybe helps reduce the amount of attacks and claims like this in the future.
Was it hard to convince your board?
Their bias was toward settling because that’s just the standard practice in the industry. Many of the best investors, board members, and executives have experience that says it’s hard enough to win as a startup, even if you have your entire executive team focused on the goal. And, if they are distracted even 5 percent that is 5 percent too much.
How deep is the problem here?
I hear it come up pretty often. Sometimes people don’t make a big deal about it. For one, a lot of times the settlement agreements involve confidentiality clauses. So if someone settles for a small amount of money, they put it out of their mind and aren’t allowed to talk about it anyway and try to move along with their life.
You left Google in 2007. What strikes you the most about that company’s evolution?
Alphabet is a bold and courageous bet that Google made. It doesn’t surprise me that they were organizing themselves to go after many industries. I’ve always seen Sergei (Brin) and Larry (Page) as ambitious to ridiculous levels.
Did you see those ambitions when you joined them?
I really did. The mission back then was to make the world’s information accessible and useful. I just had that sense that you have incredibly ambitious and smart people that really believed – and it’s not malicious at all – they really believed that the right to technology can enhance all of these experiences. The culture was that it was almost a crime to not leverage our knowledge and capability to work on new problems.
You sound pretty bullish. Have you held on to your Google stock?
I am still bullish. Not just on Google. I am bullish on companies that have massive troves of data – it’s just so valuable. Facebook has a massive amount of information tied directly to individuals. I think there is much more value in that data than people realize. Amazon also has a massive amount of information on consumer buying information. And I don’t really talk about stock holdings at this point.
Speaking of data and tech culture, do you watch “Silicon Valley”?
I love that show.
Does its version of tech culture ring true to you?
A lot of catchphrases, such as “We are doing this to make the world a better place,” have been overused. I find myself a little bit embarrassed to use that because it’s such a cliché. And what does it really mean?
Do you feel Los Angeles needs a big exit for it to be taken seriously as a tech hub?
You need a massive success in order to change the perception that the biggest companies, Google, Facebook, etc., are all Silicon Valley born and raised. But I don’t think you need an exit or IPO. I think Snapchat and a few other large successes, perhaps Tinder, I think they’ve already done what they need to do, which is change that perception.
How has it changed?
It’s only in the last year or two that I’m feeling a lot more investors wanting to make sure they have their finger on the pulse of L.A. because the next $100 billion company beyond Snapchat could be here. In fact, it’s likely to be here because we have so many engineering graduates, and there’s so much creativity and just as much desire. And it’s a great place to live.
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