The rapid proliferation of tech companies has brought prosperity to untold numbers of local workers, and the L.A. economy as a whole, but one group is being left in the dust: local chambers of commerce.
New-media companies are either shunning civic groups altogether, or at best are simply check-writing participants.
Overwhelmed by the demands of managing exponential growth, venture capitalists’ demands for quick results, and ever-shifting business landscapes, dot-com executives just don’t have time for chamber activities. In addition, chambers have largely failed to adapt to the new business environment.
“We just got a membership letter in the mail two days ago from the chamber and it was very generic. It doesn’t say why it’s imperative that we join, and before we received that letter, (the topic of joining the chamber) had sparked very limited conversation,” said Leasa Ireland, a spokeswoman for eHobbies.com in Santa Monica. “On the monthly list of things to do, it just hasn’t bubbled to the top.”
Part of the problem is that few of L.A.’s high-flyers perceive chambers as entities that can help them. Rubbing elbows with the local dry cleaner or auto mechanic, for example, just won’t do much for such businesses as eToys, eCompanies, Stamps.com and CarsDirect.com.
“Many chambers represent traditional-type businesses, where the community builds itself around them, but high-tech companies operate in a different environment. Their business contacts are global, so their networking needs are different,” said Judy Whalen, founder of Whalen & Associates, a Brooklyn, Wis.-based consulting and strategic planning firm for associations and chambers.
E-commerce firms agree that their marketplace is vastly different from that of their traditional brick-and-mortar counterparts.
“We don’t just sell locally, we sell all over the world. About 30 percent of our business is out of the U.S.,” said Dean Wallraff, chief executive of software e-tailer Hyperdrive.com in Pasadena. “There isn’t that same motivation for us to join as, say, a furniture store or a lawyer who’s building his or her clientele.”
The issue of traditional vs. new economies was even the focus of the annual conference for the Western Association of Chamber Executives held in Los Angeles in February.
“What I constantly tell chambers is to stay in touch with their market and, if they’re running the same chamber of five years ago, it’s no wonder (their membership is falling),” said David Kilby, the Western Association’s president. “These businesses want to know what’s in it for their bottom line. They want to know what the chamber’s position is on (e-commerce) taxes and a lot of chambers are like a deer in headlights and have no clue what they’re talking about.”
Indeed, it’s been a tough run for chambers for the past decade, with memberships plummeting during the recession of the early ’90s and failing to recover despite the long-running economic expansion. For instance, the Santa Monica Area Chamber of Commerce’s membership of 1,020 is down from 1,450 in 1991. Membership in the Hollywood Chamber of Commerce stands at 950, a far cry from its 1,600 level in 1991. And Culver City, a new-media hot spot, has only inched up its membership to 827 from 816 in 1991, and the current level is down from 867 last year.
“It’s a concern that more aren’t joining because, as e-commerce companies expand and move to bigger headquarters, location isn’t an important issue,” said Steven Rose, president and chief operating officer of the Culver City Chamber. “Part of the issue is building a sense of community, so they don’t leave. They are significant players in the community.”
Added Leron Gubler, executive director of the Hollywood Chamber of Commerce: “We’re supposed to represent a broad cross-section of the community, and we don’t.”
Though many chambers say they’re in the midst of implementing new policies to present a hipper, more-relevant image to technology firms, the results have yet to materialize. Most chambers still initiate contact with businesses by phone or mail, for example, often citing difficulty in obtaining e-mail addresses for the right contacts.
For many chambers, budget constraints are hampering change, because many haven’t increased their dues for years hoping that will help them attract new recruits.
“These things take time and expense, and we’re working as quick as we can to get up to snuff,” said Dan Ehrler, executive vice president of the Santa Monica Chamber.
Others say chambers simply are employing the wrong tactics.
“To bring integrity to the chamber, they need to revisit their bylaws and part of that involves raising the dues to provide the funds for infrastructure needs,” said Allie Williams, director of membership for the U.S. Chamber of Commerce.
In addition, expunging events like annual chili cookoffs or health expos from the chamber’s roster and replacing them with meetings featuring high-profile speakers could help attract dot-coms.
“If they had industry meetings where we knew high-level people such as Internet executives and VCs were there, we’d take notice,” Ireland said.
Certainly, these companies have no aversion to the right kind of networking. But they tend to be cliquish and join tech-specific organizations like the Venice Interactive Community, the Digital Coast Roundtable or the Zone Club.
“People (dot-coms) view their chambers as places like Shop.org (an organization of Internet retailers) which is a more virtual, global chamber of commerce,” said Susan Daniher, vice president of marketing with Hollywood-based Express.com, formerly DVD Express. “And Shop.org is active with the Boston Consulting Group, which provides e-commerce trends and traffic numbers. They really provide useful information.”
Ultimately, shifting the prevailing attitude might prove to be an uphill battle, according to entrepreneur Aron Benon, founder of Beverly Hills-based Florist.com, who does not belong to the local chamber.
“Lots of those people (chamber members) get those plaques and are proud to hang them up in their stores, but we don’t have walk-ins. Where would we put the plaque?” Benon said.