Los Angeles Times

Monday, April 12, 1999

SPECIAL REPORT: The Tech Coast 10
Local Leaders Making Waves on Tech Coast



In all of Southern California, the largest concentration of technology companies lies in the IRVINE CO.'s Irvine Spectrum center.
     About 25,000 people work in 1,000 high-tech Irvine Spectrum businesses at the junction of the San Diego and Santa Ana freeways in Orange County, including scores of computer, software, biotechnology and medical device companies ranging from start-ups to Fortune 500 firms.
     Dick Sim, group president of investment properties for the Irvine Co., saw a high-tech future in what once was a 5,000-acre strawberry field. He envisioned buildings--incubator-style offices as small as 500 square feet--that would appeal to engineers who were tinkering with inventions in their garages.
     As the companies grew, so did the Spectrum. Sim, 62, added 100 more buildings to accommodate everything from wet labs to clean rooms to light assembly to drafting tables to office space.
     Over the last 15 years, that variety has been key to Irvine Spectrum's success.
     "It gives us a lot of flexibility," he said. "If the computer business is down, you may have biotech and medical devices rolling. If all you have is computers and software, and that's down, you're in trouble."
     Today, the Irvine Co. is developing University Research Park to accommodate another 100 companies on the northwest corner of UC Irvine. UCI faculty members screen potential tenants to gauge their interest in partnering with the school, and only companies that are UCI-approved are able to lease space.
     Indeed, Sim said UCI could do for the Tech Coast what Stanford and UC Berkeley did for Silicon Valley.
     "UCI will drive this in the future," he said. "If you're going to have a successful high-tech business center, you should be close to a major research institution."

     The New Media Chief

     As chairman of Disney's Buena Vista Internet Group, JAKE WINEBAUM is arguably the most powerful new media executive at the entertainment company with the most aggressive strategy for the Internet.
     From his North Hollywood office, the 39-year-old Winebaum directs Disney's massive Internet presence. The new Go Network includes the Infoseek portal site; ABC news, sports and entertainment sites; ESPN sites, including official sites for the National Football League([Company Capsule]), the National Basketball Assn. and other professional organizations; and dozens of entertainment and family-oriented sites under the Disney banner. E-commerce sites are spread throughout the network.
     Go Network is the fifth-most-popular property on the Web, with a monthly audience of nearly 22 million, according to Media Metrix. Nielsen/NetRatings estimates that Go Network's reach extends to 27% of the Web, compared with 16% for Time Warner([Company Capsule]), Disney's closest rival among major media companies.
     Most of Buena Vista Internet Group's employees are based in Sunnyvale, Calif., and Seattle, but more than 100 workers who focus on entertainment and marketing are located near Disney's Burbank headquarters. The Southern California crew is responsible for the critical--if intangible--qualities that make Go Network successful.
     "Here, it's really the user experience--the look and feel--that we specialize in," Winebaum said.
     In the process of building a model for other studios to follow, Winebaum has also played a critical role in building up the Tech Coast work force. Ever since Disney plunged into the Internet in early 1995, the company has been a target of recruiters from other local tech companies.

     The Educator

     One of the San Gabriel Valley's greatest high-tech assets is the California Institute of Technology in Pasadena, and one of Caltech's greatest assets is DAVID BALTIMORE.
     As president of the world-renowned university, Baltimore, 61, is interested in turning out more than just science and engineering graduates. His personal goal is to produce high-tech companies as well.
     The university is spinning off between six and 10 companies a year, but Baltimore said the number could go much higher.
     To make it happen, would-be entrepreneurs need more commercial space around Pasadena. The Pasadena City Council has expressed its support for a biotech corridor, Baltimore said. To support these efforts, Caltech created a fund that university researchers can tap when they want to study the potential commercial applications of their discoveries.
     Because moving technology from the lab to the private sector doesn't always require a new company, Caltech will step up its efforts to license technology to existing firms from its labs and from the nearby Jet Propulsion Laboratory, which the school manages for NASA.
     Both efforts will create jobs for Caltech graduates--among others--and contribute to the local economy.
     "There's tremendous opportunity here," Baltimore said. "My hope is if we can seed it here in Pasadena, it will spread in the San Gabriel Valley."

     The Lawmaker

     When state Sen. DEBRA BOWEN was elected to the California Legislature in 1992, one of her goals was to make legislative information available to everyone in the state with access to a computer. That interest has since flourished, and today Bowen can count herself as one of the most tech-savvy members of the Legislature.
     The daughter and granddaughter of engineers, Bowen is an early adopter of high-tech gadgets. The Marina del Rey Democrat's district includes some of the Tech Coast's most formidable companies, such as Computer Sciences, TRW and Northrop Grumman's Logicon([Company Capsule]) unit.
     Bowen, 43, helped form the bipartisan California Legislative Internet Caucus last year to promote the unencumbered growth of the global computer network while ensuring privacy, free-speech rights and universal access for users.
     "Technology is a great enabler, but it also has the ability to leave people behind if we're not careful," she said. "If we don't deal with this issue straight up, we'll be very sorry in a couple of years."
     In Sacramento, Bowen has helped bring to the forefront such issues as Y2K readiness, junk e-mail and the databases created by supermarket club cards. She has also taken up issues dealing with telephone companies, aiming to protect consumers from aggressive marketing tactics and exposing hidden phone charges.
     Bowen expects the increasingly frequent clashes of technology and privacy to become a hot-button issue for Californians this year, and she wants the state government to be prepared.
     "We need to have a discussion about what expectations California citizens([Company Capsule]) have for privacy," she said. "I feel it's my responsibility to raise issues that people are not necessarily thinking about yet but that could have significant consequences in their lives."

     The Biotech Leader

     ALFRED E. MANN has founded eight high-tech companies in Southern California, including MiniMed([Company Capsule]), a $1.2-billion Sylmar company that makes insulin pumps and other devices to treat diabetics, and Advanced Bionics, another Sylmar firm that is using neuro-stimulation techniques to help people overcome disabilities such as deafness.
     But that hasn't satisfied his entrepreneurial zeal. The 73-year-old physicist has been instrumental in helping some of the region's biggest universities spin off legions of their own biotechnology start-ups.
     Mann donated $100 million to USC last year to assist in the effort, and he has pledged a like sum to UCLA. He is also spearheading development of an $80-million biotech research park on the northern edge of the Cal State Northridge campus, while helping that school create a biotechnology curriculum to train future workers.
     "Our objective is to try to make Los Angeles the capital of biotech in the U.S.," said Mann, who also serves as chairman of the Southern California Biomedical Council.
     With top-tier universities like USC, UCLA and Caltech, strong support from Los Angeles Mayor Richard Riordan, and nearly $1 billion in National Institutes of Health funding last year, Mann's goal may be achievable.
     The biggest obstacle, he said, is a shortfall in venture capital. But Mann and the Biomedical Council are tackling that issue by forming two venture funds and organizing a group of so-called angel investors who could provide essential seed capital.

     The Facilitator

     As executive director of Los Angeles Regional Technology Alliance, ROHIT SHUKLA spends about 75 hours a week counseling, promoting and nurturing small and medium-sized technology firms in Los Angeles, Orange, Ventura, Riverside and San Bernardino counties.
     LARTA was created in 1994 as a nonprofit public-private partnership to help Southern California cope with massive defense downsizing after the end of the Cold War.
     The alliance helps companies get financing through state matching grants and venture capital forums, find customers and corporate partners, expand overseas and generally improve their business practices.
     Shukla, 42, frets that his efforts have yet to produce "economic opportunity that is grandiose." But much progress has been made over the last five years, especially in terms of coordinating the efforts of Southern California's many cities and counties and eliciting venture capital from Los Angeles, New York and Silicon Valley.
     What the Tech Coast still needs are people who can serve as chief financial officers, intellectual property attorneys and other kinds of professional managers who can help entrepreneurs take their companies to the next level, Shukla said. To help meet that goal, LARTA is keeping a registry of potential candidates and making about 10 referrals a week.
     LARTA has also launched a nationwide campaign to promote the Tech Coast. With a higher national profile, the theory goes, local tech companies will have an easier time exporting their products and importing new workers.
     "The opportunities are immense," Shukla said.

     The Newcomer

     TIM DRAPER grew up with Silicon Valley, watching the apricot orchards of San Jose give way to the high-tech companies that lead today's economy. So when the Redwood City venture capitalist beholds the Southern California high-tech landscape, he fairly bursts with optimism.
     "We can reproduce the magic," said Draper, 40, founder and managing director of Draper Fisher Jurvetson.
     The Stanford-trained electrical engineer is doing as much as anyone who lives in the Southland to build the Tech Coast. Last fall, Draper founded Zone Ventures in downtown Los Angeles to invest at least $25 million from the federally funded L.A. Community Development Bank--and as much as $100 million in private capital--in Los Angeles-area technology start-ups.
     But Draper's efforts aren't limited to venture capital. He is also the driving force behind the Zone Club, a networking group that aims to link high-tech entrepreneurs with bankers, lawyers, headhunters and other entrepreneurs. About 400 people turned out for the Zone Club's inaugural event in January. And there are plans for a Zone Communications newsletter and Web site to help unify the sprawling region.
     Together, Draper says, these efforts will help the Tech Coast emulate some of Silicon Valley's best qualities, like its ability to spawn companies almost effortlessly.
     Draper believes that Southern California's high-tech economy can be healthier than Silicon Valley's if it steers clear of such traits as high employee turnover, outrageous salaries and stratospheric real estate prices.
     "Twenty years down the road," he said, "[Zone Ventures] may be a bigger fund than Draper Fisher Jurvetson."

     The Trailblazer

     Silicon Valley has Intel. Seattle has Microsoft. The Austin area has Dell Computer. And the Tech Coast has EARTHLINK NETWORK([Company Capsule]).
     A large, high-profile company is a key ingredient in the success of every high-tech center. With a market cap of nearly $2 billion, more than 1 million customers and 1,600 employees, the Pasadena-based Internet service provider is the role model for Southern California's legions of entrepreneurs.
     Certainly, Sky Dayton, EarthLink's 27-year-old chairman, is an unlikely high-tech mogul. The onetime coffeehouse owner founded the company in 1994 after a particularly frustrating attempt to connect to the Internet. Garry Betty, 41, a veteran of IBM and Hayes Microcomputer Products([Company Capsule]), brought professional high-tech experience to the company's chief executive post two years later.
     EarthLink's emphasis on ease of use and customer service propelled the company into the top tier of pure Internet access providers. With its emphasis on fast-growing services such as broadband access via cable lines, EarthLink is poised to stay there.
     EarthLink sponsors technology lectures at nearby Caltech, a weekly radio show on KLSX-FM (97.1) and hosts open houses at its business-park headquarters. But Tech Coast leaders say the ISP's more significant contribution to the region's technology industry will be the start-up companies founded by stock-enriched EarthLink alums.
     The company hasn't generated many spinoffs so far, but "the potential is absolutely there," Dayton said. "There are so many incredible ideas out there. The things that blow across my desk--I could take any one of them and build it into a billion-dollar business."

     The Entrepreneur

     It's no exaggeration to say that BILL GROSS is the most prolific high-tech entrepreneur on the Tech Coast.
     In less than three years, his Idealab business incubator has spawned 23 companies--including CitySearch, GoTo.com, EToys and Free-PC.com.
     Pasadena-based Idealab has five more companies in "incubation," while a related venture capital fund, Idealab Capital Partners, has investments in 15 companies.
     Gross, 40, who became an entrepreneur at age 12, started several successful companies--including the educational software firm Knowledge Adventure--before founding Idealab, which focuses on Internet-related start-ups.
     That business acumen perhaps led him to be among the first to recognize that Southern California's unique blend of technology, entertainment and marketing prowess make the region an ideal home for consumer-oriented Internet firms.
     A strong advocate for adopting the kind of business practices that led to Silicon Valley's success, Gross promotes such ideas as a willingness to trade salary for stock options and to raise money through venture capitalists.
     While he has made a major contribution to Tech Coast through his companies, his biggest impact on the region may be as a role model for other would-be entrepreneurs.
     "I hope that stories of people who join Idealab companies from traditional jobs and take pay cuts but get equity and become millionaires will inspire others to do the same, whether they join Idealab companies or not," said Gross, who was himself inspired by the "trials and tribulations" of other entrepreneurs.

Copyright 1999 Los Angeles Times. All Rights Reserved

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