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The Snapchat Effect: How Los Angeles Startups Are Snatching Silicon Valley’s Tech Talent

Following the VC money… down Interstate 5.

The Snapchat Effect: How Los Angeles Startups Are Snatching Silicon Valley’s Tech Talent
[Photo: Flickr user Samet Kilic]

When Adam Lilling, a Los Angeles-based entrepreneur and investor, was getting his startup BiggerBoat going in 2006, he tried to recruit talent from Silicon Valley but found it impossible.

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LA V. SF, Who Has It Better? | Click to expandInfographic by Hired

“I interviewed amazing engineers from the Bay Area, but no matter how much we offered, how great the opportunity, how perfect the circumstance, all of them ended up staying for fear of career suicide and losing the valuable relationships they made,” said Lilling, who went on to co-found the startup accelerator Launchpad LA.

Today, L.A. is no longer considered a risky proposition for talented techies living elsewhere. Indeed, the Valley is actually now starting to lose tech talent to L.A. Most notably, Snapchat, the disappearing message startup with a $10 billion valuation, has been on a poaching spree, nabbing a slew of top executives from the likes of Facebook and Google. In mid-October, Jill Hazelbaker, the former senior director of communications and government relations at Google (and this year’s fastest-rising executive in the Fortune 100), will start overseeing Snapchat’s PR and policy. And Sara Sperling is Snapchat’s new head of human resources, having recently left her post as Facebook’s Diversity and Inclusion head. Whisper, another hot L.A. startup that recently raised $36 million in funding, also has executive hires from major Silicon Valley companies, as does Cornerstone OnDemand.

“The fact that Snapchat has been able to get those guys and retain them in L.A. is amazing,” noted one tech executive, who asked that his name not be used, over lunch the other day.

While this may not be a full-on talent drain, per se, the fact that a number of high-ranking Silicon Valley folks are willing to make a bet on L.A. and relocate, marks a new milestone in the rapid evolution of Silicon Beach. No longer lampooned as a community of techies lounging around with celebrities and taking off for the beach before sunset, L.A. has gained real cred in recent months, and not just because of its sunny weather and (relatively) low rents. More VC money has flooded the ecosystem, and a series of impressive exits have been turning heads. Last March, Disney bought Maker Studios in a deal that’s potentially worth $900 million. That same month, Facebook snatched up Oculus RV for $2 billion. In April, TrueCar raised $70 million in an IPO.

“There’s a legitimate scene here now,” says Adam Miller, founder and CEO of Cornerstone OnDemand, which raised $137 million in an IPO in 2011. “We’re still not totally there yet, but L.A. has now been legitimized with multiple exits, through IPOs and acquisitions, as well as multiple major financings.”

Matt Mickiewicz, cofounder of Hired.com, which is launching an L.A. office this week, says there is now a “wealth of opportunity” in Los Angeles.

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“Five years ago, if you got recruited away to Google (in L.A.) and it didn’t work out, you’d have to move back to San Francisco. Now, if it doesn’t work out, you can do the next thing here,” says Mickiewicz. “If you’re an entrepreneur and want to be a cofounder of your own business, you’re able to do it. That VC ecosystem is maturing, there’s capital here. You don’t have to go to the Bay Area.”

Those are some of the reasons that Hired, an online recruiting company that showcases top tech talent and connects them with companies around the country, decided to open its doors in Santa Monica, three years after launching in San Francisco. (It also has a New York outpost.) Already, the company is working with over 350 local companies, including Whisper, Demand Media, and Tradesy, many of which are trolling for Silicon Valley hires.

But the company that is arguably doing the most to boost L.A.’s image is Snapchat. Led by a Mark Zuckerberg-like hotshot, Evan Spiegel, who famously rejected the Facebook CEO’s $3 billion offer to buy Snapchat (and forced Zuck to travel to L.A. to make his bid), the company is now valued at $10 billion. The fact that it’s based in Venice, not Menlo Park, is not lost on anyone in the tech world. (Snapchat did not respond to an interview request.)

“There hasn’t been a startup that had that Internet scale” in L.A. before, says Lilling. “That kind of fundamentally changes the way people think about you. If a company is worth $200 million, the founder gets rich, but employees don’t get rich, and investors don’t get rich. That’s not an outsize return for everybody. But Snapchat is telling people, ‘You come work for me, you get rich. You invest in me, you get rich.’ And that’s the Bay Area mentality–they want the next Facebook, the next Google, the next Twitter.”

Michael Heyward, the CEO of Whisper, admits that Snapchat is playing a role in L.A.’s rise, but says it is one of many companies that are generating momentum. “I think what’s happening in L.A. is that you have several companies in the mobile consumer Internet space doing incredibly well. Companies like Snapchat, Whisper, Tinder. That’s obviously something that’s having a huge impact on great talent coming down here. Great talent wants to work at great companies.”

“Silicon Valley is not Silicon Valley because it’s a beautiful place to live or because it’s got such great weather,” he added. “There’s great talent because there are great companies. And now we’re experiencing that.”

About the author

Nicole LaPorte is an LA-based writer for Fast Company who writes about where technology and entertainment intersect. She previously was a columnist for The New York Times and a staff writer for Newsweek/The Daily Beast and Variety.

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