Los Angeles’ Silicon Beach goes back to USC’s Information Sciences Institute

Magali Gruet and Habeeba Kamel | February 1, 2023

The computer research institute established in 1972 was building the internet on the Westside decades before the tech industry took over.

Silicon Beach map. Illustration: Zhiying Chen

Silicon Beach map. Illustration: Zhiying Chen

From Dogtown and Z-boys to Silicon Beach, the Westside of Los Angeles’s mix of media, entrepreneurship and technology has shaped the city’s culture and economy alike. Its tech hub, Silicon Beach, is no exception, transforming from a small string of promising companies to a global tech powerhouse.

But who was here first? USC’s Information Sciences Institute (ISI) is the indubitable answer. Established in 1972 in the newly built Marina Towers in Marina Del Rey – the first employees moved in when some floors of the building did not have exterior walls yet! – ISI was created to help build the Arpanet, the ancestor of the internet.

At the time they leased the 12th and last floor of the building and are now the main tenant of the South Tower (only 3 floors to go!). Today, their computers still have the best view overlooking the Pacific Ocean, but the tech scene on land looks quite different.

Even USC has expanded in the area since ISI was established, with the creation of the Institute for Creative Technologies (ICT) in 1999, a University Affiliated Research Center originally funded by the US Army.

While the San Francisco tech space is perhaps most identifiable by the iconic Apple logo, Los Angeles, true to its eclectic character, boasts a not-so-subtle bright yellow emblem with a ghost: Snap, former Snapchat, one of the main success stories of the area.

Spanning from Santa Monica to Playa Vista, Silicon Beach is now home to over 500 technology companies, the likes of which include tech titans such as Google, YouTube, Amazon, Facebook, TikTok, Hulu, and Postmates. Multi-billion-dollar acquisitions like Honey and Oculus have cemented Silicon Beach as a major player in the global tech industry, a far cry from the region’s origins.

Google has been a harbinger of Silicon Beach’s growth. It established its first LA office in Santa Monica in 2003, subsequently attracting other tech companies to the area. It then launched its new Venice campus in 2011 — three adjacent buildings, including the Frank Gehry-designed Binoculars Building, with 100,000 square feet of office space. In 2018, Google expanded in a repurposed 1940s hangar office building, the former Spruce Goose hangar, in adjacent Playa Vista.

Once again, smaller companies followed suit and now possess sprawling campuses with stunning architecture, like Amazon’s ongoing 620 million expansion in Culver City. Facebook and YouTube are in Playa Vista, and Hulu and Twitter in Santa Monica, with Venice still at the heart of the region.

This expansion was a natural one, as explained by Daniel Lee, Culver City’s mayor, “Consider Sony, which has been in Culver City for 20 years. A lot of the other smaller companies that complement movie production came here because Sony is in proximity, so they can work together and exchange information, either on the same network or physically.” He elaborated, “There weren’t a lot of active outreaches to get the specifically large companies here. To some degree, some of the newer media companies like TikTok – also established in Culver City – want to be closer to older media to be taken seriously sooner.”

Santa Monica has also seen major growth and diversification in their technology sector over the past decade. As of 2022, 3,166 businesses operate in this industry in Santa Monica, employing 29,000 employees, 37% of the city’s workforce (and 63% of its quarterly payroll!), and generating roughly 2 billion dollars in quarterly payroll. Snap – who started in nearby Venice – is now headquartered in Santa Monica and the largest private employer in the city at about 2,200 employees.

Jennifer Taylor, Santa Monica’s Economic Development Manager, explained the expansion of Silicon Beach in recent years: “We have a lot of traditional L.A.-type industries that had a long-term presence in Santa Monica, but we have seen evolution with tech companies in the last four or five years, with crossovers between disciplines: tech confluence with healthcare businesses, fintech businesses, and a lot of tech businesses mixed with another industry.”

The video gaming industry, the perfect mix of tech and entertainment talents, is very robust in Santa Monica, led by Activision Blizzard  – Candy Crush, Call of Duty, World of Warcraft, Guitar Hero – headquartered in the city since 2008.

GoodRx, another crossover company, marries tech with healthcare to provide affordable prescriptions to consumers across the globe.

Santa Monica is particularly attractive to companies given its proximity to ​​investment opportunities:  the city’s entrepreneurial spirit attracts millions of dollars in funding, with venture investment rising to $7.8 billion in 2020, an ideal environment to foster technological innovation.

Taylor elaborated: “We asked why companies choose to move to Santa Monica, and they said because of the quality of life and the proximity to highly skilled workers. They also cited the ecosystem where employers have access to venture capital that is right here. We have heard that repeatedly from businesses.” The Santa Monica Chamber of Commerce has taken an active role in recruiting new companies, convincing industry leaders and commercial brokers to join the growing tech and creative sector.

Silicon Beach’s maturing economy has led to various projects and initiatives to make the life of tech employees easier. Culver City installed protected bus and bike lanes to improve accessibility to and between many tech companies, and their clean power lines have helped meet the demands of green initiatives launched by companies like Amazon and Apple.

Other industries have capitalized on Silicon Beach’s growth: global law firm Goodwin established a Santa Monica practice in 2019 focused on private equity and technology, adding several early-stage technology partners to their group in June 2022. Real estate has also seen sustained growth in the area in response to strong buyer demand from tech employees seeking homes near their offices.

So, can anything stop Silicon Beach’s expansion?

Yes, unfortunately. The region is limited by its land. Santa Monica is a small city, only 16 square miles, and the local construction code prevents building more than 6 stories without a special permit. Successful companies tend to migrate South – expanding Silicon Beach’s limits – in areas away from the beaten path. This happened to Ring, the video doorbell camera company, who started in Santa Monica, got acquired by Amazon, and recently built a campus in Hawthorne near SpaceX, a 35 minute drive on the busy 405 highway – on a good day – from its mothership.

“Space is our biggest challenge to retaining businesses, admitted Taylor. Some companies start to incubate here and need to leave. We are just glad that they can stay in the region because it benefits everyone, even if it is not in the city limits. It is an opportunity for workforce development, venture capital, and investment.”

Silicon Beach pioneer USC ISI also has plans for expansion, with the goal of doubling its workforce in the next 5 years – all while staying in their Marina Del Rey headquarters – and to be an active player in the growth and expansion of this Southern California tech hub.

Published on February 1st, 2023

Last updated on May 16th, 2024

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