P&Q: The Los Angeles area has become well-known for “Silicon Beach,” a wide swath of tech startups that have produced firms like Snapchat and Hulu. Why has Silicon Beach been so effective? What do see as the future of this startup scene and how does it compare against Silicon Valley or New York? How does Anderson tap into this network of startups and established firms?
AO: Let me correct you on a misconception. I believe that when people think technology, they tend to go to Silicon Valley. But there is more technology here in Southern California. This is where defense and aerospace got started. If you think about it, the reason that firms like Tesla and SpaceX located down here was for the depth of aeronautical engineers and experienced engineers with that type of knowledge. If you go all the way to Pasadena, you get to the Jet Propulsion Laboratories and the kinds of firms of that come out of that technology. If you move a little bit further in LA and go to the broader metro area like the West Valley, there are an awful lot of established middle market ventures that grew out of defense and aerospace industries. The problem is, LA is so huge. It doesn’t have the concentration and density that you see in San Francisco, which is only 20 square miles. You could drop it into the San Fernando Valley and have room to spare. When you think about it this way, you realize that a big constraint is being able to get around.
We’re fortunate now that a lot of people are noticing what is going on in the so-called Silicon Beach. We know that one of the big ingredients that makes this area very attractive is the presence of an amazing set of universities, not unlike Stanford and Berkeley. Here, there is going to be a wide group of firms starting here now that speak to what I am going to call the digital content dollar shave club of consumer-facing technology-enabled businesses that use entertainment. You must have heard about the recent exit of the Dollar Shave Club that got sold to Unilever for a billion dollars. Anderson folks were part of that deal (The chief operating officer was an Anderson MBA). You’ve heard of Hulu. Their technology is disrupting the television space and the CEO is an Anderson MBA. When SnapChat (Snap, Inc.) goes public at the current valuation that people are talking about, it will increase the effectiveness of Silicon Beach as a place because we will have a very significant valuation and some exits from those that came down here to build. The big thing that I think is going to make a difference is the tech- enabled consumer entertainment digital content space that has the comparable advantages of the Disneys of the world, along with all the support networks — the support companies that deal with them in the movie business — is going to be a comparative advantage that other places just don’t have. It’s huge. When you have a valuation or exit like Snap, it will instantly create the millionaires that have the money necessary to attract others from other spaces to come here.
On a smaller scale, I see that happening with smaller exits that are being sold to other companies. When startups like Snapchat and Hulu, have a little liquidity event, they create the kind of wealth that you see in Mountain View or Palo Alto that will help the future startup scene considerably. I think that we will compare quite favorably against Silicon Valley and New York City which are just as expensive in terms of collateral assets that people need to live and work…but a few exits would be necessary for that.
Anderson taps into this network of startups and established firms. We are the place where companies look for talent and students can be part of internship programs to work in these companies. In b-to-b and b-to-c, I see a lot of work, particularly with the presence of medicine at UCLA, and the success we have had working with the digital health world as well as the entertainment world. I want to emphasize that it’s just not just that we know about movies and TV and everything that supports that, but there are also areas in aerospace and defense-related technologies that are creating improvements in digital health as a result of UCLA’s and Anderson’s strong presence here.
P&Q: Anderson offers 24 courses in entrepreneurship through the Price Center. What do you see as the strengths of your entrepreneurship curriculum? How is it different than what you might see at another MBA program, particularly in terms of your philosophy towards entrepreneurship?
AO: There is an entrepreneurial approach to business. We call it an “entrepreneurial mindset.” We believe that whether it is a startup or a family business, the idea is to think about how you recognize and successfully manage developments and opportunities that can appear from virtually anywhere.
You have to understand the external environment in which these opportunities arise so you know how to attack them. It is the entrepreneurial manager, as opposed to the administrative manager, who will combine leadership with management that is properly tempered by a vision of changing something in the world as opposed to managing what others have created.
A lot of our students, therefore, are exposed to what I call “active learning approaches.” We have a lot of courses, you’re right. In the end, the content pales in comparison to the way in which people need to go out and do something. That is why we established the accelerator and have one of the better known and better-established field study programs (what we call our Applied Management Research program) for our students. This is our capstone experience. So a big part of our curriculum is therefore being active with a combination of faculty who have connections and experiences who are able to bring into this community a set of ancillary resources that are collateral to the instruction and assist in this process.
By adopting an active learning approach, one that tries to leverage relationships with the rest of the campus, we can have a rich experience. Being in LA, we are able to bring on a real set of opportunities for students to work with and interact with folks who are doing big things not only in Silicon Beach, but middle market companies that bring a variety of experiences in terms of the emphasis primarily in technology like consumer-facing ecommerce and retail.
For example, all you need to do is stroll along a few of those streets in Venice and you’ll be able to see an awful lot of companies that have taken the idea of consumer-facing technology-enabled business concepts that align with the needs of society. Here in Los Angeles, we have the largest collection of middle market companies, I believe, in the country that creates experiences that differentiate the sector.
Let’s not forget the export business. If you go all the way out to Long Beach, think about everything that is supply chain there. There are a lot of businesses that are right in the middle of reaching audiences and customers that have been around for a while and are part of the legacy infrastructure that is right now in transition. By that, I mean that many middle market companies are subject to strong finance equity world. Not venture capital, per se, but private equity that works in this space that are looking to find management teams that can transform many of these companies (that are doing quite well) to work on different platforms and establish some niches that can take them into the next generation of business ownership if you will. They are in transition and need an exit and some of our students are here to be part of that. So there is a buy out business that is growing dramatically in private equity firms.
P&Q: Tell us about some outside programs and extracurricular activities that Anderson offers to help MBA students gain entrepreneurial skills and mentoring outside of the classroom?
AO: Even though there are a lot of courses, you need to take the fundamental ones, 295A and 295D, and you can complement that with Entrepreneurial Finance, Entrepreneurial Operations, or Entrepreneurial Marketing. In those courses, students get to play out an active learning role if they do the business creation option as part of their applied management research project.
Along the way, many of them might want to participate in some of the entrepreneurial activities that are sponsored through the Entrepreneur Association. They might be active, for example, in our Entrepreneurial Leadership Development Program. They may be part of the Deutschman Fellows or compete in the Knapp Venture Capital Competition. They may venture into some of the executive education programs that the Price Center offers, distinguishing themselves as teaching associates for the Management Development for Entrepreneurs or the Entrepreneurship Bootcamp for Veterans with Disabilities.
In a sense, bring their consulting skills to be able to work with entrepreneurs who are having, for example, coding problems and their challenge is to help them. So students can be part of a consultative relationship with an entrepreneurial team that’s trying to grow something and they get to work with them. I think that’s a unique experience. The Entrepreneurial Leadership Development Program was affiliated with Vistage. It is the group not unlike IPO and is very powerful and successful. We have dozens of extracurricular activities involving speakers and entrepreneurs who can be part of a mentor arrangement. The Price Center Board of Advisors is engaged in activities with student members of the Entrepreneur Association, where we host something we call Lunch or Dinners For Eight, where board members can share experiences and advise students.