When you combine the massive L.A. entertainment industry with the slew of high-tech companies in Silicon Valley and Orange County, you get the perfect laboratory for producing multimedia businesses. "If there was ever a crucible in which the two things are fused together, it's the World Wide Web, because it's both a computer medium and an entertainment medium," suggests Norman Hajjar, the developer of Radio HK, the first radio station that broadcasts exclusively over the Internet. "This is where the computer melting pot takes place."
In many ways, the coastal strip of Los Angeles has become the Lower East Side for Hajjar's "computer melting pot." Drawn by cheap rent (a legacy of the aerospace-industry collapse), media-related businesses have crowded into abandoned factories, offices, and warehouses.
Hollywood also provides the business model that Internet companies like Hajjar's use. Just as a producer pulls a team of actors, writers, and technicians together to work on a motion picture, the new Internet companies skillfully combine people from the large local pool of talent -- freelance writers, artists, and musicians, as well as hackers -- to develop their innovative offerings. What's more, the studios, advertising agencies, theme-park developers, and other businesses in Southern California's entertainment-industry complex are all markets the digital-products companies can exploit.
* * *
The Sociology of Innovation
The biggest advantage of being in cities like Los Angeles, however, has less to do with customers in suits than it does with kids in jeans. At companies like Rhythm and Hues, whose credits include the animation effects for the hit movie Babe, the average age of the animators is 27.
"The real competition in the business now is for talent, and it's ferocious," notes Rhythm and Hues' founder John Hughes. "Our ideal person is someone who's very strong in math or engineering or technology and has a second degree in art, whether it is in photography or sculpture or illustration. Those people are very hard to find."
Cities, with their tolerance for experimentation, their nightclubs, concerts, and museums, and their lively singles scenes, lure young artists. The same streets that may seem like a dead end for aging construction workers and aerospace managers provide an ideal environment for ambitious young graphic artists, animators, and interactive-game designers. Indeed, even as Los Angeles, Chicago, San Francisco, and New York were losing residents in the early 1990s, young, well-educated people continued to flow into those urban centers.
Urban universities draw another kind of raw young talent to the cities. A recent survey of top graduate departments in such fields as biomedical engineering, electrical engineering, mathematics, computer science, and neurosciences found that the vast majority of them were located in a handful of urban areas, notably the Bay Area, Los Angeles, San Diego, New York City, and Boston.
* * *
Global Ties
Entrepreneurs who set up shop in major cities can tap one resource their country cousins cannot: an international workforce. That's one of the payoffs of the massive wave of immigration that hit key urban centers during the 1980s, when upwards of three-quarters of America's 10 million immigrants settled in a small number of urban states, with New York and California accounting for roughly half that total. Today 8 of the nation's 10 most diverse counties are located in the Bay Area, greater New York, and the Los Angeles area.
Many of the companies in the industries that now cluster in metro areas -- textiles, design, movie production, fine arts, graphics, and specialized trading services, for example -- rely on labor, capital, and expertise from around the world. At Rhythm and Hues nearly half of the roughly 170 employees are foreigners. And at Audits & Surveys, Sol Dutka's hires reflect the changing population base in the New York area, which includes many Russian Jews and Koreans, as well as other Asians.
For Dutka, the son of Czech Jewish immigrants, those newcomers provide an understanding both of foreign markets and of America's own changing demographics. "How many people in Greensville or Charlotte know about East Indians or Koreans -- both big markets?" Dutka asks. "How would you know there are five different kinds of Hispanics -- and each one is a different market?"
Besides helping to link urban businesses to the increasingly global marketplace, immigrants are rebuilding urban economies. They're reenergizing areas like New York's Long Island City and Flushing, where they're establishing companies in the food-processing and garment industries. But the place that's profiting the most from immigration is, once again, California. Not only have immigrant entrepreneurs and workers helped turn Los Angeles into the garment and light-manufacturing center of the country, but many are also beginning to bring new ideas to the industrial base. Today the Fashion Institute in downtown Los Angeles has students from 56 countries, and close to 60% of its students are Asian and Latino. The look of Los Angeles, the world's center for casual fashion and sportswear, reflects the aesthetics as well as the hard work of the newcomers.
