Few entrepreneurs go hunting for venture capital while eight months pregnant. But in the land-rush environment of the Internet, expectant mom Laurie McCartney knew she couldn't afford to delay the birth of her online business, EStyle.
Besides, who better to pitch a retail site catering to moms-to-be than its pregnant chief executive? Of course it didn't hurt that McCartney also had a Harvard MBA and strategic planning experience with Walt Disney Co., the big daddy of consumer marketers.
Now armed with $15 million in venture capital, a management team packed with fellow Disney expatriates, an internationally recognized spokesmom in supermodel Cindy Crawford--and McCartney's infant son Jack plugging products on the Web site--L.A.-based EStyle is looking to grow its first-born e-tail store, Babystyle.com, into the premier online site for upscale maternity clothes and baby gear.
"We want to develop an emotional relationship with the consumer," said McCartney, 32. "[Our strategy] is very Disney-esque in that way."
Whether she can emulate the success of her old employer is far from certain. Babystyle isn't the first, the largest or the cheapest online mom-and-baby store.
What's clear is that a new breed of entrepreneurs such as McCartney--folks who cut their teeth in fields such as entertainment or consumer marketing rather than computer programming--are turning Southern California into one of the most fertile hubs of e-commerce outside Silicon Valley. In the first half of 1999 alone, venture capitalists invested a record $1.1 billion in young Southland companies, primarily in Internet start-ups.
In addition to EStyle, this year's venture winners include NetZero, CarsDirect.com, Digital Entertainment Network and BizRate.com. Those Southland firms are engaged in advertising, shopping, entertainment and consumer information--content and commerce applications rather than pure technology. The nation's hottest Internet incubator, Pasadena-based Idealab, has launched more than 20 mostly consumer-related sites in just the last three years.
Industry watchers say these companies signal a new milepost in the digital economy. Silicon Valley's technical wizards dominated the construction of the Internet superhighway. Now L.A.-based entrepreneurs such as McCartney, trained in the entertainment and consumption capital of the world, are beginning to drive it with consumer-oriented sites such as EStyle.
"Silicon Valley laid out the blank canvas," said Tim Draper, a Bay Area venture capitalist whose L.A.-based Zone Ventures affiliate has invested in EStyle and more than a dozen other Los Angeles-area Internet start-ups over the past year. "They developed this great platform for all the creative people in L.A. to do their thing."
Indeed, Draper and others predict L.A.'s entertainment juggernaut will become a powerhouse of Internet content creation, as it has done with all previous media.
With the technological infrastructure of the Internet now firmly in place, the market phase of the new medium has begun in earnest. "Dot-com" fever drove the stock market to new highs this year as entrepreneurs developed new business models to sell products, services, entertainment and information in cyberspace. Online retailing alone is expected to reach $36 billion in 1999, a 145% increase over 1998, according to Boston Consulting Group.
Because the Internet allows buyers and sellers to meet online, these e-tailers and dot-coms could be located anywhere. But experts say Southern California's critical mass of creative, marketing and technical talent has uniquely positioned it to ride the consumer phase of the Internet.
Many Skills in Labor Force
Online postage purveyor Stamps.com, for example, was created by three UCLA MBA buddies who concluded that the Southland would be the perfect launch pad for their Santa Monica-based start-up. Rents are cheaper than in the Bay Area, and technical workers are plentiful and less mercenary than in Northern California.
"The universities and aerospace industry have created an abundance of talent here," said Jeffrey Green, a Stamps.com co-founder and vice president of marketing. "And once you get them, it's easier to keep them."
But the Los Angeles region's greatest strength is undoubtedly the creative and marketing muscle in its entertainment industry. Just as Microsoft Corp. fueled other software activity in the Pacific Northwest, and alumni of San Diego's Hybritech sparked a mini-boom of spinoffs that turned that city into a center of biotech, L.A.'s entertainment companies are already fostering the next generation of Internet companies.
Consider that McCartney's alma mater Disney already has become something of a training ground for e-commerce entrepreneurs.
