Q&A

J2's Hemi Zucker says quiet L.A. tech establishment to play bigger role

Hemi Zucker, CEO of the company that owns eFax, IGN and other brands, hopes to acquire more L.A. start-ups

Hemi Zucker watched Hollywood transform from what he saw as a "seedy, kind of dead" afterthought to a thriving neighborhood. Now, he’s noticing the same evolution in the Los Angeles tech community.

No longer does he get odd stares when he mentions to prospective hires that he runs a tech company in Los Angeles.

"That era of awkwardness is over," said Zucker, chief executive of J2 Global Inc. "There’s no one raising eyebrows now because L.A. is on the map."

J2, which provides technical services to businesses and owns several news websites, has a market capitalization of $2.7 billion, making it the most valuable publicly traded technology company in Los Angeles other than video game maker Activision Blizzard Inc.

Zucker, who rarely makes appearances in the media, recently spoke to the Los Angeles Times about his plans to carve out a larger profile in Southern California.

J2's growth over its 19-year lifespan has largely been driven by acquisitions -- about 100 to date. And the increasing credibility of the Los Angeles technology community not only makes it easier for J2 to add workers, but also provides fodder for its expanding portfolio. Put simply, confidence in "L.A. tech" is boosting Zucker's optimism about J2's prospects.

"While our ambitions to grow are worldwide, we always feel more comfortable to grow with local companies," Zucker said. "If I had a choice between two companies -- one in New York and one in L.A. with the same valuations -- it’s way more easier to deal with a local company."

That's why he plans to be more visible locally and to keep an eye on companies innovating in areas such as advertising and media. J2 has considered using the $684 million of cash and investments it has amassed to start a venture capital fund, but Zucker said he'd rather go after "big fish" through acquisitions.

J2 was among the runner-ups to purchase Web hosting provider Media Temple, a Culver City company that sold to GoDaddy for about $100 million a year ago.

"Three to four companies of that size are on the block," Zucker said. "We get at least once a week a start-up looking for an exit. Not all from L.A. but some are."

He's also become involved in angel investing, served on the board of Glendale company LegalZoom and broadened J2's internship program.

Zucker began his career in his native Israel in finance roles at Motorola, which later moved him to the U.S. He joined J2 when it was a New York start-up called JFax. He secured funding from a Los Angeles investor with a suggestion that the small JFax team move west. They did, and Zucker stayed through a near-bust and has been riding a boom as CEO for more than six years. J2 expects to reach up to a record $600 million in revenues this year.

J2 went public in 1999, but its stock tumbled to below $1 a couple of years later. Acquiring its biggest Internet faxing competitor, eFax of Menlo Park, helped lead a turnaround. But Zucker recalls that few eFax engineers agreed to come to L.A. Only recently has selectivity been a part of hiring on the software development side.

"We had to be apologetic before when bringing people here: ‘Come and try it,'" Zucker said. "Now, we can take people looking for a challenge and a different kind of structure."

J2 employs nearly 1,500 people across 11 countries with plans to add at least 100 more workers and two more countries in the next few months. About two in three employees work on services sold to businesses, including Internet faxing, email hosting and online backup. The rest run advertising-supported websites, including online magazines AskMen and PCMag and video game news portal IGN.  

More than 350 employees are at J2’s headquarters in Hollywood, a neighborhood that Zucker cherishes for being “a good wild” and keeping him connected to the masses that flock to it.

Zucker is seeing signs within his own household of "Silicon Beach" and the rest of Los Angeles tech taking off. His son, Adam, a Yale University sophomore studying electrical engineering and computer science, wants to work in Los Angeles. He's already interned here at start-ups Vidme and Factual.

"L.A. is definitely becoming a stable, welcoming, attractive market," Zucker said before offering another example.

"Everyone's here every month," he said. "I used to have go to San Francisco to meet people. Now I say, 'Are you going to be in L.A. any time soon?' And they say, 'Yes.'"

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