‘101 Corridor’ Becoming Vital Route to Cyberspace
From the hardware that makes the Internet work to the World Wide Web sites that drive its popularity, San Fernando Valley firms are pushing the frontiers of cyberspace in both content and technology.
In the West Valley, a dynamic technology complex is fast taking shape around a core of traditional telecommunications and defense firms, giving rise to a thriving area known as the “101 Corridor” that produces many of the switches, connectors and high-speed lines that make the Internet run.
At the other end of the Valley, meanwhile, traditional entertainment giants like Walt Disney Co., Universal Inc. and Warner Bros. are on the cutting edge of Web site development, creating a talent pool that has spawned and staffed a growing number of independent Web-site operators and developers.
The dynamic developments at both ends of the spectrum have helped make the Valley one of Los Angeles County’s top centers for Internet activity, say high-tech analysts and entrepreneurs.
“Between the studios on the east end of the line and the communications and technology companies on the west end, there’s a lot of Internet applications companies springing up,” said Massoud Entekhabi, a partner in the global technology group at PricewaterhouseCoopers LLP.
Growing numbers of hardware and Internet service-related companies have sprung up in the last few years along the burgeoning 101 Corridor, which runs along the Ventura Freeway, roughly from Tarzana in the east to Camarillo in the west.
The earliest players in the hardware field--and now some of the Valley’s strongest Internet companies--include the likes of Xylan Corp. and Tekelec, both makers of networking switches and both based in Calabasas.
Xylan, which was recently acquired by France’s Alcatel, boasts a client list that includes IBM. Tekelec’s customers include such telecommunications giants as Bell Atlantic, Nynex and Vodafone. Both companies got their start making computer networking switches, but more recently those parts have found their way into backbone systems that power the Internet, Entekhabi said.
“These backbone companies are the most mature because they sell other things, too,” he said. “It’s not just Internet--it’s everything. Their applications are broader than just Internet.”
But around this core of more mature companies, a new generation of firms that specializes exclusively in Internet hardware and technology-related services is developing, said Rohit Shukla, chief executive of the Los Angeles Regional Technology Alliance.
“All these [Internet-exclusive] companies are probably less than 5 years old,” Shukla said. “They’ve all been staffed by entrepreneurs who have done this before.”
Examples of this new breed of Internet firm include Camarillo-based ACT Networks, a developer of technology that enables voice communication over the Internet, and Westlake-based NetZero Inc., which provides free Internet service to subscribers willing to be targeted by advertisers.
Accelerated Networks, a venture-backed firm that recently moved from Westlake Village to Moorpark, develops digital subscriber line, or DSL, technology that can move data over traditional copper phone lines up to 10 times faster than today’s quickest modems.
The West Valley’s high-tech complex has also given rise to Sandpiper Networks Inc., a venture-backed firm with a new model for Web site operators. Sandpiper, which recently moved from Westlake Village to Thousand Oaks, has established a network of 400 Internet servers in five countries that host “mirror,” or duplicate, sites for its clients’ Web pages, giving Web surfers faster and easier access to those pages, said CEO Leo Spiegel.
Since it began taking customers in October, Sandpiper has signed such clients as E! Online, Intuit, the Los Angeles Times and NBC, he said. Many of the technology-intensive companies are attracted to the West Valley because of its relatively affordable housing, good schools and low crime rates, which are all desirable among the young engineers and executives that typically staff such start-up firms, analysts said.
The availability of open, campus-like office space favored by many high-tech companies is also a factor, said Brad Jones, a partner at West Los Angeles-based Brentwood Venture Capital, which has invested in Sandpiper.
“High-tech companies tend to locate where there’s high-tech office space,” Jones said. “Camarillo has a lot of high-tech office, and so does Westlake. Places like Warner Center are built out. High-techs, if they’re start-ups, try to get cheaper space.”
At the other end of the Valley, meanwhile, a more content-oriented complex is developing around the established studios in Burbank, Universal City and increasingly in North Hollywood.
One of the area’s biggest anchors in the content arena is Disney, which bases its Internet empire in North Hollywood.
“The [East] Valley has always been an entertainment hub, so spinning out from Burbank to North Hollywood is not a big deal,” said Shukla. “It’s just an availability of space, so it’s not surprising you find entertainment-related [Internet] companies cropping up in that part of the Valley.”
While Disney has been the most aggressive of the East Valley’s three studios, Universal and Warner have been less assertive in the area, according to analysts. In fact, Universal recently sold its stake in animalhouse.com, a Universal City-based Web site targeting college students, to its partner in the venture, Hyundai Internet Technologies, said animalhouse.com chief David Hankin.
Launched last September, the site now has about 1 million registered users and does “millions of dollars” in revenue each year, said Hankin, who, in an example of studio-trained people moving out to smaller firms, came to animalhouse.com in April from Sony Online Entertainment.
Further to the west in Sherman Oaks, CarsDirect.com, a direct seller of new cars over the Internet, employs about 85 people and is adding about 10 each week, said co-founder Scott Painter.
The company is a spin-out from Pasadena-based Idealab, a well-known incubator of high-tech start-ups. CarsDirect.com launched its Web site in December, and its sales volume has doubled about every month since, Painter said.
The company expected to sell about 700 vehicles in 49 states in May, and expects to sell as many as 25,000 this year. Painter said he was attracted to the Valley by the area’s good environment for content-based companies.
“The Valley is a phenomenal area for talent,” he said. “You’ve got really good access to talent and creativity, and that’s what’s going to make these sites soar. Our creative talent is all out of the entertainment companies.”
As a case in point, he said, CarsDirect.com has hired “most of its Web development team” from Imagistic, a Web page developer that has done extensive work for Disney on the Internet.
“CarsDirect.com has definitely tapped into the entertainment community and the experience and insight that these people have gained in working in an entertainment environment, and translated that into an e-commerce environment very successfully,” Painter said.
