LA's Top VC Says These Are the Hot Trends in Silicon Beach

November 20, 2017

LA has earned a significant amount of attention as a hotbed of innovation and investment. With heavy hitters like SpaceX and Snap calling Los Angeles home, some would say the city is having its moment. Mark Suster, General Partner at Upfront Ventures, says LA isn't having a moment, it's "having a decade". Suster explains why it's no surprise the city is so attractive right now.

Los Angeles is the 3rd largest VC-backed ecosystem. The General Partner at the largest and oldest VC firm in LA says it makes sense that there have been a number of significant achievements in sciences in the city, in fields such as robotics and aerospace, because of all the top engineering programs right in its backyard.

Suster also breaks down the three hottest trends for 2018. He names cryptocurrencies, machine learning and A.I., and VR/AR. Upfront was also an early investor in Starbucks, but Suster says machines are eventually going to put Starbucks baristas out of business.

FULL TRANSCRIPT

MALE_1: The same is true of crypto.

MALE_2: Right.

MALE_1: But we've gotten way over our skis in terms of valuation. No one even understands it. I mean, people understand it, but the market at large that's investing, they don't know what they're investing in. Their momentum because it's going like this. We, we [OVERLAPPING]

MALE_2: Right. Get rich quick. [OVERLAPPING]

MALE_1: Better keep investing right. So you know it's the greater fool theory. Right? Like I'll invest because I know I can get out to a greater fool in four months, but so that's one big area. And so you hear people talk about Blockchain, you hear 'em talk about crypto, you hear 'em talk about ICOs. The truth is Blockchain is very interesting technology, but it's not gonna solve the world's problems. Right? It's a very specific type of database, and there are many types of databases. It just happens to be buzz worthy. The second thing everybody's talking about is machine learning and AI.

MALE_2: Right.

MALE_1: And so nobody can get through a pitch. If you have 25 slides in a deck, you have to say machine learning 12 times by slide 4 or you feel like you failed. Right? And it's just nauseating. Uh, machine learning is real. AI is real. It's changing the way things are gonna be done with, I'll just give you one example, okay? So a company comes in and they're applying machine learning to writing articles. And so I read these articles on this new restaurant opened on the west side of L.A. by this star chef who used to work at this restaurant now works at this res- And you read the article and you're like, "Wow, that sounds like a great place," [OVERLAPPING]

MALE_2: Right, AI.

MALE_1: Generated by a computer. And they just know the signals of what to include in an article, and then they look at what people read, and how much they consume it, and do they click, and they perfect the algorithms so the articles get better. This is one example, second example, AI meets robotics. Uh, I just saw a pitch this week for. So we were early investors in Starbucks by the way. Prior to our fund, my partners funded Starbucks when it was a startup. [NOISE] We just saw a pitch for a company that has a robotic arm that can make, uh, cappuccino, espresso, macchiato, mochas. And so you go up to this kiosk, you swipe a card, you place your order, and this arm just goes and does it all. So we're talking about how automation is gonna drive truckers out of business. Automation is gonna drive Starbucks baristas