Five LA start-ups that went big

Virgin Atlantic’s Business is an Adventure series touches down in LA this month, with the aim of discovering how great business ideas can become a success on the global stage. As Eleanor Ross discovers, the city has many fine examples of how it can be done...

Sometimes a company clicks, and its audience just gets it. Los Angeles is the perfect place for projects to kickstart, with plenty of VCs and unicorn start-ups. If you’re ever short of inspiration on how to push your business forward, here’s how some of the biggest names on the LA business scene got big.

1. Dollar Shave Club

What’s more tedious than having to pop out to the shops to buy a razor because yours has blunted? Well, quite. Dollar Shave Club capitalised on the tedium men face daily shaving and set up a mail order razor and shaving product company. 

Based in Venice Beach it was founded by Mark Levine and Michael Dublin. They started the company with their own investments and funding from start-up incubator Science Inc in 2011. Since then, seed investors supplied $1million of funding from groups including Shasta Ventures. By the time it had reached Series D funding, it had secured $75m. The company has 20 million customers, and, although its target clientele are men, 20 per cent of service subscribers are actually women. The company got big after a video Dublin made went viral - it crashed the server within the first hour. After it was up and running he enlisted friends and family to help supply the first 12,000 orders that came within an hour of the video. It now serves the US, Canada, and Australia.

2. TrueCar

An online resource for new and used cars, TrueCar makes the process easier for people who know nothing about buying and selling their cars. TrueCar claims it has purchased around two million cars from dealers - as well as making car dealing easier it also gives users access to a network of dealers who are certified. The company began in Santa Monica, LA, back in 2005, and has spread across the USA. It’s believed by TechCrunch to be one of LA’s six unicorn start-ups, or a business worth over a billion dollars. 

3. Tinder 

Our world is a busy one, which is how Tinder managed to go from 0-60 in the start-up space. We don’t have time to meet new people and we barely have time to date - Tinder has capitalised on this and has become a global phenomenon in the process.

Founded by a group of Californian students at USC, Tinder came about after Sean Rad, the founder, realised that "no matter who you are, you feel more comfortable approaching somebody if you know they want you to approach them." Tinder fills the gap in dating where people want to meet strangers, not people they already know. Tinder was seeded around different college campuses, and in 2013 won TechCrunch’s best start-up award. From there, the LA start-up boomed - the app is used in around 196 countries and was valued at around $1.35bn in July 2015 by Merryll Lynch. It’s HQ is currently on Santa Monica boulevard in West Hollywood.

4. Sonos

Electronics innovator Sonos is one LA company that’s been making waves for some time. It acts as a challenger to Samsung and other highly rated electronic products - founded in 2002,  the company was estimated to have raised £112m in venture funding. Investors include  Kohlberg Kravis Roberts and Redpoint Ventures. But what’s the USP? If a household has many Sonos products they can all connect together in the same household and each item has wifi connectivity. Headquartered in Santa Barbara, Sonos products are now available around the world, having broken away from the LA start-up scene. 

5. Snapchat

Snapchat has just signed a 10 year lease in Venice Beach, LA, making it a true part of the LA start-up scene. Like many of the world’s most widely used apps, Snapchat was created when Evan Spiegel, Bobby Murphey, and Reggie Brown met while they were at Stanford University. It’s USP? Allowing users to send pictures and galleries to friends that disappear after a few seconds. 

This became attractive as a solution to how incriminating pictures lingered on Facebook and other social media. Spiegel, who was studying product design at Stanford, tried making a social media app called PIcaboo but changed it to Snapchat later. It wasn’t popular at first - nobody could get their head around why you’d want impermanent photos. After launching it in Spiegel’s dad’s living room, the app grew from users sending 25 pictures per second in May 2012, to users having shared one billion by November 2012. Snapchat raised $485,000 in its seed round of funding and by June 2013 VCs had raised a further $60m and there were users around the world. By May 2014 700 million pictures were being taken and shared each day - it’s now worth $4billion. From a living room to the world, Snapchat is the perfect example of an LA business that exploded.

The first Business is an Adventure event, featuring Richard Branson and a panel of prominent LA business leaders, takes place in Los Angeles on February 18th. The event will be available to stream for free on virgin.com from 16:00 (PST).

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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