For much of the past quarter century, the San Fernando Valley has been treated and often thought of itself as the stepsister of Los Angeles, the butt of jokes and the place the rich and famous chose to avoid. Such resentments have been one of the key drivers behind the drive for Valley secession. Yet now, perhaps it’s time to rethink the idea of the Valley as perennial also-ran and consider a novel notion: the Valley as the vital new center of the city. Indeed, if you look at Los Angeles as a region, the Valley, not downtown, is rapidly becoming the fulcrum around which the economy turns. With the most rapid population and economic growth, particularly in technology and high-end services, occurring on the suburban fringe, the Valley is increasingly the one place that is convenient to both the historic core, the Westside and the burgeoning Nerdistan on the periphery. The Valley’s renewed strength can be seen in its office vacancy rates, which are in the single digits roughly half the rates in central Los Angeles. It can be seen in new development that is rising from the eastern edges of Burbank and Glendale to the western fringes of Calabasas. It can be seen in the fact that the Valley, in contrast to downtown, actually is adding companies to its array of Fortune 500 firms. This emerging status as what I describe as a “midopolis” is critical to understanding the incipient new role of the Valley. With the Red Line extension to North Hollywood set to open later this month, the Valley now has easy access to Hollywood and the immigrant-dominated central city. It has an emerging cultural district in NoHo, and a growing archipelago of sophisto hangouts from Studio City down to Encino that are turning Ventura Boulevard into a ersatz nouveau Beverly Hills. The new Hollywood Along with Burbank and Glendale, these areas are actually emerging as the center as well of Los Angeles’ entertainment district. The expansion of Disney’s facilities in the Valley, plus the increasing likelihood that DreamWorks SKG will settle permanently there, fuel this growth. At the same time, the west Valley is bristling with new development, reduced vacancy rates and young companies, in everything from technology to the Internet to business services. One key advantage there is easy access to the expensive, safe, sanitized places nerds like to inhabit; Westlake Village, Agoura Hills and Calabasas, for example, now rank among the 200 wealthiest communities in the country. But the Valley is not really about wealth. What it still represents, in an urban scene increasingly bifurcated between rich and poor, is the great repository of the middle class. At a time when only Shaq can afford a shack in much of the Westside, and the average home in the Conejo Valley goes for nearly $400,000, the San Fernando Valley continues to offer housing options that less-stellar folk can afford. But to make this ascendancy complete, the Valley now needs to impose its middle-class persona on the city’s political culture itself. Some may argue that the Valley already has had its chance, being the key region powering Richard Riordan’s two successful runs for mayor; he reciprocated by providing more access for Valley activists to the levers of municipal power. Yet Riordan was never a Valley guy. He lives in Brentwood and simply provided the hard-pressed homeowners, taxpayers and small businesspeople of the Valley an alternative to almost a generation of control by a downtown-dominated clique. He is still Big L.A.; the Valley is Little L.A. Time for Wachs? Looking at the 200l field, most of the candidates owe their backing to elements of the Big L.A. south of the hills. Few reflect Valley concerns, either. James Hahn is the second-rate scion to a South L.A. political legacy with a liberal and African-American orientation. Antonio Villaraigosa and, to an even greater extent, Xavier Becerra, reflect East Los Angeles and the emerging Latino political elites’ own search for civic dominance, as well as powerful connections to organized labor. Steve Soboroff is essentially Riordan Lite, a wealthy Westsider with a similar focus and political base. Mayoral aspirant Joel Wachs, however, is another story. He is Valley-bred and epitomizes the homeowner and taxpayer orientation of the place. He has a sharp eye for government waste and backroom deals, and little weakness for the municipal delusions of grandeur that seem natural on the south side of the hills. The time may be right for Wachs. If he holds the Valley’s vote, which accounts for close to half the total, and makes some inroads on the Westside, he could construct an unbeatable coalition. As mayor, he could consolidate the gains made during the Riordan years while challenging the power of entrenched interests. If Wachs can be elected mayor in 200l, the Valley’s political ascendancy will match its demographic and economic rise. Perhaps then, the Valley can end its war against the rest of Los Angeles. It can simply declare victory and go on to building a new, more middle-class-friendly L.A. in the Valley’s own image. Business Journal columnist Joel Kotkin can be reached via e-mail at [email protected].

EMPLOYERS OFFERING PREMIUM PERKS TO ATTRACT TALENT IN TIGHT JOB MARKET When Ed Garnett interviews prospective employees for Amgen Inc., he has an ace in the hole. It isn’t Amgen’s billion-dollar Epogen drug franchise, or the fact that the stock price has more than doubled over the past year, although those accomplishments certainly help to attract the finest talent to the Thousand Oaks-based biotechnology firm. What the vice president of human resources has up his sleeve is something entirely different: about 12 open slots in Amgen’s day care center, which are reserved specifically for the children of new recruits. “We had one guy (we wanted to hire) for whom it was a deal breaker,” Garnett said. “We had to find a spot for this guy’s child in our day care center (or he wasn’t going to come on board).” A spot was found for his child, and he joined the company. Amgen is not alone in designing benefits packages with appeal that goes beyond the pocketbook. In the increasingly fierce battle to lure the best and brightest and keep them employers are hauling out a new arsenal of weapons, benefits aimed squarely at workers’ quality of life. Dot-coms are offering concierge services that run the errands employees don’t have time to handle. At Universal Studios Inc., employees can schedule 15-minute massages right at their desks. And at Red Bull N.A., an Austria-based energy drink manufacturer that opened an office in Santa Monica three years ago, employees can avail themselves of free consultations on legal, financial or psychological issues. “There is this feeling that people are working harder than ever,” said Victor Hwang, chief operating officer of the Los Angeles Regional Technology Alliance. “Beyond that there seems to be some fundamental shift in people’s approach to the workplace. Quality of life is on par with strict compensation.” Amgen operates an on-premises car wash, a dry-cleaning pickup and delivery service, and takeout meal service for employees who don’t have the inclination or the time to cook at home. But the centerpiece of its benefits package is the day care center. So important is the center that on June 12, the company will cut the ribbon on a newly rebuilt and expanded facility that nearly doubles its capacity to 432 children. At 44,856 square feet, with 32 classrooms and 16 play yards, the facility is the largest corporate day care center in the country, according to Amgen officials. “We use it especially from an (employee) attraction-and-retention standpoint,” said Garnett. “As we grow, we can grow this benefit for employees with children.” Tight job market Hiring needs in the third quarter of this year are expected to continue unabated in Los Angeles County, according to a staffing report recently released by Manpower Inc., a Milwaukee-based recruiter. That will only exacerbate a worker shortage that many employers, particularly in high-tech industries, have been grappling with for close to two years now. According to Manpower’s survey, 34 percent of employers in L.A. County expect to increase their employee rosters in the period, up from 24 percent in the second quarter. In the Valley and the Westside of L.A., 39 percent of employers expect to add new hires, the report said. The scarcity of workers has sent many companies scurrying to find ways to distinguish themselves to potential applicants, and while signing bonuses, stock options and other monetary incentives are still high on the list of tactics, human resources professionals report they sometimes are not enough to do the job. Monthly meetings of the Northern San Fernando, Santa Clarita and Antelope Valley chapter of the Professionals in Human Resources Association draw one-and-a-half times as many attendees when the featured topic is recruiting, said Jenny Roney, a district chair for the PIHRA chapter. “It used to be that attorneys were the big turnout (when they spoke about employment law),” she said. “But last year and this year, the big interest is in how to attract employees. You can’t even get to retention because these people are so desperate to recruit them.” Public companies often offer similar bonus and option incentives, lessening the draw value of these rewards. Privately held firms say they need alternatives to compensate for the fact that they can’t offer traditional stock options. Getting creative with benefits Companies of all sizes report that, with demographic changes lowering the average age of employees, they are seeing worker priorities shift from perks that put food on the table to those that feed the soul. “When you talk about non-cash recognition and reward, a lot of companies are trying to create environments where employees are content and happy,” said Karen Jorgensen, president of Jorgensen HR, a human resources consulting firm in La Canada Flintridge. “I think over the last three years, we’re seeing a real focus, especially because of the unemployment levels, on best practices found in leading companies that have excellent retention rates.” Jorgensen said her clients are adding health club memberships and providing personal trainers, catering breakfasts and lunches for employees, and unbundling benefits packages to tailor perks to individual needs. “A benefit package might be, we’ll give you $5,000 in benefits, and you can choose to use it for graduate school or child care or something else,” Jorgensen said. At the Santa Monica offices of Red Bull, Director of Human Resources Dan Curtin said his privately held company can’t offer stock options so the benefits package has to compensate. In addition to paying 100 percent of the cost of medical insurance for employees and their families, three months ago Curtin (who was hired specifically to improve the company’s package) added an employee assistance program offering counseling in legal, financial and psychological matters. Red Bull also provides company credit cards, so workers can conveniently pay for work-related expenses without having to dip into their own pockets, and laptop computers to help ease the time strains placed on employees who spend a lot of time on the road. Now, Curtin is looking at the possibility of adding a concierge who would be available to run errands that employees don’t have time for. “That’s become vogue in a lot of dot-coms,” Curtin said. Depending on the region, salespeople at Red Bull might clock 50 percent of their time on the road. “And I want to find ways to make their lives easier,” he added. New-job daydreams Employers say the benefits are not just important to attract employees, they help to keep them as well. A recently released study indicates that employees think about leaving their jobs once a week, said Alysia Vanitzian, vice president and chief learning officer at Employers Group, an L.A. association that specializes in human resource services and products. “So if you’re the typical employer out there fighting for talent and fighting that fact that you’ve got people thinking how they can improve their circumstance every week, it behooves you to start thinking about ways to ease their quality of life,” Vanitzian said. Back at Amgen, the new day care center was designed with just such a focus. Developed with the help of the International Child Resource Institute in Berkeley and managed by child care specialists at Bright Horizons, the center offers such services as hard-to-find infant care, nursing rooms for new mothers and special toilets for potty training. Although it’s not a free benefit employees have to pay tuition for their children the rates are 10 percent to 15 percent below market rate, according to company officials. Amgen officials declined to reveal specific rates, but tuitions at comparable day care centers average about $585 per month, per child. That average doesn’t pertain to infant care, however, which is practically impossible to find at any cost. “It’s our staff’s children, and the ability to enhance the productivity of our staff by enabling them to not worry about their kids because the kids are right here in a high-quality facility is worth a lot,” Garnett said.

Ever since buying a Studio City coffeehouse called Jennifer’s last September, Mario and Shelly-Ann Martin have been trying to boost business through a series of comedy shows and spoken-word nights. They’ve tried open-mike nights geared at musicians, storyteller nights, and they even brought in professional comedians fresh off national circuits. The real success, though, didn’t happen until they changed the age of their performers by a decade or three. Two months ago, Jennifer’s started a children’s comedy night to fill some dead time on Friday evenings before the weekly music show. The performers range in age from 4 to 16. And Valley audiences can’t seem to get enough of them. “We were expecting mostly parents,” said Shelly-Ann Martin. “But it’s become bigger than we thought.” To the Martins’ surprise, the show, which runs every other Friday from 7:30 p.m. to 8:30 p.m., has filled the coffeehouse to its capacity of 45 people, some nights standing room only. The audience is usually a mix of parents, their friends and people who just like to see kids telling jokes. And the kids do make the crowd laugh, putting on adult-like performances with a child’s take on life. “One 7-year-old girl last week went up and said, ‘I don’t understand boys. They’re different,’ said Shelly-Ann Martin. “Some of them are funnier than the professionals.” The kids’ comedy nights were the idea of Toni Attell, an acting teacher who had been putting on a similar show at a nearby coffeehouse, The Kindness of Strangers. That establishment closed earlier this year, so Attell asked Mario Martin if he’d allow the show to go on at Jennifer’s. Attell had been holding the nights at Kindness on Wednesdays but never really drew a crowd, or many kid performers. “A lot of kids couldn’t come because it was a school night,” Attell said. She brought a group of five children enrolled in her acting class to Jennifer’s for their first show in April. Soon, some friends and siblings of the core comedians decided they wanted in on the action. Now, a typical night attracts between seven and 15 budding comedians. The kids prepare their own material, though some get help from parents. Attell preps them before the show, peppering them with tips on stage presence and helping shape some of their material. The show starts out with some group improvisation, then each kid is given two to three minutes of solo time to make the audience laugh. “(Last week), an 11-year-old boy was asked to do improv as a woman with PMS,” Shelly-Ann Martin said. “Obviously, his mother goes through it, because he was perfect.” While the occasional performer suffers stage fright and refuses to go on, most, with the encouragement of Attell and the others, make it through their acts. “The moment they get up and they get claps and admiration, it makes them feel really cool,” Attell said. While they applaud the comedy night’s jolt to the kids’ self-esteem, the Martins are also happy about the way the show has jolted sales. “They’ve all done very well for our business, and it’s introduced the place to people who would never hear of it otherwise,” Mario Martin said. “People start to dribble in from the night before.” Until January, the coffeehouse, which has been at its location on Moorpark and Tujunga avenues for 15 years, was only open in the mornings and afternoons. But Mario Martin, a musician, decided he wanted Jennifer’s to be a place where entertainers could hang out and try new stuff. “We had a lot of people who said, ‘Don’t open at night, it’s a waste of time,'” Mario Martin said. He went forward anyway. So far, it has been difficult to find musicians willing to play during the Friday music nights, though between 20 and 25 would-be comedians typically show up for the Thursday comedy nights. None of the performers are paid in fact, they actually have to pay the house by buying at least two drinks if they want to perform. Both the music and comedy nights have struggled to find an audience beyond the performers. While the shows are all free for the audience, the Martins make money selling mochas, cappuccinos other coffee drinks. The nightly shows have yet to be a financial success, but Martin said they are no longer a money loser at least enough people are now buying drinks to pay the extra expense of keeping the shop open at night. With a dozen or so coffee establishments in their immediate area, from Starbucks to other mom-and-pops, the Martins’ weren’t alone in offering coffee or comedy until they struck upon the kids. “It is quite a bit different,” said Mario Martin. “Those nights are great. The kids come with their parents and sisters and friends.” And most important, they buy coffee.

The legislative outlook for California businesses at mid-session following the June 2 deadline for bills to pass their house of origin is looking much sunnier than the outlook of a year ago. Far fewer anti-business bills are on the table, and a number of pro-business bills are still alive, including several tax credit and infrastructure spending packages being pushed by business interests. It’s a stark contrast to last year, when California companies were facing dozens of bills that threatened to raise the cost of doing business, only to be saved by vetoes from Gov. Gray Davis. What’s changed, of course, is that legislators have realized that Davis intends to stick to his centrist path, which is effectively holding the more liberal, anti-business tendencies of the Democrat-controlled Legislature in check. “The governor doesn’t want a whole slew of anti-business bills; he showed this last year and again earlier this year with his veto pen,” said Tony Quinn, a Republican political analyst in Sacramento. “The legislators now understand he’s not going to sign these bills, so they are not introducing them or are stopping them on their own in committee.” As of the June 2 deadline for bills to pass their house of origin, less than a dozen major anti-business bills had made it through. What’s more, the $12.3 billion state budget surplus is making it easier for Davis and legislators to hand out goodies to businesses, like tax credits, and to push for long-delayed infrastructure projects. As a result, business lobbyists are more optimistic than they have been in years about getting tax breaks approved, including a hike in the manufacturer’s research and development tax credit. “The budget surplus is helping us a lot,” said Gavin McHugh, senior vice president of the California Manufacturers and Technology Association. Nonetheless, business lobbyists are still concerned about some of the anti-business bills that have made it through, particularly a proposed $2.7 billion hike in workers’ compensation benefits and a $700 million unemployment insurance tax increase. Coming in a year when businesses across the state have seen an average 20 percent increase in their workers’ comp insurance premiums, the 15 percent benefit increase proposed in SB 996 by Sen. Patrick Johnston, D-Stockton, could hit the bottom lines of businesses very hard. The bill, if passed, would increase the amount of money that businesses would be required to pay injured workers. Labor and trial lawyer lobbies are vigorously pushing for the bill. “It’s moved along nicely so far and we think it’s going to pass,” said Tom Rankin, president of the California Labor Federation. But Gov. Davis vetoed a similar bill last year that called for $2 billion in benefit increases. In his veto message, Davis said the amount of the benefit increase was too large. SB 996 is now in a joint Assembly-Senate conference committee, where labor, business, trial lawyer and insurance interests are trying to hammer out a compromise. Observers believe a smaller increase this year might win Davis’ approval, especially if it were to be coupled with some cost-saving reforms. Employer groups are also concerned about a bill that would expand the scope of the Family and Medical Leave Act. SB 1149, by Senate Insurance Committee chair Jackie Speier, D-San Mateo, would make the existing law apply to businesses with 20 or more employees, instead of the current threshold of 50 workers. “This is a big threat hanging out there,” said Fred Main, senior vice president of the California Chamber of Commerce. “It could really hit thousands of small businesses that can’t afford to have people out on long leaves. Such decisions are best left to be handled on a case-by-case basis.” Businesses already have dodged one bullet when it comes to family leaves. Earlier this year Davis vetoed a bill by Sen. Tom Hayden, D-Santa Monica, that would have expanded the scope of the Family and Medical Leave Act to allow workers time off to care for people outside their immediate families. Tax breaks on the table On the other side of the ledger, California businesses appear likely to get two major tax credits they have long pushed for; both are included in Davis’ latest budget proposal. One is an increase in the allowance for “net operating loss carry-forwards,” in which companies can reduce their taxable income by deducting operating losses suffered in previous years. AB 1774, by Assemblyman Ted Lempert, D-Palo Alto, would increase the net operating loss carry forward from the current 50 percent to 65 percent, starting in 2004. The other tax credit measure calls for an increase in manufacturers’ research and development allowance from the current 12 percent of total R & D; costs for new products to 15 percent. “Both of these bills are very important to high-tech companies, which often have high start-up and development costs,” said McHugh of the California Manufacturers and Technology Association. “We’ve been trying for years to get them through and we think that with the budget surplus, this might just be the year.” Billions for transportation In his budget proposal, Davis set aside $5 billion in one-time funds for major transportation projects throughout the state. But some Democratic legislators have been pushing for more transportation spending. A compromise bill, SB 315, by state Sen. John Burton, D-San Francisco, is now in a joint Assembly-Senate conference committee. “We think the governor’s proposal is a very good start, and we are fully on board,” said the California Chamber’s Fred Main. “But we have a $90 billion problem that needs a more long-term solution. And that is what we’re grappling with now in conference committee.” Business interests are also pushing for a 10-bill housing package designed to ease environmental and legal restrictions on building new housing projects. Their main argument turns on the critical shortage of affordable housing in the state. A key target of these bills is the California Environmental Quality Act, which allows project opponents to sue on environmental grounds to stop or slow housing projects. However, environmental activists are putting up stiff opposition to these new measures. “We are extremely concerned about business and builders’ efforts to ‘streamline’ CEQA,” said Sandra Spelliscy, general counsel for the Planning and Conservation League, a Sacramento-based environmental lobbying group. “What these business interests really want to do is get rid of CEQA altogether, and we’re not about to let that happen.” As of the June 2 deadline, four of the 10 bills in the package had passed their respective houses and were awaiting committee hearings in the opposite chamber.

When the Democrats come to town in two months for their national convention, much of the public attention is going to be focused on Staples Center and a handful of public events in the downtown area. But the real action is going to take place at hundreds of lavish private parties all across L.A., from studio backlots to tony Westside restaurants and even private mansions. That’s where the Hollywood elite and powerful business executives will gather to rub elbows with prominent Democrats and other VIPs from around the country, to make powerful new friends, strengthen political allegiances, and lay the foundation for future deals. “This is going to be one giant schmoozefest, the biggest thing this town has seen in many years,” said Hal Dash, president of Cerrell Associates, a prominent local lobbying and campaign firm that has long had ties to political conventions. “Every national political convention has this schmooze element, but L.A. is going to be in a league by itself because of the Hollywood connection.” The convention runs from Monday, Aug. 14 through Thursday, Aug. 17, but the partying begins with a huge official media party on the preceding Saturday night, Aug. 12, at the L.A. Department of Water & Power plaza in downtown L.A. That will be followed by 30 official delegation parties at hotels around the county on Sunday the eve of the convention. Those affairs will play a large part in the way L.A.’s image is projected around the world. But it’s the private parties that are causing the biggest buzz. They include: – A fund-raising and voter canvassing bash for the Hispanic Unity Caucus at the Playboy Mansion; – A party on the Hollywood backlot of Paramount Pictures hosted by California Gov. Gray Davis, dubbed “A Taste of California;” – Another Paramount backlot party, this one hosted by Louisiana Sen. John Breaux, which will be held on a set patterned after Bourbon Street in New Orleans; – A party at the Petersen Automotive Museum hosted by Chrysler Corp.; – A Sony Corp.-sponsored luncheon at downtown’s Union Station for Democratic governors; – A giant block party on Canon Drive in Beverly Hills planned and produced by Wolfgang Puck’s Spago for Missouri Democrat Richard Gephardt, the House minority leader, and other members of the Democratic Congressional Caucus that he chairs. For the visiting Democrats, these parties will present the mother lode of fund-raising opportunities, since Los Angeles has traditionally been second in total political contributions to the Democratic Party behind New York City. And for the studio bosses, business execs and celebrities throwing or hosting the parties, it’s a chance to influence the national political power structure. Boon to L.A. economy What’s more, tens of millions of dollars will be poured into the pockets of local caterers, party planners, restaurants, valet services and other local businesses. The cost to put on one of these parties can range from $20,000 to more than $200,000, depending on the size of the event and the number of guests. “You will see a tremendous amount of money pumped into the economy from these parties, more even than for a Super Bowl, which lasts only one day,” Dash said. Indeed, fully $5 million is being spent by L.A. Convention 2000, the private-sector host committee for the convention, on special events, chiefly the official delegation parties and the huge bash being put on for the media. The media party will include high-profile entertainment and a showcase of photos of L.A. taken by children, according to L.A. Convention 2000 spokesman Ben Austin. “The media party is going to be of immense importance because the media itself is the audience,” said Michael Collins, executive vice president of the L.A. Convention & Visitors Bureau. “It will be one of the defining moments in setting up the image of L.A. that will be conveyed to the rest of the world.” But it’s the private, “invitation only” events that will be the most glamorous. During Chicago’s 1996 Democratic National Convention, there were several hundred such private parties, and just as many, if not more, are expected here. “This is where the real convention is going to be, not the staged television show at the Staples Center,” said one local political observer. “This is where the deals are going to be made and the contacts established.” One party that has already stirred up quite a bit of buzz is the Hispanic Unity Foundation soiree at the Playboy Mansion. The foundation, which is chaired by U.S. Rep. Loretta Sanchez, D-Garden Grove, is designed to promote voter registration in the Latino community. But the foundation’s choice of the Playboy Mansion, where centerfold bunnies often gather for parties, has already caused controversy for Sanchez, including a series of pointed attacks from the Republican National Committee. Playboy executives downplay the controversy. “We are a major supporter of Loretta Sanchez,” said Playboy Enterprises Executive Vice President Richard Rosenzweig. “She is a rising star in Congress and stands for many of the same things we do.” Clinton on guest lists Party planners around town are already swamped with requests for convention-related events. “It’s huge,” said Barbara Brass, head of Wolfgang Puck’s special events division. “Right now, we’ve got about a dozen parties (booked) in the restaurant (Spago) and about the same amount outside the restaurant (that we are planning and catering).” Meanwhile another prominent party planner, Along Came Mary, is working on setting up at least 20 convention-related parties. And Merv Griffin Productions, which has produced many Oscar night parties and celebrations, is working on several events, including the city’s official welcoming ceremony and the parties at the Paramount backlot. Planning for many of the splashiest parties is still in the works. Longtime Hollywood activists like Barbra Streisand and Rob Reiner are said to be among those who may host celebrations. (Streisand, of course, has hosted fund-raisers for President Clinton on a number of occasions.) While it’s the entertainment-related parties that promise to capture most of the headlines, other industries are going to do their share of partying as well. “I would expect a fair number of banking industry and energy industry types throwing parties here,” said Cerrell’s Dash. “And don’t forget the high-tech industry and the dot-coms who are now looking at the possibility of government regulations down the line.” The man of the hour, presumptive Democratic Party presidential nominee Vice President Al Gore, may make the rounds at some of the parties, although political observers say he’ll likely be tied up at his L.A. Convention headquarters much of the time, working on his acceptance speech. But President Clinton is expected to attend many of the soirees, primarily to raise funds. “This will be his swan song,” Dash pointed out.

Orange County Business Journal If the recent VentureNet 2000 investor conference in Laguna Niguel is any indication, it could be a long summer for local technology companies in search of funding. “A lot of them are trying to find money to ride out the summer,” said Mike Harris, an organizer of VentureNet, an annual forum hosted by the Southern California Software Council. “You do what you can to get by the summer and hope the IPO spigot is back on by time you need more. It’s kind of like a submarine that goes underwater as the storm passes overhead.” Organizers said the feeling among the 400 or so attendees, while short of panic, lacked the exuberance of the past few years. As investors once ravenous for the newest dot-com stock offerings suddenly lose their appetite for unproven business models, companies that had planned to raise money through IPOs are scrambling for more venture capital instead. Trouble is, many venture capitalists aren’t biting either. Many entrepreneurs at VentureNet said the funding process is taking longer than it did before, largely because investors are being choosier. Disagreement about how much young tech companies are worth is another sticking point. The first casualty may be the notion that a good idea and a little elbow grease are enough to create the next big thing on the Internet. In trying market conditions, financiers are looking more to fundamentals. “We’re seeing a lot of good companies having trouble because their management team is green,” said Christine Comaford, a partner with Artemis Ventures LLC, a Sausalito-based venture fund, who spoke at VentureNet. She and several other venture capitalists said companies that specialize in Internet infrastructure the not-so-sexy nuts and bolts hardware of the global network will continue to garner interest. So might any company that has a practical, money-generating solution for corporate inefficiencies, they said. Frank Creer, managing director of Los Angeles-based Zone Ventures, had an equally sanguine outlook. “It’s a fantastic time to invest,” he said. “Valuations are down, and people need cash.” Venture capitalists might be holding back now to see how the market plays out, he said, but they’ve got plenty of money and they have to invest it somewhere. While just months ago tech companies could take their pick of venture capital backers, the scales appear to have tipped back in investors’ favor.

Robinsons-May chairman robert m. soroka found himself THROWN UNWILLINGLY INTO POLITICS when the LAUSD threatened to seize his hEADQUARTERS One day last September, Robert M. Soroka picked up his daily newspaper and learned that the Los Angeles Unified School District had designated the North Hollywood headquarters of Robinsons-May the company Soroka heads for possible acquisition as a new school site. Desperate to find locations for about 100 new schools by June 30, or lose $1.5 billion in state funding, the school district had latched onto Robinsons-May because of its ample space and location close to communities projected to experience severe school overcrowding. The chairman of Robinsons-May, a 56-store division of May Co. headquartered on a 24-acre parcel along with one of its stores, could not have been more surprised or less equipped for the political arena into which he was thrust. His career had been devoted solely to retailing since high school, when he got his first job as a part-time television and appliances salesman in a May Co. store in Akron, Ohio. Soroka had little exposure to, or understanding of, the L.A. school district bureaucracy and the officials who run it. Nonetheless, he was determined to launch a counter-offensive in an effort to dissuade the LAUSD from taking his headquarters property. Within weeks, Soroka engaged public relations firm Marathon Communications to help get out the company’s message; real estate brokerage Charles Dunn & Co. to locate alternative sites for schools; and demographic consultants Hamilton, Rabinovitz & Alschule Inc. to analyze the projected population growth and pinpoint areas with the greatest need for new schools. By mid-November, Robinsons-May had presented its report to the school board with the findings from its effort. Since then, Soroka has waited for a determination from the LAUSD. Question: Where does the situation stand now with LAUSD? Answer: In our (most recent) communication with members of the facilities committee, they told us our location has been put on the table so they can understand it, along with alternate sites. I think they understand that the needs they have are for sites farther to the north, and that there are sites that are more economically feasible for them. (But the school board has not announced any resolution.) Q: What problems would you face if the LAUSD were to decide in favor of acquiring your property? A: This location houses 1,750 corporate associates who are instrumental in running 56 stores and responsible for $2.2 billion of merchandise a year. Some people view it only as a disruption for the (on-site) retail store, but it is really a disruption to 56 store locations. To try to identify another site where we feel we would be successful would be very difficult to accomplish. The biggest reason is, we get an average of 300 vendors that visit us every month and we can work with them on the selling floor on how to best present the merchandise. Q: What would it take to relocate? A: We have not considered relocation, and we would fight eminent domain to the limit. Q: What did you do when you first learned that the school board was considering acquiring the Robinsons-May property? A: From day one, we felt we needed to work very hard to establish a way for us to get off the district’s list. The day I read about their interest in our site, I scheduled a meeting with (LAUSD Chief Executive) Howard Miller. In that meeting Howard said, “If you find me another site, we’ll leave your property alone.” From that day forward, we have focused 100 percent of our effort on finding another site. Q: What else have you done? A: I’ve met with six of the seven school board members and presented alternate sites. I had several meetings with some of them. I invited Howard Miller and (board member) Caprice Young and took them through the alternate sites we’d developed. When the activity first started in September, I was meeting with people from the Economic Alliance (of the San Fernando Valley), the Valley Industry and Commerce Association (and others). I was trying to find the right way to help us communicate better. All the communication was initiated by us, so I used the methods available to me, which were these alliances and neighborhood groups. Q: How has this process differed from other negotiations that you typically engage in as a business executive? A: I was chairman of the California Retail Association, so I’ve had the opportunity to be very close to other retailers that operate in this region and work with a number of state representatives in order to support retail development in the state of California. (In most negotiations) I have found an open-door policy where I was invited to be part of whatever discussions they were having. (With the LAUSD) there have been no negotiations. They had basically made a decision on what they wanted to do. The process since then was how they could make that happen without discussion with us. Q: How much time have you had to spend on this issue and how has that affected you? A: When the activity started in September, I was spending an enormous amount of time on it. I would say I was spending about a third of my time. I think the thing that’s important to mention also is that, as you could probably imagine, the Christmas season is the most profitable and most valuable season for retailers and preparation for that season occurs during that September and October period. For me to have to take my time during that period was a major disruption to the business. Q: How have your employees reacted to the situation and how have you handled it? A: To me, that’s one of the most frustrating aspects of the lack of communication from the LAUSD. We get a lot of inquiries from our associates because they read in the newspaper about the desire of the LAUSD to take the site, and it’s difficult for me to get them an answer. They’ve invested a lot of time (working for the company), and they’re concerned about what would happen. Q: What have you learned from this process? A: Certainly, I’m not a politician and Robinsons-May is not a political organization, but I think the thing I’ve learned the most is the importance of developing relationships with the business community and the neighborhood in order to help me and this organization get its message out to the district officials and the public. I’ve met some really terrific people as a result of this activity, particularly the (people at) the Economic Alliance. Valley College has been very supportive because of the number of jobs that this location offers their students. Chances are (I would) never have the opportunity to meet with those people. I think I’ve gained some valuable experience as a result of this activity. It has been an eye-opener to me about the value of forming these alliances at a local level, as well as the state level.

Vitesse Semiconductor Corp. was trading at more than $100 a share in early March. Then the bottom dropped out from under tech stocks, and the Camarillo chipmaker saw the value of its shares decline 50 percent in a matter of days. Were employees worried? Not according to co-founder Ira Deyhimy. After all, sales have grown by an average of 52 percent per year for the last five years, while earnings per share have increased by an average of 88 percent annually during the same period. If history is any indication, the company’s stock should climb back out of the hole. “We’re pretty sanguine about the volatility of our stock,” said Deyhimy, who oversees strategic planning. “It’s part and parcel of our industry.” Vitesse, which is French for speed, was founded in 1984 after Deyhimy and Louis Tomasetta, the company’s chief executive, left a Rockwell International Corp. research lab in Thousand Oaks to start their own company. The duo had helped develop semiconductor chips made of gallium arsenide, but Rockwell wasn’t interesting in pursuing commercial applications. The tiny integrated circuits are touchier to work with, but they are two to four times faster than standard silicon chips. That made them ideal, it turns out, for high-speed communication and networking equipment. “In the ’80s, what drove the electronics industry was the PC. That led to thousands of startups,” said Deyhimy. “Today, communications is what’s driving the electronics industry, and I think it’s going to be driving it for the next 20 years.” Vitesse sells its products to a blue-chip roster of telecom and networking companies, including Lucent Technologies Inc., Alcatel Alsthom, Cisco Systems, LM Ericsson and IBM. Because of exploding growth in the industry, its customers can’t get enough circuits. “I think Vitesse is in a very exciting market,” said Arun Veerappen, an analyst with Robertson Stephens. “Their key markets are growing by a minimum of 30 percent to 100 percent a year. The market in more ways than one doesn’t have the suppliers it needs. What the company’s chip sets do is allow telecom or network providers to take millions of bits of data and jam pack them together for transport on fiber-optic lines. When the information gets to the other end, Vitesse’s chips help unpack the data for distribution to telephones, cell phones, cable television, and other systems. As information carriers try to pack more and more data onto finite fiber-optic systems, demand for Vitesse’s products is expected to accelerate. That rosy outlook may not be apparent from the financial results for the fiscal second quarter ended March 31. Vitesse reported a net loss of $18.6 million (12 cents a share), compared to net income of $15.5 million (9 cents) in the like year-earlier quarter. But that loss resulted from a one-time charge of $45.6 million related to its March acquisition of Orologic Inc., a company that also makes chip sets that handle data. Vitesse paid about $490 million for the company as part of a stock swap. Excluding that charge, Vitesse generated net income of $27.0 million (16 cents per share) in the period. Revenues were $189.4 million vs. $127.6 million in the year-earlier quarter. Orologic isn’t the only recent acquisition. In April, Vitesse paid $750 million to acquire Sitera Inc., which makes hardware and software to speed up network processing and traffic online. Deyhimy said the acquisitions are part of the company’s strategy to “morph” into a bigger player. Instead of being strictly a chipmaker, Vitesse is changing its focus to provide entire hardware and software solutions for moving data. “We’re growing in the communications space greater than 60 percent a year, but we can’t sustain that growth several years from now unless we move up the food chain,” said Deyhimy. Vitesse was trading at $2 a split-adjusted share in January 1995. Since the March downturn, the stock has already bounced back from a low of $50 to around $74 a share as of last week. Veerappen sees the company continuing to increase sales by 30 to 50 percent per year into the foreseeable future. Meanwhile, he likes the hands-on approach that Tomasetta takes in running the company. “Once I went to visit him, and I was taken upstairs to the portion of the office he occupies,” said Veerappen. “He emerged wearing a lab coat because he had been out on the floor running some tests.” For those and other reasons, Veerappen sees Vitesse as a “buy,” especially now that the market has taken the stock down a few pegs.

No Historic Status for Apartments The city Cultural Heritage Commission was unable to reach a conclusion on a bid to designate the Chase Knolls Apartments in Sherman Oaks as a historic cultural monument. The issue will now go before the L.A. City Council without a recommendation. The panel listened to two hours of public testimony before voting 2 to 1 to support the historic designation. Because two of the panel members were absent, the committee did not get the three votes it needed for a recommendation to the council. If the structure were deemed a monument, developer Legacy Partners would be blocked, at least temporarily, from demolishing the building and replacing it with luxury apartments. Tenants in the mostly rent-controlled complex have fought the proposal, saying the 1940s-era structure is a historically significant building. Councilman Mike Feuer sponsored the designation application and told the commission that the 260 apartments built in 1949 are part of the Garden City movement of design, which provided working-class families with affordable housing surrounding large courtyards of green lawns and trees. Redevelopment Panel Disbands Members of a Northeast Valley redevelopment advisory panel voted 12-4 to disband, saying they were hopelessly deadlocked. After the vote, a fistfight broke out at the hearing and police had to handcuff three audience speakers. No one was arrested. Critics and members of the city Project Advisory Committee said the group has been unable to make progress on redevelopment plans in the Northeast Valley for the six months it has been in existence. Some argued that the panel is powerless in the redevelopment process because Councilman Alex Padilla proposed barring the group from using eminent domain power to evict property owners in redevelopment zones. Some critics are questioning whether Padilla purposely sought to disband the panel so he could appoint a more agreeable group. With the current committee gone, Padilla has the authority to appoint replacements. The City Council must still approve the panel’s vote to disband. The Price of Secession The Los Angeles City Council approved a legal finding that new cities formed by the secession of the San Fernando Valley or Harbor areas might have to make payments to Los Angeles as the price of breaking away. The city voted 10-4 to give the City Attorney’s Office permission to submit the opinion to the Local Agency Formation Committee, the agency setting the rules for a potential city breakup. Council members who opposed the measure said it would force residents of areas seceding from Los Angeles to pay for services that they don’t receive. But members who approved the decision said it simply upholds a principle under state law that a section of a city or county cannot break off without compensating residents of what’s left behind for any losses. LAFCO will review the city’s opinion as it studies secession. The agency can put a secession proposal before voters only if it concludes that it wouldn’t harm residents in either jurisdiction. Judge Halts Newhall Ranch A Kern County judge blocked development of the giant Newhall Ranch project until developer Newhall Land and Farming Co. addresses concerns about the project having an adequate water supply. Newhall Ranch is the largest residential development ever proposed in L.A. County, with 21,615 homes planned for the Santa Clarita area along the Ventura County border. Ventura County, the Sierra Club and others have filed a number of lawsuits against L.A. County’s approval of the development, asserting that traffic and environmental impacts would be excessive, and the project’s water supply would be insufficient. The judge ruled that Newhall Land’s environmental impact report didn’t adequately address water issues and that the development could negatively impact the Santa Clara River. The judge also ruled that the EIR did not adequately address the potential traffic impacts on Ventura County roadways. Newhall Land officials said the company will take about a year to address the issues and it would push development back to 2003. Shortly after the ruling, Newhall Land officials announced they had discovered the San Fernando Valley Spineflower, thought to be extinct, and an endangered toad on the project site, which could also push back the project’s timetable.

State Insurance Commissioner Chuck Quackenbush has come under intense scrutiny over the last month, as the state Legislature investigates allegations that he used taxpayer money from an insurance-industry quake fund for his own political purposes. With talk now turning to possible impeachment, The Business Journal asks: Do you think Quackenbush should resign? Jack McGrath Owner GM Communications Absolutely yes. I’ve never seen a public official abuse his authority more than him. If he doesn’t resign, I think he should be impeached. I’ve worked in politics and I’ve never seen anything more outrageous than this guy. The sooner (he resigns), the better. David Adelstein Adel Music No, I don’t think that’s the answer. I think you have a person in place, and rather than have him resign and put someone else in who has to start new and will be at a loss over what’s going on for awhile, he should stay. The best thing to do is have Quackenbush do what we really want him to do. It seems to me the problem will be solved in the next election he likely won’t be reelected. I think he’s a knowledgeable kind of guy. What he’s done is questionable. I would like to see him go after insurance companies more. But the bottom line is, he’s not a bad guy, and for a long time before this everybody was satisfied with his job. Joe Hooven President Best Window Treatment I don’t know. There are so many people who say he’s a good guy, and he’s done some neat things. But there’s also those people who say the complete opposite. I think it’s important that all the facts be learned about this case and there be open and honest hearings about what happened. There are two sides to every story. I’d hate to see a public official be scrutinized unfairly. Martha Diaz Aszkenazy Owner Pueblo Contracting Services Inc. That’s a tough one. As a knee-jerk reaction, I’d say he should resign and save the taxpayers additional money. That’s a gut reaction, though. And unfortunately, as grievous as his actions seem to be, I don’t know the whole story. It doesn’t look good. If the allegations turn out to be true, then he should resign. Walter Prince Porter Ranch Is Developed Enough I think Quackenbush should resign as fast as he can. He’s typical of why people are mad at the system, and he got caught. Am I mad? No. I’m disgusted. I’m one of those guys still battling the insurance company. I don’t have anything personally against Quackenbush. I just think he shouldn’t have done what he did. Hank Yuloff Promotionally Minded The funny answer is, he should stay and fight it out as long as he can because it makes the Democrats look better all the time. But the truthful answer is, I think he ought to quit before he’s impeached. I’m absolutely mad about this. He ripped off the public and that’s not what public officials are supposed to do. Flip Smith Owner Flip’s Tire Center I think they should impeach him. He should resign. Everybody in the Valley got affected by the earthquake. It cost me $60,000 on my house. I had no insurance. Insurance is a tremendous burden.