Snapchat is a beacon for the growth of Westside tech and a lightning rod for local strife

By Joe Piasecki, Gary Walker and Christina Campodonico

Demonstrators gathered along Market Street on Tuesday to picket Snapchat’s headquarters on the eve of the company’s multibillion-dollar IPO
Photo by Maria Martin

The taco truck was the last straw for Chris Ekstein.

It was midday, he was hungry, and the truck parked outside Snapchat’s headquarters at 64 Market St. a few months back was practically next door to the independent digital content production firm that Ekstein and his wife have owned and operated for 13 years. He got in line and waited to buy lunch.

“Then the guy giving out the tacos told me ‘these are only for Snapchat employees,’” recalled Ekstein, still bristling at the memory. “I felt like he was saying ‘not for you, for us.’ That’s how they’ve treated people here. It makes me feel like I’m not welcome in my own neighborhood.”

Ekstein was among more than 100 locals who picketed Snapchat HQ last week as the Venice-based social media company made its initial public offering on the New York Stock Exchange, a debut that beat analyst expectations and put the company’s valuation at more than $22 billion.

Not bad for an app that launched from an Ocean Front Walk bungalow in 2011. Unprecedented, actually — at least in

Los Angeles, where a thriving tech entrepreneurship ecosystem is rapidly changing the economy and character of the Westside.

In the lingo of venture capital-driven startup culture, Snapchat (now Snap Inc.) is a unicorn. And that rising tide is expected to raise a lot of boats.

“There’s no denying that Snap not only has the lion’s share of attention right now with their IPO, but also retains that ‘cool kid’ swagger that appeals to Gen Z and Wall Street alike,” said Lena Lotsey, director of social media for Playa Vista-based digital content production firm Ignition Creative. “It’s forced anyone
who wants to be where the attention is to learn quicker, to evolve and grow faster, which is a great thing both as an industry and individually.”

In most communities, a company’s rise from ambitious idea to wildly successful IPO would elevate it to local hero status. But in Venice, Snapchat has also drawn the ire of many longtime locals who like Ekstein feel the company’s rapid expansion — a footprint of almost a dozen buildings in Venice, plus 80,000 square feet near Santa Monica Airport — is happening at the community’s expense.

For those who publicly mourn the broader gentrification of Venice, Snapchat has replaced Google’s presence on Main Street and the high-end reinvention of Abbot Kinney Boulevard as the favorite target. There’s anger about the closure of local small businesses to make way for Snapchat’s piecemeal expansion — boutique retailers, a handful of small offices, restaurants like Tlapazola Grill and Nikki’s. There’s anger about Snapchat shuttles blocking streets and alleys. There’s anger about public spaces being treated like part of a private corporate campus.

“Snapchat security guards run the street,” said Kelli Blair, who works for a video production company and lives next door to the Thornton Lofts at Ocean Front Walk and Thornton Court, where Snapchat leases 25,000 square feet. “I’ve kicked Snapchat employees out of my driveway, yet when a resident tries to walk down Thornton Court security guards will say ‘You need to leave. Keep it moving.’ It gets intimidating.”

In Ekstein’s words, “It feels like the Gaza Strip around here.”

Snapchat generally doesn’t speak on record with the media, but in response to last week’s protests issued a conciliatory public statement addressing critics and promising to limit future expansion in Venice.

“We’re very grateful to be a part of the Venice community, and we are sorry for any strain that our growth has placed on those who live and work here,” it reads. “We’ve partnered closely with local schools and nonprofits to be good neighbors, and we’ve always tried to help our community feel safer in a neighborhood that is all too often the victim of crime. We recognize that we are no longer the small startup that we once were, and we are necessarily concentrating our future growth outside of Venice.”

When Snapchat gives back to local non-profits, it does so without public fanfare and thus gets little credit from its critics.

Over the past few years the company has quietly funded web development training for low-income women at the St. Joseph Center, arts programs at local elementary schools, computer science workshops for high school students, programs for homeless youth, and the entire computer education curriculum at Westminster Avenue Elementary School.

Snapchat doesn’t like talking about itself, but other tech industry luminaries are willing to fill in the blanks. Many are saying the company’s successful IPO will be a catalyst for further growth of the industry in Los Angeles, in no small part because stockholding employees who just became “instant millionaires” will probably reinvest some of that money into their own local tech startups.

“We love Snapchat. We are hugely appreciative of their successes because it’s helped grow technology talent in Los Angeles, and some time down the line we know the ‘Snapchat Mafia’ will be armed with millions of dollars and fund and create startups all over L.A.,” writes Mark Suster, a general partner with the Santa Monica venture capital firm Upfront Ventures, which manages a $1 billion portfolio.

“The next three to five years will be an absolute renaissance,” Suster recently told The New York Times.

Snapchat’s existence alone has even spawned a handful of local startups that exist primarily to help other companies master the millennial-friendly platform.

Ignition Creative has collaborated with Snapchat on both paid and organic campaigns.

“Snap is unique in that they encourage our curiosity with ways to crack the platform, which we love. They’re not afraid of change; they’re driven by it. As a creative agency, so are we,” Lotsey said.

The tech industry’s most tangible impact on Venice and surrounding neighborhoods, however, is reflected in the real estate market.

David Thind, a real estate broker for Coldwell Banker Commercial, leased Snapchat its four office buildings on Market Street. He’s seen office lease rates jump from $3 to as much as $8 per square foot in just a few years.

“There’s a high demand [for space] and a very low supply. As long as that exists, the market’s going to remain extremely strong,” Thind said.

Scarcity is also what explains Snapchat’s unusual patchwork expansion.

“There’s not enough space in Venice, that’s the problem. Also economics: No. 1 is rent; No. 2 is parking. Rents are very high in Venice, and parking is very scarce,” Thind said.

Increasing home prices west of the 405 also has everything to do with frenzied demand for a limited supply, and tech is driving a lot of that demand.

Tami Pardee, principal broker for Halton Pardee + Partners — a leading Westside real estate firm whose signs are ubiquitous throughout Venice — estimates that more than half of her customers either directly or indirectly make a living in the area’s burgeoning tech industry, especially buyers under 40 years old.

“We’ve changed how we market properties to make sure all our listings our seen by the tech world,” Pardee said. “They’re smart buyers. They want a lot of information on what they’re buying.”

Stephanie Younger, principal agent and team leader of the Playa Vista-based Stephanie Younger Group at Compass (a new digital real estate platform), said at least 25% of her customers throughout the Westside work directly for tech companies. Most are either young professionals buying their first homes or more established people relocating from Northern California or Seattle to work here.

“It’s not just Venice. It’s the whole area,” she said. “Tech is certainly important to real estate in general, at least the improvement in real estate prices and the increased demand right now.”

Venice Neighborhood Council President Ira Koslow, who has lived in Venice for 40 years, acknowledged “a vocal minority” in Venice who blame Snapchat for economic pressures that are really a function of broader socio-economic changes.

“Venice is changing and people find it upsetting. There are people being hurt by these changes,” he said. “But we live in a capitalist system. We can’t prevent companies like Snapchat from leasing these buildings.”