labusinessjournal.com
LOS ANGELES BUSINESS JOURNAL
THE
Volume 37, Number 11
Up Front
COMMUNITY
OF
BUSINESS
TM
March 16 - 22, 2015 • $5.00
Wage Hikes May Hit Tipping Point
Court Goes Big
For Mansions,
Curbs Nimbys
DINING: State bill would cap pay
for gratuity-receiving employees.
By HOWARD FINE Staff Reporter
How this app will
lure Spanish
speakers to a new
Disney film.
For Madelyn Alfano’s restaurants, a proposed minimum-wage hike in Los Angeles could drive up costs
by as much as 40 percent.
That’s why Alfano, owner of local chain
Maria’s Italian Kitchen, is heartened by a new
proposal in Sacramento that could take much of
the sting out of local wage increases by letting
employers pay a lower hourly wage to tipped
workers than they pay to other minimum-wage
employees.
The proposal, Assembly Bill 669, sponsored by
By CALE OTTENS Staff Reporter
Megamansion developers in Los Angeles got a
big win this month after the California Supreme
Court significantly restricted the circumstances in
which single-family homes can be subject to costly environmental reviews.
As some homes in posh communities such as
Bel Air and Beverly Hills have come to rival the
size of shopping centers, foes of mansionization
have argued the massive projects should be held
RINGO H.W. CHIU/LABJ
Facing Heat: Owner Madelyn Alfano at
Maria’s Italian Kitchen in Marina del Rey.
Please see DINING page 54
Please see REAL ESTATE page 55
PAGE 3
News &
Analysis
Why Frank
McCourt is doing
more deals with
Dodgers’ new
owners. PAGE 6
Tourism Drive
Malls put money on
drawing Chinese visitors.
Lined Up: Chinese tour group checks in at the Beverly Center.
The List
By SUBRINA HUDSON Staff Reporter
O
any given day, sometimes with as little as 20 minutes warning, a bus will
pull up to the Beverly Center and let
out dozens of Chinese tourists eager to drop
thousands of dollars on luxury clothing, elec-
L.A.’s largest
residential real
estate brokerages. PAGE 19
N
Phone Scam Disconnects Incubator
TECHNOLOGY: Be Great founder
hit with $150 million judgment.
By OMAR SHAMOUT Staff Reporter
Exec
Office
What? No velvet
in Playboy CEO’s
pad? PAGE 58
tronics and accessories.
It’s a common sight for Susan Vance, marketing and sponsorship director for the L.A.
mall, and getting much more so. Last year,
about 300 buses stopped there. They are already
approaching half that so far this year, the result
of a boom in Chinese tourism and of a concert-
When Be Great Partners founder and managing
partner Lin Miao planted his incubator’s flag in Los
Angeles a little more than two years ago, he had
grand plans to turn it into a major player in the city’s
burgeoning tech scene through a flurry of seed investments, glitzy networking parties and a string of coworking facilities.
But Miao hit a $150 million bump in the road a
few months later when the Federal Trade
Commission said the fortune he used to bankroll Be
Great came as a result of a scam. Now, with its
founder forced to liquidate his assets in the face of a
massive judgment, Be Great has disappeared.
The company vacated its 21st-floor office at 5900
Wilshire Blvd. on Feb. 28, according to a spokeswoman for landlord Ratkovich Co. The Miracle
Mile location housed its corporate office as well as a
co-working facility that charged businesses $295 a
month for workstations and other office amenities.
A second Be Great co-working space, on
Please see TECHNOLOGY page 57
ed effort by the Beverly Center to cash in on
that growth.
“This program has been so beneficial,”
Vance said. “If we missed (this trend), we
would have done a disservice to our stores.”
Please see TOURISM page 56
SPECIAL REPORT
BUSINESS PERSON
OF THE YEAR
BUILDING
MOMENTUM: From
making Eagle Scout
at age 13 to negotiating the largest office
lease in the world as
an adult, real estate
dealmaker John C.
Cushman III has
always kept climbing.
BEGINNING ON PAGE 22
Who’s in your corner?
Get insight and strategies tailored to the middle market. And handle
any punch thrown your way. For more visit www.deloitte.com/us/dges.
56 LOS ANGELES BUSINESS JOURNAL
MARCH 16, 2015
Tourism: Malls Look to Sell Chinese on Bus Stops
Continued from page 1
The Beverly Center isn’t alone as other
shopping centers, such as Citadel Outlets in
Commerce, and even cities, such as West
Hollywood, are making a push to bring in
more Chinese tourists and tour groups.
Doing so isn’t easy or cheap. For malls
and shopping districts, it requires hiring
Mandarin-speaking customer service representatives, offering special incentives to
tour guides, sending representatives to
China and staying in the loop on Chinese
social media platforms.
But malls see their money and effort as
well spent, especially as the number of
Chinese tourists in Los Angeles has boomed.
Those tourists continue to be big spenders
and new rules make it more likely tourists
will regularly return to their favorite spots,
said Haybina Hao, director of international
development for National Tour Association
in Lexington, Ky., a trade association that is
authorized by the Chinese government to
maintain a list of U.S.-based tour operators
approved to handle Chinese tour groups.
Last year, the United States and China
announced an agreement making it easier to
get tourist visas, and Hao said that change
is driving more Chinese tourists to Los
Angeles and other destinations.
“It’s going to really encourage them to
come back,” Hao said. “Normally, for the first
trip they go west to east in two weeks and do
a quick sketch to see the country. When they
become a repeat visitor, they’re likely to
choose more destinations and stay longer.”
And most, if not all, travel itineraries
include plenty of time for shopping. It’s an
attractive set-up for malls, as the average
Chinese tourist will spend about $6,000 on a
U.S. visit, not including travel costs, Hao said.
China ready
Last year, 686,000 Chinese visitors
came to Los Angeles, up more than fivefold from 2013, when L.A. saw 116,000,
according to the Los Angeles Tourism and
Convention Board.
Vance said the Beverly Center anticipated that surge and started planning in 2013.
“We saw it coming, and it was either
you get on board now or you’re not going
to be China ready,” she said.
At the time, tourists from Australia were
the mall’s No. 1 visitor. Now, tourists from
China rank first by a wide margin, Vance said.
The Beverly Center’s program has several components. During busy shopping peri-
ods, such as the recent lunar new year season, the mall has as many as four in-house
consultants – called Chinese Luxury
Advisors – who handle everything from
translating written materials such as mall
directories to managing the Beverly
Center’s account on Weibo, China’s version
of Twitter. They also communicate with
tour operators – often through Chinese
messaging service WeChat – to find out
when a busload of tourists will arrive.
(Operators often give little notice.)
The mall also hired several Mandarinspeaking guest services agents, who often
serve as the first point of contact for
Chinese tourists coming off a tour bus.
Mall retailers also have made efforts to
be prepared for Chinese visitors.
Courtney Saavedra, director of marketing and public relations for retailer Kitson,
said it hired a Mandarin-speaking sales
associate at its Beverly Center boutique
several months ago to meet the demand.
The Beverly Center also takes things a
step further with an exclusive partnership
with USC and UCLA to target Chinese students. The mall offers free shuttle services
for back-to-school shopping events and,
more recently, partnered with Pasadena’s
East West Bank to host a job-readiness
and networking event at the mall.
Vance declined to say how much the
mall has invested into its program or how
much Chinese tourists spend, but the program has proved successful.
“It’s something we look at weekly, if not
daily, and we see where the spending is
going,” she said. “And as we kept doing that,
we realized investment in the program was
well worth it.”
Bus wars
Bringing in buses takes more than customer service reps and mall directories in
Mandarin. Malls have to actively work with
tour operators based in China, convincing
those businesses to add a visit to their shopping centers to its customers’ itineraries.
Last year, the Beverly Center sent its
first representatives to China for the China
International Travel Mart, where they
schmoozed with tour organizers.
Cynthia Schmitt, director of international tourism and sales at Citadel Outlets,
said she’s been making similar trips to
China since she started working for that
mall two years ago.
“We forge relationships with these tour
operators and heavy hitters who are bringing the tourists,” Schmitt said. “They’re the
RINGO H.W. CHIU/LABJ
Putting Self On Map: Bevery Center retail complex in Los Angeles.
ones who build the itineraries, and we say,
‘You have to include shopping and we want
to be part of that itinerary.’”
Her pitch seems to be working: On a
busy day, the outlet mall can receive as
many as 65 buses of Chinese tourists, with
groups as small as 10 people or as large as
65, she said.
But surprisingly, given the huge numbers involved, no money changes hands
between the shopping malls and tour operators. The National Tour Association’s Hao
credits a new Chinese law that suggests taking money can be considered bribery.
“From a business standpoint, those tour
operators bring in a large number of consumers, but it’s a sensitive matter for the
Chinese side,” she said. “In American culture, it’s nothing strange, but it’s very politically sensitive within the Chinese context.”
Of course, there are still ways to offer
incentives, Hao said.
Citadel, for instance, offers tour guides
access to a VIP lounge with complimentary
Internet access and snacks. The idea is that
if tour guides can put their feet up and grab
a drink, they’re less likely to hurry groups
along to the next stop.
“We don’t want them to rush the guests
at all, so it’s really kind of a nice added
bonus for them,” Schmitt said.
Malls aren’t the only ones with plans to
bring in more Chinese shoppers.
Bradley Burlingame, chief executive of
Visit West Hollywood, said that city doesn’t have a plan in place yet but it is working to develop a program to bring in more
Chinese tourists.
“One thing we need to gear up for is not
just marketing to the Chinese consumer, but
making sure when they come we’re prepared,” Burlingame said. “Whether it’s language, service or cultural experiences, we
want to make the Chinese traveler more comfortable and we want them to come back.”
While buses haven’t arrived in droves to
the streets of West Hollywood, retailers
have seen an uptick in the number of
Chinese tourists, he said, many of them
with lots of money to spend.
“A lot of retailers that I’ve talked to
already are seeing that Chinese visitor
come here,” he said. “But the real opportunity and the exciting part is now there’s
going to be continuing growth in the
Chinese market coming here.”
Health Care: Firms Keep Doctors, Patients in Touch
Continued from page 5
sor of dermatology at UCLA’s David Geffen
School of Medicine. “I’ve done them at
37,000 feet in the air and in foreign countries.
It’s a way to extend professional impact in a
flexible way.”
Though some physicians may not want to
be more beholden to their smartphones, Craft
said he likes the increased access a patient has
to him.
“The overarching benefit is that it
increases communication with patients, and
a lot of doctors like that,” he said, noting
Direct Dermatology has a backup team of
doctors, allowing him to disconnect when
necessary.
Craft’s Direct Dermatology patients have
run the gamut from Californians covered by
Medi-Cal in more rural parts of the state
through clinics to direct-to-consumer patients
at home who want to check a mole.
“You send us a consult directly,” Craft said.
“We diagnose, advise and prescribe to a pharmacy without meeting you. That’s growing
quickly.”
Lowering costs
Craft, a clinical researcher, started his own
telemedicine firm last year called Science 37.
Based in Palms, it recruits and manages clinical trial participants remotely via a mobile
application.
The company built software to enroll patients
from their homes and ship drugs to them.
“If they need blood drawn or an infusion,
we can send a mobile nurse to their home as
well,” Craft said. He added that any portion of
a trial handled with this kind of telemedicine
is still regulated by the Food and Drug
Administration and an independent agency
that monitors studies. Additionally, nurses
already visit patients’ homes to draw blood
and infuse medications.
He said one of biggest hurdles to build-
ing a telemedicine company are the legal
requirements.
“In every state, it’s totally different,” Craft
explained. “The amount of capital invested in
attorneys to understand legal structure and
what you can and can’t do is incredible. But
once you know that and understand, it allows
you to scale.”
That is part of the reason Michael
Yedidsion founded OnD Lab in 2009. The
West L.A. company provides patients with a
mobile health care delivery platform that collects vitals such as blood glucose, pressure
and temperature, before transferring it to a
server so doctors can access real-time data.
Yedidsion, who had run a home respiratory
service since 1992, started OnD after having to
contract with a company across the country to
do in-home oxygen tests for its clients.
“Nationally, there were just a handful,”
Yedidsion said. “That’s when I decided to collect engineers and talk about how we could do
this on own our own.”
It took three and a half years to develop the
platform and more than $5 million from
Yedidsion and a medical venture capital investor.
Today, Yedidsion said that OnD contracts with
physicians and payers serving more than
100,000 users throughout the country. It charges
between $10 and $40 per patient per month
depending on how much equipment is involved.
One challenge is keeping up with different
patients’ needs as they’re added to the platform.
“You really have to be flexible in reworking your engineering continually,” Yedidsion
said. “I thought we were done a couple years
ago, but on a daily basis you’re tweaking programming to make sure you keep up with
what the insurer wants and how the patient
reacts to different protocols. It’s time-consuming and costly.”
But he doesn’t regret jumping into telehealth.
“It’s a good segment to go into,” he said.
“We knew we’d be somewhat unique and we
still are.”