What the NYC startup world needs (and doesn’t need)

Here’s what I think NYC needs to become a serious, long-term startup hub:

1) Some extremely successful startups. We need PayPals – companies that spin out boatloads of talented entrepreneurs and “smart money” angel investors. Big successes also reinforce the “culture of equity” that is so strong in California – the idea that owning options in a startup is the best path to financial and career success.

2) More web product design talent. This is the scarcest talent of all (more so than engineering). NYC has perhaps the best design community in the world, but most of the designers are trained in non-web design fields (e.g. print design).  Most of the good design schools don’t emphasize web product design (some exceptions – e.g. my friend Zach Klein taught an excellent class at the School of Visual Arts last semester on web product design). NYU’s ITP stands out as a program that focuses on the intersection of design and technology (e.g. the Foursquare team went to school there). CMU’s HCI program and MIT’s Media Lab are also great. Other schools need similar programs.

3) More engineers. However, this doesn’t mean we need more engineering schools (although that wouldn’t hurt). Like Silicon Valley, NYC is populated mostly by people who moved here from other places. For the right opportunity, it isn’t hard to convince, say, recent MIT grads to move to NYC.  The problem is that NYC startups are basically unknown to students at MIT, CMU, Penn, and even (shockingly) to engineering students at NYU and Columbia (big props to HackNY for trying to fix this). East Coast CS students also view startups as a much riskier path than they actually are. I say this having been at dozens of events with East Coast students over the last year or so talking about startups. I’m constantly amazed that most of the students simply don’t realize startups are a viable option. What we have is primarily a marketing, not a supply, problem.

4) High-speed internet throughout all the “startup areas” of Manhattan (Flatiron, Meat Packing, Soho etc) and Brooklyn (Williamsburg, Dumbo, etc). It’s amazing that we have such a fundamental infrastructure problem in a city as advanced as NYC, but I can’t tell you how many startups I know that struggle to get working high-speed internet access that has solid uptime.

5) More marquee tech companies opening large tech offices here. Google has something like 1500 engineers here. This adds a lot of vibrancy to the tech culture and attracts more engineering and design talent to the city.

Some things we don’t need:

1. Government or university organized events that introduce entrepreneurs to other entrepreneurs. There seems to be one such event each week. Entrepreneurs are by nature very good at meeting one another and it’s a small enough community that pretty much everyone already knows each other anyways.

2. Expensive projects like big engineering universities. Again, the more engineers and CS programs in the US the better (even better yet we need more CS majors – which probably means more CS education in high school and earlier), but I can think of far more productive ways to spend $100M to help the NYC startup and tech world.

3. Lower rents. No doubt the rents are too damn high and lower rents would be great. I’ve been living here since college when my room for one year was a hallway in a friend’s apartment. I sympathize with people who say this. But the idea that NYC is unaffordable on a typical startup salary is a complete myth. You can rent a decent place in a cool part of town on a typical startup salary. As to commercial space, for venture-backed startups the difference between rent in NYC and rent in other cities is generally the difference between spending, say, 3% versus 4% of your total financing on rent.

4. More early-stage investment capital. There are plenty of smart angels, seed funds, and VCs who are either based here or are based elsewhere but actively invest here.

Most of all what we need is for our tech and startup scene to reach critical mass (and to sustain that critical mass even if a tech downturn comes). Facebook wasn’t started in Californa and lots of future big successes will be started in all sorts of random places.  NYC needs enough tech critical mass that the next Mark Zuckerberg seriously considers relocating to NYC.

134 thoughts on “What the NYC startup world needs (and doesn’t need)

  1. tylernol says:

    the founder who gets forced out early and gets a bunch of shares does not bug me as much as the VP brought in late, in one case a month beforehand, who gets a huge chunk for essentially doing nothing to get the company acquired. I have seen this at both the startups I have worked at.

  2. Very helpful post. Follow up question: Lets say your company is acquired for cash. If you have a year left after acceleration (in the case of a single trigger), who is taxed on this? Let’s assume you already filed an 83b.

  3. mcenedella says:

    You’re right, Chris. From a simple mathematics perspective, the impact of vesting on the Founders is likely to be two or three times as important to their ultimate payout as the successful conclusion of valuation negotiations.

  4. You make a number of good points Chris.  The Digital Triangle does offer an interesting start-up value that can’t be found eslewhere. Brooklyn for code, SOHO for design and brand experience, and Union Square for da monies.  All a couple of subway stops apart.   

  5. Great post as usual, Chris. For my entire first 3 semesters at NYU, I was also completely unaware that startups were a viable option. I was under the impression that as a finance major it was either “bank or bust” for me. Luckily, I had a few friends in the startup community that enabled me to learn more about it and get really involved.

    But for people who don’t have friends inside the tech community in nyc, how do you suggest we “market” it better so that we can reach this demographic?

  6. Judi Huck says:

    .@cdixon:twitter puts it best :) shout out to @skillshare:twitter for a solid product that continually awes

  7. Jacek Grebski says:

    Well said indeed. The internet issue is a problem that we face every day in our office and it’s a frustrating one at that, especially when you’re trying to do something on the box and all of a sudden, plop. No connection, the rent is a problem as well, but there are many co-working spaces that have at lessened this burden to an extent, the housing rent however, well… it’s NY, so all I’ll say is good luck. 

    As for the rent is too damn high, here’s one of our co-Founders with the dude who started it. http://www.playbadger.com/media.php?i=13917 He’s kindof an awesome guy, not to mention he has awesome facial hair. :)

  8. I know nothing about the tech culture in NYC, so I’m just talking here. However, I live in a city where the local University has a Co-Operative education program where students can alternate semesters of work with semesters of school. At the last startup where I worked, I used to hire at least one of these students every semester and introduce them to startup life.

    Their work terms were amazing – whereas their friends who went to bigger companies would file, we had students building out websites, working closely with designers and making real contributions. Not only did they learn more, but their resumes usually grew substantially. So, they would go back to school and tell their friends. Over the two years I hired students, the number of resumes we received each term grew steadily and we even started getting resumes from people who were about to convocate.

  9. For up-and-comers out of college, the rent really isn’t THAT high even on a startup salary. I think it’s overstated significantly by outsiders. I’m more than willing to give up a little in luxury in some respects to have the higher standard of living in terms of “things-to-do” in the city. Not to mention you don’t need a car like you would if you lived in suburbia.

    I have heard of an example of a startup wanting to move in NYC and having infrastructure issues/Internet problems. Fred Wilson mentioned it a while back on his blog and it’s not the greatest situation. Worth some investment by the city.

  10. badboyboyce says:

    Great post Chris– I’ll keep championing the NYC startup scene and rally great engineers from Boston to head down to Silicon Alley.

  11. Pretty great points all around. 

    One thing I’ve noticed is that because NYC is such a business city with tons of different verticals, investors tend to be more conservative and looking for quick wins in those markets.

    Silicon Valley didn’t (and other than tech) or doesn’t emphasize traditional markets as much, and as such, they tend to fund more “out there” startups with big ideas but smaller histories of proof. 

    In my (admittedly limited) opinion, I can’t imagine a Twitter or Facebook being born here because NYC tech isn’t as interested in hitting home runs, just singles, doubles and the occasional stolen base.

    I’m not saying NYC Tech is more like the Mets than the Yankees, but certainly more NL than AL. 

    I’d love to see some companies and investors swinging for the fences here. 

  12. Mogens_Nielsen says:

    All you have to
    do is just finance a couple of west coast startups (like mine hint, hint) and
    drag them to NYC. As you said the more high exits the more
    investors you will see. 

  13. Adam N says:

    This map helps when shopping for new space – look for places with fiber connectivity: http://www.broadbandmap.ny.gov/

  14. Agree wholeheartedly with most of this, though I might quibble a little with organized events, or at least those in some of the less-connected-to-the-tech-scene industries, like fashion, retail and even financial services (as opposed to just the tech side).  They can still use some more networking.  Same with financial sources within those realms, though this is changing rapidly, which is a good thing.

  15. Good point. In the “vertically focused” areas I could see the need for more networking. I’m just saying the “usual suspects” (people like you and me) don’t need help meeting each other.

  16. That map seems optimistic. Says fiber is available at an office where I know it isn’t.  Seems like it is at the granularity of blocks when in fact it varies from building to building?

  17. We also need companies like AOL, or other media types, to thrive. Because they act as acquirers and also spit out people who try new things, new companies.  Just as it relates to my self interest, I desperately want AOL to thrive and do great things, because then we all will win.

  18. I’ve been introduced to a number of interesting start- ups here [ I'm an Englishman in New York]. Smart people and better thought out plans than I came across in Silicon Valley.

  19. I believe that the culture of obsessive collaboration is what makes SV what it is.  We all fall over ourselves to help each other on the assumption that together we can make the pie bigger, rather than assuming the pie is finite and thus trying to secure the biggest possible share for ourselves.

  20. I agree. That is one of the many things that makes SV great. I think that ethos is present among startups here but definitely not as strong city-wide. Especially on Wall Street which is the epitome of the opposite ethos.

  21. Really great article, agreed on most points. In regards to 3.) More engineers and  2.) Product/design talent we need to create better connections between the start-up community and the academic community. Yes, HackNy is a good start. But I think the way to accomplish that is adverse your first point in what we don’t need. I totally agree entrepreneurs are good at meeting each other and don’t need sponsored events all the time, but CS students at Columbia are not good at meeting entrepreneurs. We live in different worlds. Literally, they live in harlem, we live downtown and in brooklyn. We need events and programs that connect their academic community to our start-up community, open their minds to the idea of working at a start-up and dispel myths about working in tech. We need to compete on the ground at campus with Wall Street, Consulting firms ect.. who recruit aggressively. Again, you’re right that start-up salaries are competitive and provide a fine lifestyle in New York, the problem is students in New York don’t know that. I started this program to work on that disconnect: http://www.nytechmentors.org/

  22. Completely agree with #3, startups need to advertize themselves to students a lot more since new grads are in a great position life and career-wise to join a startup. But don’t just focus on NYU and Columbia, we have a lot of smart students at CCNY too! I understand one of us was even on the winning team at this year’s HackNY Hackathon ;)

  23. 1)  I wouldn’t take this map too seriously.  Note that the block where 111 8th Ave is situated apparently has no fiber connectivity.

    2) “Fiber availability” as defined by this map is delineated by U.S. Census blocks, which is all well and good, but it means nothing when you call up TWC or Verizon asking for a high speed circuit.  If they have fiber to a commercial building at 14th and 6th Ave and your office is at 15th and 7th Ave, that still means they need to dig a 2-3 block trench, which is not something that a big telco or cable operator will be willing to do without a multi-year contract.
    When shopping for office space, you want something that is “on-net” to the provider, not “fiber available”.
    Disclaimer:  worked for a large cable provider for 7+ years before coming to my senses.

  24. RE 2) FWIW, there’s a hell of a lot of web design talent in NYC that’s locked up in advertising. Many of these folks don’t know that startups are an option or that there’s a ready market for their talent outside of the grind of agency work.

    RE 3) Totally agree regarding the marketing problem. I got a CS degree upstate, didn’t know there was a NYC startup scene, was subsequently brought to the city by IBM, and didn’t even discover the startup scene until years later.

  25. joelcloralt says:

    I think you can perfectly do a find and replace of NYC for Miami. We need and don’t need pretty much the same.

  26. Prior to working in the valley, I was in stock market finance in London.  The atmosphere there is that I do better if I beat the guy next to me (and sadly it’s true!).  It’s the same in other big NYC industries where it genuinely is zero sum (advertising, law, fashion, finance…).  Very hard to develop a real SV style selflessness when surrounded by a city where you eat what you kill!  Having said that, NYC is an amazing place that I intend to be a part of in the next couple of years.  General Assembly is amazing.  USV are amazing.  The Knicks are…wait. ;-)

  27. andrewdeandrade says:

    If I were in the NYC scene, I would exploit the fact that the BoltBus can get students from top engineering universities Boston to NYC in a couple of hours very very cheaply. I would organize a bunch of NYC startups to do a startup-crawl weekend two to four times a year for MIT and other Boston CS/engineering students. It shouldn’t be hard to divert off a bunch of talent from Silicon Valley to NYC.

  28. Gotta disagree with you 100% on the rent.

    I’ve lived in NYC for 10 years and left because of the rent (among many other factors – but that was a big one).

    Maybe its fine for the young single dev, but for the young married dad dev its not a good omen. In that position I’m not just talking about extra bedrooms and such – we now need to factor in school districts which has a HUGE impact on your choices and price ranges.

  29. I think that’s a great idea. The problem is most startups don’t have the resources to do all the legwork to get all the students rounded up, motivated etc. A bunch of startups have talked about joining together to do this but thus far we haven’t managed to pull it off. I think this is an area where VCs could really help.

  30. I know devs with kids who live in Brooklyn, NJ etc and seem to get by fine. Agree that living in Manhattan with kids going to good schools etc requires lots of dough.

  31. ip2k says:

    I wish Detroit was even worth mentioning in this article, but the tech/startup scene here is more or less dead / a joke (I recently went out to SF and visited the valley and….well, let’s just leave it at I’m planning to move there when my lease is up).

  32. One way to prime the pump is for people with ux/ui chops at the agencies to start moonlighting more. Contracting on product cycles often fits well into a startup’s rhythm (and spend), and it’s a great way for both parties to try each other out. After a few of these experiences, the designers may feel more comfortable and more likely to leave the corporate shop. The good news is this appears to be happening more and more. 

  33. andrewdeandrade says:

    Totally. I think the support of VCs would be essential. Also, AFAIK, some NYC founders like Matt Mirelles have tried organizing similar efforts in the past. There really is no reason why NYC can’t suck off a lot of the talent from the Boston area simply by establishing a solid relationship with Boston CS students. If a student there already has a bunch of friends in the NYC startup scene by the time he graduates, I reckon that that would weigh very heavily in their decision before flying across country to move to SF. 

  34. Great Post im from new jersey studying CS and Computer engineering and I have to agree with you when you say Web Product design isnt taught in school. It really Isn’t I have taught myself Web design and web engineering this summer. Been using Django and Python and loving it. Sometimes one can not just depend on school to learn something. It takes dedication and ambition.

  35. blameitonthebanks says:

    The problem with NY is that there are too many other very well paying jobs.  If I was a Stanford CS grad living in NYC (which I was at one point) I could either go to a startup and at best earn $150k / year or go to work for Goldman Sachs and get a guaranteed $400k for glorified IT work or try to get a buy side position at a hedge fund and make seven figures a year.

    So long as there are banks in NYC, there will never be a thriving startup world.  And there will always be banks in NYC.

    You think Max Levchin goes to work with Peter Thiel had he lived in NYC? No way.  He would have been a quant at some hedge fund and probably made more money than he did at PayPal.

  36. Assuming a somewhat fixed demand on Wall Street, I don’t see why NYC can’t recruit more engineers than Wall Street needs. I have found that a lot of engineers at startups simply prefer the startup lifestyle and the types of projects they get to work on. Obviously startups can’t compete on a cash basis, but as I tried to say in the post if we have big exits and develop an “equity culture” startups might be able to compete against Wall Street even on a financial basis. If we had a bunch of Max Levchins running around (who has done quite well, even by Wall Street standards), that would provide a good role model for startup engineers.

    btw, nice email (dixonsucks@yahoo.com)

  37. That sounds like a great idea to me. Especially in New York, where there are so many startups that need help and so many students that are looking for jobs. I know there are a few clubs (mainly tech at nyu) that promote startup life in downtown Manhattan, but I think we need to see some more “official” promotions such as the school itself running programs (like the type you mentioned).

    The other issue is – as Chris mentioned – that we have a shortage of engineers and probably an abundance of business people getting involved in startups because it’s “hot” right now. So that leaves a lot of companies who are not looking for business help at all. So I like your suggestion about alternating between working for a startup and going to school, but I don’t know how scalable that is for all students who are interested in the startup space.

  38. blameitonthebanks says:

    Sure, Wall Street has fixed demand but they will constantly take the top caliber because they pay up so tech is forced to only get 2nd stringers or people who want to do it for lifestyle – not because they’re hungry.

    And Max did do quite well but on a risk adjusted basis, he made the wrong decision.  Paypal (and the original Confinity) was a crazy idea – it continues to violate just about every wire transfer act on the books.  And there have been lots of payment companies before and after that have failed.  Whereas at a quant shop, one good year makes him set for life and if his fund blows up, he just goes to the next one.

    I was in NYC and looked around at the talent pool and realized there’s now way I could build a company there.  I moved to SF and recruited some top developers who if they lived in NY, would definitely be working for Jim Simons at Renaissance making a guaranteed 8 figures.  But, shhh, don’t tell them.

    And don’t try to trace the email.  It’s a fake!  And no, you don’t suck, but I’m not feeling creative today.  Sorry.

  39. As a DC person who watched AOL grow, thrive, struggle, get acquired and atrophy, I would (with respect) slightly amend your comment.  NYC can benefit from companies like AOL if they remain independent and located there.  Once they are acquired, particularly if the acquirer is headquartered elsewhere, things change quickly. If they stay, they remain part of the ecosystem and continually spin off and acquire entrepreneurial companies to keep the game going.  Here, the best talent has been scattered to the winds or relocated.  One of the strengths of the Valley is that an acquirer is likely to be a neighbor.  NYC needs to keep its companies strong and independent.

  40. MIT Sloan Entrepreneurship and Innovation club brought 40 students last year to visit NYC tech companies in October (the second year in a row of the trip).  We are already planning this year’s trip.  We visited Gilt, Gawker, Etsy, Foursquare, Dogpatch Labs (met with a pre-turntable.fm Stickybits), Knewton, and a bunch more.  Almost everyone we reached out to was really welcoming and gave us over an hour of their time.  HBS does a similar trip.  Most of us aren’t devs though…

  41. Marc Hayem says:

    How do you explain the hardcore engineering problems (search, databases, OS, Enteprise Apps, etc.) are mostly tackled in Boston or on the West Coast? Is there a lack of hardcore CS skills in NY?

  42. mark crowther says:

    Chris, The culture gap between East and West is vast. As you know. West will back an idea. East want to see revenues. I think it’s hard for the mindset of the investor community to change. Maybe it will. But I think it’s entrenched. Mark

  43. if anyone hasn’t seen it, this is somewhat relevant: http://www.paulgraham.com/cities.html

    excerpt: “This suggests an answer to a question people in New York have wondered about since the Bubble: whether New York could grow into a startup hub to rival Silicon Valley. One reason that’s unlikely is that someone starting a startup in New York would feel like a second class citizen. There’s already something else people in New York admire more.”

  44. I think that definitely used to be true but has clearly changed. Look at the websites of Union Square, Founder Collective, Lerer Ventures, IA Ventures, Betaworks. 99% of those investments were pre-revenue.

  45. I think one of the biggest problems is the money/image driven culture in NYC. Coming from the west coast and what I’ve seen in general, people in NYC seem to care a lot more about their looks, how they dress, how others perceive them, are more materialistic, and money driven. Given that, I agree with “blameitonthebank’s” post about how the majority of people would rather go work at a bank and make a lot more money than at a startup. What you said about some successful exits would definitely help that, where people can see how much equity really means at a startup. I think you would rather have someone not join a startup because of the equity/money, and instead join because they enjoy the startup culture, believe in the product, and want to change the world and do something great – but I feel like it’s much harder to find that type of person in NYC compared to elsewhere.

    Here’s a couple Quora threads discussing the differences between Silicon Valley and NYC and it just seems shows that NYC cares a lot more about money:

    http://www.quora.com/What-are-the-differences-between-and-pros-and-cons-of-Silicon-Valley-Bay-Area-vs-Silicon-Alley-New-York

    http://www.quora.com/What-cultural-differences-exist-between-New-York-and-Silicon-Valley

    A few posts that stood out to me from those Quora threads:

    “Silicon Valley is big on community (support, team, help, helping, community). New York is focused on the individual (self, myself).”

    “Culturally, New York City is generally about optimizing for the present, while Silicon Valley is about optimizing for the future. Everything in New York is orientated toward maximizing the now.”

    “Pick-up line that works:SV: I work at Facebook. NYC: I work in private equity.”

    “A generalization — I have the sense that people in NYC tend to think less about changing the world as opposed to making money. It’s my personal opinion that while NYC is a creative capital in many ways, many people here, both in business and within the creative industries, are pretty conventional and set on following well-defined paths to success rather than blazing new trails. Hopefully this will change. A lot of people here made their money by extracting value from other people’s activities, rather than making anything or improving the world. Luckily, there are enough people who do the latter to associate with.”

  46. treyfisher says:

    Have lived in both, I rate NYC much higher in terms of vibrancy and creativity. SV is a pretty homogenous place and attracts the same type of people in that most want to be involved with a start-up. There are more magnets pulling people to the City than people wanting to jump into a tech start-up. Personally, I hope NYC never turns into SV. It’s only a matter of time before a landmark tech company grows out of NYC. It will happen and it will be great for the city when it does. That said, the Internet connection throughout the city should more accurately reflect the city and be the best in the world.

  47. Those Quora threads are written by people who have no familiarity with NYC startup culture. The description of California is true and the description of Upper East Side Banker types is true, but there is a very large culture of people from whom those descriptions are completely inaccurate.

  48. betashop says:

    Chris. Come by Fab.com and we’ll show you how a NYC startup can take advatage of the unique qualities and talent of NYC. Fab.com could only be done in NYC.

  49. Chui Tey says:

    Over here in Australia, where there is a mining boom running, the parallels are similar. The rents in the mining towns are very high (around $1000 per week), and people are offered a job but no one can move into town because the accommodation is scarce. Under these circumstances, why would anyone living in a mining town contemplate working in a start up, given the salaries are already so high working in the mines operating machinery.

    The fact is New York has been experts at leverage AND reducing risk. This is why high salaries are possible in the first place. Growing a start up in New York would be like trying to grow mango trees there, ie you’d need a green house etc and it’d never make any financial sense.

    Your comment about critical mass is important. People working in startups need sufficient runway to learn what works and what doesn’t. If there are enough new startups to replace the pool of failed ones, people will be able to continue taking their experience to new companies.

  50. Judi Huck says:

    I’m going to side with Chauzer’s points (even if source is whack), writing more on my thoughts now…

  51. Judi Huck says:

    this is the best comment I’ve read so far & btw, congrats on TechStars – may your mind explode with wisdom ;)

  52. Great post. I’m excited that there’s so much going on with start-ups here these days, but we need to work on infrastructure. I live and work in the #1 ZIP code for startups, and I can’t get decent Internet for the life of me.

  53. Once designers from the world of advertising realize how much they can leverage their talents in the startup world, they’ll start to come over. As a former advertising Art Director, I can safely say maybe 5% of my ideas ever got green lit simply because the the approval process was too bureaucratic. It’s crazy to think that some middle manager can kill a great idea for no good reason. 

    Whereas in a startup, that great idea can get hacked together in a few days and then A/B tested by the public.If I were to do a PR campaign to recruit designers I’d focus on that leverage that the startup world offers. 

  54. rimalovski says:

    Andrew: You’re dead right. Over the past year, we’ve started a bunch of  “official” programs including the NYU Day 1 Tech Expos, NYU Technology Venture Competition, NYU Entrepreneurs Network, and lot more to come. Check out nyu.edu/entrepreneur.  Happy to talk with your more offline.  

  55. Chris to say that New York City doesn’t already have a serious, long term startup hub is misleading. It has one, it’s called advertising technology, and it has been vibrant for more than a decade. It’s just that you read about it more in AdExchanger than you do in TechCruch (hint).

    For example, we sold our NYC-based startup, Pictela, to AOL last December. Admeld was just acquired by Google for $400MM. Likewise, Invite Media went to Google last year at a great valuation. A few years back Tacoda sold to AOL for over a quarter billion dollars and DoubleClick went for $3.1 Billion — still Google’s largest acquisition ever!

    Ad tech deals of this size and valuation generally only happen here because this is where media buying decisions are made. I would venture to say that a company like Sprout would have had a much better outcome had it been based in New York.

    I think what you are really saying is that New York hasn’t recently had a big, high profile B2C internet company blow up which is fair. Personally, I love our New York startup culture and the real value that our B2B companies deliver. I’ll take a Simulmedia over a Color any day!

    Matt

  56. Frank- 
    I’m familiar with a few of these programs, but would definitely love to hear more about them and help out in any way I can. What’s the best way for me to reach you offline?

  57. I’ve noticed one thing about NYC’s startup scene:  Everybody wants to do it by himself or in very small teams.  When entrepreneurs network, then mostly to sell their services to one another or brag about how much traction or funding they have got.  There are no leaders who rally people behind them and start something truly big with lots of people involved.  Ultimately, a 20 person shop can only innovate so much.  You need hundreds working on the same idea to get a true breakthrough.

  58. tomhenning says:

    This entire conversation has an odd assumption. Namely, that Engineering = Computer Science. Software and web design are small slice of what engineering is, although it gets a lot of press.  Engineering and technology also include the things that make software possible: circuits, chips, sensors, displays, batteries, the factories that produce them, and the basic research that underlies them. Silicon Valley is full of start-ups of this ilk, and NYC would be advised to foster this sort of innovation. It’s the missing piece.

  59. Sean W. Coughlin says:

    This is absolutely right. The people writing those Quora threads simply don’t account for start-up hustlers in New York, many of whom left those private equity jobs or banking jobs or law jobs to create new things.

  60. Or maybe it’s not necessary to New York (NYC needs to become a serious, long-term startup hub)? It rather good to move here with well established business. But starting in the big city, with such huge rents (including) is quite difficult. Well, NYC can grow many more specialists, bring  ‘em from abroad after all. To lay high-speedInternet. So what?  When the idea for a successful start-up ripens, conditional
    Mark Zuckerberg will leave for 100 miles from NY and will open an office there.. Less noise, more storage space. Easier to launch. You didn’t get a move a car with the fourth gear, Isn’t it? New York
    is good at the stage when business was overclocked … and it seems to me, this situation will not change during my life.

  61. What NY needs (like SV) is less subprime VC. Because when subprime VC is gone and companies with substantial social economic value are produced, investors will care more about securing upside rather than downside, and the commodity squeeze in innovation will disappear. Along with many of the pain points you listed here.

    Best,

    Georges

  62. “Not needed: 4. More early-stage investment capital. ” 
    I imagine you say that, fearing that this would:
    A) raise already-high valuations further, and 
    B) allow less than the best startups to also get funded, producing downsides such as diluting the scene and further drying up scarce resources.

    Or maybe you’re trying to shoo away your would-be competitors ;)

    Or happy to hear if i’m way off base.

  63. I’m not sure who ip2k hangs out with in Detroit, but I like to think that we have a pretty thriving tech and startup scene. Our community spans everything from opportunities for networking (Startup Drinks, Detroit Venture Partner Meetups, D New Tech) to action / pitch / hackathon events like Startup Weekend (we’ve hosted four in the past three years) and Funded by Night. Hell, this past year was one of the best ever for Michigan VC firms (links to Crain’s Detroit Business article – http://bit.ly/l4nWls). We’re a lot like a number of cities out there and still navigating our way as we continue to grow.

    However, I get it. Detroit is not Silicon Valley. But, if every single entrepreneur packed up and left their hometown because it wasn’t like the valley, we would have a lot of dead communities around the country. Detroit has A LOT to offer people with a huge network of passionate supporters, access to numerous incubator programs, growing venture firms AND dedicated media support. To quote my friend Raji Bedi, just call us the “Silicon Garage.”

    ip2k – if you want to come hang out and meet people in the community, drop me a line at brandonchesnutt@gmail:disqus .com. If you’re not busy tonight, there is a D New Tech Meetup in downtown Detroit at TechTown with demos from five local startups (http://www.dnewtech.org/).

    Brandon Chesnutt
    @bchesnutt:twitter 
    Startup Foundation – Detroit Co-Founder

  64. I suppose you could argue that. But we only invest at earliest stages so actually want more Series A and later VCs here who keep our companies going.
    Also, I was mostly thinking about government initiatives to encourage early stage investing. just seems to me the private sector has filled this (former) gap nicely.

  65. exactly. I expected to see the “more later VC” item in the “needed” list. 

    I agree with msuster’s post about the coming brick wall.

  66. cookiemonster923 says:

    When talking about engineers at NYC, or in the Northeast in general, everyone is quick to mention columbia and NYU while often leaving out the (by far) highest rated engineering program located right in the middle of the city at The Cooper Union.

  67. jboh says:

    Here is an older post, but another take on why NYC just isn’t SV, from a respected techie. (RoRistas and Pythonistas love him or hate him).
    Basically echoes some comments here that NYC is dominated by a few old, large industries where the “me first, only today matters” ethos precludes fostering the type of ingenuity that makes SV work. MBAs dictate, techies serve; SV is not quite as one-way.

    http://zedshaw.com/blog/2010-01-19.html

     

  68. Also, 6) should be: granting H1-B visas to allow for more overseas tech talent to flow in to the cosmopolitan capital of the world that is NYC. It would be amazing if 2. and 3. could be merged into 7) “More affordable housing for techies” like turning Roosevelt Island into Silicon Island, except instead of making it a school, make it mixed use commercial & residential and let hackerspaces and campuses sprout up there. Like Co-Op City, but for tech. Schools only take one so far, and take a long time to mature good people, and there’s no guarantee they’ll stay in the area; on the other hand, hackerspaces and skillshare places where people teach classes build and fortify the local talent. Every space in the city that encourages lifelong learning should get a stipend.

  69. Thought: what if you had a non-prof co-funded by the city and VCs that went around to raise awareness with campus job centers, participated in official on-campus recruiting events, and ran awareness/recruiting events at all the schools putting out engineers where the startup scene in NYC is simply unknown?

  70. ben kartzman says:

    Great post Chris.  As a CMU HCI grad and startup CEO in NYC I definitely agree that we need to find ways to get more engineering, product and general entrepreneurial talent here early.  The fun part about being an entrepreneur in NYC is that we’re in the minority / are the underdogs in a city that is dominated by wall st.  I’m hopeful that will change with more people, better infrastructure (ex. we use 2 Clear 4g’s plus 2 cable internet lines for our office!), successful company exits, and office space that doesn’t require 7 year leases (seriously?).  Ultimately though I think that’s a big difference between here and SV, and one that fosters good collaboration, since we are more likely to feel like we’re all in it together as we collectively try to build out the ecosystem.

  71. Great post.

    Have been comparing Amsterdam, London, Helsinki, Marseille, Geneva and Hamburg all of which have stated ambitions to be a magnet for various industries like fashion, design, and something rather vague termed “creative industry”. Most of the time the discussion is distribution lead (we have big pipes…now all we need are ideas on what to do with them). In the Netherlands particularly the culture of government sponsored “twinning schemes” has been killing. High quality content production is weak. Lots of event blogging and pr hype, little in the way of investigative analysis outside the UK. If I am missing something, please shout out. Otherwise I conclude US is about 2-3 years ahead of us.

  72. Dave W Baldwin says:

    Very good post Chris!

    Went through some of the comments and have to repeat what I said in one of Mark Suster’s blogs regarding LA… do not focus on comparing to the SV and everyone push to have NYC grow into what you know it can.  At the same time, it is a matter of nurturing tech understanding in all the other geography blocks which will allow more interaction as should be at this time.

    CS needs to be taught to Junior High.  In this decade you can do so without sacrificing BioNanoTechnology.

    Let the cultural advantage NY claims work to its benefit… instead of pushing the child solely into fabric design, encourage their understanding of the higher tech of the moment.  Trust me, the kids are truly sponges.  Just a little difference within that pushes collaborative circle potential in the future. 

    To someone who wants to make fun of the developing world, just sit there on your cushion claiming anything in the world WILL have to be developed in the US first… you will be caught sleeping.

  73. Francesca Krihely says:

    You don’t need a nonprofit to do this work. What we need is to spur a culture of innovation that is widespread and doesn’t simply reside in the startup scene. It needs to be integrated into the corporate mentality–which has a larger voice in NYC. A good model: AOL Venutures, for example, sponsors a scholarship program for up and coming Design and Technology students from all over the world to come work @ a startup for a semester, summer etc. Giving lean startups extra help is so valuable, and getting more students thinking, networking and innovating in NYC will lead to more people with ties to NYC’s social capital. 

    How else can we bring the best and brightest to NYC? 

  74. Francesca Krihely says:

    The only NYC startup that has effectively embraced the AWESOMEness of NYC is Foursquare–no hate on Hunch Chris, I love it, but it isn’t a locally fed machine. NYC’s venues and restaurants, some of the best in the world, feed the business model. Services, technology and platforms that can grab the city’s value–like Fashion, Finance, Marketing–will help differentiate this startup scene from the rest. 

  75. James Mitchell says:

    I live in Boston, soon to move to LA. In almost all parts of Boston, you cannot get Verizon FIOS. So you are stuck with cable (Comcast has hired some of the dumbest people on the planet) or Verizon DSL, which is much slower and has higher latency than FIOS.

    If I were the mayor of Boston, I would summon the CEO of Verizon and say, “Let’s make a deal. Within a month you submit a detailed plan on how every part of Boston will have FIOS within 18 months. Otherwise, I will tell my underworked police officers to follow every Verizon truck that comes in Boston and issue parking tickets every time they are illegally parked. I anticpate thousands of tickets being written every day.”

  76. James Mitchell says:

    What matters a lot is what your peers are doing. If you live in Silicon Valley, most the people you will most likely meet are starting a startup, working for a startup, or thinking about starting a startup. If you are not at least thinking about it, people will think you are weird.

    In NYC, you are much less likely to meet a guy starting a company at a party. If you are passing yourself off as an alpha male and you want to impress the girls, you would probably tell her you work for a hedge fund or a major investment bank.

    So in Silicon Valley, it’s a positive feedback cycle. There are a bunch of people (Brad Feld in Boulder, Mark Suster in LA, Fred Wilson and you in NYC) who are trying to make their cities more startup friendly. I applaud their efforts (Brad in particular has done an amazing job) but the fact of the matter is that they are swimming uphill. SV is simply in a different league than any other city. If you are not in SV, for some types of startups, you are at a huge disadvantage. Even Boston, which supposedly is number two in the U.S., can’t hold a candle to SV.

    If you want to act in movies, you need to be in LA or NYC. If you are not, life will be tough. Same for starting certain types of startups in any place other than SV.

  77. Great post. However, in response to your #2 bullet for “these we do not need” in the startup world, the fact of the matter is the Applied Sciences NYC initiative will happen. So why not focus on good locations for this new university and the spillover effect it will ultimately have on the surrounding community? 

    I’m working with a great non-profit called the Coalition for Queens. We are encouraging prospective AppSciNYC respondents to consider alternatives to the three designated sites of Roosevelt Island, Governors Island, and Brooklyn Naval Yard. Respondents have been told that they can propose any site. We believe that Willets Point, Queens is ideally and uniquely suited within New York to realize the potential of the initiative. 

    I’m surprised that very few people have talked about Queens (most diverse borough!), as it already has some of the most active cultural, artistic, and entrepreneurial communities in the country. Start-up companies need room to grow, and Queens can provide that space at an affordable price.

  78. NYC is a huge city. eg, You can get invited to parties every night where people are completely unimpressed with finance jobs.
    Statements like these are only made by people who don’t know NYC.

  79. Ok, I’ll bite.  I am building a start-up.  HQ might be NYC, Cambridge or Princeton.  Haven’t decided yet.  Want to see who’s out there.  Need a web designer and programmer.  Send resumes to djjordo@hotmail.com.  

  80. Generalizations about NY never take into account this very important numbers…. during the day in borders of New York City, there are 25 million people.  Things can happen here….

  81. Excellent point Chris – firmly agree with your assesment. I think the idea of collaboration / connections taking place even outside of NY is important as well.

    There’s a load of talented developers and designers here in the Midwest, the key is establishing the networks for businesses to succeed where ever the talent and skill is based…

  82. The thing is parts of Brooklyn & Manhattan already have good concentrations of tech companies, and I think it’s generally a good strategy to build on that instead of spreading things out the thinly. That said, I love Queens! :)

  83. This broad characterization of New York bears no resemblance to my experience as an entrepreneur and media professional in this city over the past decade. In some sectors, particularly ad tech, New York is at significant advantage. New York has a been a leading center for commerce and business for 400 years for a reason.

  84. abenego says:

    On number two, I think besides your comment in regards to print design, there are actually a ton of “web” product designers in the city more so than one may realize in the tech startup scene.

    The problem (in regards to tech startups ) is that most of these designers are actually employed by large “non-traditional” ad agencies likeR/GA, Huge Inc, Akqa, etc.  

    The root to this problem may be due to the fack that traditionally tech companies aren’t really founded by graphic designer but rather by engeniers, google, facebook, etc.
    I also just haven’t seen designers in general launching much or attaining entrepreneurship much in my experience. 
    I will argue that when they do, they are not taken into consideration as seriously as tech founders for the very reasons listed above.

    So… I may add that NYC needs a rock start product person who is founder to a great startup to stir things on that end. (If there is one, please point that person out for me.)

    In regards to ITP (and I may add Parson’s Design and Technology Department as well) People sitting on the boards of these programs are the very CEOs of these non-traditional ad agencies, furthermore high percentage of people teaching the classes at ITP or Parsons are fulltime employees at  R/GA, Huge, Akqa, Ogilvy & Mathe, etc., etc… so they are being trained young and taken young (me included)

  85. The opportunity for designer’s is arguably a new development. The barriers to building and funding something are low, which means intense competition, which has forced even the most technical products to compete on UX, brand, and design. More non-creative founders are showing a commitment to a design led product strategy, looking to bring in designer co-founders or putting designers in lead roles rather than farming out the work to cheap freelancers.

    Chris is right — it is an awareness problem. The industry is new, unfamiliar, and generally unknown to the design community. And let’s face it, designers like to surround themselves with well ‘designed’ things — homes, offices, even people. New York has the distinct advantage of being a creative city. The valley seems like more of an isolated geek bubble.

  86. Given that “barriers to building and funding something are low” I think we might start to see developers looking more actively for a designer co-founder than a business one. #justsayin

  87. I completely agree regarding the need for a strong designer in the founding team of today’s startups. This will sound self serving but I believe that the “design first” approach that we had at Pictela played a big part in leading us to a sale to AOL in just 26 months. I designed the initial version of the Pictela product myself because I had run a web design shop previously and knew design, typography, Photoshop, etc. A background in media was also key, though, because I knew what spec the product needed to be built to so it could be applied to online advertising and be monetized.

    Thanks to my business partners I was able to maintain a strong hand in the design of our product even after we brought UI designers on board. Having no egos is vital in a founding team because you need so many different types of people in combination to be successful — engineers, designers, finance, data, reporting, etc. You’re not going to find all of that in one person and we had very little overlap on our team which definitely helped.

    The truth is that most internet startups today need to solve product design and marketing problems. Unless the scale is absolutely immense, the technology is a given.

  88. Its great that attention is being brought to this topic. I’m currently working in NYC and have been looking at getting out of the current consulting work that I am in and join a start up. The problem is where do I go to see what startups are here in NY and which ones are looking for people?

  89. I wonder if excellent blogs like this one might help by giving entrepreneurs a sense of the problems they are looking at that need solving – the hardest ones? the ones need that need the best minds on them?

    Or perhaps coming disruptions you see which will create opportunity?

    Personally I feel that increased interest in digital identity ownership may present one of the biggest internet enabled opportunities we’ve seen yet.

  90. aaronajp says:

    Great and insightful piece. Though it really makes me realize how horrible we have it as startups in Chicago. The list of things Chicago needs would probably  be a 5,000 word manifesto! 

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