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.

http://twitter.com/AndySack Andy Sack

Start-ups are a great community and New York is on it’s way!
http://eastagile.com kenberger

“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.

http://www.cdixon.org chris dixon

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.

http://eastagile.com kenberger

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.

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Anonymous

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.
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Anonymous

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
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http://mikecap.mp/ Mike Caprio

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.

http://www.facebook.com/FrantzdyRomain Frantzdy Romain

My co-founder is on a student visa from Russia there should be some changes made in that system. Its rather flawed
http://www.cdixon.org chris dixon

Totally agree on H1-Bs. I left out national issues in this post. I’d also add patent reform to national issues.

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http://twitter.com/benkartzman ben kartzman

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.
http://www.jonathanmarks.com Jonathan Marks

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.
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Dave W Baldwin

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.
Francesca Krihely

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.
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James Mitchell

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.”

http://www.cdixon.org chris dixon

agree in principle though not sure that’s the best method

James Mitchell

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.

http://www.cdixon.org chris dixon

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.
http://twitter.com/courtines Laurent Courtines

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….
http://namely.com Matt Straz

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.

http://twitter.com/coalition4qns Coalition for Queens

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.

http://www.cdixon.org chris dixon

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!

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http://pulse.yahoo.com/_AVS2LPUT6KHB3WKDHOFVURDYC4 jakarta

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.

FAKE GRIMLOCK

REAL QUESTION: WHY A DESIGNER AND PROGRAMMER NEED YOU?

http://www.SiliconPrairieNews.com/ Jeff Slobotski

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…

FAKE GRIMLOCK

TALENTED DEVELOPERS AND DESIGNERS IN MIDWEST NOT STAY THERE.

THAT WHY SILICON VALLEY WIN. IT SUCK OXYGEN AWAY FROM EVERYWHERE ELSE.

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Anonymous

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)

Anonymous

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.

http://mrcoles.com/ Anonymous

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

http://namely.com Matt Straz

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.

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http://pulse.yahoo.com/_FPESOYK3SVQQQ75I4IACCBKNWM Anthony Smith

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?
http://twitter.com/AndrewKorf Andrew Korf

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.
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http://dissertation-service.co.uk/ dissertation uk

interesting! thanks!
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http://twitter.com/deepkut anthony deepkut

Saying New York City will serve startup needs like Silicon Valley is akin to saying Silicon Valley will serve banking needs like New York City. Not happening.
Anonymous

Unfortunately this won’t happen for a long time Chris. Cities take a long time to change. Check out 58 mins in:

http://fora.tv/2011/07/25/Why_Cities_Grow_Corporations_Die_and_Life_Gets_Faster#fullprogram

P.S. Hunch is cool.
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http://www.facebook.com/Aaronjphillips Aaron Phillips

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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Chris Dixon