Screw the Valley. Timothy Sprinkle
is intense. While it’s easy to see the appeal in many other cities (including the Bay Area) where success seems within reach if you have a novel idea and the right kind of business sense to make it happen, entrepreneurs who set up shop in America’s largest city are cut from a different cloth, given all of the challenges that come with doing business there. It’s expensive, it’s competitive, the market is crowded, and no matter what you’re doing, there’s a good chance the city has seen it all before and is far from impressed with your latest version.
In short, it’s New York.
But, across the board, the city’s entrepreneurs don’t see it that way. When they look at New York City—the massive, overwhelming, challenging, hyperactive city that it is—they don’t see the same hurdles and challenges that I do. All they see are the opportunities that being in this city at this time in history affords them.
“I mean, the difference between New York and San Francisco really is that in San Francisco technology is just ingrained in everything you do,” explains Alex Taub, the cofounder of Social-Rank, a startup dedicated to helping brands find their most valuable social media followers. “So, you know, unless you’re someone like a Drew Houston or Brian Chesky, the founders of Dropbox and Airbnb, you’re still small potatoes compared to these big tech titans.”
Whereas in New York, he says, the scene is still early enough in its development that a founder can still make their mark and “be somebody” in the tech community pretty much right away. Meaning you don’t need to start a $4 billion company to get noticed. Even as of 2013, an entrepreneur can get something started, do a really good job with it, and be considered one of the founding fathers and mothers of the New York tech scene. The city’s ecosystem is just at a different point in its development than Silicon Valley is.
“When a company in San Francisco starts and then sells itself for, you know, $100 million, it’s great, but they’re not the new kings and queens of the Bay Area tech scene,” Taub says. “They’re just someone who sort of just cashed out. In New York [with an exit like that], you would really be somebody.”
This trend has not gone unnoticed in City Hall, where former mayor Michael Bloomberg (who was New York tech’s chief cheerleader during his time in office) long promoted the city as a high-tech destination and fertile breeding ground for startups. By the end of his third and final term in office in 2013, the city was home to a growing technology sector that had already seen its first $1 billion–plus exit when Tumblr sold to Yahoo. In fact, according to a report released in September 2013 by Mayor Bloomberg’s personal foundation, there were at that time 262,000 workers in the New York tech/information sector, including those at startups, those at more established tech companies (like Google and Facebook), and those working for “major information companies” like Reuters and the New York Times. Economist Dr. Michael Mandel, the author of the report, estimated that those jobs contributed almost $30 billion annually to the New York economy in the form of wages.
“Despite the aftermath of the financial crisis, New York City’s share of the nation’s private sector employment stands at the highest level since 1992,” Mandel wrote in the study. “The reason: In an era of massive convergence, New York City rapidly reinvented itself as a world-class, urban tech/information hub, uniting tech startups with the city’s publishing, media, design, and entertainment companies, all of whom are rapidly digitizing themselves. A key catalyst of this reinvention was policies undertaken by the city itself to improve the tech infrastructure, build and promote a tech/information community, and provide training and support for entrepreneurs.”
The data is staggering. According to the Bloomberg report, the tech/information sector is now the second most important part of the New York City economy, behind only the financial services industry, and was reportedly responsible for one-third of the private sector job growth in the city since the start of the Great Recession in 2007. And that’s in a metro area that saw its number of private sector jobs increase by about 4 percent between 2007 and 2012, compared to a 3 percent drop in those jobs nationally. In fact, since the beginning of the recession, New York tech has added about 26,000 jobs worth some $5.8 billion in wages to the city’s economy.
This growth extends beyond Manhattan, as well. Brooklyn’s tech/information sector alone has reportedly outpaced almost every other large startup area in the country—including Austin, Seattle, Boston, the Research Triangle, and even Silicon Valley itself. Only San Francisco has been growing faster.
“The mayor, himself being an entrepreneur but also focused on ensuring the economy is diversified, has devoted a ton of focus and effort into growing the tech sector here,” explains Eric Gertler, executive vice president and managing director of the New York City Economic Development Corporation’s Center for Economic Transformation, the office charged with keeping the city’s economy prepared for the next century. “It’s been a major focus of ours to ensure that, you know, we’re involved in making sure that we’ve got a very vibrant tech community. And I think we’re pretty proud that, if you look at the statistics, you know New York has become now the number two geographical area in the US for most venture capital invested in all these tech startups.”
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