

NYC vs Silicon Valley - MediaSquirrel
http://www.metamorphblog.com/2010/02/nyc-vs-silicon-valley.html

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yummyfajitas
_a) Wall Street has been a huge talent suck for a long time...the default
dream...: Work for Lehman._

Actually, there is a bigger talent suck than Lehman. I can easily see the
appeal of working for a startup rather than Lehman: don't wear a suit, don't
deal with bureaucracy or MBAs, technology rules the day. Less money, but a lot
more fun.

Now, consider many small hedge funds: don't wear a suit, no bureaucracy, maybe
one or two MBA's who handle clients, technology rules the day. Bring your dog
to work, but the CEO's dog gets veto power.

Both seem like fun places to work, but the hedge fund can compete on price.

~~~
pw0ncakes
The technological problems that you work on in a hedge fund are less
interesting than those you do in a startup. On the other hand, making actual
money has benefits.

~~~
mtalantikite
I don't know, I disagree that they're not solving really interesting problems.
My first jobs out of college were at hedge funds, pretty much by accident, and
I got the chance to work with a ton of really smart people -- many of whom
were math or engineering PhDs -- in a very challenging environment.

One two-person team I got to work with was doing something resembling stat-
arb, and was pushing about $250 million of trades in the last 10 minutes of
the market. Beyond getting to be hands on with some crazy math, building a
system to make that happen isn't exactly trivial.

~~~
pw0ncakes
Fair point. At a quant hedge fund, you do get to work with some awesome
people, and you learn a lot from after-work conversations.

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starkfist
I am a veteran of both places. Here is what you need to know.

\- NYC is 30% more expensive than Silicon Valley / SF

\- you don't need a car in SF but you probably do in SV

\- you might need a car if you live in the inconvenient neighborhoods of SF.

\- the bay area is sort of automatically healthy, you have to work hard to be
unhealthy

\- NYC is automatically unhealthy, you have to work hard to be healthy

\- the weather is better in California

\- the women are better in NYC

\- if you are decent looking and have a job, you can get a date in NYC

\- you can be good looking and rich in SV/SF and still never get a date

\- there are better options for outdoors activities in California

\- anything besides outdoors activities is more convenient in NYC.

\- hedge funds / finance can be more interesting than a dumb startup and will
certainly pay more

\- working for a dumb startup is bad for your career

\- you can get trapped in a startup career spiral in SF/SV where you never
make any money, even if you're a great programmer

\- you'll eventually make decent coin in NYC even if you're only an average
programmer

\- there are interesting people in NYC with varied careers ranging from UN
analyst to fashion designer

\- in SF/SV there are tech industry people and weirdos

\- counterintuitively, even though NYC is more money oriented, the programmers
often have very interesting outside interests. the meetup scene in NYC is
intellectual, there's math, machine learning, functional programming, etc

\- in SF/SV most of your fellow programmers will only claim road cycling and
guitar hero as interests. the meetup scene is usually about source control or
social media tweeting

I could go on and on. Thinking about where the best place is to build your
startup is kind of silly. You want to think about what you want to build, and
build it. You can always move later if needed. These lists are also dumb,
although it was fun to write. Really the only way you can decide where to live
is to experience places yourself.

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carterac
In further defense of NYC, I want to address this whole rent/commuting
argument.

We are comparing this to Silicon Valley, where the freeway is packed with
traffic both ways every morning and evening. That same commute in NYC means
you could live in very affordable places in Brooklyn, Harlem, Queens, and NJ.

Another founder I know, after exiting his company, moved to NYC from SV mainly
because he couldn't stand being stuck in traffic all day.

Commuting in via the subway or NJ Transit is no longer than the time a lot of
people spend in traffic in SV.

And the best part? You can read a book. I just finished another chapter in
Founder's at Work on the subway back from a meeting. Awesome.

And since when was SF and Palo Alto that cheap anyway?

Plus in SV you need to own a car and car insurance. That is expensive. I
couldn't afford that so I had to borrow a bike. That bike had to get me
EVERYWHERE. Want to go to a meeting in SF? There goes half your day because
you're at the mercy of the caltrain.

Anyway, I could go on, but you get the point. I would argue that NYC will save
you time and money when it comes to transportation and rent. OK /rant

ps SV and Palo Alto will always have a place in my heart :).

~~~
dnsworks
Just a quick point, you do not need to own a car and pay for car insurance in
SF. I've been car-free for two years. Whenever I need to go somewhere that
isn't convenient to my schedule or by public transit, I use zipcar, which is
very convenient (at least in my neighborhood). Between car payments,
insurance, maintenance, fuel, parking, and parking tickets I used to pay an
average of $1,500/month for my vehicle. Now I spend about $70/month on
Muni/BART/Caltrain, and between $100-$400/month on zipcar.

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bwh2
_[Wall Streeters turned venture capitalists] are people who do dumb shit like
ask about pricing for a premium version of a genuinely novel product (in a
category with no existing market) that hasn't even launched yet...in the first
meeting._

Right, because asking about pricing (you know, the process by which you charge
actual money for a product, thus generating revenue and hopefully profit) is a
completely unreasonable thing for an investor to ask about.

~~~
pchristensen
When the product hasn't launched and there's no existing market, the questions
should be around finding customers, distribution, and technology risks.

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sak84
VCs/Angels in NYC(northeast as well) are just not in the same investing
environment as the West Coast. And it's solely because this area is just not
as mature as there. There are the investors that are smart and are willing to
take the risks (Founder's Collective, USV, FRC, Flybridge etc.), but the
problem is that they are few and far between relative to earlystage VCs and
angels on the west coast. Therefore, because they're smart, have branding and
don't have serious competition, they DON'T have to take the risk. And why
would they, who would blame them? They can wait until the company is almost
completely de-risked before they move in. (I guess an argument here is that
it's a good thing that the early stage investing industry is small and less
risky here. If they succeed more will come.)

The other investors here (the wall streeters turned VCS) just don't get it.
They're not investing, as you say, in "change the world" ideas. They're
investing in stuff that can make money right away, which is probably why they
ask about pricing prematurely.

NYC is frustrating in this respect, and it's easy to see why you're thinking
about the West Coast. They're just way more intelligent, early-stage
investors. That's changing though, I believe. It just sucks to be a startup in
this sort of purgatory. The more Ron Conway's that come to the east the
better!

~~~
gyardley
From personal experience, I can tell you that's not remotely how Union Square
Ventures and First Round Capital invest. (Can't tell you about Founder's
Collective or Flybridge because I haven't taken money from them.) They're
certainly willing to put money into companies before the risk is gone.

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dgallagher
_I hate Boston. Would never live there. So ignoring that city, where are you
going to find, ohh, let's say Speech Engineers?_

Why hate Boston? I would disagree. Boston's a great city to live in. It's much
smaller than NYC so you can walk from one end to the other, is a lot more
scenic, and my favorite part of all is that it isn't gritty/dirty like NYC is
(unless you head out to Boston's outskirts like Ashland/Brighton/Somerville).
Whenever I've visited NYC, all of the pretty parts (outside of Central Park)
were tucked away in some place most people can't afford. Being rich in NYC
looks like fun, but most people aren't rich.

NYC feels like an extension of an office cubicle to me. Crammed buildings.
"Rat Race" economics in full effect. No nature, no beauty. You're insulated
inside a sea of cement and brick. The only thing that's missing are the metal
bars.

IMHO of course. Boston isn't perfect either, but I wouldn't dismiss it as a
startup hub. Great universities, plenty of talented people available. No, it's
not Silicon Valley, but an admirable alternative none-the-less. NYC certainly
is too, regardless if I personally like it or not.

~~~
mtalantikite
Boston occupies a strange place in my heart. I grew up in and around Boston,
but am now a New Yorker, and I don't think I could ever move back. There are
definitely worse places to live, but Boston has always felt more like a really
big small town than a city to me, and the amount of close-mindedness and
racism I've found in Boston has always been surprising to me. I just often
don't feel comfortable in Boston.

While Manhattan might feel crammed, it's part of the appeal for us. Everything
is always open, everything you need is within a couple blocks, you can get
anywhere anytime in the city via 24 hour public transit. You walk down the
street and hear tons of different languages constantly. The diversity in
ethnicity, cultural backgrounds, and experiences is mind-blowing. It's one of
the world's cultural centers. Art and music is everywhere all the time. We
have enormous, beautiful parks all over the place, Central Park only being one
of them. Gorgeous brownstone neighborhoods with tree lined blocks. Old factory
neighborhoods repurposed into everything imaginable.

Is there trash on the ground? Yes, everywhere. That fades from your perception
into the landscape within weeks of living here.

Maybe Brooklyn would be more your thing (it is for me) -- it's more laid back
here and less crowded, but gives you easy access to all the amazing parts of
being in NYC.

'No beauty' really is hard for me to swallow -- I look around me here all the
time and am always amazed at how beautiful and diverse this city is.

~~~
dgallagher
Perhaps I was harsh implying "no beauty". The definition of beauty is
something that differs from person to person, depending on what then enjoy and
where they are in life. I think we can agree that it comes down to a matter of
personal preference. :)

I'm curious, but what racism did you see or experience in Boston? I'm likely
shielded from it (white American english-speaking male), so it's not something
that I've ever experienced.

Will check out Brooklyn the next time I visit. I've only ever spent a lot of
time in Manhattan.

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carterac
Matt, I'm reprinting my reply on your blog here:

Duuuude, NO! Or at least, that's what I want to scream at you after reading
this. But it is hard for me to refute your logic around investors. Of course,
SV has a larger and older network. Can't deny that. But, of course, in SV
there are also waaaay more entrepreneurs vying for VC dolla bills. Having
spent time in both locations, I wouldn't say it's any easier to raise funds in
SV, although they do have more smart money for sure.

But now with FRC, Flybridge, and Founder's Collective (among many others)
stepping up in NYC, I think we're just seeing the beginning of an awesome
growth curve.

Plus, haven't you been reading Dave McClure's blog? It's not about the tech,
it's about the design and marketing. Which NYC has in SPADES.

Alright dude, enjoy SV!

~~~
pw0ncakes
New York will succeed as a startup hub if the rents come down fast enough.
Right now, they're still too high; you pretty much have to work a Wall Street
job or be parentally supported to live here, and this is a problem.

~~~
sak84
Not true, you can find cheap places to live, if you're willing to live outside
Manhattan. Jersey City, Queens, BK, are all viable options for the scrappy
founder.

~~~
mtalantikite
Brownstone Brooklyn isn't exactly cheap -- my place is considered a steal here
in Park Slope, but it's still an eyebrow raising amount of money.

Places like Prospect Heights, Crown Heights, and Clinton Hill are gentrifying
quickly, and rents are getting up near the $2k month for a 1 bedroom mark.
It's just not sustainable.

~~~
jbooth
Bushwick. $1275, 1BR. Booyeah.

~~~
pw0ncakes
This shows how far New York has diverged from reality. No one in any other
city would consider this "booyeah" worthy.

In most cities, you can raise a family in a $1275/month apartment.

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eirene
Sorry to hear about your feelings re: Boston. I really enjoyed it during my
trip this week and briefly considered moving as FC has an office in Cambridge.

I do, however, feel your ecosystem pain. NYC is such a money town, and while
there are pockets of sun, air, & water here and there, they don't instantiate
enough to be completely nourishing.

That said, culture evolves and history re-writes itself with every passing
second. Given time, I can see the city reaching her potential as a startup
hub; she will make her inexorable way forward. Certainly it's time that
neither you nor I can afford to let slip by, but if it's not people like you
and I (& other like-minded folks) who help move this city forward, people who
give a damn and follow passion up with action, who's it going to be?

I realize that you've got to put your company first, but the two (help
NYC/grow company) aren't mutually exclusive. For instance Mouse.org -- I'll be
chatting with them soon, & if SpeakerText is still in town, would love to
place a capable high school intern from one of their squads with you.

We (NYC entrepreneurs & investors alike) might make more progress if we could
set aside more than a couple hours a month to work concertedly on building
culture and making history.

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gyardley
This article is almost completely 100% opposite to my own experience raising
money in NYC.

There's plenty of good angels here - largely entrepreneurs who have been
successful with their own businesses. I talked to a number of them one-on-one
and never paid to pitch.

There's plenty of good early-stage venture capital firms here - yes, fewer
than Silicon Valley, but there's fewer startups to compete with.

Raising money from early-stage firms here was a relatively straightforward
process. The deal terms were clean, and the valuation was adequate. (Trust me,
you want clean terms and an adequate valuation over a high valuation under a
ton of preferences anyway. Keeps your options open.)

Recruiting was also easy - I largely hired people I'd worked with before at
other startups, or who came recommended to me by people I'd worked with before
at other startups.

The differentiating factor, I suspect - because personally, I'm nothing
particularly special - is that I worked at a few startups in NYC and got to
know people over a few years before founding my company. (Like Chris Dixon
wrote a while back, there's a time to learn and a time to earn.) I suspect
this is largely true for Silicon Valley as well.

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char
Having lived in both NYC and the Bay Area for extended periods of time, I
would say that at least in terms of rent and location, that there are many
more options for running a start-up cheaply in the Bay Area. You might be able
to find a decent deal on housing in, say, Astoria, but if you look in Silicon
Valley, Berkeley, Oakland, or even certain areas of SF, you'll find many
cheaper options that give you twice the space and are just as conveniently
located.

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hypermatt
I don't it helps that most startups here in NYC are pretty lame, ripoffs of
yelp or really weak ideas. I have been very unimpressed and stayed away from
both startups and wall st.

~~~
pw0ncakes
I work for a startup in New York. We have a really cool idea, but raising
money has been a bitch and a half. We've decided to bypass the VCs almost
entirely and focus on customers.

~~~
char
In my opinion, this is exactly what you should do! Build a really great
product and perhaps even become profitable on your own before you try to take
on capital.

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shanedanger
this is a great freaking post. smart notes on all points.

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MediaSquirrel
a take on this from the Founder's Perspective...

