

Why there's no real startup culture in New York - indy
http://zedshaw.com/blog/2010-01-19.html

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wavesplash
As a former New Yorker that spent 20 years there, all I can say is "spot on".
Don't get trapped in the specifics of his numbers. He did a fair job
characterizing the main markets, the types of people in the startup scene, the
personalities and degrees that are valued by the average business person in
NY. Oh, and the girls (sadly).

~~~
vaksel
as a former New Yorker I agree.

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matthewer
As a the co-founder of an NYC startup I would like to share my insight. NYC is
a great place to do business if your startup is consumer facing with a
marketing skew. If you are an engineering company you do not belong here. I
also truly believe it is extremely hard to raise funding here, much more so
than in the Valley. NY Seed is the biggest joke in the world. Most of the VC
firms are run by ex-finance guys that are not willing to take chances on
ideas. Obviously this is changing (think Betaworks and USV.)

I also think the Startup scene here is especially small, and full of the kind
of people you should avoid. If you really want to meet the kind of people that
will help you and are doing innovative things you need to head to Brooklyn or
hunt them down. They are not at New York Tech MeetUp or any of the other
startup events. Most people doing interesting things (I am only doing somewhat
interesting things) are doing them off the radar. The people you hear about
are kind of like the football players from High school - everyone knows about
them, but they don't really amount to anything.

If your doing a startup in NYC, you should surround yourself with other
interesting people outside the tech community. Meet people from Fashion,
Music, Art, Advertising, PR, Marketing, ect. NY has so much to offer - the key
is not to get stuck in the tech community. NY is all about expanding your
horizons, and that is truly the benefit of starting a business here.

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dasil003
The part I think Zed got right is that the cost of doing business in New York
is not worth it for most startups. More expensive than silicon valley with a
fraction of available (ie. not working in finance for $250k) talent.

The part that is really wrong is that finance is New York's heroin. No,
finance is America's heroin. All the super rich are tapped into it, and the
government is bamboozled into supporting it because the bankers have the
bureaucrats convinced that the obscene profits of the financial sector are the
backbone of the economy. Here we sit borrowing up to our eyeballs just to prop
up the GDP so everyone can pretend everything is okay, while the smartest
among us dream up new ways to create paper profits and China keeps a steady
focus on actual real-world productivity and standard of living.

New York, much less the U.S. is not going to kick the heroin habit, the whole
nation is going to keep shooting up until we actually lose our position as a
financial superpower, the dollar loses its power, and the reality of that
situation comes home to roost with the Fed's options finally exhausted.

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natfriedman
There's a difference between the value of a hedge fund company and the total
assets under management.

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zck
So even take 1% of the assets under management. Hedge funds take a percentage
of assets each year. So 30 billion under management means 300 million revenue
each year if they do nothing. They get a larger percentage of profits. So yes,
it's not the same, but it's still a lot of money.

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ynniv
Why are all the comments here fixating on financial minutia? Zed puts it as
well as it can be put - NYC is obsessed with Finance (and Design and
Publishing to a lesser degree) and really expensive, and these combine to
create a harsh environment thats prone to failure. Its tough to get people
excited about money when the next guy is talking about orders of magnitude
more. But there's a huge variety of activity overall, and that makes life fun.
None of this is surprising if you're familiar with the area.

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aditya
It is most likely that Zed didn't work with some of the most interesting
startups in New York because he was too busy stroking his own ego and thinking
he was too good for them. ;-) (this is mostly a joke, Zed is a great guy but
he loves pissing people off.)

So I'll take the bait and present:

Exhibit A: A list of the most well-known startups in NYC seems to completely
disagree with what Zed is saying (Edit: that you need to be in _banking,
marketing, government or publishing_ to do a startup in NYC.)

1\. Meetup

2\. DoubleClick

3\. Vimeo

4\. Etsy

5\. Gilt Groupe

6\. Boxee

7\. FourSquare

8\. Tumblr

9\. Bit.ly/Betaworks

10\. Blip.tv

11\. Drop.io

12\. Hunch

13\. omgpop

I've been here 6 years now, and think New York is about as great a place to
build a startup than anywhere else in the country. Sure, there's a lot of hype
around NYC and starutps and finance is still a huge part of the scene but if
you want to build your startup here, don't let these silly posts get you down!

~~~
ardit33
honestly, there are twice as many startups in the 1/2 mile stretch between
elcamino st and caltrain castro st/ in mountain view. I know as I drive it
everyday. And that's one town in the valley.

~~~
aditya
Your point being? I was responding to Zed's point that you _need to be in
banking, marketing, government or publishing_ if you want to do a startup in
NYC.

It is _obvious_ that the valley's startup scene is bigger, what I'm saying is
that it is silly to write nyc off and make generalizations about what works
here.

Also, there's a ton of startups that don't get techcrunch'd all the time in
NYC as well, that are doing cool stuff. Bug Labs being one of them.

~~~
FooBarWidget
As with most things in life, few things are mathematically true. You should
rather read it as "your chances to succeed will drop by 99% if you're not in
banking, marketing, government or publishing".

~~~
aditya
Citation needed :-)

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saikat
Fair point about raising money in New York with a startup, but I feel like he
just glosses over trying to bootstrap. Seems like there are a fair number of
startups already there for a support group (plus, plenty of support channels
online), and there are definitely places to live in NYC that are comparable in
price to SF or the valley (Manhattan does not NYC make).

I would argue that bootstrapping in NYC might even be easier than SF - the pay
rates for contract programmers (especially if you can get hired by a bank or
hedge fund) are very high, and there are fewer contractors flooding the
market. You can also just work for a hedge fund for about a year, and that
will keep you fed for a good year or so after you quit. And then, you
bootstrap.

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brown9-2
This article makes no sense. It's main arguments seem to be:

1\. The US Federal Government (based in Washington) gave billions of dollars
in bailouts/loans to US financial companies, most of which are headquartered
in New York. Technology companies didn't get a bailout in 2001. Therefore,
doing a technology startup in New York doesn't make sense.

2\. Investors in New York won't want to invest in small startup companies in
New York because they have better investment opportunities in the finance
industry in New York.

#1 is completely illogical and #2 seems to forget that anyone can invest in
anything from any city.

~~~
noelchurchill
1\. Finance companies get government bailouts and are more likely to succeed.
Tech startups don't get govt bailouts and have a high likelihood of failure.
Therefore, investing in a finance co is a safer bet. That's the point he
makes, and it's logical enough to me.

2\. Yes, investors from anywhere can invest in companies from anywhere, but it
(obviously) doesn't always work out that way. Finance companies didn't
gravitate to NYC by accident. Why would a finance investor fund a co across
the country when he can choose from a dozen in his back yard? The world is
"small" and "flat" but proximity still matters.

~~~
KonaB
_"Finance companies get government bailouts and are more likely to succeed."_

You are painting things with a very broad brush. How many hedge funds are
there? Thousands. How many of them got bailout funding? Virtually none. How
many top tier investment banks are there that got bailed out by the
government? 5 or 6? I rest my case...

Besides, Finance is a very vast field. Hence, the words _Finance companies_
means nothing. A hedge fund is, essentially, a startup... and the likelihood
of failure is high. By contrast, a bank is anything but a startup. A boutique
investment bank and a boutique HFT hedge fund are both "finance companies",
but their cultures are more distant from one another than what you can
imagine.

You are thinking of GS, MS, City, ML and the like, and generalizing that all
finance companies are like that... which is utterly absurd.

~~~
sandee
When finance industry gets into trouble, the govt will step in to fix it. (It
may be by bailing out big banks etc.). Indirectly all players in financial
market benefit from it. (see the stock market gain from bottoms last year). In
this context a financial startup is in a much better position when compared to
startups from other domains.

~~~
KonaB
Please define _financial startup_.

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joeconyers
This post would have made much more sense had it been written in 2007. Three
years have past and the community has grown. His arguments are based on
anecdotes and outliers from a bygone era. He fails to mention that yea there
are a ton of hedge funds in nyc - you can start one in your basement with
about a million bucks.

It would have been worth mentioning that NYC seed is a public private
partnership that includes a mentoring program and that there are hundreds of
millions(if not billions) of dry powder in vc funds here that are just about
ready to start investing heavily again.

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va_coder
Washington DC has similar reasons for a weak startup culture. Replace NY with
DC and finance with government.

As long as China keeps lending us big money, this game will keep rolling on.

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lvecsey
You can buy a basket of speculative stocks (small market cap companies) and
have a few winners. Having a convenient place like that to play your money
changes the scope of a good VC or Angel investing opportunity. They become
exceedingly rare.

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KonaB
_"...tell you they have a "tiny" hedge fund already worth 500 million and they
can give you a return on your investment within one year, and in 5 they’ll be
worth a few hundred BILLION. Oh, and if they fail the Fed will bail them out
so there’s no risk."_

As far as I know, the Fed did not directly bail out any hedge funds, except
those internal to big banks. The last 2 years were a blood bath in the hedge
fund world, with hundreds of shops closing down. Zed's text is amusing, but it
does not reflect reality all that accurately.

Last but not least, I have never heard of a hedge fund worth hundreds of
billions. A 1-billion fund is common, but hundreds of billions? When Jim
Simons of RenTec started talking of a 100-billion hedge fund in 2006, everyone
was so excited...

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rbranson
You might not be familiar with Zed's writing, but the level of sarcasm is very
high in his posts, to the point of just plain falsehood. Take it all with a
grain of salt.

~~~
FooBarWidget
Having met him personally, I am 100% confident he's telling the truth, at
least from his perspective.

