
Still Starting Up - daegloe
http://www.nytimes.com/2014/04/28/business/still-starting-up.html
======
WoodenChair
This comment thread and the article itself are like parodies of all of the
detachment from reality that the tech industry faces. Only in this community
do you increase in investment size by 200% over a 4 year period and still see
people questioning whether your market is becoming more viable. New York's
investment share is apparently more than 1/4 that of Silicon Valley and
climbing. That's a big deal for a city that was once seen as tied exclusively
to old money.

"The amount of venture, angel and private equity money invested in New York
soared about 200 percent from 2009 to 2013, to $3 billion from $799 million,
according to CB Insights, a data analysis firm that specializes in venture
capital trends. Silicon Valley, by contrast, took in $11.4 billion in 2013."

~~~
zmitri
I don't think anyone questioned if it was becoming more viable, but if you are
concerned with macro figures I think this one is much more telling:

SV: Largest exit so far 2014: WhatsApp: 19B

NY: Top 5 exits since 2009: Tumblr: 1.1B Indeed: 1.0B Buddy Media: 745M
Shutterstock: 570M Ascend Health: 500M

Not sure where the parody or detachment from reality factors in.

~~~
k-mcgrady
Is it really fair to compare the exit of WhatsApp with Tumblr? Tumblr has been
around much longer, is used regularly by a lot of people, and isn't too hard
to monetise via advertising. WhatsApp was purchased by a giant with a lot of
money simply to prevent it's competitors from getting it. Obviously WhatsApp
provided a lot more value to it's investors but the comparison just doesn't
seem fair to me.

Edit:

It's also important to realise that our idea of a huge exit has changed
rapidly over the last few years largely because of Facebook. A couple of years
ago Instagram's $1bn astonished people. And yet Tumblr's $1.1bn isn't
considered huge?

~~~
zmitri
I wasn't trying to compare WhatsApp to Tumblr, I was trying to compare one
exit this year vs the top exists from an entire ecosystem over the past 5
years.

I think New York is great, and I think Tumblr is great, but I think if Tumblr
were perhaps in SV, things could have went differently.

------
danielrakh
Let's stop with the comparisons to the Valley. Let's stop trying to be like
the Valley. NYC's edge is the fact that we're exposed to so many different
industries and cultures, many of which have not yet been "modernized" with
tech. Let's focus on that.

~~~
zmitri
In my experience that makes it a better place to live -- but not necessarily a
better place to try to build a (very large) technology company.

The difference between NYC and the Valley was unclear to me when I lived in
New York, but after spending just a few months out west, it became very
apparent to me that there is an order of magnitude difference between the two
-- and I believe that will translate into an increased chance of success.

There are lots of reasons that New York just doesn't compete with SV, mostly
to do with people and networking, but the difference that really struck me was
the openness and positivity in the Valley. Yes there's an echo chamber, and
yes you need to keep your BS detector on at all times, but when you are just 3
or 4 people trying to crack into a behemoth of an industry you need all the
help you can get. I felt lots of people in New York were looking for
weaknesses in what we were doing or trying to figure out who would acquire us,
whereas people in the Valley were looking for ways to help us really succeed.

The combined operating experience is not only greater in the Valley, but much
more accessible too. I felt like larger companies like Tumblr and Foursquare
were silo'd off from everyone else, whereas you can barely shake a stick in
Mountain View without hitting someone at Google.

Personally, I believe New York is the greatest city in the world and due to
it's culture and array of experiences, a great place to start a company -- but
if you want to build a big tech company, you should move out west. In fact,
it's one of YC's indicators of success after going through the program.

As a side note, the closest thing I've seen on the east coast with a similar
vibe to the valley is Waterloo, Ontario. Although very, very small, they've
somehow captured that same feeling.

~~~
willholloway
> I felt lots of people in New York were looking for weaknesses in what we
> were doing or trying to figure out who would acquire us, whereas people in
> the Valley were looking for ways to help us really succeed.

NYC is a weary, jaded and cynical metropolis, it's inhabitants perpetually
cranky from six months of winter in their cramped, expensive, rented
domiciles.

It's not your company, it's their depressed mood coupled with feelings of
inferiority constantly triggered by the immense glittering wealth that
surrounds them, always just out of their grasp.

~~~
riggins
Here's another hypothesis.

It's the finance industry culture. Why?

Finance is a zero-sum game. That leads to a set of incentives where what you
need to do is beat the next guy.

Tech is almost the opposite of a zero-sum games. That leads to a set of
incentives where what you need to do is crack a complex problem. Cracking
complex problems requires collaboration.

~~~
gumby
"Here's another hypothesis: It's the finance industry culture."

I have been on boards in the valley and in NYC, and I can see this very
directly. The NY VCs were far more transactional, and more aggressively
willing to drop a company and take the loss early.

Not that it's rainbows and unicorns in the valley! The VCs, after all, work
for their customers (err, "LPs"). I've noticed that as the valley VCs are more
and more frequently finance rather than former operating guys that they are
more like this. I saw it in the dot-com boom, and guess which VCs got
shellacked? Mostly the finance guys.

------
Killah911
According to Brad Feld's book "Startup Communities" you have to be committed
to a place for 10 years to see any real change. He mentions politicians as
being too short sighted for not being able to carry thru for that long. I'm
not sure if it's been 10 years for the New York Startup scene, but maybe NY
Times is being a little hasty. If the current political establishment keeps
it's support up and so does the next batch, I think the NY has a very decent
chance indeed.

However, it's the tough times that will tell whether NYC Startup Culture
endures, especially when the hype has died down and the economy has had
another mood swing. I remember after the 90's .com boom people in the city
acted like tech was over (the boom and subsequent bust was surreal on the
people's part too, I thought), but what it proved was when the party's over,
all the riff raff falls away and only tech companies that were fairly strong
not only made it thru, but thrived.

NYC, shouldn't be Silicon Valley, only Silicon Valley can be that! The city,
despite it's many "issues" is one of the most amazing places on earth. I hope
the tech that comes out of there is just as amazing and real. Cheers!

~~~
mathattack
It's also a question of if you are looking in the right places. NY startups
tend to be less pure technology plays that need lots of VC money, and tend to
be tied to information intensive industries like advertising and finance.
Fintech startups frequently are cash flow positive by the time they hit 20
employees. These aren't game breakers that will get multi-billion dollar
valuations, but they build from strength and don't need to become monsters.

The biggest hold-up is actually the cost of living in NYC. It's worse than the
Bay Area, and there is less pride in being a starving entrepreneur.

------
kapkapkap
non paywall (at least for me)
[https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newss...](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&cad=rja&uact=8&ved=0CD4QqQIoADAA&url=http%3A%2F%2Fwww.nytimes.com%2F2014%2F04%2F28%2Fbusiness%2Fstill-
starting-up.html%3Fhpw%26rref%3Dbusiness&ei=r-ZdU9zKJ-
bisAS6-oKYBg&usg=AFQjCNHhlRPLcSkACDdPvUpB0lAkc0i-ag&sig2=PCUy-
OYv9cHhq4z4baUTEQ&bvm=bv.65397613,d.cWc)

------
brc
'No New York startup has been a breakout hit with a multi-billion valuation'

'Tumblr, the blogging service based in downtown Manhattan, made headlines last
May when Yahoo acquired it for $1.1 billion. '

I don't know where the writer hails from, but 1.1 billion isn't exactly chump
change.

It's unlikely that any one city can overtake anotner for a specific industry.
It's unlikely that San Francisco coudl ever supplant Wall St, despite San
Francisco having a large financial centre.

The top people will want to go to Wall St for finance, and the Valley for tech
companies. Very hard to reverse that, and I don't see a lot of reasons why
anyone would want to.

~~~
williamcotton
I'll bet you 0.5 bitcoin that in 20 years the financial industry is bigger in
San Francisco than in New York.

~~~
NkVczPkybiXICG
How about 500 USD to be settled in bitcoin (or similar virtual currency)? The
metric for winning will be where the top (by market cap) 10 finance companies
are headquartered at midnight Apr 28, 2034. If more are in NYC, I win. If more
are in San Francisco, you win. If it's a tie, the "next highest" will be added
until it isn't a tie.

Deal?

------
TheBiv
> "Being in the San Francisco area, he said, helps start-up founders know the
> right people to pick up on bits of gossip about new product releases or
> venture financing rounds."

I'm based in Dallas, so I am wondering from a Sillicon Valley/SF perspective,
how beneficial is this data point?

Or is it one of those data points that keep the overall investor excitement of
early stage startup investments going, but doesn't actually help early stage
start ups with their own companies?

~~~
jkaljundi
This does boil down to a point: do media and blogs write about startups that
are interesting and/or important, or those who they can grab coffee, beers etc
with. Quite often I've found being in the same city with someone covering
helps you immensely, as many European startups can attest to. Hard to build
those relationships from another city. Same goes for investors, biz dev
partners etc.

~~~
brandnewlow
Do you even have to ask the question? Of course it helps being able to meet
someone in real space to win them over to your cause.

------
kator
I wonder how much employment laws play into this also? I moved from California
(born and raised) to New York three years ago and currently work for a "Start
up". I've been stunned to find the differences in employment laws, taxes, non-
compete, cost of living etc.

~~~
dopamean
I think some of us may really like to hear specifics regarding these stunning
differences. I grew up in NY and as far as I can tell both NY and SV are high
tax areas with extremely high costs of living.

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efnysien
If someone could be so kind as to paste-bin this, I'd be grateful. The NYTimes
paywall has been in full force lately (probably due to me being on uni IP?)
considering that I rarely visit the site.

~~~
cwperkins
If you open the article up in incognito mode in chrome it will get you past
the paywall.

~~~
mafuyu
Appending '?share' to the URL will do it as well.

~~~
efnysien
cheers!

------
normloman
I loathe all the armchair sociologists here, trying to blame the status of
NYC's tech scene on everything from NYC's finance culture, to the supposed
unfriendliness of New Yorkers, to the colder weather. Get over yourselves. We
don't know what makes for a good start up community. You might have some
hunches, but you're just as clueless as the rest of us.

Besides, I for one am glad NYC is not the valley. Who says you folks in the
valley are right about everything?

~~~
_nato_
`Also glad NYC is not the valley. But there _is_ reason for it. It's not
random. I think SV was first to market. This is more or less in keeping with
my sentiments about it: [http://www.evanmiller.org/marketing-startup-
hubs.html](http://www.evanmiller.org/marketing-startup-hubs.html)

------
mhidalgo
Like everyone's been saying I think these kind of things take time. I think
all in all the shift in startup culture has been dramatic over the last ten
years in NYC. Its only a matter of time for an iconic tech company to come out
of NYC, especially if investments keeps growing.

