I think a big factor of "why now in NYC?" was the recession: with firms collapsing, job security at an all time low, and dismal salary and bonu$ prospects, all the talented individuals that had flocked to Wall Street and hedge funds were now leaving or forced out. This yielded two things: smart, networked, tech savvy individuals that had monetary padding (via a few years of pulling down salaries and bonuses back in the gilded era) to bootstrap an idea and the network to tap into AND investment oriented folks looking for opportunities that offered a better ROI than the dismal public capital markets'.
There's some truth to this, but it's probably overstated. Almost all of the smart people on Wall Street are quants and, except in large-scale layoffs, they aren't likely to be let go.
Also, the deciding factor regarding whether New York can become an innovation/startup hub will be if the rents come down fast enough. So far, signals are mixed but more negative.
There are a ton of smart people on Wall St who aren't quants. And I personally know startups being started because of exactly what the parent said.
Incidentally based on my experience of NY, a seldom noticed major drag on startups is that by default if you create a startup while working for someone else, your employer can declare it a work for hire and just take all of the associated intellectual property. (Said default is reinforced by the standard employment contracts.) In California your right to own what you do in your own time with your own property is protected by state law. This is huge.
How many startups never happen because people have been burned by this, or know people who have been burned by this?
Agreed - likely not any one thing, but a combination of several trends.
Quants are smart, but not necessarily in a startup way - they could definitely be on the startup team (build the product, crunch the data, etc.), but might not be the best fit as a founder (obviously this is a sweeping generalization, but so was your "almost all of the smart people on Wall Street are quants")
There are plenty of other smart people that make up Wall Street (traders, investment bankers, pwm, sales / marketing) and likely better equip to take on the multi-faceted beast that is a startup venture. Also, few were safe in 09, regardless of what role they filled.
Rents in New York definitely need to come down in order for the innovation / startup hub to continue it's upward move ... having banks and funds recover and salary / bonus talk coming back will not help either.
Rents in New York definitely need to come down in order for the innovation / startup hub to continue it's upward move ... having banks and funds recover and salary / bonus talk coming back will not help either.
First of all, I think our financial crisis/recession is doomed to have a "W" shape. We're going to dip again; it's unclear when. This is because, despite the bailout, there hasn't been any material change in the workings of Wall Street; we've merely reduced the number of players.
Wall Street salaries will always be high relative to other industries, but what will change post-crash (the upcoming one) is that the industry will employ fewer people. We'll have as many if not more billionares made by hedge funds, but the number of players is going to drop considerably, and Wall Street will no longer be able to singularly support the Manhattan economy (and no industries other than finance and "biglaw", whose clients are mostly Wall Street firms, pay sufficiently to support these prices). This will be good for New York's diversity and character; bad for real estate prices. But it could easily take 5-10 years before RE prices revert to a reasonable level. In that time, the talent will have moved elsewhere.
