My Interview with “The Wall Street Journal”
An article I was interviewed for ran earlier today in The Wall Street Journal. Check out the full text of Alex Hotz’s piece here: “Three Reasons Why Venture Capitalists Are Investing in New York Startups” (my quote is in the last paragraph of the “East/West Mentality” section).
The WSJ’s hedcut artists aren’t exactly asking to sketch my mug (although they did recently for the never classy Nicole “Snooki” Polizzi), but since I have the full transcript from the interview I figured I would publish it here for better context.
The WSJ’s questions are in bold and my answers are in italics.
First, do you think there’s a difference in the startup cultures in NYC and SV? If so what? How would you describe the differences?
There are absolutely differences – gigantic differences – but the nuisances seem more generational than fundamental. Specifically, today’s New Yorkers didn’t grow up in technology entrepreneurship and instead most “immigrated” into it. In other words, they haven’t always been tech people. This non-native “upbringing” means New York still has some learning to do about founding and growing startups. With that said, NYC’s naïveté is dissipating as an increasing percentage of New York’s workforce – especially in terms of engineering talent – has spent its entire career in tech entrepreneurship in NYC.
Do you think Valley VCs are more likely to accept an entrepreneur who has failed as long as their idea was new and interesting? Is New York less forgiving?
I don’t think there is any difference in how the two VC communities look at failed entrepreneurs, but there are profound differences socially. Friends and family in the Valley are more tolerant of a loved one whose startup just went under than New Yorkers are.
Are New York entrepreneurs and VCs more focused on the bottom line than SV? Is SV more invested in ideas…creating new platforms/products/etc?
I hear this a lot from my friends in Silicon Valley, but I don’t really understand their pejorative tone. I actually think the recession coupled with the decreased cost to get a business off the ground have pushed all VCs to be more focused on the bottom line. Consequently, this phenomenon is perhaps accentuated in New York because the city doesn’t have as long a history investing in ideas without fully baked business models.
Does NYC have the same sense of community as SF? Sure there’s the Ace Hotel and NY Tech Meetup, but is the scene as vibrant as SV?
The community in the Bay Area is more organic than in New York, but that doesn’t mean it’s more vibrant. NYC’s entrepreneurs and investors alike are double-booked almost every night between networking events, competitions, mentoring programs, and on and on. Additionally, the city government has focused on fostering the tech community here through NYC BigApps, a ~$20mm seed investing program, and other incentives for startups in terms of rent and taxes. Also, TechStars is opening an outlet in NYC, the TechCrunch Disrupt conference over the summer was a huge success, and our mayor is one of the most successful technology entrepreneurs of all time.
How does finance affect the startup ecosystem in NYC? Do you think Wall Street still poaches the best engineers? Are New York investors influenced by a Wall Street mentality?
Finance affects the entrepreneurial ecosystem in a variety of interesting ways. Sure, some engineers who are capable of creating new companies instead go write code for hedge funds, but the smartest and most intellectually curious engineers are joining or creating startups. Wall Street previously offered stability, but in the wake of what happened to Lehman Brothers, Bear Stearns, Merrill Lynch, etc., joining a startup is less risky than ever before.
Chris Dixon has written about creating a startup culture like SV in NYC…do you think that’s possible? What does NYC need that the Valley has? What should New York avoid….if anything?
The single largest thing the Valley has that NYC doesn’t is a dearth of technical talent. This is changing, however, as more and more college graduates realize commuting to a nondescript office park is a distant second place to the New York lifestyle.
In your blog post you suggested that New York needs some big exits to cement its ecosystem. What companies do you think stand the best chance of doing that?
Just to name a few: Buddy Media, Conductor, Etsy, FourSquare, Gilt Groupe, RecycleBank, and SecondMarket. The companies themselves are less important than having employees of those firms see a startup from creation to exit and then leverage this knowledge to do it again and again. In the Valley, Paypal, Google, and now Facebook all have former employees who have left to start exciting new businesses; this is what New York needs to cement the ecosystem.
Anything else you’d like to add?
There are two other noteworthy phenomena:
First, the prevalence of Boston investors seemingly spending half their time in NYC (and likely the other half on the Acela). Polaris set up a Dogpatch Labs outpost here, Matrix Partners has made several investments in NYC, and others such as Spark Capital and General Catalyst have been particularly active. I keep hearing rumors from the folks that track this sort of stuff that New York will soon pass Boston as the second largest recipient of VC investment dollars…
Second, media/marketing is a huge driver of NYC entrepreneurship (and an important differentiator from Silicon Valley). Most of the largest advertising agencies are based in New York and these folks are constantly exploring new ways to reach and engage with their end customer. This mindset is why companies like Buddy Media and Conductor (both mentioned above) thrive in NYC. To put it another way, everyone in New York may not understand tech entrepreneurship, but everyone certainly understands marketing and how important doing it well is to growing a company.