Big Players and Big Deals Needed to Help Solidify New York’s Tech Scene

2/13/12Follow @jpruth

Although New York basks in the Giants’ second Super Bowl victory in four years over the New England Patriots, the city’s startup scene still has hard work ahead if it expects to seriously compete with the more mature tech hubs such as Boston. With Facebook due to open engineering offices in New York this year the city is gaining more and more street cred on the bigger technology landscape.

However the presence of Facebook in the city, along with other major players such as Google, also increases the competition for talent vital to startups growing in this neophyte market. If New York wants to keep its momentum alive, it needs to establish a symbiotic environment where the big and little guys can thrive.

New York-based angel investor Jerry Neumann has witnessed the technology boom both as an engineer as well as a money guy. Prior to becoming an investor, Neumann worked for such companies as IBM, Deloitte, and Prodigy. These days, Neumann backs companies such as New York’s Yieldbot, 33Across, and PlaceIQ, and he is an advisor to startups such as data analytics provider Sociocast.

Neumann spoke at January’s Digital Media Center event held in Times Square. Xconomy caught up with Neumann recently to talk about the influence big technology companies have on innovation in New York, the truth about the social, local, and mobile (“SoLoMo”) movement, and the delicate nature of the local tech startup community.

Xconomy: Can big companies generate innovative ideas the same way risk-taking startups do?

Jerry Neumann: Whenever you really try to innovate, there is someone who doesn’t want you to change what is happening. The politics of innovating are difficult.

There’s sustaining innovation, which is about people making their product better. In other words, if I’m making widgets, I change something to make widgets for five percent cheaper than I was. That kind of innovation happens inside big companies primarily.

If somebody shows up at my door and says they can do what Google does for 10 percent cheaper, I would not back that. Doing something slightly better is not enough to overcome the incumbent. I don’t invest in better, I invest in different. If you build … Next Page »

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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