New York’s Technology Future: Is It a Bubble or a Lasting Boom?
Amid the hullabaloo about New York’s growing innovation scene lurks a big question about the future. “Is New York’s rise in technology a combination of the mayor’s exuberant personality, things that are happening organically, and the overall growth of tech?” asked Steven Rosenbaum, CEO of Magnify.net. “Or is there a fundamental shift happening?”
Last Thursday during the many Social Media Week events happening across the city, he moderated a panel that included local entrepreneurs, representatives of Mayor Michael Bloomberg’s administration, and a pioneering venture capitalist who offered a few opinions on the matter. Rosenbaum’s company Magnify.net is a provider of cloud-based video curation service. He is also entrepreneur-at-large with the New York City Economic Development Corp. (NYCEDC).
Joining him in the discussion were Scott Anderson, chief strategy officer with the Control Group; Matthew Burnett, CEO of Maker’s Row; Alan Patricof, managing director with Greycroft Partners; Ann Li, managing director and executive vice president with the NYCEDC; and Jonathan Bowles, executive director with the Center for an Urban Future think-tank.
Rosenbaum wondered if a landmark IPO or other exit by a startup in New York could give the city real bragging rights in its rivalry with Boston over which region follows Silicon Valley in the list of top tech hubs.
New York to some extent is still waiting for a big win among its startups, according to Anderson of Control Group, a technology innovation strategy company, but he also cast doubt on the necessity of achieving such a milestone. “That doesn’t mean business isn’t happening or people aren’t making money,” he said. “Hanging our hats on that big win is a mistake.”
Maker’s Row co-founder Burnett told Xconomy after the panel it is getting easier for some startups in the city to reach customers thanks to such e-commerce platforms as Etsy and Fab.com. “They are creating opportunities for entrepreneurs to create their own goods and run their own businesses,” he says. Maker’s Row is an online marketplace that connects small and midsize businesses with American manufacturers. Burnett previously founded fashion accessory company The Brooklyn Bakery. “[Fab.com] helped me be able to pay rent for so long as an entrepreneur,” he says.
The growth of the local startup community, according Greycroft’s Patricof, is not likely to halt anytime soon. “New York is like a meteor at the moment,” he said. “The momentum has been started; you can’t stop it now. This train is moving.” An early player in the private investment world, he was a founder and chairman of New York magazine and founded private equity firm Apax Partners, now based in London, prior to forming Greycroft.
Patricof said investments in the past focused largely on technology semiconductors and computers whereas today many deals are about the advertising industry and content. “You can’t be in those areas without being in New York,” he said. “The whole ad tech business is centered in New York.”
He also offered a few opinions on the rival technology scene in Beantown. “Boston has lost a lot of its luster,” Patricof said. “It’s really more of a biotech type of environment.”
Looking at the overall funding ecosystem, he voiced concerns about the amount of seed capital fueling the rise of startups. That can lead to copycats and me-tooism, which muddles the landscape. He said there is not enough Series A money around for all the companies that have proliferated. “An awful lot of stuff we’re seeing is very imitative of other operations,” he said. “There are just too many of the same thing.”
The efforts by Bloomberg’s administration to nurture the local innovation community might lead to more original technology being created in New York, according to NYCEDC’s Li, but it will take time and a lot more engineers. She talked up the Cornell NYC Tech $2 billion project underway to establish an applied sciences campus on Roosevelt Island.
“New York is really underweight in the number of engineers we produce when compared to the size of our economy,” she said. Existing academic institutions in the city produce their share of technology professionals, Li said, but New York clearly wants to prove it can be an even bigger player in innovation. “There was just no way we were going to achieve our ambition of being a tech hub through organic growth on the talent front,” she said.
The forthcoming Cornell NYC Tech campus on Roosevelt Island and other efforts in the city, she said, are expected to double the number of graduate-level engineers in New York—in about 20 years. “In the short term we’ll have a lot more students in New York,” she said, “in the long term we’ll have a lot more intellectual property.”
For its part, the Center for an Urban Future sees the need for more innovations from the city’s academic institutions needs to be commercialized. “If New York is going to continue to take the next steps, we’ve got to have more entrepreneurs and growth companies coming out of our universities,” Bowles said.
Whoever succeeds Bloomberg—whose third and final term ends in December—as mayor of New York will also have to maintain a positive outlook even if things sour. “There’s going to be a lot of startups that fail in New York in the years ahead,” Bowles said. “So many have started in the last few years, they’re not all going to succeed. The next mayor has got to be supportive even in light of some negative press that may come.”