Closer To The Ideal

Caterina Fake on the New York startup scene

Matt Mireles advances the classic arguments for why NYC is not a good place for a startup in his piece for Business Insider — raising money is hard, and talent is scarce — but I’d like to make a couple of points to the contrary

Read the whole thing.

Chris Dixon again argues that the tech scene is doing very well in New York.

The NYC tech scene is exploding. There are tons of interesting startups. I’m an investor in a bunch and started one (Hunch) so won’t even try to enumerate them as any list will be extremely biased (other people have tried). I will say that one interesting thing happening is the types of startups are diversifying beyond media (HuffPo, Gawker) to more “California-style” startups (Foursquare, Boxee, Hunch).

…The one thing we really need to complete the ecosystem is a couple of runaway succesesses. As California has seen with Paypal, Google, Facebook etc, the big successes spawn all sorts of interesting new startups when employees leave and start new companies. They also set an example for younger entrepreneurs who, say, start a social networking site at Harvard and then decide to move.

I wrote recently about the New York tech scene.. Now Caterina Fake offers her thoughts on what New York is missing:

But what NYC is actually missing is not engineers. In NYC you can find lots of great engineers, visual designers, and great publishers and contributors to social media. But in CA I seem to find far more people with multiple skills – engineers who blog and dabble in design, designers who can do great UI but also great UX, etc. These multidisciplinary people are the ones who hack together brilliant new stuff, can innovate across the board, see various avenues of attack, and are indispensable at startups. It is these hybrid people that we are always looking for at Hunch and for whatever reason find them much more often in CA than NYC.

I grew up in New Jersey so I have some memories of New York City during the 1980s. I lived in New York City (or near it) in 1995 and 1996. And now, in 2009, I’m living there again. The change is dramatic, almost surreal. The shocking thing about New York City in 2009 is how incredibly safe it is.

The modern crime wave began in 1964. The crime rate rose till 1993. It has declined dramatically since then. Every part of America has seen a decrease in crime, though no large city has seen as dramatic a decline as New York. In 1993 the murder rate in New York City peaked at 2,500 people. Last year it was around 500. The 80% fall in the murder rate suggests a major demographic transition.

The FBI just released a report today saying that 2009 will be another year of declining crime. The murder rate, for the nation, has fallen further. Theft is down. Theft of automobiles is down in a big way. But check out this headline: New York City Violent Crime Down 8%, Outpacing U.S., FBI Says

New York City “remains the safest big city in America,” Mayor Michael Bloomberg said today, citing FBI statistics for the first half of 2009 showing an 8 percent decrease in violent crime that outpaced a national decline.

The percentage change in murder, rape, robbery and assault was almost twice the 4.4 percent drop nationwide in the same period, according to the Federal Bureau of Investigation report. Property crime in the city fell 6 percent from a year earlier.

During the stretch from 1965 to 1993 New York City lead the nation upward into carnage. Now it leads the nation back down to sanity.

I was recently living at the corner of 14th Street and Avenue A. In 1995, this was a sketchy neighborhood. Even New York veterans warned me to be careful at night, take a cab home from any bar, don’t walk. Nowadays I walk around and I see mom’s with young children, teenagers walking alone, talking with friends, laughing, people sauntering along the streets, there is no sense of danger anywhere. At 2 AM, most nights, the streets are busy with people going from one bar to another. The restaurant scene is thriving. The graffiti is mostly gone. The streets are cleaned up.

I recall visiting Williamsburg in 1995. I had a friend living out there. I recall walking down desolate streets where every building was a bombed out ruin, the windows covered with plywood. I recall a tough looking crew watching me as I crossed into their territory, walking down the sidewalk. I remember being scared and trying not to show it.

That was then. I went to a party in Green Point (in Brooklyn) last month. I left the party at 3 AM. I walked back to Williamsburg. It has become the hipster capital of the nation. Even at 4 AM, the streets were buzzing with young people in fashionable outfits. I stopped and got pizza. The whole area has become suprisingly affluent. I’ve the impression a lot of young people, if they have some money, come here right after they graduate from college.

I’ve a few friends who lament that the “real” New York is dead. It’s been replaced by this suburban mall that just happens to look like Manhattan. I get their point. To some extent, I regret some of the things that have been lost – New York no longer feels as avant garde. A certain amount of danger is needed to energize a truly daring art scene. Still, much has been gained. For almost all of the southern half of Manhattan, you could walk alone, late at night, and never have any cause to fear. For someone with memories of what New York City used to be like, the current epidemic of safety is hard to understand, almost hard to believe.

There is some kind of grand reversal going on. The suburbs are getting (relatively) more dangerous, certain cities are less so. Shows like Breaking Bad highlight the change. When my parents were young, in the 1950s and 1960s, they traveled the country and they briefly considered settling down and raising a family in Arizona. It was a Sunshine State, with a booming economy. The sun was always shining and a new kind of society was being built along the new highways, an open affluent society where every family had its own house and its own plot of land, out in the suburbs. That was how it looked in the early 1960s. Nowadays, Arizona has been devastated by the collapse of the housing boom. It’s economy is in tatters. It is a major conduit for drugs. The border area is dangerous. Drug cartels bribe custom officials so as to get more illegal goods into America. Our popular culture reflects some of the changes. Whereas in the 60s crime (on TV) was something that only happened in the big cities, nowadays shows like Breaking Bad highlight the amount of crime happening in the suburbs.

The hard part is figuring why this happened, or how it happened. My mom spent the 1970s getting her Masters Degree in urban policy. She struggled to understand the crime wave that was then unfolding. I don’t think anyone of that generation of theorists was able to come up with a solid answer that explained the crime wave. And do not think any current theorists have a solid idea about what caused the outbreak of peace.

Chris Dixon notes a revival of the startup scene in New York City:

But the question that has puzzled me is: why did New York City lag behind the West Coast this decade so much more than last decade? Especially since the internet in the 2000’s has been more than ever about consumers, media, and advertising – traditional New York City strengths?

I think the only explanation is that the finance bubble of 2003-2008 was a giant talent suck on the East Coast. The people I knew graduating out of top engineering or business programs on the East Cast were all trying to work at hedge funds or big banks or else felt like fish out of water and moved west. Money was flowing so freely in the finance world that there was no way the risk/reward trade off of startups could compete. Eventually it just became downright idiosyncratic to be a startup person on the East Coast. The Larry and Sergey of the East Coast were probably inventing high frequency trading algorithms at Goldman Sachs.

But this is why New York City now seems poised for a technology startup boom. The finance bubble has burst and the industry will hopefully return to its historical norm, about half its bubble size. The traditional advertising and media businesses are in disarray. The people who work in them will no doubt find new applications for their talents.

There is also a nice ecosystem developing in New York City. Union Square Ventures is one of the best VC’s in the country, with early stage investments in companies like Twitter and Etsy (that were followed on by top West Coast VCs at significant markups). Bessemer is an old firm that has a managed to stay relevant with investments in Yelp, Skype, and LinkedIn among others. There is also a new wave of scrappy Boston firms spending a lot of time in New York City – specifically Spark, General Catalyst, Flybridge, and Bain Ventures. First Round Capital out of Philadelphia is extremely active in early stage investing in New York. There are a bunch of veteran entrepreneurs actively investing in and mentoring seed stage startups. Google has a big office here and many people seem to be leaving to go start companies.

A fascinating look at some of the startups based in New York City.

One thing I’ve noticed over the past year is that NYC’s version of Silicon Valley will be Soho, which has been primarily associated with the fashion industry. The combination of the falling price of leases stemming from the 2008 financial collapse, and the dropping rent (all the bankers moved out of Manhattan); there have been dozens of creative startups opening up office in Soho. I’ve listed the ones I know in the list below.

1. 20×200 sells art for everyone at ridiculously affordable prices (Soho).

2. Aviary makes creation accessible to artists of all genres.

3. Behance organizes the creative world to make their ideas happen (Soho).

4. Betaworks is an internet media company.

5. Blip.tv is the next generation television network (Soho).

6. By/Association is a private service for new introductions to remarkable people (Soho).

7. Bug Labs is a modular, open source system for building devices.

8. Boxee is the best way to enjoy entertainment from the Internet and computer on your TV.

9. Carbonmade helps you build and manage an online portfolio website (Soho).

10. ChallengePost is a marketplace for challenges.

11. Clickable is an online solution that makes creating and managing online advertising simple and effective.

12. College Humor is the best humor site on the internet.

13. Designer Pages is a free social application for finding products in architecture and interior design.

14. Drop.io allows simple real-time sharing, collaboration, and presentation.

15. Etsy is the world’s most vibrant handmade marketplace.

16. Foursquare gives you and your friends new ways of exploring the city (Soho).

17. gdgt is the new consumer electronics site by the guys behind Engadget and Gizmodo.

18. Harvest allows simple online time tracking, timesheet, and reporting (Soho).

19. Hello Health helps doctors communicate, document, and transact with their patients in person and online.

20. Hot Potato allows you to find events, join the crowd, and share the experience.

21. Hunch helps you make decisions and gets smarter the more you use it.

22. Kickstarter is a funding platform for artists, designers, filmmakers, musicians, journalists, investors, and explorers.

23. Livestream is the most powerful live broadcast platform on the internet.

24. Meetup helps groups of people with shared interests plan meetings and form offline clubs in local communities around the world.

25. OMGPOP is the #1 place to play free multiplayer games with your friends.

26. Parachutes aims to reinvent how people teach and learn.

27. Quirky is a social product development company.

28. SeamlessWeb is the fastest, easiest, and smartest way to order food delivery online.

29. Squarespace is a fully hosted, completely managed environment for creating and maintaining a website, blog or portfolio (Soho).

30. Tumblr is the easiest way to blog.

31. Vimeo is a respectful community of creative people who are passionate about sharing the videos they make.

PUBLISHING/EMAIL COMPANIES
New York City has always been the epicenter of the publishing and advertising industries. And that hasn’t changed with this list of innovative companies changing the publishing and email businesses.

1. Daily Candy is a handpicked selection of all that’s fun, fashionable, food related, and culturally stimulating in the city you’re fixated on.

2. Flavorpill is a daily guide to quality cultural events in New York City, Los Angeles, San Francisco, Chicago, Miami and London.

3. Gawker is an online media company (Soho).

4. Gilt Groupe offers luxury designers and fashion brands at prices up to 70% off retail.

5. Huffington Post offers syndicated columnists, blogs and new stories with moderated comments.

6. One King’s Lane offers exclusive sales on designer home accessories.

7. Tasting Table is a free daily email about the best of eating and drinking culture.

8. TBD is a free email newsletter that delivers one world-changing idea and one collective action to improve our future.

9. Thrillist’s daily emails sift through the crap to find the newest and best the Nation is hiding (Soho).

10. Urbandaddy brings you the single thing you need to know every day about your city.

11. Very Short List is a collection of distinct, free, daily e-mails that each recommend one must-see gem a day.