It’s really difficult for me not to get into the thick of discussions about whether or not you can and/or should build a company in New York City. I grew up here, went to school here, and have worked hard over the last 5+ years to help build up the NYC innovation community. I’m extremely passionate about the topic and so when my city gets picked on, I tend to respond confidently and with the same (and sometimes greater) force than I perceive the complaint to have. And sure, there’s a little bit of bull in a china shop in me—but if I didn’t have that, I wouldn’t work nearly as hard, and frankly, I wouldn’t be me.
What gets frustrating is that I tend to hear the same arguments over and over again from new entrepreneurs, and many of them are just completely unfounded. Unfortunately, they tend to resonate really well with frustrated entrepreneurs and a lot of dust gets kicked up over them.
Here’s my best attempt to shed some light on the most common misconceptions about building a company here in NYC.
Charlie O’Donnell is entrepreneur in residence at First Round Capital. He is also co-founder of Path 101, a NYC-based startup, and founder of NextNY, a tech community group. He blogs at This Is Going To Be Big, where this post was originally published.
Misconception #1: There's no money in NYC for startups… and the money that's here isn't smart or experienced money.
Response: A lot of things are expensive here, as they are in other cities. If you want to build your startup in the middle of nowhere and optimise purely for low burn rate, then sure, I'm sure you could work more cheaply elsewhere.
That being said, is low burn rate really what you should be optimising for? How about considering the following:
- If you have to bootstrap, you'll find way more opportunities to make money here doing side projects than anywhere else--working for bigger companies, agencies, other startups.
- As an interesting place to live for a younger person, I'll put NYC up against any other city--unless you don't like having seasons in your weather, than I can't help you. NYC helps with recruiting because it's a place people want to come and live in.
- You don't have to live in the West Village. There are plenty of places within a 40 minute commute of the city that are quite reasonable and even might I say cheap (compared to other cities, not compared to Kansas). If you lived in SF and you worked at Facebook or Google, you'd have at least a 40 minute drive ahead of you everyday, so if you're going to compare apples to apples, don't limit the price of housing just to Manhattan.
- You don't need a car here.
- Lifestyle has value. If someone really wants to live here because of the lifestyle, they find ways of making it work. How in the world do all my actor friends live here if you're saying you can't hire a developer because you have to pay them too much?
- Are their annoying costs, like the cost to publish an LLC notice? Yeah, totally, and that sucks… but if you consider how much you'll save in airline tickets when you don't have to fly to find your clients because they're right here in the same city, I'm pretty sure it nets out.
- Office rents? I'm still waiting to find a company who had to go under or couldn't launch because office rent was too high. People are always going to be your #1 expense in a startup--not that you even really need an office before you get funding.
- Life is a tradeoff. It's more expensive to live here, but if you could run into people who can really help your business in the local community, what's that worth to you?
Response: Startups get covered all the time here--just not necessarily when the launch or simply because they're a startup. There's more media here in NYC than anywhere and it's up to the startup to get themselves in the thick of the conversation as a relevant player innovating in a space. No, you don't get extra credit and a pat on the back for being a startup here, but if you get to know the people covering your industry, they'll tell you that they're always looking for stories about companies doing new and innovative things.
On top of that, tech blogs like TechCrunch, Mashable, GigaOM, and Venturebeat all cover NYC tech startups. They're national and they all have local people on the ground here covering companies.
In fact, it's probably easier to get media coverage for your company here than any place else, because you can literally run into a relevant reporter at your average tech event and go for coffee because they work down the street from you.
Response: Some of the most successful and visible companies in NYC--Gilt Groupe, TheLadders, Meetup.com, and Etsy aren't media startups dependent on the advertising industry. On top of that, some of the biggest/most popular tech companies out there--Google, Facebook, Twitter, YouTube… are, in fact, media companies. Hell, there are even companies like EnergyHub, Peek, Square, and Phreesia in NYC that made devices. They're all doing pretty well.
Just because there are a lot of startups living off of a certain ecology in a city doesn't mean you can't build a different kind of company in that place. In fact, most companies need a lot of the stuff anyway--and if you're different, perhaps that works to your advantage. Maybe you meet a CTO who is tired of working with ad agencies. New York City is so damn big, that if you can't find 10 people doing interesting stuff in your space, perhaps your market isn't big enough or you're too early.
I love this city, but there are things that I can understand don't mesh well with people's priorities and values. However, when someone says they can't build a company here for any of the above reasons, I get really frustrated, because the resources are here and I already see the best and most experienced entrepreneurs taking advantage of them. I'm not trying to say it's better than the Valley--it's not better, it's different. What I am trying to say is that anyone can build a company here--anyone. Now, maybe this current idea of yours isn't the right one. Maybe you have more to learn as an entrepreneur--I certainly do. But, I'm a firm believer that the tools are in place for a well executed company to succeed here. Let me know if you need help finding them, but keep an open mind that perhaps you also have more work to do to get your company to a point where it's investable or attractive to work at.
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