“What’s the deal flow look like?”
“What are you seeing in general?”
“What’s the breakdown of Alley vs Valley deals you’ve been contacted on?”
“What themes and patterns are developing?”
These are the typical questions we get from the VC’s, Angels, Founders, and Executives with whom we work.
The questions seem to be coming much more frequently these days.
Daversa Partners is a leading executive search firm focused on building teams for venture backed, emerging growth companies. We have 40 people in the firm and offices on both coasts.
Until mid-2009 Silicon Valley had dominated our attention and dwarfed the sheer number of companies we have recruited talent for by a 4-1 ratio, driven by breakaway consumer internet businesses as well as the emergence of the cloud based offerings. The big location question used to be San Jose or San Francisco, the valley or the city.
With our good fortune of being able to work with great venture firms and great entrepreneurs, we are often one of the first calls when people need to build leadership teams — thus we become an interesting barometer for the ebbs and flows of industry trends. The most glaring observation over the last year has been that, for the first time in my 20 years of search, the deal flow and investment lines have begun to blur as NY has become a hot-bed for building great tech companies and leadership talent is migrating to New York.
Silicon Valley will maintain its undisputed grip on engineering talent, overall thought leadership and sheer volume of innovation. There is no arguing that point. The depth of the talent pool in the Bay, especially in product and engineering seems almost unfathomable.
But here’s is what has changed: more than any time in recent history I am seeing a migration of talented engineering and operating executives leaving the Bay area and other parts of the country to lead NY companies. As a matter of fact, it seemed commonplace to hear “NFW” when talking to Valley execs as recently as 18 months ago when called about a NY opportunity.
Now we expect the receptivity! There is no doubt that the burst of NY’s momentum is being fuelled by signs of life from Madison Avenue and large brands that dominate the East Coast. There is also a newfound energy that is serving as the shot in the arm of vitamin B to Silicon Alley investors and start-up…a signal that Silicon Valley’s birthright and mecca of professions is being threatened (or least facing some viable competition).
Here’s the most telling statistic for us; at least 50 per cent of all the projects we do–and we get our share of the plum projects–are coming out of New York. The challenge used to be that NY was viewed as a one hit wonder…if a candidate moved to NY then they knew they would have to consider moving again for that next job. And, even if the candidate did really think about the move, the idea of having to build his/her team was a major issue.
Some of our recent projects have included multiple senior hires for Zynga (CA), CFO of Twitter(CA), CEO of Recycle Bank (NY), CFO of Gilt.com (NY), CEO of Mozilla (CA), CEO of Buywithme.com (NY), SVP of Rockyou (CA), CTO of AOL (NY), VP Engineering Boxee (NY), CEO of Grockit (CA), President of Drop.io (NY), President of Knewton (NY) and CTO of Renttherunway.com (NY), and CMO of The Ladders.com (NY).
What is telling about the NY projects is the infusion of Silicon Valley executives as well as other executives from other locations that often flock to the bay. Gilt’s CFO and President of Stores, Buywithme.com’s CEO and CTO, and Renttherunway’s CTO were either West Coast recruits or from other locations in the country.
In a recent Daversa Speaker Series (a fireside chat we have monthly with industry leaders and innovators), Ron Conway of SV Angels and legendary Angel investor disclosed that 25 per cent of his current portfolio of investments are now in NY — up from 5 per cent just two years ago. NY has regained some of its swagger thanks to companies like Gilt.com that picked up where Doubleclick left off, setting in motion an ecosystem being developed around the 5th Avenue and Madison Avenue beachheads of advertisers, brands and buyers.
The big question remains: can NY create 2nd and 3rd generation legacy much like executives at Google, eBay and Paypal that have been a part of the Web 3.0 emergence? The theory would go that, as NY companies continue to scale, those companies will create the next generation of innovators. As Gilt, Foursquare, TheLadders, Etsy or Boxee (or whomever the winners will be) grow, employees from these companies will branch out to form new ventures. No longer does great talent have to think of NY as a one hit wonder. The talent pool will grow exponentially over the next 3-5 years. And NY will find itself as the definitive “other” market where great US tech companies are born.
The prevailing theme is that the Valley vs. Alley dogfight is in its early stages and given that there is a flurry of high quality start-ups germinating at a frenzied pace on both coasts, we are already seeing the stepped up and accelerated decision making being made to lock down talent. So, the recruiting won’t get any easier, but the once scoffed at idea of moving to NY to run tech companies will be replaced by the idea that any good exec will have to have NY on their radars.