Why New York Is Going To Replace Silicon Valley As The centre Of The Tech Universe

New York City

Photo: AP

There’s been a lot of dis­cus­sion in the past cou­ple of years about the resur­gence of New York City as a tech cen­ter (I actu­ally called the com­par­i­son to Sil­i­con Val­ley a silly one about a year ago).In the past cou­ple of years, how­ever, a lot of fac­tors seem to be point­ing to New York not only becom­ing an impor­tant force in the tech­nol­ogy space but also finally achiev­ing its poten­tial not as another tech cen­ter but more as its epi­cen­ter, dis­plac­ing Sil­i­con Val­ley after almost three generations.

The rise of New York to promi­nence is, first and fore­most, due to a series of happy acci­dents. While the tech­nol­ogy world was long dom­i­nated by hard­ware and algo­rithms, the cur­rent phase (often referred to as “the social web”) is all about people.

In order to full back those assump­tions, I’ve cre­ated five lenses, each with its own post:

  1. Mono­cul­tures have neg­a­tive impact. Poly­cul­tures take longer to cre­ate pow­er­ful organ­isms but inher­ently build ones that are more adaptable.
  2. Liv­ing in a city is inher­ently a social expe­ri­ence. Liv­ing in a car-driven soci­ety isn’t.
  3. Every­one poaches techies — the New York tech scene was born of those peo­ple that can’t be poached and found ways to attract like-minds.
  4. Don’t look at adver­sity as some­thing that can be over­come with brute force, deal with it as a nor­mal con­di­tion and you will find inno­v­a­tive workarounds.
  5. Busi­nesses are ulti­mately about money so to con­tinue fos­ter­ing suc­cess, val­ley startup might do well to act a lit­tle more like New York ones if they want to build sus­tain­able futures.

A his­tor­i­cal settingThe New York dot­com scene of the 1990s was vibrant but ulti­mately flawed. Its own hubris killed it (and I should know as I was one of those peo­ple) and along with it killed the chance of New York dis­plac­ing Sil­i­con Val­ley as the epi­cen­ter of the tech­nol­ogy world. A decade after its implo­sion, New York is being given a new chance to pick up the man­tle, along with some dis­tinct advan­tages this time around.

With many vet­er­ans still being part of the scene, it seems the lessons of the past have not been for­got­10 so the chal­lenge to Sil­i­con Valley’s supremacy will be sub­stan­tially stronger than it has been in the past. I hope this series will give both groups chances to think about the dif­fer­ent issues fac­ing their own envi­ron­ment and work on deal­ing with those.

At the end of the day, if both Sil­i­con Val­ley and New York were to emerge stronger than they are today, this con­flict could leave the US more pre­pared for the next set of chal­lenges that will push both coast to pull together and fight against the rise of cities in for­eign locale to try to take the lead­er­ship away from the USA. If you are read­ing this, you prob­a­bly have a dog in that fight and it is up to you, as well as every­one else in the field, to ensure that this com­pe­ti­tion ends up turn­ing each loca­tion into the best it can be.

New York is home to a huge array of industries; Silicon Valley just has one

The real talent is already living in New York City

There has been a lot of writ­ing about the tal­ent short­age in the Val­ley now that large com­pa­nies like Google and Face­book have gone into a tal­ent arm race, prompt­ing some to think that this could be the begin­ning of a new bub­ble.

New York­ers used to tal­ent wars

Bub­ble or not, the New York tech scene has been used to tech­ni­cal tal­ent being poached. Because there are other dom­i­nant forces in the city, New York star­tups have often fought the tal­ent wars at a mon­e­tary dis­ad­van­tage. Wall Street can attract some of the most tal­ented maths­e­mat­i­cal minds with inter­est­ing prob­lems and extremely high salaries. The media and adver­tis­ing world has been appeal­ing to cre­ative types and peo­ple who enjoy being close to the spotlight.

The New York tech scene was born of those peo­ple who felt that there was more to life than work­ing for a large com­pany, mak­ing gobs of money, or hang­ing out with famous peo­ple. Peo­ple in the New York tech scene tend to be peo­ple that view the tech field as attrac­tive for its own sake, a place where one can build an inter­est­ing busi­ness. So tal­ent wars have always been part of the make-up, just another busi­ness prob­lem to solve.

By com­par­i­son, the val­ley had it easy as it was seen as the place to go if you are a techie, always replin­ish­ing its engine with fresh new tal­ent and the sup­ply always was roughly equiv­a­lent to the demand for new tal­ent, leav­ing the sys­tem mostly prop­erly balanced.

Now that larger actors like Google and Face­book have gone into hyper-hiring, demand in the val­ley has been exceed­ing sup­ply, reach­ing a level that is prob­a­bly no dif­fer­ent than the one peo­ple in the tech field in New York are used to. But for peo­ple in the val­ley, this is a new dynamic to adapt to; for peo­ple in the city, it's busi­ness as usual.

There is also a vir­tu­ous cir­cle to the rise of New York turn­ing it into an ever more attrac­tive place for mem­bers of the tech field. As Fred Wil­son recently pointed out:

If you are a 22 year old man or woman just start­ing out in life, would you rather live in sub­ur­bia and work on a cam­pus or would you rather live in Williams­burg and work in Flatiron?

So the more suc­cess­ful the city becomes as a tech cen­ter, the more attrac­tive it becomes to peo­ple who want to help it become more suc­cess­ful as a tech cen­ter. The qual­ity of life ele­ment is going to be an impor­tant chal­lenge the val­ley will have to change if they want to sur­vive the New York onslaught.

New York, how­ever, will have to con­tinue, as Fred points out, its effort to fos­ter local tal­ent straight in col­lege. While it is OK to import tal­ent from the schools along the rest of the north­ern cor­ri­dor, other cities could try to stop that migra­tion. It is up to New York's aca­d­e­mic cir­cles to start devel­op­ing the next ver­sion of Stan­ford locally if they want the cur­rent growth to be sustainable.

Take­away: Every­one poaches techies -- the New York tech scene was born of those peo­ple that can't be poached and found ways to attract like-minds.

And New Yorkers are tough enough to deal with a little adversity

New York is not always an easy place to live in. Poor band­width, inad­e­quate mobile net­works, and mas­sive pop­u­la­tion breed adver­sity. New York­ers have learned to deal with it and lever­age it to cre­ate new experiences.

Adver­sity is Potential

But where some peo­ple look at gaps as an exam­ple of why some­thing or some­one can­not ful­fill its full poten­tial, entre­pre­neurs look at those as oppor­tu­ni­ties to cre­ate new busi­nesses. So things like mak­ing it impos­si­ble to open sam­ple sale places in mul­ti­ple loca­tions around the globe led to the cre­ation of Gilt, cre­at­ing a whole new model for online com­merce; issues around improv­ing gov­ern­ment effi­ciency led to see-click-fix; or more effi­cient ways to locate where your friends have gath­ered led to FourSquare.

Another aspect of the advan­tage of adver­sity is that it forces New York­ers to think about solu­tions that are adverse-condition resis­tant. So while many look at inap­pro­pri­ate band­width being an issue, it's led New Yorker to cre­ate solu­tions that can work in the US as well as over­seas, in mar­kets where band­width is more constrained.

I was recently chat­ting with a New York based founder who told me that he was relo­cat­ing his tech­ni­cal team from Ukraine to Esto­nia because, beyond the cost of employ­ees, Eston­ian users tend to use slower com­put­ers and have less band­width. I was con­fused as to why that would be a good thing so he explained to me that since his com­pany was devel­op­ing soft­ware for mobile devices, it was bet­ter to have pro­gram­mers who knew how to wring every sin­gle bit of per­for­mance out of a 5 to 10 year old com­puter because that's the kind of proces­sor you get on a mobile device today. Eston­ian pro­gram­mers have been doing that for a long time and it has now become a valu­able skill, one he couldn't find in US markets.

I, not unlike many peo­ple in both the val­ley and New York, have often called for more band­width as some­thing that is essen­tial to future growth but that entre­pre­neur showed to me that such a call may not be nec­es­sary: smarter use of lim­ited resources may be a more effi­cient approach and only when we have have wrung out every lit­tle bit we could out of the band­width and pro­cess­ing power we have should we start beg­ging for more.

Because invest­ments in large-scale ambi­tious tech­no­log­i­cal projects have been suc­cess­ful in the past, money in Sil­i­con Val­ley tends to be less scared when it comes to invest­ing heav­ily in cre­at­ing brand new infra­struc­tures. So when an adverse con­di­tion arises out of con­straints, there is a nat­ural 10­dency to address the con­straint by throw­ing more resources at it. This brute force approach may not always be the best way to han­dle it (although, in some cases, it could be: for exam­ple, dig­ging up the exist­ing elec­tric grid and replac­ing it with a smart grid would be some­thing to look at).

So whereas the val­ley looks at a way to steam­roll a con­straint, New York­ers look at a way to mine it.

Take­away: Don't look at adver­sity as some­thing that can be over­come with brute force, deal with it as a nor­mal con­di­tion and you will find inno­v­a­tive workarounds.

Finally, New York startups are business oriented, meaning they are destined for success

So, are you convinced that New York is the new Silicon Valley?

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