Doublethink

Is New York poised to become the next tech startup mecca?

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.

Here’s my spin on it: the entrenched media interests who dominate much of the NYC tech scene were still holding on for dear life during the last few tech booms and refusing to innovate, which locked up a lot of talent and energy with old money. Now that newspapers are dying, journalism is in flux, and media is looking for a new identity, there is a lot of talent in the city with training in both “traditional” media/journalism and web technologies. These cross-trained people, once they decide they can’t make money blogging, are going to get together to build platforms that will rebuild new media from the ashes of old. This very blogging platform we’re using, based out of NYC, is evidence of that, and I think it’s only going to get bigger as more unemployed media types realize that their most lucrative path is to do what all the Sil Valley kids have been doing for the past 15 years - starting companies and sucking up VC funding.

This observation was also inspired by my visit to the Manhattan Googleplex yesterday. There are a lot of very talented and very hungry engineers employed at GOOG but not blissful about being cogs in a very large machine, and that leads me to think that the software developer resources of the city are lurking largely untapped waiting for good startup ideas to latch onto.