Lee Semel

Last night NextNY had an event called NYCHub to talk about ideas for improving NY as a center for technology and entrepreneurship. Just to get down my initial thoughts, it seems that the challenges boil down to two main areas:

• Money: New York startups suffer from an extreme lack of funding options. Companies face a much higher hurdle here, and only those businesses with a proven business model that have already gained traction stand a chance. Creative, risky or visionary concepts that could succeed out west will not get funded here. Right now, onvestors simply do not take startups seriously. This is something that needs to change.
• Community & Culture: There need to be better ways to connect with other talented, entrepreneurial, and creative people. While there’s an abundance of talent, it’s very siloed, and people from one industry don’t interact with others. Aside from NextNY, there aren’t many great places to connect with people. Furthermore, there are fewer role models, success stories and mentors for up-and-comers to look up to. There’s a general lack of awareness of technology entrepreneurship as a viable life choice and as a pathway to success, compared to other big industries here, such as finance, fashion or advertising. Because of this lack of awareness, tech people are very risk-averse and prefer to work on Wall Street. It’s also difficult to get legal services, office space, or other resources for equity. These social and community aspects are definitely within the power of a group such as NextNY to change–whether through publicity, larger events that cross the silos of industry, having more networking events, and aggressively promoting NY success stories.

Nobody mentioned real estate as a problem, and significantly, nobody mentioned any problem connecting with clients/customers or making sales. An abundance of businesses to sell to is definitely one of NY’s advantages. Also, there are already a lot of people in NY developing innovative products and ideas, but they’re either below the radar, or exist within large business such as NYTimes Digital, R/GA, InterActiveCorp, Google, NBC, Goldman Sachs, Reuters and others.

I actually think this all comes down to mindset. Out west you if you’re doing something cool, new or creative, people might be interested. They may even want to help. Here everything is met with extreme skepticism. “What’s the point of doing that? What’s the business model? Why don’t you work on Wall Street like everyone else?”

Update, further thoughts:

• Having a vibrant tech community makes working at one individual startup much less risky. If the company you started or joined fails, there will be another one around to jump to.
• Many of New York’s key industries face competition due to new technology, especially television, newspapers, and media. NY businesses seem to have a ‘fat and happy’ attitude that they have the natural right to be at the top. But they’re going to need innovation here if they want to keep NY as a center for those businesses. There will be other Craigslists and YouTubes destroying other industries in the future, and the centers of those businesses will move out west if NY remains complacent.
• A lot of the participants at today’s meeting felt that technology was just a support function for their business, and could be entirely outsourced overseas. I think it works for some businesses, but not all See my thoughts on when offshore outsourcing works and when it fails. I’ve met with too many entrepreneurs whose whole businesses are being stalled because of the technology side. And the people they do find have the old-school ‘long project with waterfall process’ mentality, rather than a quick, agile, and creative development process. They’re getting average work, and not hitting the high notes.
• A few big successes can change help change the culture. The current boom was started practically by two companies, Google and YouTube.
• The film and TV industry in NY has the same kind of startup mentality as technology in the West Coast. People are willing to make creative bets on risky projects, because that’s how the whole industry works. And it’s easy to get people to work for you for free. What’s the business model of a TV show? The same as for most Web 2.0 companies–attract an audience and sell advertising. I think there is a good chance NY will be come a major center of online video content. (That’s why I’m involved in this business)
• New York has a large and vibrant interactive industry. Companies such as R/GA, Digitas, Grey, and Ruder Finn routinely execute technology projects for their clients. There’s a pool of high quality designers, usability experts, online marketing strategists, and programmers working on such projects. They have a clear idea of what companies want from working with them regularly. But there’s little connection between this industry and the tech industry itself. If the boom comes back to New York in full force, a lot of entrepreneurs will emerge from these companies.
• NY interactive firms are also a good channel for selling technology products to large companies, because these firms routinely recommend products and services to their clients. It sounds ridiculous that big companies ask their design firms to specify what technologies their intranets should use, to implement social networking on their sites, or to choose mobile marketing technology providers, but that’s what happens.

This entry was posted on Thursday, March 1st, 2007 at 11:36 am and is filed under General, Internet & Tech Industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.