Last week I attended an event at The Standard hotel in New York City hosted by venture capital firms NEA, Silicon Valley Bank and Lerer Ventures. The Standard’s Roof Bar offers extraordinary views of lower Manhattan, including Freedom Tower and its newly installed spire. “Fitting,” I thought to myself as I chatted with this next generation of founders, business press and venture capitalists. The completion of Freedom Tower marks a new era in New York and its technology industry.
Having been present for New York’s first tech boom, it’s striking to see how much has changed since the World Trade Center, along with the dot com tech sector, was reduced to rubble. Companies like Flooz, govWorks, and Kozmo.com are distant memories today, as are many of the people, parties and publications of the day. Jason Calacanis’ Silicon Alley Reporter stop publishing long ago, nobody has had a Cocktail with Courtney in awhile, and F*cked Company is still f*cked.
Like many people around for New York’s first tech boom, after the bust I found a home in media and advertising. Banner ads and search engines were a lifeline for a generation that needed to piece together a career after the crash. Ad tech helped New York bridge the first tech boom to this new one, keeping key engineering and sales talent in the region.
But now the New York tech industry is expanding its remit and advertising is not the focus. At the event at The Standard I found plenty of founders building ecommerce companies but only a couple involved with making or optimizing ads. This is both a reflection of the success of ad tech which is now so large that it occupies a universe of its own as well as the need for the city to do more than just split the advertising atom.
So how close are we to achieving the goal of a truly diversified tech economy? In terms of marketing it would appear that we’ve already arrived. The city’s omnipresent “We Are Made in New York” campaign features dozens of new tech companies, including music apps and crowd funding sites. New York startups like Buzzfeed, Thrillist, 10gen, Birchbox, Etsy, and ZocDoc are posting significant revenues and experiencing real growth.
But we are still lacking in at least two areas. First, we have yet to have a breakout company with a big IPO. An IPO would be incredibly helpful to the entire tech ecosystem, enriching early employees and blazing a path for everyone else.
The other area where New York is lacking is in terms of the number of founder-friendly venture capital firms. West coast firms have more experience in building non-ad tech businesses and have more capital to work with. East coast VCs tend to be more demanding when it comes to terms, valuation and diligence. As a result, many New York founders still end up winging it to the west coast to find a VC to lead their Series A or B rounds.
Overall, New York has made tremendous progress since its first tech boom and bust. The key will be to continue to grow through a complete economic cycle and come out the other end with an intact and vibrant industry.