Why New York City’s tech scene is thriving

As spring melts into summer, there’s been much discussion around New York City’s blossoming tech scene and you can feel the energy in the air as you walk through Union Square. Coworking spaces like WeWork Labs, General Assembly and Dogpatch and incubators like TechStars, Gramercy Labs Collective and Prehype are experimenting with new ways to cultivate young companies in the city that never sleeps. As a friend of mine described it, the kids are launching startups the way they used to start rock bands.

NYC Mayor Michael Bloomberg believes New York City’s startup center, dubbed “Silicon Alley,” is superior to California’s Silicon Valley in a number of ways. Earlier this month, NYC Mayor Michael Bloomberg announced his roadmap to make NYC the nation’s premiere digital city by increasing New Yorkers’ access to new technologies, continuing to make government services more transparent and promoting the tech industry.

We’ve published several lists of NYC’s shining startups in the past but never fully paused to think about why this shift is happening and why it’s happening now. As summer officially kicks off in New York City, let’s dive into why New York City’s tech scene is so hot right now.

Thank you Silicon Valley, now everyone can play on the Internet

When I first moved to New York City a childhood friend of mine described it as combustible. No one moves to New York to relax and kick their feet up. Citizens pay a high price to live amongst the best and brightest because they seek inspiration through opportunities that thrive on intellectual collaboration.

Startups like Gilt Groupe and Etsy have proved their potential to attract mass markets, as have companies like Meetup, Tumblr and Foursquare; they are startups that have enabled and inspired connections within the tech community, spawning opportunities for entrepreneurs, engineers and tech enthusiasts to create and grow the city’s digital ecosystem. (In fact, there’s practically a secondary market for tickets to NYTM, New York’s largest technology Meetup.) This emerging ecosystem is quickly attracting talent from all industries like a bonfire might on a cool summer night.

“We are finally seeing the tech industry recruiting away from other industries in NYC, such as lawyering, banking, consulting, etc. And this is exciting because people who previously were taking the safer financial road, are instead going for their dreams, starting great companies and creating a new ecosystem,” says TechStars‘ David Tisch, a lifetime New Yorker.

For the past decade, the West Coast has focused on building the accessible, technical infrastructure that New York City’s wide-ranging talent is now molding into its own media-rich, socially-driven and design-focused startup culture. Overall, NYC is less “hardcore tech” (with the exception of companies like MakerBot) than Silicon Valley. If you look at many of the great companies New York has birthed, such as Jetsetter or Lot18, they’ve innovated the most at the presentation layer, in the UI. Of all the interviews conducted for this piece, Henrik Werdelin, the Founder of Prehype, a local incubator we profiled last weekend said it best:

The East Coast tech-scene is booming because we are going through a phase where experience design, clever new business models and distribution is becoming as important as the technology itself. The new East Coast growth companies are standing on the shoulders of the tech platforms that the West Coast has built over the past decade such as easy-to-use infrastructures like Amazon, discovery tools like Google and Facebook’s social graph. While companies like Esty, Groupon and Gilt Groupe are considered technology companies, they are really just smart, new innovative companies – built on top of technology. I imagine that New York’s access to talented designers, marketers and business developers will continue this trend.

As the next level of innovation occurs across the Internet, New York City’s wide skill set is well suited to reap its benefits. Unlike Silicon Valley, where tech is its own industry, New York City is the homebase for a myriad of industries including finance, fashion, media and real estate. That isn’t to say that Silicon Valley and the Bay Area don’t have a number of different industries, but in New York City the focus is less on tech for tech’s sake and much more about its complementary role and the cooperation between the different industries.

Traditionally, the big competition for startups trying to attract talent is high paying jobs, which New York has quite a few of in finance and media. But these are two industries that have been jolted in recent years. Smart people are discovering that instead of getting the next big paying cog-in-a-machine job that they are able to start their own company and they’re receiving a lot of satisfaction from doing so.

“Yesterday, I had an epiphany that for the first time in my life, who I am and who I want to be are virtually one in the same. It’s so much more effective to be yourself than to pretend to be something your not because doing the latter is so emotionally taxing, you’ll never be someone that is fully committed. Being yourself pays dividends,” says Brett Martin, a former banker and now the CEO and Founder of Sonar, a hot new social, location-based mobile application.

Dan Leahy, the Co-Founder of Village Vines points out that while disenchantment with banks led to some questions about the attractiveness of a Wall St. career, the real driver has been the fact that getting a company off the ground now requires significantly less capital and technical resources than it did 10 years ago, making launching a new idea as a ‘business’ type far more practical and attractive.

And it seems that New York City’s emerging entrepreneurs are impressing industry legends. According to SV Angels’ Ron Conway, NYC’s startups today have real business models; they’re building a real audience and as Lerer Ventures‘ Eric Hippeau pointed out at Tech Crunch Disrupt last week, there’s real capital this time around.

“In 1999-2000, there were hardly any VC firms based in New York. People in San Francisco were not flying to NYC as they are today. They saw it as a pesky center of innovation. Today, you have the solid, well-integrated angel community… Even if there is a hiccup, the feeling is that this financial structure that supports entrepreneurs will stay.”

–Eric Hippeau

So, if there’s one New York City startup that defines the rest, which one is it?

Winner: Since New York City is all about digital collaboration, the winner is Kickstarter, a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, explorers and other creative types that is not only an incredible start-up in its own right but it has the unique ability to spawn other start-ups. Founded in April 2009 by Perry Chen, Yancey Strickler, and Charles Adler, the site is undoubtedly one of the coolest growing businesses in New York City.

Artists create videos to outline their projects, set fundraising goals and users come to the site to pledge money in exchange for rewards like small tokens of art, CDs, concert tickets, etc. instead of equity. The trick is, no one is charged and no one gets any money unless the full goal is met. If the goal is met, Kickstarter takes a 5% cut of all successful funding drives. Projects funded on Kickstarter so far include Diaspora, which received over $200,000 to fund a “privacy aware, personally controlled, do-it-all, open source social network” and read our article on The Glif, an iPhone 4 tripod mount which raised $137,417 for production.

Runner-Up: Foursquare takes second place in the run because it’s truly emblematic of living in New York City, a naturally hyper-local, social, realtime, all the time place. As we constantly create connections on the web, living in a city such as New York complements this highly connected experience. Furthermore, Foursquare was able to achieve early success through key media partnerships with Bravo, Zagat, Showtime and Metromix, which is indicative of working in the media capital.

It’s hard to imagine a more perfect birthplace for socially driven, location-based mobile services than New York City. Maxim’s Senior Tech Editor Seth Porges points out, “NYC is a hyper-social town, where people are packed close enough that the spontaneity afforded by apps like Foursquare just makes sense.”

Audience Choice: Tumblr is like the FFFFound for the rest of the world. It’s shareable, fast-paced and populated with fashion-centric images. In fact, Tumblr’s fashion and art content is what has allowed it to flourish. For example, Of A Kind, a popular limited edition fashion site has built its entire platform on both Tumblr and Shopify.

I asked Tech Stars’ David Tisch if he could pick any company in New York City right now to be the CEO of, which one would it be? “Tumblr. I think there is so much potential in the vision – and the strength of community they have built is unparalleled,” he answered.

And he’s not the only one who loves Tumblr. Foodspotting’s Soraya Darabi says, “Tumblr is basically the Pony Boy Curtis of NYC startups: totally cool, young, hip and a good narrative of everything cultural happening these days.”

What else makes New York’s tech scene so great? The Chicks.

More than a few New York City entrepreneurs were quick to point out that the babe situation in New York City trumps San Francisco’s any day. On this topic, one former New Yorker now happily married Silicon Valley VC said, “If you’re moving to San Francisco, just make sure to pack a sandwich.” All light joking aside, I’d like to shed some light on NYC’s impressive roster of female founders.

“I definitely see there are more female founders, specifically more first time female founders. In the next few years, I expect to see more serial female entrepreneurs who will be able to get funding even more easily.”

–High Line Venture Partners’ Shana Fisher

New York City wouldn’t be the city it is without its impressive roster of female entrepreneurs. Many of these women have been able to launch successful companies around their passions, be it fashion, food or saving the world. To name just a few: Mayor Michael Bloomberg’s new chief digital officer, Rachel Sterne; Birchbox founders Katia Beauchamp and Hayley Barna; Marissa Evans, the Founder, Go Try It On; Hilary Mason, the Chief Scientist, Bit.ly; Makery’s Elizabeth Stark;Foodspotting‘s Amy Cao and Soraya Darabi; SpotOn Founder Gauri Manglik; Suzannie Xie of Lollihop;Fashism‘s Brooke Moreland; Of A Kind‘s Claire Mazur and Erica Cerulo; Rent the Runwayfounders Jennifer Hyman and Jennifer Carter Fleiss; AHAlife‘s Shauna Mei; Campbell McKellar of Loosecubes; Texts From Last Night’s Lauren Leto and Cindy Gallop of If We Ran The World.

Gilt Groupe, the flash sale fashion company, which has become an iconic New York City startup was founded by two Harvard Business School grads, Alexandra Wilkis Wilson and Alexis Maybank. “I love Gilt, it’s a hometown hero and expertly pioneered by two fabulous female founders alongside NYC legend Kevin Ryan of DoubleClick. Beyond that, I’m addicted to it and probably have a guilt complex associated with my ongoing Gilt purchases,” says Foodspotting’s Soraya.

Speaking of food, The Daily’s Abigail Drachman Jones points out that Foodspotting (while technically with a fork on each coast) brings to life all of the reasons to love New York — the food, the culture, the friendships, the delight in discovery and the ability to contribute to the crazy, exciting, hectic world that is New York City.

So with all these fabulous women in one city does it ever get catty? No, says Of A Kind’s Claire Mazur, “Everyone seems to realize that if someone is doing well here the benefits reverberate throughout the whole community and you see it manifested in resources like General Assembly and Tech Stars coming to the city.”

To this point, I recently met with entrepreneur Christina Vuleta, who is in the midst of launching 4020Vision, a forum for women in their 40s to pass on what they have learned from their experiences and for 20-somethings to seek advice from women who lived with the choices we face in our 20s. Keep an eye out for our upcoming interview with Vuleta later this summer.

What does the future hold for New York City?

While every week in New York has started to feel like geek week, June 6th marks the official start of Internet Week in New York City, a festival of dozens of offbeat, visual events that will bring the Internet to life – from Digital Archaeology, an exhibition of websites from the 90s that have been restored and exhibited on the software and hardware of the day to Speed Show in Williamsburg, where every computer in a public Internet café will be taken over by an Internet art exhibition to The “Can You Draw the Internet?” Project, which challenges NYC kids and designers and to see who can best draw what the Internet really looks like to The 15th Annual Webby Award. This year, over 20,000 people will attend Internet Week, up from 15,000 last year. The celebration and community of tech is clearly here but in comparison to Silicon Valley’s engineering talent and mindset, we may have a little ways to go.

“The culture and logistics is all set up in California to nurture startups in a way that New York is not quite there yet. While I was hiring last year I used to joke to friends that the first thing people want in NYC is a 6-figure salary while in California the first thing people want is half your company,” says 4Chan’s Christopher Poole who moved his new startup Can.vas to NYC last year.

It’s clear NYC startups are hungry. As a city, we’re petrified to keep moving faster and keep doing better. We benefit from having a great commercial center, and we’ve witnessed a massive cadre of talented people migrate to startups.

In the end, it’s clear that there’s much room for collaboration between the two coasts. What the East Coast needs in terms of raw engineering talent, the West Coast needs in media partnerships and advertising savvy. Company wise, Google already has an impressive office across the street from Chelsea Market, home to Google’s Creative Lab. And Silicon Valley giants Facebook and Zygna have opened up offices in New York in the past year as well. Last week, “Super Angel” investor Ron Conway announced that his West Coast based SV Angel and NY- based Lerer Ventures are entering into a formal partnership to invest in one another’s deals and share access to each other’s golden Rolodex. “We’ll be each other’s eyes and ears on each coast so hopefully we don’t miss the next great company,” Huffington Post CEO and Lerer Ventures partner Eric Hippeau said at Tech Crunch Disrupt last week.

If innovation and startups are what’s going to create a brighter future and the jobs of tomorrow, it’s time to start racking up those miles on Virgin America.