…and not Silicon Valley.
I am broaching this topic because I’d once surmised that the Bay Area is the best place to start a company, and even though there might still be some truth to that, I’ve concluded that New York is the best place for me and CityPockets right now. Having recently returned from a wonderful trip out to the Bay Area (SF, Mountain View and Palo Alto), I’m more convinced about my decision to keep my roots in New York. I’ve always loved San Francisco and may even move out there some day. But this is the first time I’ve been back there as a ‘tech person’ so the perspective is entirely different.
One thing I noticed is that New York is traditionally more concerned about wealth (“who has the bigger paycheck/bonus”) whereas Silicon Valley is more concerned about power (“who has the bigger influence/status/’celebrity investor or founder’ title). Nonetheless, here are some of my observations on the two cities:
Observations on Tech Infrastructure
Everyone in the Bay Area is really enthusiastic and aware about tech. Even the cab driver, bakery owner, and hair dresser speaks tech lingo, which is pretty cool. The sight of developers coding at a cafe or overhearing people talking about a round they’d recently closed with their investors is not uncommon. There has been snide comments in the past that NY will always be a tech backwater because we don’t have the infrastructure to support tech startups, but I beg to differ.
The wifi cafe and co-working boom in NYC is quickly changing the scene, facilitating entrepreneur-investor meetings and allowing co-founders to rent affordable desks on a month-to-month basis. I know a group of 6 entrepreneurs who are living ‘dorm-style’ in a 3-bedroom apartment in StuyTown. I’ve personally moved into a living room partitioned by a curtain and have been sleeping on a futon for the past 4 months in my bootstrapping mode. I know of countless other founders who pay less than $800 to rent a room in Brooklyn or Queens. So, if there’s a will, there’s truly a way 🙂 Entrepreneurship is not for everyone but if you can deal with the ramen lifestyle, you can deal with it anywhere.
Observations on Funding
In Silicon Valley, you are likely to take angel money from a former entrepreneur who’s exited or ‘made it.’ So the money tends to be smarter since you’re getting an experienced entrepreneur to back you up. This is what they call ‘new money’ and usually the preferred kind of money. However, Bay Area ‘super angels’ like to be anti-trend. With all frothy buzz about an investment bubble going on, prominent angels out there are putting their brakes on and declining meetings with the excuse that ‘they are re-evaluating their portfolio and hence slowing down in early-stage investments.’ And with all the noise out there, it’s harder for a first-time entrepreneur or young startup to get noticed without a lot of politicking involved (well either way you’ll have to hustle hard).
In New York, you’re likely to take angel money from a former (or current) finance tycoon who’s made millions from their hedge fund or proprietary trading firm. Or you find hedge funds/private equity shops investing in early stage startups to ‘diversify’ their portfolio since there aren’t too many investment vehicles out there churning decent returns anymore. As a result, we see a sudden influx of angel or seed stage investment, which propagates a booming NY Tech scene. This is what they call ‘old money.’ While money is indeed abundant here, you do have to work harder to get a little bit of money because investors here tend to be less sophisticated in tech and hence require more data points and proof of a business model. While I eventually got lucky with extremely entrepreneur-friendly lead investors who offered to close my round upon 20 minutes of meeting me for the first time, the majority of angels don’t act that quickly and require 10 meetings before they give you a single penny. I can probably write an entire post about this another day.
In short, although raising money is relatively easier now that ever before, it’s still an extremely grueling process, as much as some founders like to proclaim otherwise (few like to admit they had a tough time). I wonder if angel funding in the bay area is tapering right now as it seemed to be while I was out there. On the other hand, there is a bounty of ‘old money’ in New York that’s waiting to be tapped even though it’s going to take a lot more work to get it. My take is that it might be slightly easier for a first-time entrepreneur to raise seed money in the east coast right now.
People in the Bay are more health-conscious; eat healthier (organic, local, fresh, etc), play sports and enjoy the outdoors more. This is probably one of the biggest selling point to me since I put a lot of emphasis on eating healthy and exercise, something that has unfortunately taken a back seat since I moved to NYC 3 years ago. People are also much more laid back here, which tends to dictate your stress level. When I was working in SF for 8 days, I felt more relaxed and balanced. Being in New York has made me more impatient and highly strung. The quote below speaks to what I feel about NYC:
“In New York, external stimulation is everywhere. Want an amazing meal at 4:00 in the morning? Easy. Best theatre in the world? Done. Most beautiful people? Everywhere. This omnipresent temptation fuels the present-tense way of life. New Yorkers are impatient for a reason.” ~Geoffrey Lewis
There is also truth to the saying that New York is for the “young and very rich.” You have to be young to be okay with living in a living room and surviving on a $35/week food budget. The opposite of that is the presumptive ‘need’ to be very rich to truly experience the richness of what the Big Apple has to offer (the expensive clubs, 3-star michelin restaurants, loft apartments on 5th ave, etc). But again, I think the culture in NY is changing; there’s a sense of nobleness in giving up some (or all) of the luxuries that New York has to offer in pursuit of one’s passion and dreams through bootstrapping.
Observations on Dating
There are definitely more men in the Bay (and disproportionally more women in NYC thanks to SexInTheCity), although one complain I consistently hear about dating in SF is how passive or shy the men are out there are than in NYC, probably because they are so obsessed with their startups. But once you have them, they are likely to remain loyal and committed. The opposite is true with men in NYC. It’s a great city for meeting new people and dating, but it’s a horrible city for finding true love. Sad I know. I do find men in NYC more interesting though 🙂 Ah, but alas with the startup schedule, how does one find time to date?
Observations on Diversity
There is much more ethnic diversity in NY. SF is becoming more of a ‘white, asian and hispanic’ community whereas I can find various other nationalities in New York. You tend to meet more interesting people from various walks of life and this melting pot is what truly makes New York so special and unique.
To further the diversity point, I do feel that New York startups being a mesh of finance, fashion, social media, and real estate results in startups that are far more refreshing than the startups that are focused on tech for tech’s sake.
So, Why Did I Choose New York?
With all the blown out valuations in the Bay Area as a result of the higher competition among investors, every other person you talk to in the Bay Area is in a startup that has received some sort of funding. They react nonchalantly when you tell them you’ve just raised your Series Seed or A because that doesn’t mean anything to them (which is probably true). Do I want to be a small fish in a big pond, or a big fish in a small pond?
1. Community & Being a Leader
I chose New York not only because the tech scene here is thriving from all the money that’s flowing into young startups, but also because I feel that we’re leaders of the pact. I can pack my bags, move to SF, potentially raise money from the best investors and learn from the best entrepreneurs but I will always be a follower because it’s a lot harder to rise above the noise and get attention from the right people there.
However, in New York, we represent a new wave of startups (right behind more than a handful of highly reputable startups), led by hungry, fresh entrepreneurs who have just broken free from traditional NY jobs that were suffocating and sucking life out of them. Here, you get this sense of sparkle, pride and ‘coolness’ factor when you stand up and say you’re a founder of a startup in NY. The sense of community here is incredible. In SF, I had a feeling that the techies there are somewhat ‘pocketized’ (a term I coined in SF), meaning there are pockets of tech folks everywhere who are somewhere disconnected, probably attributed by the distribution of startups within a larger geographic area. The tighter New York tech environment fosters collaboration and a genuine desire to help other entrepreneurs succeed because we see ourselves at relatively the same stage when it comes to being a first-or second-time entrepreneur. There’s a feeling that ‘we’re all on the same boat’ and we’re constantly rooting for each other, because if a couple of us become breakthrough successes, this will complete the NY tech ecosystem that Chris Dixon speaks about, as we continue to evolve into tech community maturation.
2. Recruiting from Just Outside of NYC
A startup can only be as good as its people; you need to find the best talent to take your company to the next level. While you may find more experienced engineers in the west coast, it’s also highly competitive to get them and they cost so much more. As New York becomes a tech hub, a lot of great tech talent on the outskirts of NY are looking to move into the city… so smart founders have excellent opportunities to look into areas such as DC, Boston, Pennsylvania, North Carolina, Texas and even as far as Chicago to bring the raw talent in. They always say go where you can find resources, but when there is extreme competition, I say go where you can attract nearby resources!
3. Diversity – Why I Love New York
Life is not just all about tech. As much as I work 100-hour weeks, I do think that NY keeps me in tune with other aspects of life when I go out to catch an occasional play, ballet, or dine out at an authentic Venezuelan restaurant. Where else can I work with smart tech teammates during the day, jam with a band of musicians at night, attend your best friend’s play because she’s the lead actress, and always know that you’ll be able to get good pizza at 4am? Yet, New York lures me not only in its cultural diversity but also in the types of startups emerging that varies from art, fashion, and food to social and media-based. Definitely makes life a heck lot more interesting and rich.
4. Makes Sense for CityPockets
New York is actually the perfect location for my startup, CityPockets. NY has the highest number of daily deal sites start up here, a high density of merchants in close proximity, and a ton of people buying daily deals every day. There’s also the support of media, marketing, advertising, and potential distribution partners here. Why move when the ecosystem is already here?
Summary / Moral of the Story
In short, I chose to be a leader in my own community and did not to run away to a more mature community because my ‘odds’ or valuation will be better there. I chose to be part of the technology revolution in New York because I believe that this city has what it takes to foster a thriving startup community.
The purpose of this post is not to claim that NY is a better place to do a startup. In fact, I despise people who barrage other cities and treat it like we’re in a competition to be the best. I don’t freaking care which is the best city as long as we are producing startups that are building something that people truly really need. At the end of the day, you’ll have to pick a city where you feel most comfortable in and where you can find the resources, network and support that you need. I found that in NY! ❤