New York’s Silicon Alley occupies a densely populated area loaded with human expertise, money and corporate ambitions. The local tech culture stands in opposition to Silicon Valley’s shoot-for-the-moon ethos by emphasizing practical concepts that are magnets for funding and, if realized, are ideal as bite-size acquisitions for larger companies.
“There’s less of the ‘giant idea’ that’s meant to re-paint the sky but more down-to-earth [concepts] that can be implemented in the short term,” says Al Lieberman, professor at New York University’s Stern School of Business and executive director of NYU’s Entertainment, Media & Technology program.
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By all measures, the Big Apple region ranks a distant second in tech heft after Silicon Valley. The PwC/CB Insights Money- Tree Report counts New York second among states for tech deals and investment measured in dollars for the second quarter of 2019, but the sum is less than a quarter the size of leader California. When looking at metropolitan areas, PwC/CB Insights MoneyTree places New York-Newark as No. 2, ahead of No. 3 Boston-Worcester-Providence and No. 4 Los Angeles-Long Beach. Those numbers measure all tech, reflecting specializations such as the Boston region’s concentration of health-care tech, Pittsburgh’s leadership in robotics and Washington’s focus on cybersecurity and defense.
The New York tech industry’s focus is in digital media, entertainment and advertising. Those are in synch with established hometown industries such as advertising, broadcasting, cable TV networks, magazine and book publishing and the pro sports leagues headquartered in the city. For example, Warner Bros. parent company AT&T is building a 20,000-square-foot WarnerMedia Innovation Lab in the Chelsea neighborhood of Manhattan that will be a testing and proving ground for digital media touchpoints.
Tech congregates in Manhattan, especially at the emerging Hudson Yards real estate development, as well as in Brooklyn and adjacent Long Island. Among New York’s appeal to employers is its sheer size, with a vast cadre of white-collar workers and a youth-skewing population, which is the first generation of digital natives.
“When you see all the drivers across many verticals, not just media/entertainment but also financial tech and health care … they’re all here,” says Jesse Redniss, general manager of the WarnerMedia Innovation Lab.
Manhattan-based tech entrepreneur Brett Goldberg, co-CEO of online concert and sports ticketing company TickPick, which scored a $40 million investment from PWP Growth Equity in August, says the population provides “expertise in every specific job front you want to hire, whether it’s developers, engineers, CFOs and marketing. You don’t have to worry about re-locating people. The people are already here.”
Other New York advantages include a cosmopolitan old-world atmosphere and geographic location that attracts European companies setting up U.S. offices. For example, the U.S. headquarters for Sweden-based music-streaming behemoth Spotify is a Manhattan high-rise. The region’s extensive in-city train transit system is cited as other advantage, because tech workers uncomfortable driving can live a car-less lifestyle.
Of course, New York has drawbacks. Labor, operating and land costs are high; the city’s infrastructure is crumbling; and the major tech players are largely headquartered elsewhere.
Moneywise, Wall Street rarely funds tech’s boom-or-bust startups. But as an affluent region, there’s potential to attract high-net-worth financial angels with deep pockets willing to take a bet.
Nurturing companies from scratch — keeping tech-skilled wizards from running off the business rails — is the realm of specialist venture-capital funders who are “company building specialists,” says Eric Hippeau, managing partner of Lerer Hippeau Ventures, a Manhattan-based VC firm with media investments. “That’s not done through financial engineering. It’s done through blood, sweat and tears.”
New York tech mushroomed by embracing the digital side of the region’s traditional media and entertainment industries and an orientation toward the practical. “There is very little tolerance here for building something with a ton of eyeballs and no revenue, which is something you do see in San Francisco,” says one digital New Yorker.