Mama I'm Coming Home

Return of the Diaspora: After a Taste of the Valley, New York Techies are Coming Home

All work and no play makes Jack a dull startup.
go west Return of the Diaspora: After a Taste of the Valley, New York Techies are Coming Home

(flickr.com/usnationalarchives)

Underlit bars and blaring techno set the scene at the Park Avenue Armory earlier this month, when a who’s who of New York’s tech scene gathered in the cavernous block-length building for the sort of startup event that bore little resemblance to the usual beer, pizza and Powerpoint office gathering. No, this was a fashion show; a nerdy fashion show, to be sure, but one with glamour and theatrics. Raise Cache, a fundraiser for the apprentice developer program HackNY, tapped local tech personalities to walk the runway outfitted in glasses from local e-prescriber Warby Parker, slacks from e-tailor Bonobos and accessories from e-jeweler Bauble Bar. Larger-than-life cartoon avatars lorded over the crowd from the DJ booth as amateur DJs spun tracks using Union Square-based streaming music startup Turntable.fm. Founders and VCs milled about in gowns, coattails, pinstriped vests, glittery tights and cowboy hats. A recording of Mayor Mike Bloomberg, who has been pumping his pom-poms for the New York tech scene of late, boomed out at the close of the show: “Now more than ever, [New York] is the place for to be for tech soirees!”

That seems to be the consensus among a contingent of New York founders who made the pilgramge to the tech mecca of Silicon Valley but have returned to be part of an up-and-coming scene, as well as for the nightlife, the restaurants, and the higher baseline average peer attractiveness. “There’s a lot more good-looking people in New York,” one founder told Betabeat. “Don’t quote me about that, but if it’s something you want to work that into the story, there’s definitely something there.”

In the past, incubator programs in Silicon Valley contributed to a techie brain drain from East to West. Paul Graham, the architect of the prestigious startup accelerator Y Combinator, insists Silicon Valley is the best place to start a company, and often counsels his startup acolytes to set up shop nearby. The vast majority of the Y Combinator alumni network is in Palo Alto, Menlo Park, Mountain View and San Francisco. Tales of New York-based founders like Matt Mireles, a Columbia graduate and uber-hustler founder of a video transcription startup, shipped out to the Valley when they found themselves struggling in New York are common. “But if you’re a schmoe like me and you’ve got a big, world-changing dream, NYC is not the best place for you,” Mr. Mireles wrote in a heavy-hearted blog post about the move in February 2010. “The odds are already stacked against you. Being outside the Valley just stacks them higher.”

Whatever the reason, a passel of companies have recently boomeranged back to the city after a season on the far shore. The longtime tech mantra of ‘go West, young founder” is being revised for the simple reason that New York’s tech scene is up-and-coming, more social and more fun. Recent Y Combinator grads Codecademy, The Fridge, MessageParty, Hirehive and Tutorspree all moved back the New York within the past 18 months. Sam Rosen, plucked from Flatiron’s General Assembly for the Mountain View accelerator 500 Startups by superangel Dave McClure, returned after the program ended.  “My friends in New York City—one would be in marketing, my good friend was a producer at MTV, other friends are lawyers. Whereas in the Valley you go to the party and everyone is in tech,” he told Betabeat in January. “It’s not like I’m tired of talking about my company, but it’s all we talk about.” Josh Weinstein, founder of the Facebook competitor CollegeOnly who later pivoted to interactive web television with a startup called YouAre.TV, ventured out to the Valley to work with a cofounder and be closer to investor Peter Thiel. In September, he returned—mostly because the cofounder bailed on him, but partly because he felt “isolated,” he said.

Amanda Peyton, MIT business school graduate and proud owner of a 212 cell phone number, moved out to Menlo Park in the summer of 2010 to participate in Y Combinator with her cofounders of the mobile blogging platform MessageParty. “It reminded me of Westchester, where I grew up,” she told Betabeat. “We had a lot of space where we lived, and the grocery store was really big and nice and things like that.” At the end of the summer, she and her roommates found out they had been living in the three-bedroom house that Lisa Brennan Jobs, Steve Jobs’s daughter, grew up in. The house was also next to Sand Hill Road, where all the big VC firms are, but there were only two places to eat within walking distance: Safeway, and a well-loved bar called the Dutch Goose.

At the end of the program, Ms. Peyton started talking to friends and colleagues about where to go next. “I had two arguments for going back to New York,” she said. “One was more of a macro trends argument about how there’s so many industries in New York that are going through truly fundamental shifts… but then I was talking to one guy, and he was like, why don’t you just admit that the reason you want to move back to New York is because you want to live in New York? And I was like: you’re totally right. I just want to.”

Ms. Peyton and her team are now ensconced in the former Williamsburg coworking space The Makery (currently transforming into the office of conversation-logger Bnter). “There’s just more stuff to do in New York,” she said. “There’s more places to eat, more people to hang out with. I just learned how to work smarter. Yeah I have cut down the hours a little bit, but I don’t feel like I’m any less productive. I just don’t feel like I’m only working.”

Same Same, but Different! 15 Parallels Between Silicon Alley and Silicon Valley [SLIDESHOW] >>

Beyond the pizza and the social scene, New York’s startup support network is booming. There are more tech companies starting, more investors scouting for tech companies, more rockstar startups—Foursquare, Etsy, Kickstarter, Tumblr, to name a few—and more developers teaching themselves the lightweight coding skills that power much of the consumer internet. There have also been some high-profile exits, including GroupMe’s $85 million sale to Skype and Hunch’s $80 million acquisition by eBay, both in the last six months.

New York also embodies a camaraderie and enthusiasm that derives from being a relatively unproven startup hub still forging an identity.

RRE Ventures principal Tom Loverro, who recently moved back to New York after four years at a startup in Silicon Valley and a stint in Chicago, was impressed by the Raise Cache techie fashion show. “The New York Tech Scene has not only arrived, but it is different and it is defining its own trajectory,” he wrote in a blog post. “It is characteristically and unabashedly New York. The event itself was a fashion show. It was young and full of 21-35 year old urbanites.”

Kirill Sheynkman, who heads up the U.S. arm of RTP Ventures, a $750 $700 million fund based in Russia, was more cynical. “It’s great to have that attitude, but it’s [like] a high school football team,” he said. “What was the line from Bill and Ted’s Excellent Adventure? ‘San Dimas High School football rules!’”

Mr. Sheynkman spent most of his career in Silicon Valley as a former entrepreneur in residence at Sequoia Capital and venture partner at Greycroft before he moved to New York and became enamored of the city.

Traditionally there have been three reasons for starting a company in the Valley, he said. “For a long time the VCs in the Valley would only invest in local companies. That has changed,” he said. ”The old saying of, ‘I’m not going to invest anything unless I can drive to the board meeting’ … was in the days before we had Skype and iChat and Go To Meeting. Now you have weekly status meetings on video and they’re just as great as being there. It was a little bit of an attitude. ‘You have to come to us and not us come to you.’”

The second argument is that when a company gets started, the top priority is hiring the right people. While there is more techie talent in Silicon Valley, he said, there is also a higher concentration of startups and significantly more established tech companies to suck that talent up. “Prices are higher in the Valley than they are in New York,” he said. “Although New York isn’t cheap in terms of hiring people.”

The third argument is that there is a more active tech scene in the Valley, he said. “In terms of meeting people and hanging out, New York is much better. It’s in the nature of the city to go out there and network and be social.” He pointed to Meetup.com, a ten-year-old New York-based startup that serves up tech rendezvous on every topic from Javascript to Hadoop to Twitter etiquette. “It’s like Alcoholics Anonymous,” he said. “There’s a meeting every night somewhere.”

Indeed, the number of recurring tech events on Meetup.com has wildly accelerated: Startup Lunch, 193 members; Dumbo Tech Breakfast, 783 members; UWS Startup Meetup, 240 members; the New York Technology Bathhouse Meetup, 31 members; the Wall Street to Startups Meetup, 98 members.

And yet, “there’s still a lot of learning that I think New York has to do,” Mr. Sheynkman said.  “A lot of the companies are in love with doing a startup for the sake of doing a startup. They’re MBAs that think instead of a career at Goldman, we’re going to do a startup company!” We imagined him rolling his eyes on the other end of the line. “You know, you actually might want to do your thing at Goldman Sachs, it might actually be better for you.”

By way of disclaimer, he added: “I’m a New Yorker, I’m never leaving Manhattan. I love the city. Let’s make sure we mention that.“

“I get the impression that there tend to be proportionally more folks in New York that are trying to start companies but have no fucking clue what they’re doing,” Fitocracy CEO Brian Wang told Betabeat by Gchat. He and his cofounder, Dick Talens, are subletting their apartment in Clinton Hill while they complete a session at 500 Startups. “Granted, I don’t think I have a fucking clue either.”

At any rate, he plans to head back east when the program is over. “We’re pretty set on returning to New York,” he said. “Both Dick and I enjoy New York City as a place to live immensely. Honestly, that’s 95 percent of the reason. The other five percent for me, is probably the hope and expectation that the New York City scene will continue to grow and mature and that we can call ourselves an important part of that.”

Same Same, but Different! 15 Parallels Between Silicon Alley and Silicon Valley [SLIDESHOW] >>

CORRECTION: An earlier version of this article identified Tom Loverro as a partner at RRE Ventures; that is incorrect. He is a principal. Betabeat regrets the error.

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. “The Valley” is a much more broad locale than New York City… Menlo Park, Mountain View, Palo Alto, etc. offer an extremely different lifestyle than urban San Francisco. 

  2. Matt Mireles says:

    NYC offers a better lifestyle than the valley, for sure. Suburbia is not fun. SF is much much better because it’s an actual city, but still doesn’t match NYC in terms of fun. If you want to optimize for fun, you do not live in Mountain View or Palo Alto. Period.

    If you want to optimize for surrounding yourself with awesome, experience people at the center of the tech industry––both employees and mentors––live in the SF Bay. 
    Two mistakes I’ve seen people make are:1) failing to cultivate mentors. 2) not going to the mountains.If you don’t leverage the wealth of experience and professional resources that’s here in the valley, you’re gonna wonder why the hell you’re here. If you don’t go to the mountains and experience the insanely awesome California outdoors (hello, Tahoe!), you’re gonna be stuck with a second rate city, or worse yet, Westechester-esque suburbia. 

  3. ststrat says:

    I call bullshit. If you are in walking distance to the Dutch Goose you are within walking distance to about 10 other places and about a 5minute drive max to downtown Palo Alto.

    1. “walking distance” and “Dutch Goose” in the same sentence…  That’s the problem, it’s not walking distance to anything.  I remember from my Stanford days that it’s not even “stumbling distance” ;-)

    2. “walking distance” and “Dutch Goose” in the same sentence…  That’s the problem, it’s not walking distance to anything.  I remember from my Stanford days that it’s not even “stumbling distance” ;-)

  4. Matt Straz says:

    The tide has turned. New York is now the coolest and best place in the world to start a software company, period.

    http://the-makegood.com/2011/11/08/how-new-york-beats-silicon-valley/

  5. Matt Straz says:

    The tide has turned. New York is now the coolest and best place in the world to start a software company, period.

    http://the-makegood.com/2011/11/08/how-new-york-beats-silicon-valley/

  6. Kate says:

    Is it me, or does Adrianne mention Fitocracy once a week? I don’t think of them as representing the NY tech scene at all.

    1. Anonymous says:

      Why not?

  7. Guest says:

    Silicon Valley: vc likes you if he thinks startup staff can answer google/facebook/zynga interview questions

    NYC: vc likes you if he thinks he can flog your concept off in news corp