Starship Enterprise

Why I Chose to Build My Enterprise Startup in New York City

It's a good time to make a "sector bet."
david on a rock Why I Chose to Build My Enterprise Startup in New York City

Mr. Politis

This is a guest post from David Politis, the founder and CEO of BetterCloud, the makers of FlashPanel, an admin tool for Google Apps that has acquired 10,000 customers and 3 million users since launching this July. You can follow him on Twitter @DavePolitis.

New York City has long been the promised land for investment bankers, hedge funders, media moguls and advertising agencies. More recently, it has become a center of innovation for technology startups. There is no shortage of launches and funding announcements for consumer-facing tech startups and service providers for digital advertisers.

However, exceptions side, one thing is certain: New York City is not known as a home for startups developing for enterprise.

Conventional wisdom has it that enterprise innovation takes place in the Bay Area, Seattle and other cities that have traditionally attracted enterprise venture capital investment and engineering talent. But faced with a number of options for where to build BetterCloud, the enterprise startup that I launched last year, I chose New York City. Here’s why:

Easier to Standout

For starters, the local venture capital climate is ripe for evaluating truly disruptive technologies that can demonstrate a path to monetization.  To date, most observers would agree that a majority of seed, angel or Series A-funded NYC-based startups fit into two camps: consumer web or digital media. This has created a cluttered, hyper-competitive ecosystem of NYC startups, many making very similar claims about what their products can do (respective to their product categories). While one might argue that this gives both investors and target audiences greater choice, I would argue this homogeneity makes it far easier for startups operating in the enterprise sector to standout.

Making a sector bet in NYC isn’t a new strategy. Mike Lazerow has called his 2007 founding of NYC-based Buddy Media a ‘sector bet’ rooted in Facebook’s then emerging ecosystem of third-party services providers. Buddy Media was one of the earliest providers of B2B social media services in NYC, paving the way for the massive influx of social media startups operating in the city today.  Earlier this year, of course, Buddy Media sold for $745M to enterprise company Salesforce.com, one of many early signals that the enterprise sector is regaining much of the ground it ceded to consumer and digital media over the last decade.

Talent Pool from the Finance Industry

We’ve received several job inquiries from investment bankers, all of whom have been searching for business development jobs. For these candidates, making the switch from banking to enterprise technology is far easier to grasp than a move to consumer tech, where products are seldom monetized and the buyer is hard to categorize.

Staying Grounded

In San Francisco there are so many startups it’s easy to forget that not all Americans actually work in the technology sector. The last time I was in the Valley, a city bus passed with an ad for a company I had never heard of. After expressing confusion, my friend, who had moved to San Francisco a year earlier to start his own tech company, informed me that this was the coolest new startup–how could I have possibly not heard of it?

In New York, you’re surrounded by more Fortune 500 companies than in any other city and brush by celebrities and Wall Street’s wealthiest on a daily basis. It’s pretty easy to stay humble here (though the rest of the world would tell you otherwise). And although the “techlebrities” featured in Bravo’s Startups: Silicon Valley have received significant backlash from Valley insiders, the very premise of the show would be hard to pull off in New York. (I don’t see the real housewives of New York facing any competition soon).

Unmatched Loyalty

In Silicon Alley, choices are limited if you want to work in tech, as opposed to larger industries like finance and media, which breeds a sense of loyalty. If you’ve ever spent a summer morning commute on a jam-packed subway car without air conditioning, you understand the “we’re all in this together” mindset. New Yorkers can reach a point of defensiveness when it comes to their city, and I’ve found the same to be true in New York’s burgeoning startup scene.

People here seem to work with a greater sense of urgency because of this loyalty and because of the pace of life attributed to the city. I’ll often hear of people leaving New York because of the city’s breakneck speed, so those remaining here have self-selected themselves as the kind of people who thrive in this fast-paced environment.

Resilience 

It’s only been a year since I moved back to New York to launch BetterCloud, but as expected, the city hasn’t let me down yet. We’re excited to be a part of this nascent community and are confident more enterprise focused startups will make their way to the Big Apple. And I’ve never been more proud to be a New York startup founder than over the last week week. Hurricane Sandy, as horrible as the effects have been, has validated every reason why founding a startup in New York is the right move. Since the power went out on Monday night, we’ve seen the incredible kindness and resilience of this city. Whether it was the VC who offered us workspace, our employee who trekked on foot from West 99th Street downtown to our office on Tuesday when the rest of us were unable to get in touch, or the willingness of our employees to get to our temporary workspace on the Upper West Side by any means possible–bus, taxi and by foot. Our makeshift office has enabled us to work normal hours and the team has welcomed visits from employees’ loved ones (dogs included).

New York is a resilient city and this week has proven it. As the city is slowly restored and power is returned to our office, I’m certain that BetterCloud and the thousands of other companies impacted by Sandy, will come out stronger on the other side.