Except to see more of this. (Photo: Guest of a Guest)

It's never too early to start speculating about the next election cycle. So we're calling it, less than a month into the new year: 2013 will be New York tech’s debut as a political force.

Tech moguls and politicians have always been willing bedfellows, of course. Last year, technophiles in Silicon Valley and the Bay Area outpaced "Hollywood celebrities and Wall Street moguls" in funding President Obama's reelection campaign, according to a report from MapLight.com. On the other side of the aisle--like far, far to the right--Facebook investor Peter Thiel "almost single-handedly" funded Ron Paul's super PAC. After his fringe candidate dropped out of the race, Mr. Thiel donated $1 million to Club for Growth Action, a Tea Party super PAC.

Locally, however, New York's tech set has been able to rely on the Bloomberg administration asking for their two cents on what might benefit the community. Cornell-Technion's applied sciences campus and the software engineering high school, for example, were responses to founders and investors bemoaning the talent crunch for engineers.

The dialogue was mutually beneficial. After Wall Street's collapse, New York City Economic Development Corporation president Seth Pinsky kicked off a number of initiatives, like funding General Assembly's urban campus and launching app competitions, in the hopes that a robust startup sector would mitigate losses in the financial industry.

But with the countdown clock ticking on Mr. Bloomberg's third term and the success of defeating SOPA/PIPA, New York's techies are taking a more proactive role in making sure City Hall is invested in their success.

This week, the New York Tech Meetup announced plans to host a series of candidate forums in advance of upcoming citywide elections. Leaders of the 30,000-member group are also soliciting input on seven proposals under the banner “Help Us Make NYC the Best City for Tech in the World!" The slate includes creating a deputy mayor for technology innovation and providing New Yorkers with the fastest broadband at the lowest possible price.

Local entrepreneurs and investors are also voting with their wallet, a pattern the Wall Street Journal says is "likely to continue as the campaign season heats up":

Kevin Ryan, chief executive of online luxury retailer Gilt Groupe, contributed $1,000 to City Council Speaker Christine Quinn, a Democrat expected to vie for mayor, and gave the same amount to state Sen. Daniel Squadron and Reshma Saujani, two Democrats preparing to run for public advocate. Andrew Rasiej, chairman of New York Tech Meetup, gave $100 to mayoral hopeful Bill de Blasio. Fred Wilson, of Manhattan-based Union Square Ventures, has contributed the maximum of $4,950 to Mr. Squadron and Ms. Saujani.

As Crain's later reported, Cameron and Tyler Winklevoss--who have been hosting political fundraisers at the Hollywood mansion financed by their Facebook settlement--each donated $4,950 to Mr. Squadron's campaign as well.

In fact, the race for public advocate between Ms. Saujani, Mr. Squadron, and Letitia James--all Democrats--is an early sign of the tech sector's eagerness to flex its newfound political clout. Mr. Squadron has been involved in tech initiatives like successfully advocating for an applied sciences campus in Brooklyn. But Ms. Saujani, a former hedge fund lawyer, has cultivated more visible ties to the tech world.

Last year, she founded the very well-regarded non-profit Girls Who Code, which secured backing from Twitter, eBay and Google to educate and encourage teenage girls toward careers in technology and engineering. At private fundraising events, Ms. Saujani has advocated for bringing the same energy and job opportunities in the Flatiron's tech enclave to the outer-boroughs. She recruited Uber to sponsor transportation for volunteers to Far Rockaway after Hurricane Sandy. Her husband, Nihal Mehta, is the founder of the successful advertising startup LocalResponse.

Indeed, while The Village Voice estimated that 40 percent of donations for her 2010 Congressional campaign came from Wall Street big wigs--in addition to high-profile support from Jack Dorsey, Chris Hughes, and Randi Zuckerberg--Ms. Saujani's campaign for public advocate has greatly benefitted from advocates in New York tech, beyond just the Fred Wilsons and Kevin Ryans. No surprise considering she was the first candidate, back in 2010, to accept donations using Square.

According to the New York City Campaign Finance Board, Ms. Saujani has raised $759,711 to Mr. Squadron's $820,008. But Ms. Saujani got a last-minute boost from techies, using the mediums they love best: 150 of her donations were made in the final hours via Twitter and Facebook. Mr. Mehta galvanized last minute social media efforts while he was at Summit Series' mountain in Utah. Gary Vaynerchuk, Adam Braun from Pencils of Promise and Scooter Braun Project CMO Brad Haugen, who has nearly 60,000 Twitter followers, tweeted out their donations, encouraging others to join.

That's in addition to support and fundraising efforts from Gotham Gal and angel investor Joanne Wilson, who donated $4950, as well as Google's community affairs manager Alex Abelin. Last Spring, Gilt Group's Alexis Maybank also headlined an event for her campaign.

"I think with a new mayor there's an awareness in the tech industry that things could change in the relationships between city government and the community--whether it's getting RFPs for incubators or partnering on the academies," Ms. Saujani told Betabeat. It was a morning after the Presidential Inauguration and Ms. Saujani, a former bundler for President Obama, had been in D.C. for the inaugural ball, followed by a party hosted by Electronic Arts. "The change presents a real opportunity for people in the tech sector to be active in the 2013 elections, like we're seeing with New York Tech Meetup and with supporters of my Public Advocate campaign," she continued. "So there's a lot of excitement too."

The startup sector likes to present itself as a positive force for world change. But with more political lobbying, is there a danger, we asked Ms. Saujani, of the tech sphere seeming more like a special interest? "The conversation about innovation in New York City is not just happening in the tech community in Manhattan--it's happening in all five boroughs. Elected officials citywide are interested in bringing more 21st century jobs to their communities, and that means partnering with tech."

Those divergent conversations are part of the reason tech voters are unlikely to present a unified bloc. As Anil Dash told the Journal: "It's venture capitalists and 23-year-old graphic designers in Bushwick. It's labor and management. It's not traditional allies."

(Photo: CornellNYC Tech)

The patent wars rage on in the tech world, but today a couple of big names extended olive branches in hopes of brokering a peace--or at least one between the industry and the notion of patents. This morning, leaders from the Commerce Department and Cornell University announced that there'll be a U.S. Patent Office staffer permanently planted right on campus.

That individual will serve as a kind of liaison between the worlds of tech and intellectual property, working to connect university students and affiliates to whatever resources the Commerce Department has to offer. (Before you private sector devotees scoff, that ranges from IP strategizing to government grants.) It's all in the service of speeding innovations from academic notion to marketable product.

This is the first time the bureau has ever devoted such attention to a particular university campus. How you like dem apples, Stanford?

To make the announcement, acting U.S. Commerce Secretary Rebecca Blank appeared at Google's New York digs with Cornell president David Skorton and a host of local politicos, including both Seth Pinsky and a very tan Charles Schumer.

Secretary Blank quickly clarified there won't be an actual office--wouldn't want the already overworked patent officers besieged by PhD candidates!--but rather just the staffer.

“The resources we’ll provide at Cornell University’s New York City tech campus are a natural extension of the Administration’s commitment to removing the barriers that get in the way of more jobs and more innovation," she said.

It's all part of exploring a new model of university-led innovation, she added, "so we can push even more great American products into the global market."

President Skorton stepped up to say that the program would allow broadening the curriculum to incorporate both academia and industry. Nor will this staffer be kept closeted in the ivory tower--everyone who spoke was very clear the initiative would be available to other schools.

Of course, one wonders how having a patent officer on the grounds of a high-profile tech campus is going to play out, given the rampant problems with patent trolls and the popularity of open source. President Skorton made pointed mention of the discussion, but also said that having a patent point person on campus will help with the process of "figuring out together the sweet spot for IP protection in the software area from trade secrets to patent protection."

It's also probably an indication that CornellNYC won't limit itself to consumer Internet startups, as one doesn't typically wade into biotech without filing some serious paperwork.

Receiving a shout out from Patent and Trademark Office director David Kappos was Stack Exchange. The two have a partnership to get third-party feedback on pending applications and share prior art, with the aim of making patents stronger and more specific. He gave props to the site for having stepped up to the plate. "We're getting discussions going on in Stack Exchange in real time," he said, surely blowing the minds of everyone who's ever attempted to get a straight answer regarding a governmental application process.

Senator Schumer took the floor and first gave props to Congresswoman Carolyn B. Maloney for wearing the appropriate shade of red. "Almost like rapunzel it takes research and transforms it into jobs and companies," he said of the tech transfer process.

He proceeded to hold up a copper pipe in one hand an iPhone in the other, to illustrate the rapid rate of innovation. Senator Schumer made the point that university founding father Ezra Cornell had held the patent on a pipe-laying machine, making it only appropriate that his should be a leader in the current technological revolution.

The Roosevelt Island Tram sure will be crowded circa 2017.

Mr. Pinsky and Ms. Sterne

Yesterday morning, Betabeat popped out of the subway a little further downtown than normal for an Internet Week breakfast panel at Eventi. The four speakers, assembled to discuss the city's role as a leader in the new tech economy included Seth Pinsky, president of the New York City Economic Development Corporation, Rachel Sterne, the city's chief digital officer, Daniel Huttenlocher, dean of Cornell NYC Tech, and Craig Gotsman, director of the Cornell-Technion Innovation Institute.

Considering our profile of Mr. Pinsky and multiple features about the battle between Stanford and Cornell to win a chance to build on Roosevelt Island, it was not unlike seeing the pages of Betabeat on stage--only with free pastries and a lot more suits.

The event, which was sponsored in part by the Observer Media Group, was moderated by New York Observer editor-in-chief Elizabeth Spiers and former New York City Council member Kenneth Fisher from Cozen O'Connor, another sponsor.

We were hoping the panel would touch on the often-overlooked subject of failure rates among startups, which surfaced recently in a report about the state of Startupland, New York. And the topic did indeed arise, by way of an anecdote from Mr. Gotsman, who said one of the key traits of a good entrepreneur is willingness to take a risk. "If he's not willing to take a risk, he's dead before he starts, he's just not going to start," said Mr. Gotsman, before launching into what he called "a really bizarre example."

"I was recently sitting in McKinsey--the McKinsey here in New York, the management consultants. They were helping us to do some research behind offerings on the new campus," said Mr. Gotsman. They had assembled a team of 15 "techies" from within McKinsey, that included recent graduates from Stanford, Princeton, MIT, Berkeley and the like who had studied computer science and engineering, even up into the post-doc level. "Literally I could see the sparkle in their eye," when he talked about the mission of the applied sciences campus, said Mr. Gotsman. "I asked them, why are you guys not out there making startups?" he said, "Why are you sitting here in McKinsey giving me advice about how to do it? They answered, 'We didn't want to take the risk.'"

Mr. Gotsman said the city needs to figure out a way to educate and help the best and brightest to become less risk averse.

Mr. Pinsky chimed in that the issue of risk was tied to the ability to build critical mass in the startup sector, which he called, "the biggest challenge that we face."

"Once you have that critical mass it becomes self-sustaining," said Mr. Pinsky. "So you have to have a number of people who have succeeded as well as a number of people who have failed and you can use those lessons for themselves and teach them to others."

Dean Huttenlocher put a finer point on it. "The reason critical mass is important in the tech sector is because 90 percent of startup companies go belly up," he said, adding that employees are well-aware of that. "Until you have a critical mass where there's a really good community not just in scale but also in strength of the networks of people across the corporate boundaries, it's very hard to attract the best talent. Because they need to know that they know somebody at ten other startups so that when this one blows up, they can jump to another one seamlessly. They don't have to spend six months unemployed. And that's something that other areas of the country have that we're just starting to build here."

The Made in NY Digital Map

It was sticky and rainy outside, but scores of people showed up to see Mayor Bloomberg shake his tech pom-poms today at Internet Week HQ. The Mayor trudged to 82 Mercer to announce a new initiative alongside chief digital officer Rachel Sterne, NYCEDC president Seth Pinsky and--surprisingly--Josh Miller, the cofounder of Branch.

So what exactly did Mr. Mayor have up his sleeve? Turns out it was a new interactive map that displays the locations of tech companies around New York City. A sidebar also displays which of these companies are currently hiring.

The map "also locates the offices of investors, making it an excellent tool for entrepreneurs in search of capital, and includes over 30 tech incubators," he said. "We expect this map to be another tool that helps propel our tech industry forward."

Ms. Sterne elaborated, "Right now, there are over 600 startups, investors and incubators listed on the map, and we invite others to submit their company because this is an interactive resource."

Ms. Sterne also said that over 320 companies on the map are hiring, equating to "more than 1,000 open jobs in New York. The message is loud and clear: New York City is open for business."

So much rah-rahing was starting to make us nauseous. After Mr. Pinsky spoke, Mr. Miller then took the podium and briefly listed three reasons why he decided to move Branch back to NYC, the last of which was, "I much prefer a slice of New York pizza to a San Francisco burrito."

Finally it was the press's turn to ask questions. We were dying to ask the Mayor if he's keeping to his New Year's resolution to learn how to code.

Unfortunately, we never got called on. Maybe next time, Mr. Mayor.

NYU's initial proposal for a tech campus at 370 Jay St.

UPDATE: Read our liveblog of the Mayor's press conference about the NYU's new Brooklyn campus here.

Well that was well-timed! Hours after The New Yorker posted a profile of Stanford that tore at old wounds about the innovation engine's decision to drop out of building an engineering campus in NYC--blame sour grapes or Seth Pinsky, depending on who you ask--the city is finally ready to make an announcement about a secondary initiative.

According to Mayor Bloomberg's schedule, it looks like the second-place winner is a bid from NYU and the Polytechnic Institute of New York University (NYU-Poly). In its initial proposal, NYU wanted to transform the derelict former MTA headquarters at 370 Jay Street into a Center for Urban Science and Progress. At 1pm this afternoon, the Mayor will be joining NYU President John Sexton to announce a partnership to create a new "applied sciences center in Downtown Brooklyn." 

A quick refresher: Back in December, when a joint submission from Cornell-Technion was named the winner of the New York City Economic Development Corporation's competition to build an applied sciences campus on Roosevelt Island, Mayor Bloomberg also teased the possibility that a secondary winner would be named among the three remaining proposals: NYU (Downtown Brooklyn), Columbia (Manhattanville), and Carnegie Mellon (Brooklyn Navy Yard).

The only hangup? The entire $100 million grant from the city for the campus contest had been allotted to Cornell-Technion, meaning the new project (or projects, the city said they would love to build all three) would likely have to rely on philanthropic donations or some creative financing on the city's part in terms of incentives. That's probably why this announcement took months longer than expected.

It's unclear whether NYU's proposal, which also got hung up on the MTA's buyout price for 370 Jay St., will still be at the same location and cover the same scope as initially proposed. But we'll be live-blogging the presser and let you know as soon as we find out. Brooklyn politicians--and real estate developers!--have been lobbying hard for this to get approved, so expect plenty of self-congratulatory back-patting.

Stanford's proposal for Roosevelt Island

In this week's issue of The New Yorker, the illustrious Ken Auletta, who recently profiled Sheryl Sandberg's attempts to "upend Silicon Valley's male-dominated culture," looks at the Bay Area from a different perspective. This time, he analyzes how Stanford became "the farm system for Silicon Valley," and whether the "gold-rush mentality" among both Stanford's students and faculty is good for the university.

Tucked inside the story are also a number of details about why Stanford, which was widely considered a frontrunner to open a its first-ever second campus on Roosevelt Island, abruptly dropped its bid at the last minute.

In our post-mortem about the botched deal in December, Betabeat previously reported how Stanford balked at costly penalties for failure to meet deadlines, even if the factors were outside the university's control, such as toxicity on the Roosevelt Island site. Stanford wasn't the only institution whose legal teams threw up a red flag. Other universities that applied and those familiar with the city's development process cited an alarming vulnerability to legal action. Stanford appeared to be particularly insulted by last-minute attempts to pit Stanford against Cornell in an attempt to see which institution would make more concessions.

(Aggressive negotiating tactics and contracts with onerous demands in the city's favor have been a hallmark of Seth Pinsky's career as president of New York City Economic Development Corporation.)

Mr. Auletta's investigation offers more details and insights along those lines.

According to Mr. Auletta, Stanford President John Hennessy was pissed that the school was being held to impossible deadlines:

On December 16, 2011, Stanford announced that it was withdrawing its bid. Publicly, the university was vague about the decision, and, in a statement, Hennessy praised “the mayor’s bold vision.” But he was seething. In January, he told me that the city had changed the terms of the proposed deal. After seven universities had submitted their bids, he said, the city suddenly wanted Stanford to agree that the campus would be operational, with a full complement of faculty, sooner than Stanford thought was feasible.

Mr. Auletta cites "city lawyers," and not the Mayor's office as responsible for the millions of dollars in penalties sprung on Stanford during negotiations:

The city, according to Debra Zumwalt, Stanford’s general counsel and lead negotiator, added “many millions of dollars in penalties that were not in the original proposal, including penalizing Stanford for failure to obtain approvals on a certain schedule, even if the delays were the fault of the city and not Stanford. . . . I have been a lawyer for over thirty years, and I have never seen negotiations that were handled so poorly by a reputable party.” One demand that particularly infuriated Stanford was a fine of twenty million dollars if the City Council, not Stanford, delayed approval of the project. These demands came from city lawyers, not from the Mayor or from a deputy mayor, Robert Steel, who did not participate in the final round of negotiations with Stanford officials.

Deputy Mayor Robert Steel, who had "an agreeable conversation" with President Hennessy the same week Stanford dropped out, insists that there were no last-minute changes, but in fact schools were pitted against each other to see who would offer the city a better deal, Mr. Aulleta reports.

All the stipulations that Stanford now complains about, he says, were part of the city’s original package. Actually, they weren’t. In the city’s proposal request, the due dates and penalties were left blank. Seth Pinsky, the president of the New York City Economic Development Corporation, who was one of the city’s lead negotiators, says that these were to be filled in by each bidder and then discussed in negotiations. “The more aggressive they were on the schedule and the more aggressive they were on the amount, the more favorably” the city looked at the bid, Pinsky told me. In the negotiations, he said, he tried to get each bidder to boost its offer by alerting it of more favorable competing bids.

Along with responsibility for the toxicity of the Roosevelt Island site, Stanford was asked to shoulder penalties as high as $25 million for delays outside of its control:

At one point, Stanford asked about an ambiguous clause in the city’s proposal request: would the university have to indemnify the city if it were sued for, say, polluted water on Roosevelt Island? The city responded that the university would. According to Pinsky, city lawyers said that this was “not likely to produce significant problems,” and that other bidders did not object. To Pinsky and the city, these demands—and the twenty-million-dollar penalty if the City Council’s approval was delayed—were “not uncommon,” since developers often “take liability for public approvals.” To Stanford, the stipulations made it seem as if the goal posts were not fixed.

This may not be the end of Stanford's presence in New York City, however:

Jeff Koseff, who played golf with Hennessy within a few days of Stanford’s withdrawal, recalls, “He was already talking about what we could do next.” One venture that Hennessy was exploring, though there is as yet no concrete plan, is working with the City College of New York to establish a Stanford beachhead in Manhattan. Deputy Mayor Steel says, “I’d be ecstatic.” Still, a Stanford official is dubious: “John’s disillusionment with the city is pretty thorough.”

A partnership with City College was one facet's of Stanford's initial bid for the campus competition.

A photo from the .NYC domain campaign (gothamist.com)

If the "Made in NYC" label wasn't enough to cement your status as an integral part of the burgeoning local tech community, perhaps a .NYC domain name might pique your interest. Luckily for enterprising young founders hankering to swap .ly or .co for a cooler extension, the New York Times reports today that the city is seeking a contract with a Virginia-based company that could bring us closer to finally landing .NYC's.

We first reported on the city's continued pursuit of .NYC domain names last June, when NYC EDC president Seth Pinsky told us that the new domain could offer local businesses and the city unique opportunities to establish New York as a beacon of innovation.

Now that the Internet Corporation for Assigned Names and Numbers has approved .NYC as a domain extension, the city is in talks to establish a five-year contract with a Virginia company that would, according to the Times, "apply for the domain and operate and market it on the city’s behalf. The company would pay the upfront costs, and the city would get a share of revenue." Not only would we get our much-desired .NYC domains, but the city is also slated to make at least $3.6 million from the deal.

Scoring its own domain has been a New York pipe dream for a while. A campaign started by Connecting.nyc Inc. last year helped push the desire for .NYC's into the mainstream. The .NYC Domain site argues, "The greatest city in the world deserves its own domain extension." Here, here.

If you thought the 212 area code was an elite Manhattan status symbol, just wait until .NYC is unleashed upon the masses. According to Coactivate, if everything goes according to plan, we could all be fighting over the .NYC extension as early as Spring 2013.

We're totally down to jump on the bandwagon. Betabeat.nyc, anyone?

via nycedc.tumblr.com

On its Tumblr, the New York City Economic Development Corporation posted an announcement this afternoon about the 28 individuals named to the city's NYC Venture Fellows Program. The press release was actually issued last Tuesday, the NYCEDC confirmed by phone, but was only just added to Tumblr. C'mon, guys, until they plant that RSS chip in our brains, you gotta get with El Bloombito's new social media agenda: everything updated all a' the time.

This is the second year of the Venture Fellows program, developed with the agency along with Fordham University. "NYC Venture Fellows promotes emerging business leaders and encourages international entrepreneurs to start or expand their operations in New York City. The program connects fellows with mentors who are investors, serial entrepreneurs, CEOS, and operational managers from New York City and abroad."

Combine that description with the word "fellows" and you might picture some accelerator-stage startups in real need of mentorship and connections, not far off the the lean Ramen life. Not so with the 28 rising stars on this year's list, which includes BillGuard founder and CEO Yaron Samid, MakerBot cofounder and CEO Bre Pettis, Warby Parker cofounder and co-CEO Dave Gilboa, and charity: water founder and CEO Scott Harrison.

But if the city's competition for the tech campus wasn't enough of a clue, Mayor Bloomberg and the NYCEDC are thinking global, which means our promising tech companies need to get great. As EDC president Seth Pinsky said of the program:

“Through innovative programs like Venture Fellows and World to NYC, we will ensure that New York City continues to strengthen its position in an era of increasing global competition. By introducing established businesses to the many opportunities that exist within the five boroughs—as well as providing emerging entrepreneurs with the mentorship needed for their businesses to take the critical next steps towards success—we are confident New York City will remain the global hub of business and innovation well into the 21st century.”

Here's the full list:

• DonorsChoose Co-founder and Chief Executive Charles Best
• BaseKit Co-founder and CTO Simon Best
• Medivo, Inc. Co-founder and CEO Sundeep Bhan
• EnNatura Technology Ventures Co-founder and CEO Sidhartha Kumar Bhimania
• Warby Parker Co-founder and co-CEO Neil Blumenthal
• H.Bloom Co-founder and CEO Bryan Burkhart
• MBA & Company Founder and MD Daniel Callaghan
• hoopCHINA.com Co-founder and CEO Shawn Cheng
• Catchafire Founder and CEO Rachael Chong
• Rent the Runway Co-founder and President Jennifer Fleiss
• Totsy.com Co-founder and CEO Guillaume Gauthereau
• Warby Parker Co-founder and co-CEO Dave Gilboa
• charity: water Founder and CEO Scott Harrison
• Paperless Post Co-founder Alexa Hirschfeld
• Miniwiz Founder and MD Arthur Huang
• Rent the Runway Co-founder and CEO Jennifer Hyman
• Lot18 Co-founder and President Philip James
• Student Competitions Co-founder, Chairman and CFO Robert Lyngman
• AHAlife.com Founder and CEO Shauna Mei
• The IOU Project Founder and Creative Director Kavita Parmar
• MakerBot Industries Co-founder and CEO Bre Pettis
• BillGuard Founder and CEO Yaron Samid
• Papayamobile Co-founder and CEO Si Shen
• South Pole Carbon Asset Management Ltd. Co-founder and CEO Christoph Sutter
• LanguageMate Founder and CEO Bill Tan
• soleRebels Co-founder and MD Bethlehem Tilahun Alemu
• Yipit Co-founder and CEO Vinicius Vacanti
• LearnVest Founder and CEO Alexa von Tobel

Gleaming the cubes.

On Monday, the lobby of the Weill Cornell Medical College, which resides on a particularly gray stretch of the Upper East Side, was crawling with men and women in wooly blazers dotted with “carnelian” buttons—the technical name for the maroon hue that invariably moves Cornell students to chant some version of “Go Big Red!”

Inside the auditorium, as an assembly of press, pols, and local technorati waited for Mayor Bloomberg to appear, a giant projector flashed a mosaic of the Cornell University logo.

The news had been leaked to every major news outlet by midnight on Sunday; there was no point in being coy.

“Today will be remembered as a defining moment,” Mayor Bloomberg told the crowd, officially announcing that a 50-50 joint proposal between Cornell and the Technion-Israel Institute of Technology had won the $100 million grant to build a new engineering mecca and applied sciences campus. The project is designed to help New York surpass Silicon Valley as a global innovation capital, creating 30,000 jobs and as much as $1.4 billion in tax revenue.

For the next hour, a stream of political operatives, from New York City Economic Development Council president Seth Pinsky to councilmember Jessica Lappin, who represents Roosevelt Island, where the 2 million sq. ft. build-out will stand, took to the podium to express their breathless excitement at the scope of the $2 billion initiative.

Cornell president David Skorton debuted a video of an aerial rendering of the gleaming net-zero energy building. Set to a dramatic score, it looked like a CGI version of a utopian future—you know, the part in the sci-fi flick before the apocalypse sets in. “There are visions of sugarplums dancing in my head right now,” said New York City Public Schools Chancellor Dennis M. Walcott in response to the bit about Cornell and Technion instructing 200 of his teachers in science education every year.

"Of all the applications we received, Cornell and the Technion’s was far and away the boldest and most ambitious,” Mr. Bloomberg said of the sweeping offer, which included a $150 million venture capital fund, startup accelerator, and ambitious plans to construct 300,000 sq. ft. by just 2017—as close to the end of his third term as the mayor was likely to get.

But what should have been an effortless victory lap for the city’s yearlong plan to remake its economy for the coming century was clouded by a note of confusion. Stanford, after all, was pegged the front-runner at least as far back as March, when Mayor Bloomberg gave a speech in Palo Alto, noting, “We’re particularly pleased that Stanford—which has a top-flight engineering school—is considering the idea.” Stanford batted its eyelashes back by launching a Tumblr—native technology!—featuring a video of Larry Page and Sergey Brin talking up the Mayor’s initiative.

Indeed, as late as Friday morning, the school’s negotiating team was still locked in meetings with EDC officials; a few hours later, news hit the wire that Stanford had withdrawn its bid. And not long after that, Cornell issued a hastily-written press release revealing that it had received a $350 million anonymous donation. The largest gift in the school’s history was announced late on a Friday afternoon.

At the time, it was hard to say what was chicken and what was egg. Was Stanford trying to save face with a preemptive break-up, or did Cornell win by default? Surprisingly bitter recriminations followed from the various players as everyone tried to spin the narrative in their favor.

Part of the difficulty of understanding where negotiations broke down is a silence clause stipulated in the request for proposal (RFP). But numerous sources, who spoke under condition of anonymity, painted a picture of tense discussions and onerous demands that left several schools wary, including Stanford.

Cornell, eager to increase its presence in New York City, was more compliant at the negotiating table and better versed in what it took to get city approval, including fundraising before commitments were made. Sources said the $350 million gift, for example, had been secured for months. "We need to expand beyond Ithaca," President Skorton said plainly from the podium.

“Cornell needed it more. But NYC Tech needs Stanford more,” tweeted New York City–based venture capitalist David Pakman, alluding to the latter's prestige within tech circles and facility with spinning out successful startups. (There's a reason China and Russia are trying to build their own Silicon Valley.)

In the end, it seems the city got a better deal for taxpayers by going with the one that wanted it more, rather than the one it was supposed to want.

A university source familiar with the negotiations said Stanford’s decision to drop out wasn’t based on any one issue, but rather due to “a whole host of things that held them liable for factors outside of [their] control,” such as big-ticket penalties for missed construction deadlines and the city’s desire “to indemnify themselves for any toxicity” at the Roosevelt Island site. Although a Phase II study was commissioned this year, a full scale analysis of the medical dump under the hospital cannot be done until the building is razed. Should serious hazards be uncovered, the school will be on the hook not only for the clean-up but also potentially for resultant delays."You had a lot of institutions that wouldn't even apply because of the terms, and they got even more severe in the negotiation process," said the source.

City officials counter that such stipulations are par for the course. “If we didn’t include these types of commitments, there would be a chorus of people saying: How could the city write a blank check to a university that in five years could just decide it wasn’t into it?!” one official said. “It’s standard in any kind of long-term land lease or land sale that the city would ask the recipient to agree to certain benchmarks.” (Cornell and Technion are leasing the land for the next 99 years, at which point they can pony up $1 to buy.)

However, legal representation for schools besides Stanford also balked at the contract. “The legal document that we got was essentially, if you signed it, it would require you to build even if you didn’t hit the [fundraising] target,” another university source said. “If you state that by this date, you’re going to have this much faculty and this much building completed, and you don’t get it completed, you’re left open to a legal challenge. It was enough for our general counsel to raise a red flag to say they are not comfortable with signing this.”

Even institutions that have negotiated to build in New York City before hadn't encountered this level of vulnerability to legal action. "There wasn't any contract we signed that if our endowment goes to Madoff and then goes to nothing, we're required to build," said another source familiar with land use issues in New York.

The city’s aggressive negotiating stance also created friction. As has been reported, Stanford did not take a shine to Mayor Bloomberg’s assertion during a talk at MIT in late November that “Stanford is desperate to do it,” even if he said the same of Cornell. The bigger stumbling block, according to our sources, seems to have been another remark uttered during that same speech: According to Mr. Bloomberg, the desperation meant that, “We can go back and try to renegotiate with each one." A university source said Stanford “had no idea that everything was back on the table.” The school “responded in good faith, and everything was changing,” said the source, wryly adding, “But apparently Cornell said yes to everything.”

“Seth [Pinsky] famously negotiates every last penny off the table, and that spooked Stanford,” acknowledged a New York City real estate executive. “They thought they had a partner and were shocked with his hard line. They were told not to worry about the particulars and that it would be fixed in the end, but despite assurances, they ultimately felt uncomfortable partnering with the city.”

A city official pointed out that it was that same aggressive stance that helped Mr. Pinsky close "complicated and thorny" deals on Hudson Yards and Willets Points, which the city had been trying to navigate for years.

In fact, a source with knowledge of the negotiation process said familiarity with the way the city does business helped Cornell, which already employs more than 5,000 New York City residents. "There are things the city is going to ask you to do that [Cornell] was very comfortable with, it's not clear that the other side was that comfortable," said the source before dropping a bit of local trivia, "They know what a ULURP is."

ULURP, or Uniform Land Review Procedure is the city's notoriously arduous standardized review process. In October, Columbia University president Lee Bollinger told the school's newspaper, "I’ve been through a ULURP process. Nobody in their right mind should go through a ULURP process more than once in their life.” Of course, Mr. Bollinger was talking about how the ordeal might hold back his competitors for the tech campus RFP, noting that it took Columbia three-and-a-half years from submitting rezoning plans to getting mayoral approval to develop in Manhattanville. It's something candidates no doubt had in mind considering the penalties for delays.

"It's binding," Mr. Bloomberg shot back to a question from the press corps about the contract. "Keep in mind, if we’re gonna invest, commit this land, turn down other people who wanted it, and invest $100 million, you don’t do that unless you have a binding commitment... One of the attractive things about Cornell is that they know how to do business in the city. Just look around," he added, referring to Weill Cornell Medical College.

But both city officials and Cornell say it was the school’s superior offering that clinched the deal. “The catalyst was that Cornell was beating them in every single category,” said source close to Cornell, citing the speed of construction, the size of the campus, and the amount of students and faculty it will serve.

“Cornell was hungrier, Cornell was more humble in the process—I think it helped them win the proposal,” said Charlie Kim, CEO of Next Jump, a loyalty rewards company, who sits on the advisory committee that helped select winners. Mr. Kim said the committee met a thirty to forty-five days ago and then again last week to go into more detail. "I think probably after reviewing everything, and this is kind of my opinion, I felt Cornell-Technion was the number one recommendation."

City officials claim the rush to sign the papers was merely a reflection of the way discussions were being structured. The city was simultaneously negotiating with everyone that applied, trying to move each deal as far along as possible. When Stanford dropped out, the deal with Cornell was already near completion.

And what of the mysterious $350 million donation? Though some speculated that the money had come from Mayor Bloomberg himself, The New York Times revealed Monday evening it had been a gift from Cornell alum Charles Feeney, the Duty Shop Group entrepreneur and subject of the book The Billionaire Who Wasn’t: How Chuck Feeney Made and Gave Away a Fortune Without Anyone Knowing.

Which isn’t to say Mr. Bloomberg won’t be opening up his wallet to see that his legacy-defining project remains on track. Although Cornell and Technion have been granted the full $100 million, the city left open the possibility of approving a second smaller-scale project, like  plans from NYU and the Polytechnic Institute to transform the derelict former MTA headquarters into a Center for Urban Science and Progress, or Carnegie Mellon’s proposed partnership with Steiner Studios to build a digital media campus at the Brooklyn Navy Yard, both of which will now likely have to rely on philanthropic donations.

“You assume that when they make phone calls, I’d be on the list,” Mr. Bloomberg said at the press conference, while trying not to crack a smile. “But I also have some commitments to some other educational institutions, as you know.”

ntiku@observer.com

Mr. Bloomberg, flanked by Facebook's Serkan Piantino and Sheryl Sandberg

When Facebook COO Sheryl Sandberg told a crowd of reporters last week that Facebook would be opening its first engineering office outside Palo Alto right here in New York, it sounded like the Bloomberg administration’s dream come true. Could the West Coast tech giants finally be taking New York seriously as an innovation center, rather than just a convenient base to sidle up to advertisers?

Indeed, earlier this year, the Economic Development Corporation said its goal in accepting bids to build an applied sciences campus in New York was to "increase the probability that the next high growth company—a Google, Amazon, or Facebook—will emerge in New York City and not in Shanghai, Mumbai, or Sao Paolo." An engineering office from a company on the verge of what might be the biggest IPO in history sounds like the next best thing. What’s more, Facebook seemed so confident about luring technical talent (typically a sore spot with New York techies) that they weren't waiting for the campus to break ground.

Facebook's decision was so glaringly aligned with the city's goal of diversifying into an innovation capital that it was hard not to wonder if New York had tried to sweeten the deal.

According to Julie Wood, Mayor Bloomberg's deputy press secretary, however, Facebook was not offered any tax or real estate incentives, "as of right" or discretionary, to start an engineering outpost here. Both EDC President Seth Pinsky and Facebook confirmed the same to Betabeat.

Ms. Wood said a number of administration officials work with Facebook regularly and that the Mayor himself "visited Facebook last year and there’s an open line of communication between our administration and their senior leaders." Rather, both the EDC and the Mayor's office credited the move to the city's strategic approach to economic development.

"In a lot of cities, the role of an economic development agency is very tactical: Let’s get this company to move their office here! It’s great, but it’s a very inefficient way to build an economy," Mr. Pinsky told Betabeat. "To have an economy that consists of 3.5 million jobs, to build it 100 jobs at a time or 50 jobs at a time is not really going to move the needle."

"In just the last five years the number of people in the technology sector has grown by nearly 30 percent, though in certain cases that may be attributable to certain tax programs, for the vast majority of cases the reason companies have grown is because this Mayor and this city have put into place the conditions that make it in the interest of these businesses to expand here," he added, pointing to the applied sciences in particular.

"Remember the whole fuss about Goldman?" asked a source familiar with City Hall's tech initiatives, referring to the deal Goldman Sachs got to stay in the Financial District back in 2005. "I don’t think they got anything special, they just qualified for things because they were building in Lower Manhattan and the threat of them leaving Lower Manhattan may have kicked some other things in." In terms of an outsider coming to New York, the city would be even less likely to roll out a red carpet.

"There was no, 'Hey, come here, we’ll give you $100 million.' Or ‘Please, please, please Facebook please come here," said the source. "There’s no courting because we don’t see the need because we know New York is a premium brand. That comes up a lot, New York is a premium brand. We don’t need to sell down. We don’t need to go down market the way other states and cities do. This is like a really, really firm policy. That’s why the applied sciences campus is such a big deal because it’s such a diversion from the standard policy."

From a Valley perspective, of course, New York still has a lot to prove. But another reason the city was unlikely to offer incentives might have been because they lack the funds to do so, said the source. "There isn’t money to do stuff like this." That is partly the reason why the EDC offered up sites like the Brooklyn Navy Yard as potential locations for the campus because they represent areas for growth that the city hasn't yet found a way to develop.

Of course, Mayor Bloomberg and legislators like Chuck Schumer were more than happy to join Ms. Sandberg and company for a victory lap at the press conference. "If this was some specific City Hall thing, you wouldn’t have seen that massive outpour of random legislators all showing up," said the source. "I think it’s just everybody trying to take credit for something good happening. If Chuck Schumer had been responsible for getting Facebook to come here, doing something, he would have tried to take that event for himself."

In a statement Facebook sent to Betabeat, the company said its New York engineering team would be located at its current offices at 333 Madison Avenue where they are looking to expand to another floor in the building. "Facebook’s New York office has been open since 2007, so being in New York is not new for us," the company wrote via email. "Recruiting great engineers is one of our highest priorities and some of the most brilliant, ambitious, and talented people in the world are in the Northeast. We want those people to help us continue to grow and innovate on an experience that more than 800 million people in the world rely on. This is why we selected to open an engineering office in NYC."

Rather than incentives, Mr. Pinsky said the EDC is more likely to offer tech companies moving to New York help with finding talent or vendors. The EDC is also open to help with locating office space. Betabeat heard they offered to help foursquare with its recent relocation effort. But for the most part, Mr. Pinsky said, the startups are better equipped to do the office search themselves.

Does that mean the EDC will help Facebook staff up, we asked. After all, since Friday the number of open positions for the office has increased from 15 to 17. "[Facebook has] proven themselves to be very effective at hiring talent and expanding their business," responded Mr. Pinksy, in the understatement of the year. "If they need assistance then the city certainly is here to help as we are for any business in New york City, but they haven’t specifically asked us."