THE POWER OF ENTREPRENEUR NETWORKS How New York City Became the Role Model for Other Urban Tech Hubs
a report from: 2 / How New York City Became the Role Model for Other Urban Tech Hubs
NEW YORK CITY IS THE BEST EXECUTIVE SUMMARY 1 ROLE MODEL FOR OTHER URBAN TECH HUBS.
OVER THE LAST YEAR, our team at Endeavor New York City has become the largest Insight studied the rapid growth of New York truly urban center for tech companies and the City’s information technology industry. We second-largest tech hub in the world. Tech define tech companies as those developing companies led by local entrepreneurs directly an information technology or those whose employ 53,000 people, over 1% of New York businesses are Internet-enabled, excluding City’s workforce.2 Between 2003 and 2013, the financial tech, green tech, and life sciences New York City tech sector grew twice as fast companies.1 Our goal was to identify lessons as Silicon Valley’s in terms of dollars invest- that leaders in other cities can use to support ed, with its companies raising more than $3.1 the growth of their own tech sectors. In the billion in funding in 2013.3 Unlike many other process, we created one of the largest data- urban tech hubs, most of the growth of the sets on a single entrepreneurship ecosystem New York City tech sector has come in the last in the world. It combines data from AngelList, decade. Venture funding for tech companies Crunchbase, and LinkedIn with nearly 700 in New York City increased by 240% from 2003 interviews with local tech entrepreneurs. In to 2013, and more than 85% of the sector’s total, these founders dedicated more than a current companies and 86% of its current jobs month of their time to this project. Our analy- were created during this time.4, 5 sis reveals three key findings: How New York City Became the Role Model for Other Urban Tech Hubs / 3
FOUNDERS WHO REINVEST THEIR DATA FROM NEW YORK CITY’S SUCCESS INTO OTHERS HAVE TECH SECTOR DEBUNKS SEVERAL 2 3 GREATLY ACCELERATED THE COMMON STARTUP MYTHS. TECH SECTOR’S GROWTH. Many people believe that tech founders Connections between successful found- are young, technical experts who studied at ers and new entrepreneurs are a critical driver a prominent local university. We analyzed of the sector’s growth. Data from over 2,500 data on the age and educational history of companies shows that top-performing tech New York City tech founders, and found that entrepreneurs are more likely than their peers these myths do not tell the full story of the to start new companies, encourage their city’s founders or the sector’s success. The employees to do the same, mentor, angel average New York City tech founder is thirty invest, and inspire new entrepreneurs. In turn, one years old when she founds her company new founders who are connected to or influ- and founders are just as likely to have stud- enced by these top-performing founders are ied a non-technical subject in university as a more likely to be successful than other local technical one. Founders also tend to be highly tech entrepreneurs. The development of this mobile, with nearly 90% graduating from uni- network of top-performing New York City versities outside of New York City. tech founders has initiated a virtuous cycle of reinvestment that continues to fuel the sector’s growth.
Created with assistance from: The development of this research and content would not have been possible without the expertise and assistance of the Partnership for New York City. The staff of the Partnership provided critical feedback and connections that greatly enhance the reach and quality of this study. 4 / How New York City Became the Role Model for Other Urban Tech Hubs
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NewNYC York = ROLE City is MODEL the best role model for other urban tech hubs.
AT $1.1 BILLION, the sale of Double- LOOK TO NEW YORK CITY, NOT Click in 2005 kicked off a decade of rapid THE VALLEY. Silicon Valley may seem growth for the New York City tech sector. like an attractive template for creating ur- Since then, companies like Buddy Media ban tech sectors, but it is unlikely that cit- and Right Media have followed closely in ies will be able to replicate it. Silicon Valley DoubleClick’s footsteps, selling for hun- commercialized the fundamental technol- dreds of millions of dollars. ogies of the last half century: the silicon computer chip, personal computer, and THE FASTEST GROWING URBAN consumer Internet. These companies and TECH HUB. New York City’s tech sector technologies emerged in a farming region creates hundreds of new startups annual- in the 1950s, which, over the course of ly. These aren’t just small businesses, but five decades, became a robust suburban ones that are scaling rapidly in preparation tech hub.11 Its tech companies may have for IPOs and acquisitions, with at least 27 expanded into San Francisco, but the ma- companies exiting for more than $500 jority of the region’s funding and startup million in the last decade.6 The sector has activity continues to be located in subur- expanded so rapidly that the growth of ban areas like Palo Alto, an hour south of invested venture capital dollars, at 13.3% the city. annually between 2003 and 2013, is twice Cities don’t have 50 years to create a as large as that of Silicon Valley, at 6.4%, tech sector or the revolutionary technol- and dwarfs that of Massachusetts, at neg- ogies underpinning the Valley’s rise. Most ative 1.7%.7 New York City’s tech sector has importantly, the strategies San Francisco superseded even Boston’s by many mea- used to attract neighboring suburban firms sures to become the largest standalone are only useful to other cities that have urban tech hub in the United States.8 world-class innovation hubs next door. New York City’s tech sector is a much POISED FOR GREATER GROWTH. better role model for other cities. The Between 2010 and 2013, the number city’s tech sector has emerged in just two of New York City tech employees grew decades, with many of its new companies by more than 26% annually.9 At this rate, using existing infrastructure and indus- based on 2013 tax rates and a $100,000 tries like advertising, media, and fashion as average salary, the city could add nearly platforms for growth. This approach has $160 million annually in new tech employ- allowed the city to set aside the unlikely ee income tax receipts by 2019 and over chance that it will birth the next comput- $500 million by 2024.10 Assuming each of er chip, and instead focus on making its these new employees uses 100 square feet media companies social and its advertising of office space, tech companies would companies digital. By looking at its own need almost 450,000 square feet of ad- strengths, New York City has overcome ditional office space annually by 2019 and the constraints facing post-industrial cities 1.4 million square feet by 2024 to accom- worldwide to accumulate the talent and modate them, providing real benefit to capital at the core of its thriving urban industries beyond the tech sector. tech sector. How New York City Became the Role Model for Other Urban Tech Hubs / 5
The economic impact of New York City’s tech sector12 2003–2013
2,206 336 Companies founded IPOs & Acquisitions
53,000+ Jobs
$14.2Bn $18.1Bn Investment Exit amount 6 / How New York City Became the Role Model for Other Urban Tech Hubs
Data from New York City’s tech sector debunks several common startup myths.
IT IS NOT EASY to build a tech sector, and tech founders, rather than recent graduates, myths regarding what causes one to grow are tend to be mid-career specialists with substan- common. Many of these assumptions right- tial industry experience who use their per- fully focus on the entrepreneurs themselves; spective to help existing industries innovate. after all, without them, businesses never start A group of seasoned executives, for exam- and a sector never grows. We analyzed New ple, founded Gilt Groupe, a successful e-com- York City’s tech founders to understand several merce company. One of the founders, Alex- of these common assumptions and find that, andra Wilkis Wilson, had an MBA and several contrary to popular belief, neither youth, nor years of corporate experience at retailers like technical skills, nor even homegrown talent Bulgari and Louis Vuitton before starting Gilt. have been central to the growth of New York Like Alexandra, Neil Blumenthal, founder of City’s tech sector. online eyeglass company Warby Parker, spent five years as Director of Vision Spring, honing EXPERIENCE TRUMPS YOUTH. En- his industry knowledge and managerial skills trepreneurship is oftentimes portrayed as a before becoming an entrepreneur. These are vocation of youth: tech-savvy young people, not isolated cases: New York City tech found- it seems, can disrupt whole industries without ers were, on average, 31 years old before start- ever having worked in them. New York City’s ing companies.13 New York City tech founders’ age at founding
500 AVG. = 31 YEARS 400
300
200 Number of founders of Number
100
0 17–21 22–26 27–31 32–37 38–42 43–47 48–52 53–56 57+ Founders’ age at founding (years) Note: Assumes founders were 18 years old at undergraduate start year; 1,679 founders with undergraduate start data. How New York City Became the Role Model for Other Urban Tech Hubs / 7
TECH TALENT ISN’T NECESSARILY rather from colleges throughout the Unit- HOMEGROWN. Cities don’t have to source ed States and even worldwide. In aggregate, entrepreneurial talent from within their bor- nearly 90% of New York City’s tech founders ders in order to create a successful tech sector. graduated from an undergraduate institution Great tech sectors are instead built in one city outside of the city, while 70% of those who by people from around the world. New York attended graduate school did so elsewhere.15 City’s tech sector is no exception, with 82% Surprisingly, the University of Pennsylvania is of its founders graduating from high school by far the number one college destination for outside of the city.14 future New York City tech founders. New York City is home to several world- class higher education institutions, including the recently inaugurated Cornell Technion tech campus. Despite the renown and suc- cess of these institutions, New York City’s tech sector is not strictly a product of talent coming out of these universities, either. In fact, it has succeeded in attracting the vast majority of its tech founders not from local universities, but Percent of New York City tech founders by undergraduate university attended
4.6%
3.7%
3.6%
3.5%
3.2%
2.3%
2.1%
1.8%
1.7%
1.7%
Percent of New York City tech founders Note: 1,920 founders with undergraduate university data. 8 / How New York City Became the Role Model for Other Urban Tech Hubs
.
New York City tech founders’ undergraduate majors by STEM and non-STEM fields of study
Philosophy 60% Marketing
History
Business
Political Science
Finance
40% Economics
Mathematics
Engineering
Electrical Engineering Percent of founders of Percent
Computer Science 20% Other Non-STEM
Other STEM
0% Non-STEM majors STEM majors
Note: 1,681 founders studied 2,499 majors in undergraduate. How New York City Became the Role Model for Other Urban Tech Hubs / 9
FOUNDERS ARE POETS AND QUANTS. from economics, to computer science, to For many, mention of tech entrepreneurship philosophy, and more often pursue the arts brings to mind a programmer hunched over than the sciences. 65% of New York City tech a computer developing groundbreaking new founders studied non-STEM fields, while just technologies. This image doesn’t tell the full 35% studied STEM ones during college.16 story, however, of New York City tech found- It’s not that New York City’s tech founders ers, who are as likely to write marketing copy are transitioning into more technical fields of as a new compression algorithm. Combining study after they finish their undergraduate de- these skill sets, these founders have found a grees, either. Among the 42% of New York City way to grow both their businesses and the tech founders who attended graduate school, sector. nearly two-thirds received non-technical grad- This dynamic begins as far back as col- uate degrees like MBAs, MAs, and JDs.17 lege, where more New York City tech founders The story of New York City’s rise is about study non-technical subjects than technical much more than the background of its found- ones. We divide these founders’ undergradu- ers, the degrees they hold, or even the uni- ate majors into two categories: STEM (science, versity they attended. We dig deeper, and find technology, engineering, and mathematics) that the founders themselves, by contributing and non-STEM. This breakdown reveals that to one another’s success, are causing the New New York City tech founders study everything York City tech sector to grow.
Percent of New York City tech founders by graduate degree studied
MS 23%
MBA 43%
PhD JD MA Other 5% 7% 14% 8%
Note: 798 of 1,723 founders attended graduate school. 10 / How New York City Became the Role Model for Other Urban Tech Hubs
Founders who reinvest their success into others have greatly accelerated the tech sector’s growth.
THE CITY’S TECH ENTREPRENEURS look quite Media, and AppNexus have gone on to influ- different from the stereotypes. They are older, ence 177 other companies themselves, which less technical, and more likely to have attend- in turn have influenced 227 companies.19 With- ed undergraduate and graduate school else- in just three degrees of influence, these three where. It is not New York City’s mix of founder companies alone touch over 400 New York characteristics, however, that other cities City tech firms.20 should attempt to recreate. Policymakers who As New York City tech companies be- focus only on certain types of entrepreneurs come more successful, their founders are risk orienting urban entrepreneurship policy more likely to connect to and influence other towards yesterday’s challenges, as opposed to entrepreneurs. Although the vast majority of tomorrow’s opportunities. Instead, cities can New York City tech companies are still private, focus on supporting the dynamic unfolding it is possible to look at over 300 companies in New York City: few entrepreneurs who give with recorded exits between 2003 and 2013 rise to many generations of spinouts. Through to determine how influential their entrepre- five types of influence—inspiration, mentor- neurs became after being acquired. For every ship, investment, serial entrepreneurship, and 100% increase in the dollar value of an exit, former employee spinouts—New York City’s that company and its founders become 25% tech sector is benefitting from a virtuous cycle more influential.21 After selling their compa- in which entrepreneurs grow their businesses, nies, founders and employees combine new become successful, and reinvest their human, wealth with the experience of having built a financial, and social capital in the next gener- fast-growing company. With this expertise, ation. capital, and visibility, these entrepreneurs found new companies, accelerate the growth SUCCESSFUL COMPANIES ARE IN- of existing ones, and contribute to the ongoing FLUENTIAL COMPANIES. Over the past expansion of the sector. decade, companies like DoubleClick, Buddy Media, and AppNexus have received hundreds SUCCESS PASSES FROM ONE GENER- of millions of dollars in investment and exit- ATION TO THE NEXT. The most successful ed for several billion more. These resources companies have an important impact on the have found their way back into the sector, with performance of the entrepreneurs they influ- the founders of these companies influenc- ence. To explore this, we look at companies ing 75 other New York City tech companies, that are top performers, as defined by being in using their success to mentor, invest, inspire, the top 10 percent of all companies founded in found new companies, and encourage former the same year by number of employees, total employees to do the same.18 Over time, the investment, or exit amount between 2003 and companies they have influenced have become 2013.22 Companies that have been influenced successful in their own right, and continue by these top-performers become top-per- to accelerate this cycle’s momentum. The 75 formers themselves 22% of the time, more companies influenced by DoubleClick, Buddy than twice as often as those that do not have How New York City Became the Role Model for Other Urban Tech Hubs / 11
Percent of top-performing New York City tech companies based on connections to other top-performing companies
25%
20% 22%
15%
10%
10% become top-performers become
that companies of Percent 5%
0% Influenced by a top- Not influenced by a top- performing company performing company
Note: 85 companies are top-performers of 386 companies influenced by top-performers; 101 companies are top-performers of 1,052 total companies not influenced by top-performers. a connection to a top-performer, at just 10%.23 to the percentage of successful companies We look at these same results in a regression influenced by other successful companies. framework and find that companies that have The results are surprising: 22% of companies been influenced by top-performers are 14% influenced by another successful company more likely to become top-performing com- are themselves successful, compared to 22% panies themselves.24 Put another way: being with connections to the top three universities, connected to a successful business makes it and just 11% from the top three incubators, more likely that a business will receive a lot of accelerators, and co-working spaces. Only the investment, employ many people, or exit for a top three New York City investment firms have large amount of money. a higher portfolio company success rate, at 44%, and almost half of these top-performing CONNECTIONS AS IMPORTANT AS companies are themselves connected to other INSTITUTIONS. The prevailing wisdom has top-performers.25 often been that institutions drive the success Companies and founders that connect to of an entrepreneurship ecosystem. We look other top-performing companies are signifi- at New York City’s top three investment firms, cantly more likely to be successful than those incubators, accelerators, co-working spaces, that tap into existing support organizations and undergraduate universities based on the alone. New York City tech is not wasting its percent of top-performing companies coming success; a small handful of companies are out of each. We compare the percentage of instead multiplying it. Highly connected com- successful companies founded between 2003 panies do better and, in turn, successful com- and 2013 affiliated with these top institutions panies give rise to more connections. 12 / How New York City Became the Role Model for Other Urban Tech Hubs
Five types of connections are accelerating the New York City tech sector’s growth.
GIVING BACK has become the norm for New ANGEL INVESTMENT. Angel invest- York City tech founders. They inspire, mentor, ments, typically from $25,000 to $500,000, invest, found new companies, and support play a critical role in providing the early capi- their former employees to do the same. These tal and expertise necessary to get a business five connection types bridge the gap between off the ground.28 Angel investors are not just the experienced and the novice, the successful sources of capital, but also mentors in their and the striving. In a city where so many are own right, as well as important sources of transplants, the entrepreneurs included, they credibility as new entrepreneurs seek outside are creating a reservoir of talent and capital for funding. In New York City’s tech sector alone, new entrepreneurs to tap. there have been over 3,500 New York City tech angel investments made by more than MENTORSHIP. High-quality mentorship— 2,000 angels.29 relationships among founders to solve critical Over 860 of these investments have been business issues—represents a unique oppor- made by New York City tech entrepreneurs tunity to transfer knowledge from one gen- themselves, and more than a quarter of New eration of entrepreneurs to the next. No one York City tech companies have at least one is better positioned to guide an entrepreneur co-founder who is also an angel investor.30 through the challenges of scaling a business, Large numbers of New York City tech found- growing a sales pipeline, or sourcing talent ers are spurning the opportunity to retire to a than someone who is a bit further along in tropical beach and are instead staying com- her journey as a New York City tech entrepre- mitted to the growth of the sector and pro- neur. pelling its growth with the smartest capital: With over 400 entrepreneur-to-entre- entrepreneur angel investment. preneur mentoring relationships, collabora- tion across generations of entrepreneurs has INSPIRATION. Entrepreneurship is not become the norm in the New York City tech an obvious career choice, and there are easier sector.26 Successful entrepreneur mentors like ways for talented people to make money, par- Stephen and Heidi Messer of LinkShare (ac- ticularly in New York City. Despite these chal- quired by Rakuten for $425 million in 2005) lenges, as New York City tech entrepreneurs and Scott Belsky of Behance (acquired by become successful, they are also attracting at- Adobe for a reported $150 million in 2012) are tention. Increased visibility in turn allows these just two of hundreds investing their time and entrepreneurs to become role models for the expertise in new tech companies.27 The New next generation of founders. In fact, successful York City tech sector is increasingly collab- entrepreneurs like Alexis Maybank and Alex- orative, and successful entrepreneurs are andra Wilkis Wilson from Gilt Groupe, Jonah helping the next generation as a way to pay Peretti from Buzzfeed, and Dennis Crowley it forward, stay tapped into new innovations, from FourSquare, have inspired over 180 future and cultivate future business relationships. New York City tech entrepreneurs.31 How New York City Became the Role Model for Other Urban Tech Hubs / 13
Inspiration and mentorship connections from the founders of Foursquare and LinkShare
Inspiration Mentorship
SUNRISE OUTSIDE.IN DIMENSIONU HAVE TO HAVE
FELT TIP FASHISM YOUARE.TV SWAAG BLUEFLY SOCIOCAST POPPIN
MONTAJ SHOPTIQUES SINGLE DIET TV STYLECASTER PLATFORM
SERIAL ENTREPRENEURSHIP AND have been founded by former employees of FORMER EMPLOYEE SPINOUTS. New York City tech companies.33 The multi- Successful companies and entrepreneurs have plicative effect of these two types of connec- two more ways that they can impact an eco- tions alone is impressive: on average, every system: serial entrepreneurship and former two New York City tech companies connected employee spinouts. More than 400 serial en- to this network give rise to one more through trepreneurs have founded over 650 New York serial entrepreneurship and former employee City tech companies.32 spinouts.34 It’s not just the entrepreneurs who go on to found new companies, either. Many New York City tech founders promote entrepre- neurship among employees, inspiring them to venture out on their own and oftentimes supporting them financially when they take the plunge. In total, more than 500 companies 14 / How New York City Became the Role Model for Other Urban Tech Hubs
Connections among New York City tech companies grew rapidly between 2003 and 2013.
REINVESTMENT IS ACCELERATING. tempered growth and intense competition for The combined effects of the five connection nascent entrepreneurs, supporting this cycle types cannot be overstated. New York City is the only way for cities to capitalize on their tech has become a successful urban tech success stories and create successful urban sector in large part because its best entrepre- entrepreneurship ecosystems of their own. neurs and companies are accumulating not just employees, investments, and exits, but FROM FEW ENTREPRENEURS, MANY. also influence. Over time, a network of 2,340 New York City is now home to several groups New York City tech entrepreneurs from 1,297 of founders and former employees—some- companies has emerged. Between these peo- times referred to as “mafias”—who have left a ple and companies, a dense network of at least single successful company and founded many 2,000 connections has developed.35 more. These mafias demonstrate that over Growing at an annualized rate of nearly time, the strongest companies have an impact 25% between 2003 and 2013, entrepreneur that spills across an entire city, generating jobs, and company connections are the pathway revenue, and new companies. The three firms through which New York City tech entrepre- we have profiled, DoubleClick, Buddy Media, neurs are accumulating the human, social, and AppNexus, are all important financial suc- and financial capital necessary to drive the cesses, but their founders have exceeded this formation of new companies. Without these success by mentoring, investing in, and inspir- relationships, people, knowledge, and money ing the next generation. would leave the city’s tech sector: the iconic never inspire, the knowledgeable never men- tor, and the successful never invest. Rather than standing on the shoulders of successful founders, young entrepreneurs of each sub- sequent generation would instead start on the ground floor. In a global economy with How New York City Became the Role Model for Other Urban Tech Hubs / 15
Cummulative connections among New York City tech companies
2,070
2,000 1,813 336
1,503 1,500 428
1,070 1,000
719 865
Number of connections of Number 535 500 359 236 320 148 87 45 121 0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Inspiration Mentorship Investment Former employee Serial entrepreneurship
Note: 24.6% connections CAGR, 2010–2013, 2,070 total connections, 2003–2013. 16 / How New York City Became the Role Model for Other Urban Tech Hubs
DoubleClick
Legend:
MENTORSHIP Size of circle reflects the influence INSPIRATION Connections within two degrees: 146 of the entrepreneurs at each company based on their number INVESTMENT • First degree: 44 of outgoing connections. FORMER EMPLOYEE • Second degree: 102 FOUNDER
WHEN HOUSEHOLDS in the U.S. were just getting their first di- vate equity firm Hellman & Friedman in 2005.37 At $1.1 billion, al-up Internet connections, Kevin O’Connor, Dwight Merriman, this acquisition was one of the biggest of a New York City tech and Kevin Ryan mixed technology and advertising to monetize company at the time. The new owners would go on to sell the the consumer Internet. DoubleClick became a leading Internet company to Google for $3.1 billion, and today DoubleClick ad-server and rode the expanding Internet bubble to an IPO in is at the center of Google’s $50 billion advertising business. 1998. When the bubble burst and decimated the tech industry, The financial success of this business has been superseded DoubleClick managed to survive, losing 70% of its clients but by its ongoing impact, with Dwight and Kevin Ryan going on 80% of its competitors.36 As the industry slowly regained its to found seven more New York City tech companies and its footing, DoubleClick and its founding team managed to resize former employees starting 26.38 Yahoo! acquired one of these the company and achieve profitability before selling it to pri- firms—Right Media—in 2007 for $850 million. How New York City Became the Role Model for Other Urban Tech Hubs / 17
Buddy Media
Legend:
MENTORSHIP Size of circle reflects the influence INSPIRATION Connections within two degrees: 59 of the entrepreneurs at each company based on their number INVESTMENT • First degree: 16 of outgoing connections. FORMER EMPLOYEE • Second degree: 43 FOUNDER
SEEING AN OPPORTUNITY to link social media with traditional million in investments from blue chip investors including Grey- advertising, Mike and Kass Lazerow, Aryeh Goldsmith, and Jeff croft, Softbank, and British advertising giant WPP.40 In 2012, Ragovin started Buddy Media in 2007. Mike and Kass, having Salesforce.com, seeing the strength of Buddy Media’s man- recently sold Golf.com for $24 million to Time Warner, were aging team and the staying power of its product, acquired the ready for a new challenge. Even as the financial crisis began company for more than $800 million. The story doesn’t stop to strike down traditional companies, Buddy Media thrived by there. The four founders have become influential investors and offering companies a Software as a Service (SaaS) platform on mentors to younger entrepreneurs. They have made at least 11 which they could easily engage their own customers through angel investments in New York City tech companies and have social media.39 Buddy Media continued its rise through 2010, continued to mentor and inspire several other entrepreneurs. scaling to add several hundred employees and attracting $90 18 / How New York City Became the Role Model for Other Urban Tech Hubs
AppNexus
Legend:
MENTORSHIP Size of circle reflects the influence INSPIRATION Connections within two degrees: 86 of the entrepreneurs at each company based on their number INVESTMENT • First degree: 20 of outgoing connections. FORMER EMPLOYEE • Second degree: 66 FOUNDER
WHEN RIGHT MEDIA, which was founded by a former Double- in the billions.41 Brian and Mike have already begun to multiply Click employee, sold to Yahoo! for $850 million, two of its for- their impact by investing in at least ten other New York City mer employees had an idea for a new kind of digital advertising tech companies, with a strong focus on ad-tech startups, and company. Brian O’Kelley and Mike Nolet founded AppNexus six former employees have gone on to found new companies to transform digital advertising by offering real time bidding themselves. There are rumors of an IPO on the horizon that to compete with some of the biggest names in the business: may ultimately create new liquidity for founders, early employ- Google, Yahoo!, and Facebook. In just five years, the company ees, and investors, but AppNexus is already demonstrating that has grown to be one of the largest ad exchanges in the world, success breeds success. second only to its homegrown competitor, Google’s Double- Click. AppNexus’ $130 million in revenues and 500 employees at the end of 2013 helped it to raise $140 million at a valuation How New York City Became the Role Model for Other Urban Tech Hubs / 19
The growth of New York City’s tech sector from 2003-2013
2003 2004 2005 45 total connections 87 total connections 148 total connections
2006 2007 2008 236 total connections 359 total connections 535 total connections
2009 2010 2011 719 total connections 1,070 total connections 1,503 total connections
Total connections among New York City tech en- trepreneurs in 2013
121 inspiration connections 320 mentorship connections 865 angel investments 428 serial entrepreneurs 2012 2013 336 former employee spinouts 1,813 total connections 2,070 total connections 20 / How New York City Became the Role Model for Other Urban Tech Hubs
Other cities can use entrepreneur networks to acceler- ate the growth of their local tech hubs.
CITIES AROUND THE WORLD can recreate the ital.nyc, is a platform for all things tech in the success of the New York City tech sector, and city. Its news stories promote local companies they don’t need to seed new industries or cre- and emerging technologies and celebrate the ate tech parks to do it. In fact, the public effort growth of the sector with a map of local tech necessary to recreate the dynamic of reinvest- companies, investors, jobs, and events. ment now happening in the New York City Cities can promote their success stories tech sector may be much smaller than many without building a dedicated online platform policymakers think. Most cities already have or launching a large-scale advertising cam- many of the components necessary to accel- paign. In Texas, The Dallas 100 is an annual erate the growth of a tech sector, including list of the fastest-growing companies in the aspiring founders, new startups, and successful city. Over 1,100 executives, investors, university entrepreneurs. By connecting startups, scale- leaders, government officials, and journalists ups, and top-performing companies to one celebrate and promote the companies on the another, cities can catalyze the growth of an list during an annual award celebration, cre- entrepreneurship ecosystem on top of existing ating examples of inspirational high-growth local companies, capital, talent, and industries. entrepreneurs in the process.
INSPIRE ENTREPRENEURS TO START MENTOR BUSINESSES AND THEIR HIGH-GROWTH BUSINESSES IN YOUR ENTREPRENEURS AS THEY SCALE UP. CITY. Successful entrepreneurs are powerful Successful local entrepreneurs have a great ambassadors and role models for your city’s deal of expertise when it comes to creating a tech sector, and celebrating them and their business model, raising capital, and scaling a businesses can raise the visibility of the entire business once it has product market fit. These sector. Promoting these figures can change entrepreneurs tend to be busy, so creating the trajectory of people who had not previ- opportunities for high-quality, structured men- ously considered entrepreneurship as a good torship is particularly important and oftentimes career path, and local stories make the possi- difficult to achieve. bility of launching a successful company much Accelerators like Techstars and Entrepre- more tangible. neurs Roundtable Accelerator (ERA) provide Several New York City campaigns have targeted mentorship to help young New York highlighted the growth of the sector at large, City tech entrepreneurs address critical busi- as well as the success of specific companies ness issues, but both organizations also take and entrepreneurs. Made in New York City is an equity stake in their companies. Recently an ongoing advertising campaign promoting, launched public programs like NYC Gener- among other things, the city’s digital indus- ation Tech work directly with high school tries. A citywide advertising campaign put students, while NYC SEED works with very local companies like LearnVest, Etsy, Songza, early stage companies. New York City may Kickstarter, and AppNexus on city buses and lack formal programs to promote later stage subways. A separate program, now called dig- mentorship, but its successful entrepreneurs How New York City Became the Role Model for Other Urban Tech Hubs / 21 have filled that gap and created a robust expert options to angel investment vehicles can also network in their absence. increase the quantity of local entrepreneur Not all cities already have the scale or seed capital. resources to support programs like ERA and Tech Stars. However, examples from out- ENCOURAGE SERIAL ENTREPRE- side New York City can help cities to create a NEURS AND FORMER EMPLOYEE SPIN- culture of mentorship. In Boston, MIT’s Adolf OUTS. Successful entrepreneurs and their F. Monosson Prize for Entrepreneurial Men- employees have experience starting, working toring promotes individuals and organizations in, and scaling fast-growing businesses. Cities that have mentored young entrepreneurs. must not only retain these entrepreneurs and Recipients tend to include the award in their employees, but also enable them to spin out biographies. By elevating the status of men- new businesses. torship, cities can encourage the successful to The Partnership for New York City runs contribute back to the ecosystem. an Entrepreneurs Council to give successful entrepreneurs a platform to engage with each INVEST INTO THE MOST PROMISING other as well as local civic organizations and COMPANIES. Encouraging more entrepre- government. These interactions facilitate fu- neur angel investment not only facilitates the ture business relationships and wed entrepre- transfer of knowledge and money into new neurs and their future ventures to the city. ventures, but also keeps successful entrepre- Former employees of New York City tech neurs engaged in the ecosystem’s success. companies are tapping into a similar network This is particularly important for entrepreneurs to create new businesses. New York Tech who have exited companies and have enough Meetup, an organization dedicated to support- liquidity to retire and leave the local ecosys- ing the New York City tech sector, has more tem. than 40,000 members, many of them work- New York City has robust networks of ing at tech companies. Its monthly gatherings angel investors, as well as the resources and enable these employees to share and demo financial infrastructure to train recently suc- product ideas with one another, and it is not cessful entrepreneurs in the finer arts of seed uncommon for attendees to meet their future investing. The city has dozens of angel groups co-founders, formulate business plans, and dedicated to investing in early stage startups, launch new companies at these events. including New York Angels (a top 10 most Even without a robust network of thou- active angel group in the world with over $95 sands of people interested in tech entrepre- million invested), The Angel Investor Forum, neurship, cities can implement policies to and 37 Angels. Comprised of both entrepre- facilitate serial and former employee entrepre- neurs and investors, these groups lower the neurship. According to a study by the Kauff- barriers to becoming an angel, reduce risk, and man Foundation, non-compete agreements professionalize the practice. inhibit the formation of new local companies.42 Cities lacking angel investment networks In New York, non-competes are only narrowly can still help to spur the practice locally. The enforceable, and in other domestic tech hubs Angel Resources Institute (ARI) is just one like California, non-compete agreements are such organization that conducts training pro- not enforced at all, freeing employees to be- grams on the investment process, valuation, come entrepreneurs themselves.43 term sheets, the post-investment relationship, and due diligence. Tax credits that enable recently liquid entrepreneurs to allocate stock 22 / How New York City Became the Role Model for Other Urban Tech Hubs
METHODOLOGY
WE COLLECTED THE DATA for this report We interviewed 643 New York City tech between March 2013 and March 2014 using founders representing 664 New York City tech primary interviews with entrepreneurs and companies and asked them five core ques- publicly available data from Crunchbase, An- tions: gelList, and LinkedIn. • Who inspired you to become an entrepre- Tech companies are defined as those that neur? are either actively developing a new informa- • Who invested in your company? tion technology or those whose businesses • Who was your mentor during the growth are Internet-enabled. We excluded financial and development of your company? technology, green technology, and life scienc- • Have you founded other New York City es companies from this analysis. Our rationale tech companies? for excluding these three industries was 1) the • Which of your former employees have overlap between finance and technology has gone on to found New York City tech increased, and it is difficult to disaggregate the companies? two; 2) manufacturing drives large portions of green technology; 3) expertise and founders We use the responses to these questions in life sciences firms are largely distinct from to create an edgelist of connections among those in information technology businesses. companies, along with a corresponding set All companies included in this study met of five outbound connection types, each of three criteria: 1) information about them was which is represented by a different colored publicly available; 2) they were founded in one arrow. 45 of the five boroughs (Manhattan, Brooklyn, Where an entrepreneur has founded mul- Bronx, Queens, and Staten Island) of New York tiple companies, his or her most prominent City; and 3) they had received investment and/ company based on an index of founding date, or had revenues at the time of data collection. number of employees, total investment, and Using these definitions, we created a list of exit sizes represents his or her influence on the New York City tech companies using Crunch- map. base, AngelList, the Made in NY Digital Map, Companies are oftentimes connected by and the portfolio companies of all major ven- more than one type of connection. Where ture capitalists, incubators, accelerators, and a purple “founder” arrow connects any two co-working spaces active in New York City. We companies, the only other arrow that can added to this list additional companies men- appear is the blue “former employee” arrow. tioned by entrepreneurs, who we define as Likewise, where mentorship and investment company founders, in the course of interviews. occur simultaneously between two compa- In total, we reviewed 3,609 companies nies and their entrepreneurs, we only include to determine if they met the aforementioned the green investment arrow. In the former criteria and identified 2,593 New York City tech case, we assume that inspiration, mentorship, companies. These companies were founded and investment are encompassed within the between 1980 and 2013, although 96.58% of act of serial entrepreneurship represented companies in the dataset were founded af- by the purple arrow. In the latter, we assume ter 1996 due to survivorship bias.44 We then that angel investment comes with a degree of identified and vetted 4,542 entrepreneurs and mentorship. Otherwise, multiple arrows can found that 4,161 had founded one or more of connect two companies. these New York City tech companies. We calculate the size of a company’s circle How New York City Became the Role Model for Other Urban Tech Hubs / 23
based on directed closeness centrality for un- the year the target company was founded. connected graphs. In layman’s terms, the size To estimate when a mentorship relationship of a company is a function of the number of started where we are lacking a start year, we first-, second-, third-, etc. degree connections reviewed mentorship relationships where the company and its entrepreneurs have to we do have start year information. For the others in the network. 273 mentorship relationships where this in- Each ring represents a time period and formation is available, we find that the mean companies are located on a ring according elapsed time between company founding to the year they were founded. Connections and mentorship is .5 years. We then set the accrue to a company based on the time period mentorship year equal to the year the target in which the connections occurred. Where we company was founded, and add .5 years to do not know the year a connection occurred, it, rounding to the nearest year. we take one of two different approaches. In this model, a company’s circle and Where we do not have year information influence grow over time as it and its entre- for an inspiration, former employee, invest- preneurs become more connected to other ment, or founder connection, we assume New York City tech companies. that the year of the connection between the For other analyses, all percentages are source and the target companies is equal to calculated using a 95% confidence interval. 24 / How New York City Became the Role Model for Other Urban Tech Hubs
APPENDIX 1 Interviewees LISTED BELOW are all 643 entrepreneurs who participated in interviews. Entrepreneurs are affili- ated with their most influential company. Companies are listed in alphabetical order.
33Across: Eric Wheeler Capture Your Flag: Erik Michielsen Feengo: Stephen Theogene 42Stats: Dinyar Mistry Caribbeing: Shelley Worrell Felt Tip: Lucius Kwok 72Lux: Heather Marie Carrot Creative: Mike Germano Fieldlens: Doug Chambers Abbeypost: Cynthia Schames Casahop: Florent Peyre, Paul Berry Fiverr: Micha Kaufman, Shai Wininger Acquaintable: Joel Rodriguez Caseable: Marvin Amberg Flavorpill: Sascha Lewis Activecause: Damion Hankejh Centzy: Jeremy Clemenson Flint And Tinder: Jake Bronstein Ad60: Jason Reposa Charitybuzz: Coppy Holzman Floored: Dave Eisenberg Adaptiveblue: Alex Iskold Chatalog: Natalie Gonzalez Fluidinfo: Terry Jones Adbuyer.com: Tim Ogilvie Chatid: Dan Herman Foliodynamix: Aaron Schumm Adcade: Rob Cromer Cheapism: Max Levitte Food52: Amanda Hesser Adheretech: Michael Morena Citymaps: Aaron Rudenstine Force Therapeutics: Bronwyn Spira Admeld: Ben Barokas, Brian Adams Classtivity: Payal Kadakia Foretuit: Michael Liebow Adstruc: John Laramie, Josh Warrum Clothes Horse: Will Charczuk Fotolog: Adam Seifer Adtuitive: Isaac Oates Code Climate: Bryan Helmkamp Fueled: Rameet Chawla Advizr: Mustapha Baassiri Cognitive Match: Alex Kelleher Funding Gates: Ismail Colak Aftersteps: Kfir Shay CollaborativeHealth: Elliot Turrini Gallerama: Aleksandr Yampolskiy Agolo: Mohamed Altantawy Collective: Joe Apprendi Gamblino: Frank Wilson Alley Interactive: Matt Johnson Collective[i]: Tad Martin Gertrude: Kenneth Schlenker Alleywatch: Reza Chowdhury Colormodules: Asmau Ahmed Getmaid: Steven Gutentag Alluring Logic: Dane Arpino Compstak: Michael Mandel Gigzolo: Henry Tseng, Nathan Meeks Altah Net: Elizabeth Golluscio Consignd: Luke Sherwin, Neil Parikh Gilt Groupe: Michael Bryzek, Alexis Maybank, Phong Nguyen Amicus: Seth Bannon Contently: Shane Snow, Joe Coleman Goaloop: Lori Terrizzi Amie Street: Joshua Boltuch Contract Room: Emil Stefanutti Grade Spotter: Christopher Kennedy Amplience: Rory Dennis Cookstr: William Schwalbe Gridpop: Avishai Weiss Amplify: Joel Klein Coursehorse: Nihal Parthasarathi Group Commerce: Jonty Kelt, David Rosenblatt Angelpolitics: Ricardo Garcia-Amaya Craft Coffee: Michael Horn Grouper: Michael Waxman Animoto: Brad Jefferson, Tom Clifton, Stevie Clifton, Jason Creativeworx: Mark Hirsch Guest Of A Guest: Rachelle Hruska Hsiao Crisp Media: Xavier Facon Handshake: Glen Coates AppAddictive: Michael Onghai Crowd Play: Brian Newman Hark.it: Mae Karwowski, Ryan Matzner AppArchitect: Ilya Zatulovskiy Crowdtap: Brandon Evans Harvest: Danny Wen AppCard: Yair Goldfinger Crowdtwist: Irving Fain, Josh Bowen Hatch: Anastasia Leng AppNexus: Brian O’Kelley Customer.io: John Allison Have To Have: Carla Holtze Appboy: Bill Magnuson, Jon Hyman Custora: Corey Pierson Health Guru: Christopher Bruno Appssavvy: Chris Cunningham Dada: Beatriz Ramos Healthination: Tony Estrella Arc90: Robert Ziade Dailyburn: Andy Smith Heavy: David Carson, Simon Assaad Architizer: Marc Kushner Dailyworth: Amanda Steinberg Heybubble: David Amsallem Arkadium: Jessica Rovello Dance Online: Andrea Sferes Heykiki: Joe Vadakkekara Article One Partners: Cheryl Milone Datadog: Alexis Le-Quoc, Olivier Pomel Honestly Now: Tereza Nemessanyi Artsicle: Alexis Tryon Datemyschool: Balazs Alexa, Jean Meyer Hoppit: Steven Dziedzic Artstar: Chrissy Crawford Datorama: Ran Sarig Hopskoch: Marty Monaco Artsy: Carter Cleveland Dejamor: Rodrigo Fuentes Howaboutwe: Brian Schechter, Aaron Schildkrout Assured Labor: David Reich Demdex: Randy Nicolau Hukkster: Katie Finnegan, Erica Bell Audio Network: Robert Hurst Designer Pages: Jacob Slevin Hullabalu: Suzanne Xie Aviary: Israel Derdik, Avi Muchnick Dietbetter: Jamie Rosen Humanity.tv: Gaston Blanchet Axial Market: Peter Lehrman Digital Ocean: Mitch Wainer Hunch: Caterina Fake Azoogle Ads: Joe Speiser Digital Railroad: Evan Nisselson Hyperpublic: Jordan Cooper, Doug Petkanics BA Insight: Guy Mounier, Martin Muldoon Dimensionu: Ntiedo Etuk Iamplify: Murray Hidary Bar & Club Stats: Benjamin Silbert Dimestore Media: Doug McFarland Iareanet: James Decrescenzo Jr Barkbox: Henrik Werdelin, Carly Strife Divvy: Jeremy Greenfield Ideeli: Paul Hurley, Mark Uhrmacher Basno: Nicholas Thorne Dmind: Tom Kwon Image Space Media: Kevin Tung Baublebar: Daniella Yacobovsky Docasap: Puneet Maheshwari Imagineeasy Solutions: Neal Taparia Bcontext: Massimo Scapini Doodle.ly: Evan Vogel, Darren Paul Imrsv: Jason Sosa Beautybooked: Hillary Hutcheson Doodledeals: Caren Sinclair-Kay Indiewalls: Gavriel Wolf, Ari Grazi Behance: Scott Belsky DoubleClick: Kevin Ryan, Dwight Merriman Innovid: Tal Chalozin Bettercloud: David Politis Doubleverify: Oren Netzer Inphonic: David Steinberg Bib And Tuck: Sari Azout Drop.io: Darshan Somashekar Insparq: Veronika Sonsev, Richie Hecker Big Fuel: Avi Savar Dstillery: Joe Doran, Kathy Leake, David Honig Instinctiv: Peter Brodsky Bindo: Brad Lauster Easy Pairings: Darren Wan, Peter Lada Integral Ad Science: Will Luttrell Birchbox: Katia Beauchamp, Hayley Barna Eatdrinkjobs: Jason Miller Interclick: Michael Katz Bitehunter: Gil Harel Ecarediary: John Mills Internet Media Labs: Peter Bordes Black Lapel: Warren Liao, Derek Tian Edamam: Victor Penev Internet.com: Tristan Louis Blank Slate Factory: Kael Goodman Edealya: Chaim Zucker Internetcash: Yiannis Tsiounis Blinq Media: Luis Caballero Edition01: Jessica Kamel Inttra: Kenneth Bloom Blip.tv: Dina Kaplan, Jared Klett Educlipper: Adam Bellow Invision: Steve Marshall Blog Talk Radio: Robert Charish Electnext: Keya Dannenbaum Invite Media: Scott Becker, Michael Provenzano, Nat Turner Blue Apron: Matt Salzberg Enchanted Diamonds: Joshua Niamehr Irrive: Steven Cohn Bmobilized: Bjorn Holte Equametrics: Christopher Ivey iVillage: Robert Levitan Bombfell: Bernard Yoo Estimize: Leigh Drogen JMT Apps: Jean-Marie Truelle Bomoda: Brian Buchwald Everplans: Abby Schneiderman JW Player: Dave Otten Bonobos: Andy Dunn Evidon: Scott Meyer Jamplify: Moses Soyoola, Andy Pickens Bonusly: John Quinn, Raphael Crawford-Marks Ewatch: James Alexander Jibe: Joe Essenfeld Booker: Josh McCarter, Daniel Lizio-Katzen Exelate: Elad Efraim Joor: Mona Bijoor Boomset: Kerem Baran, Cem Kozinoglu ExpoTV: Bill Hildebolt Jukely: Bora Celik Boonty: Mathieu Nouzareth Eyeview: Tal Riesenfeld Just Sing It: Alec Andronikov Branch: Cemre Güngör, Hursh Agrawal Fab: Bradford Shellhammer, Jason Goldberg Kaltura: Shay David Brandyourself: Patrick Ambron Faithstreet: Sean Coughlin, Ryan Melogy Kapitall: Gaspard De Dreuzy, Serge Kreiker Brewster: Steve Greenwood Falcon Expenses: Brooke Sugarman Karma Mobility: Stefan Borsje Broadstreet Ads: John Crepezzi Fanbridge: Spencer Richardson Keep Holdings: Scott Kurnit, Maryann Bekkedahl Buddy Media: Michael Lazerow Fanduel: Tom Griffiths Keepideas: Phil Michaelson Bunny: Alexander Torrenegra Fantasy Buzzer: Simon Pettibone Keywordsmart: Josh Haas Buywithme: Andrew Moss Farmersweb: David Ross Kindling: Timothy Meaney Buzztable: John Brennan Fashism: Brooke Moreland Kinetic Social: Don Mathis CPXi: Michael Seiman Fast Society: Matthew Rosenberg Kinsa: Inder Singh How New York City Became the Role Model for Other Urban Tech Hubs / 25
Kleverbeast: Dinesh Moorjani Ordr.in: David Bloom Squarespace: Dane Atkinson Knewton: Jose Ferreira Outside.in: Cory Forsyth Squidoo: Gil Hildebrand Krossover: Vasu Kulkarni Paddle8: Aditya Julka, Alexander Gilkes Stack Exchange: Joel Spolsky L’Idealist: Fabrice Le Parc Pando Networks: Laird Popkin Stellaservice: Jordy Leiser Launch.it: Brian Cohen Panelfly: Stephen Lynch Stereotypes.fm: Jason Keck Leadspend: Craig Swerdloff Panjiva: Josh Green Stray Boots: Scott Knackmuhs, Avi Millman, Noemi Millman Lean Startup Machine: Trevor Owens Panther Express: Pablo Mayrgundter, Ryan Nitz Stunable: Samantha Radocchia Lenddo: Richard Eldridge Panvidea: Chris Cali Stylecaster: Albert Azout, Ari Goldberg Lendkey: Vince Passione Parse.ly: Sachin Kamdar, Andrew Montalenti Stylefactory.com: Sebastian Reichelt Liazon: Timothy Godzich Patch: Warren Webster Stylyt: Jenny Wu Lifedots: Rafael De Haro Patentory: Fatih Ozluturk Suitey: David Walker, Phil Lang Likeable Local: David Kerpen Pay With Cover: Andrew Cove Sumall: Korey Lee Linkshare: Heidi Messer, Stephen Messer Peeriscope: Ambar Shrivastava Sunrise: Jeremy Le Van Lit Building Directory: Stephen Klenert Peoplehunt: Adrian Avendano Monterrubio Surfsecret Software: Jon Oringer Little Borrowed Dress: Corie Hardee Persado: Alex Vratskides Systems Forge: Peter Bell Littlebits: Ayah Bdeir Philo: David Levy Taboola: Adam Singolda LivePerson: Robert Locascio Photoshelter: Allen Murabayashi Take The Interview: Danielle Weinblatt Local Bigwig: Ray Madronio Phreesia: Evan Roberts Tervela: Barry Thompson LocalResponse: Michael Muse, Nihal Mehta Pickie: Sonia Nagar Test Prep International: Nilanjan Sen Localvox: Trevor Sumner Pictela: Sanjay Jain Thankster: Paul Geller Locket: Yunha Kim Pictorious: Michael Park The Loadown: David Renard Logic Product Group: Jill Taft Picturelife: Nate Westheimer Theatermania.com: Darren Sussman Lot18: Philip James Piiku: Jim Rice Thefuture.fm: David Stein Lua Technologies: Michael Defranco Pingg: Lorien Gabel Theladders: Alexandre Douzet Luckydiem: Andrew Landis Pixable: Inaki Berenguer Thinknear: John Hinnegan M5 Networks: Dan Hoffman Pixafy: Uri Foox Thinkup: Gina Trapani MMI Broadcasting: Teemu Airamo Placeiq: Steve Milton, Duncan McCall Tickpick: Chris O’Brien, Brett Goldberg Machinio: Dmitriy Rokhfeld Plated: Nick Taranto Timehop: Benny Wong Magnetic: James Green Playpower Labs: Derek Lomas, Kishan Patel Tip Card: Gregory Wright Markerly: Sarah Ware Plenishable: Jeff Freedman Tiqiq: Jesse Lawrence Market Publique: Jonathan Berger, Pamela Castillo Plexx: Yscaira Jimenez Topi: David Aubespin Marshad Technology Group: Neal Marshad Policymic: Christopher Altchek Topshelf Clothes: Katie Nadler Maxwell Health: Veer Gidwaney Pontiflex: Zephrin Lasker, Geoffrey Grauer Totsy: Guillaume Gauthereau, Christophe Garnier Meddik: Benjamin Shyong Poppin: Chris Burch Tra: Mark Lieberman, Bill Harvey Mediabistro: Laurel Touby Poshly: Doreen Bloch, Bradley Falk Tracks: Daniel Klaus Mediabrix: Ari Brandt Postable: Scott Potash Tremor Video: Jesse Chenard Mediamorph: Michael Sid Powhow: Viva Chu Trendabl: Jon Alagem Meegenius: Wandy Hoh Preo: Richard Liang Trendalytics: Karen Moon Meetup: Greg Whalin, Scott Heiferman Proper Cloth: Seph Skerritt Tresensa: Robert Grossberg, Rakesh Raju Memoir: Lee Hoffman, Angela Kim PulsePoint: Matt Keiser Triplelift: Ari Lewine, Shaun Zacharia, Eric Berry Mentormob: Vince Leung PuzzleSocial: Jeb Balise Tripology: Douglas Krugman Merchantfuse: Dan Merns Quigo Technologies: Yaron Galai True Office: Adam Sodowick Merchantry: Edward Shenderovich Ranku: Kim Taylor Truveris: AJ Loiacono Milewise: Sanjay Kothari Rap Genius: Mahbod Moghadam Tutonic: Kyle Cromer Mimeo: John Delbridge, Jeff Stewart, David Uyttendaele Razorfish: Craig Kanarick, Jeff Dachis Tutorialize: Leo Shemesh Mirror: Daniel Mattio Readrboard: Porter Bayne Tutorspree: Aaron Harris Mixee Labs: Nancy Liang Realdirect: Michelle Pae Twistage: David Wadler Mobile Commons: Benjamin Stein, Jed Alpert Recordsetter: Dan Rollman Twochop: Mo Lam Modalyst: Jill Sherman Redstapler: Sandro Pugliese Ufora: Alexander Leeds, Braxton McKee Modelinia: Nicole Esposito, Liane Mullin Rent The Runway: Jennifer Fleiss Umami: Bryan Slavin Mojiva: Miles Spencer Renthop: Lawrence Zhou, Lee Lin Uncommon Goods: Thomas Epting, Dave Bolotsky Mojo Motors: Paul Nadjarian Rentshare: Christopher Toppino, Ian Halpern Undertone: Eric Franchi Monaeo: Nishant Mittal, Anupam Singhal Retailmls: Ben Zises Upfront Digital Media: Ran Cohen, Yiftah Frechter Mongodb: Eliot Horowitz Revtrax: Jonathan Treiber Uplanme: Sean Barkulis Moonit: Dana Kanze Right Media: Jonah Goodhart Uprise Art: Tze Chun Motionbox: Josh Grotstein Rock The Post: Tanya Prive, Alejandro Cremades Useful Capital: Alok Tandon Movable Ink: Michael Nutt, Vivek Sharma Rockerbox: Ron Jacobson V Bespoke: Vik Venkatraman, David Whittemore Mr. Youth: Matt Britton Ruby Ribbon: Anna Zornosa, Deborah Uri Vault: Samer Hamadeh Music Xray: Mike McCready Run: Dan Schwartz, Seth Hittman Vaunte.com: Leah Park My Damn Channel: Rob Barnett, Warren Chao Sailthru: Neil Capel Vee24: James Keller MyCityWay: Puneet Mehta, Archana Patchirajan Salemove: Daniel Michaeli, Justin Dipietro Verbalizeit: Ryan Frankel Myclean: Michael Brody Salonpulse: Greg Ratner Vhx: Jamie Wilkinson Neverware: Jonathan Hefter Savored: Benjamin McKean Vidbid: Patrick Boze New Healthcare Enterprises: Peter Henderson Scanbuy: Chai Outmezguine, Didier Frantz, Olivier Attia Visual Revenue: Charlie Holbech, Alex Poon, Dennis Newlywish: Amanda Allen SeamlessDocs: Chachi Camejo, Jonathon Ende Mortensen Newscred: Shafqat Islam, Asif Rahman Seatgeek: Russell D’Souza Vocalizelocal: Philip Krim Newslook: Fred Silverman Seedinvest: Ryan Feit Vonage: Carlos Bhola Next Big Sound: Alex White Send The Trend: Divya Gugnani Voxy: Gregg Carey, Paul Gollash Next Jump: Charlie Kim Sense Networks: Tony Jebara Wander: Keenan Cummings, Jeremy Fisher Next New Networks: Jed Simmons, Fred Seibert Shake: Abe Geiger Wanderfly: Evan Schneyer, Christy Liu Niftythrifty: Topper Luciani Shapeways: Robert Schouwenburg Warby Parker: David Gilboa Nimbusbase: Alex Volodarsky Shelby.tv: Reece Pacheco WeDidIt: Su Sanni, Ben Lamson, Bryan Liff Nlytics: Hide Harashima Shopcube.com: Reid Covington Weespring: Allyson Downey, Jack Downey Nomi: Wesley Barrow Sidetour: Vipin Goyal Wicked Start: Bryan Janeczko Noodle Education: John Katzman Simplereach: Eric Lubow Wirelawyer: Matthew Tollin Nrelate: Neil Mody Singleplatform: Wiley Cerilli Wishi: Lia Kislev Nu-Kitchen: Mark Newhouse Site59: Michelle Peluso, Damon Tassone, Richard Harris, Josh Work Market: Jeffrey Leventhal, Jeff Wald Nuskool: Abran Maldonado Feuerstein Workfolio: Charles Pooley Off Track Planet: Freddie Pikovsky Sizeseeker: Mona Safabakhsh, Ian Campbell Yieldbot: Jonathan Mendez Offerpop: Prakash Mishra, Wendell Lansford Sketchfab: Alban Denoyel Yieldex: Tom Shields Ogmento: Ori Inbar, Oriel Bergig Skillshare: Michael Karnjanaprakorn Yipit: Vinicius Vacanti OkCupid: Max Krohn, Christian Rudder Slader: Kyle Gerrity Yodle: Ben Rubenstein, John Berkowitz Olapic: Jose De Cabo Slate Science: Guy Vardi Youare.tv: Josh Weinstein Olo: Noah Glass Snapgoods: Ron Williams Zazoom: Jay Dedapper Olx: Fabrice Grinda Socialbomb: Adam Simon Zipmark: Jay Bhattacharya Onetok: Ben Lilienthal Socialfeet: Nathaniel McNamara Zipments: Garrick Pohl Onewire: Skiddy Von Stade Socialflow: Mike Perrone, Frank Speiser Zocdoc: Cyrus Massoumi Onswipe: Andres Barreto, Juan Pablo Buriticá Socialguide: Sean Casey Zola Books: Michael Strong Open Air Publishing: Jon Feldman Socure: Bradley Leinhardt [L]earned Media: Nick Kaye, Sam Zises Opensky: John Caplan Songza: Eric Davich, Elias Roman, Peter Asbill, Elliott Breece [x+1]: Ted Shergalis Opprtunity: Janis Krums Spanfeller Media Group: Jim Spanfeller Optier: Amir Alon Spinback: Andrew Ferenci Optimost: Mark Wachen Sportaneous: Omar Haroun Orchard: Kevin Kim, Art Chang Spotflux: Chris Naegelin Ordergroove: Greg Alvo Spreadsave: Andrew Fox 26 / How New York City Became the Role Model for Other Urban Tech Hubs
APPENDIX 2 APPENDIX 3 Acknowledgements Participants
Michael Goodwin, Project Leader at En- The following investors and support orga- deavor Insight, created this report in Novem- nizations assisted in connecting us with found- ber 2014, with research assistance from Jeff ers: Incubate NYC, 500 Startups, Projected Chambers, Alex Coburn, Joni Cooper, Charles Spaces, Alley New York City, Consigliere, So- Dolan, Matthew Echelman, Sravanthi Kadali, cratic Labs, Varick Street Incubator, Founders Nina Kamath, Max Leonesio, Joyce Lin, Ricky Institute, Tipping Point Partners, The Hatchery, Lopez, Nihal Mehta, Austin Mertz, Alba Sophia, and WeCreate NYC. Pablo Suarez, Neby Teklu, Chris Veasey, and In addition to connecting us with their Linda Zhong. portfolio companies, the following organiza- The report could not have come to life tions also participated in roundtable discus- without Matt Lerner’s deep involvement with sions of preliminary findings in October and both the data and infographics. Rhett Morris, November 2013: Bessemer Venture Partners, Endeavor Insight’s Vice President, guided the DFJ Gotham Ventures, Flybridge, Founder Col- interviews, analysis, and drafting of this report. lective, Google Ventures, Greycroft Partners, Fernando Fabre, Endeavor’s President, pro- IA Ventures, Lerer Ventures, DreamIt Ventures, vided invaluable input during the analysis of Entrepreneurs Roundtable Accelerator, Fueled findings. Collective, Grind Spaces, IncubateNYC, Ingk Special thanks to participants of roundtable Labs, InSITE, NYC Seed, and NYC Seed Start. discussions held with key investors and sup- port organizations and to staff at The Partner- ship for New York City, New York City Digital, the Mayor’s Office, and the New York City Eco- nomic Development Council for elucidating the history of the New York City tech sector. This study would not have been possible without New York City tech founders’ gener- ous contribution of over 200 hours of inter- view and survey time. For more information regarding this report, please contact Michael Goodwin at [email protected]. How New York City Became the Role Model for Other Urban Tech Hubs / 27
ENDNOTES
1. See Methodology section for additional information on the definition of New York City’s information technology sector.“ 2. 3.8 million people were employed in New York City in July 2014. “New York City Local Area Unemployment Statistics Program.” New York State Department of Labor. Accessed 15 september 2014
21. R-squared = .1905, n=48, p=0.002. 22. We group companies in cohorts and calculate percentiles based on the year the company was founded. 23. 22.02% (+/-4.22%) of companies with a top-performing inbound connection are successful, 9.60% (+/-1.82%) of companies with no top-performing inbound connections are successful. Analysis includes companies with no inbound connections. 24. R-squared = .0404, n=730, p=0.000. 25. 21.93% (+/-6.05%) of top three university connections are top-performers; 10.92% (+/-5.72%) of top three incubators, accelerators, and co-working spaces are top-performers; 44.17% (+/-9.07%) of top three investment firm connections are top performers. 45.28% of top three investment firm connections also are connected to top-performers. 26. There have been 413 mentorship relationships among New York City tech founders, all time. 27. Romain Dillet. “Adobe Acquired Portfolio Service Behance For More Than $150 Million In Cash And Stock.” Techcrunch. 21 December 2012, accessed 8 August 2014.
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