EMBARGOED UNTIL 11/11/2014
THE POWER OF ENTREPRENEUR NETWORKS How New York City Became the Role Model for Other Urban Tech Hubs in Just Ten Years
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 MODEL FOR OTHER URBAN TECH HUBS.
OVER THE LAST YEAR, our team at Endeavor New York City has become the largest truly Insight studied the rapid growth of New York urban center for tech companies and the sec- City’s information technology industry. We ond-largest tech hub in the world. Between define tech companies as those developing 2003 and 2013, the New York City tech sector an information technology or those whose grew twice as fast in terms of dollars invested businesses are Internet-enabled, excluding as Silicon Valley’s, with its companies raising financial tech, green tech, and life sciences more than $3.1 billion in funding in 2013.2 Tech companies.1 Our goal was to identify lessons companies led by local entrepreneurs directly that leaders in other cities can use to support employ 53,000 people, over 1% of New York the growth of their own tech sectors. In the City’s workforce.3 Unlike many other urban process, we created one of the largest data- tech hubs, most of the growth of the New sets on a single entrepreneurship ecosystem 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
NEW YORK CITY TECH FOUNDERS DATA FROM NEW YORK CITY’S REINVEST THEIR SUCCESS INTO TECH SECTOR DEBUNKS SEVERAL 2 3 OTHERS, FUELING THE SECTOR’S COMMON STARTUP MYTHS. GROWTH. Many people believe that tech founders are Connections between successful founders young, technical experts who studied at a and new entrepreneurs are a critical driver prominent local university. We analyzed data of the sector’s growth. Data from over 2,500 on the age and educational history of New companies shows that top-performing tech York City tech founders, and found that these entrepreneurs are more likely than their peers myths do not tell the full story of the city’s to start companies, encourage their employ- founders or the sector’s success. The aver- ees to do the same, mentor, angel invest, and age New York City tech founder is thirty one inspire new entrepreneurs. In turn, founders years old when she founds her company and who are connected to or influenced by other founders are just as likely to have studied a top-performing founders are on average more non-technical subject in university as a techni- successful than other local tech entrepreneurs. cal one. Founders also tend to be highly mo- A network of top-performing New York City bile, with nearly 90% graduating from universi- tech founders has initiated a virtuous cycle of ties outside of New York City. reinvestment that is now fueling 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
gg NYC = ROLE MODEL New York City: a model urban tech hub.
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
gg
Debunking the myths of New York City’s tech sector.
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 US and HOMEGROWN. Cities don’t have to source even worldwide. In aggregate, nearly 90% of entrepreneurial talent from within their bor- New York City’s tech founders graduated from ders in order to create a successful tech sector. an undergraduate institution outside of the Great tech sectors are instead built in one city city, while 70% of those who attended gradu- by people from around the world. New York ate school did so elsewhere.15 Surprisingly, the City’s tech sector is no exception, with 82% University of Pennsylvania is by far the number of its founders graduating from high school one college destination for future New York outside of the city.14 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 undergrad 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
.
Undergraduate majors of New York City tech founders broken down by STEM and non-STEM fields
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
Entrepreneurs who reinvest their success into others are the foundation of New York City’s tech sector.
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 replicate. Policymakers who As New York City tech companies become focus only on certain types of entrepreneurs more successful, their founders are more risk orienting urban entrepreneurship policy likely to connect to and influence other entre- towards yesterday’s challenges, as opposed to preneurs. Although the vast majority of New tomorrow’s opportunities. Instead, cities can York City tech companies are still private, it is focus on supporting the dynamic unfolding possible to look at the 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, almost companies influenced by DoubleClick, Buddy three times 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%
8% become top-performers become
that companies of Percent 5%
0% Inbound connection from a No inbound connections from a top-performing company top-performing company
Note: 85 companies are top-performers of 386 companies influenced by top-performers; 26 companies are top-performers of 344 total companies not influenced by top-performers. a connection to a top-performer, at just 8%.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 21.9% panies themselves.24 Put another way: being with connections to the top three universities, connected to a successful business makes it and just 10.9% 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 44.2%, and almost half of these top-perform- CONNECTIONS AS IMPORTANT AS ing companies are themselves connected to INSTITUTIONS. The prevailing wisdom has other 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 only into existing support organiza- and undergraduate universities based on the tions alone. New York City tech is not wasting percent of top-performing companies coming its 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 connection types 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 ways for talented people to make money, par- like Stephen Messer of LinkShare (acquired by ticularly in New York City. Despite these chal- Rakuten for $425 million in 2005) and Scott lenges, as New York City tech entrepreneurs Belsky of Behance (acquired by Adobe for a become successful, they are also attracting at- reported $150 million in 2012) are just two of tention. Increased visibility in turn allows these hundreds investing their time and expertise entrepreneurs to become role models for the in new tech companies.27 The New York City next generation of founders. In fact, successful tech sector is increasingly collaborative, and entrepreneurs like Alexis Maybank and Alex- successful entrepreneurs are helping the next andra Wilkis Wilson from Gilt Groupe, Jonah generation as a way to pay it forward, stay Peretti from Buzzfeed, and Dennis Crowley tapped into new innovations, and cultivate from FourSquare, have inspired over 180 future future business relationships. New York City tech entrepreneurs.31 How New York City Became the Role Model for Other Urban Tech Hubs / 13
Inspiration Mentorship
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SERIAL ENTREPRENEURSHIP AND New York City tech companies.33 The multi- FORMER EMPLOYEE SPINOUTS. plicative effect of these two types of connec- Successful companies and entrepreneurs have tions alone is impressive: on average, every two more ways that they can impact an eco- two New York City tech companies connected system: serial entrepreneurship and former to this network give rise to one more through employee spinouts. More than 400 serial en- serial entrepreneurship and former employee trepreneurs have founded over 650 New York spinouts.34 City tech companies.32 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 have been founded by former employees of 14 / How New York City Became the Role Model for Other Urban Tech Hubs
Connections among New York City tech companies are growing rapidly.
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 between 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 employees 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 by DoubleClick managed to survive, losing 70% of its clients but its ongoing impact, with Dwight and Kevin Ryan going on to 80% of its competitors.36 As the industry slowly regained its found eight more New York City tech companies and its former footing, DoubleClick and its founding team managed to resize employees starting 26.38 Yahoo! acquired one of these firms— the company and achieve profitability before selling it to pri- 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 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 entrepreneurs in 2013
121 inspiration connections 320 mentorship connections 865 angel investments 428 serial entrepreneurs 336 former employee spinouts 2012 2013 1,813 total connections 2,070 total connections 20 / How New York City Became the Role Model for Other Urban Tech Hubs
Create an entrepreneur network in your city.
CITIES AROUND THE WORLD can replicate subways. A separate program, now called dig- the success of the New York City tech sector, ital.nyc, is a platform for all things tech in the and they don’t need to seed new industries or city. Its news stories promote local companies create tech parks to do it. In fact, the public and emerging technologies and celebrate the effort necessary to recreate the dynamic of growth of the sector with a map of local tech reinvestment now happening in the New York companies, investors, jobs, and events. City tech sector may be much smaller than Cities can promote their success stories many policymakers think. Most cities already without building a dedicated online platform have many of the components necessary to or launching a large-scale advertising cam- accelerate the growth of a tech sector, includ- paign. In Texas, The Dallas 100 is an annual ing aspiring founders, new startups, and suc- list of the fastest-growing companies in the cessful entrepreneurs. By connecting startups, city. Over 1,100 executives, investors, university scaleups, and top-performing companies to leaders, government officials, and journalists one another, cities can catalyze the growth celebrate and promote the companies on the of an entrepreneurship ecosystem on top of list during an annual award celebration, cre- existing local companies, capital, talent, and ating examples of inspirational high-growth 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 How New York City Became the Role Model for Other Urban Tech Hubs / 21 mentorship, but its successful entrepreneurs recently liquid entrepreneurs to allocate stock 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 22 / How New York City Became the Role Model for Other Urban Tech Hubs
Methodology.
WE COLLECTED THE DATA for this report companies in the dataset were founded af- between March 2013 and March 2014 using ter 1996 due to survivorship bias.44 We then primary interviews with entrepreneurs and identified and vetted 4,542 entrepreneurs and publicly available data from Crunchbase, An- found that 4,161 had founded one or more of gelList, and LinkedIn. these New York City tech companies. Tech companies are defined as those that We interviewed 645 New York City tech are either actively developing a new informa- founders representing 665 New York City tech tion technology or those whose businesses companies and asked them five core ques- are Internet-enabled. We excluded financial tions: technology, green technology, and life scienc- • Who inspired you to become an entrepre- es companies from this analysis. Our rationale neur? for excluding these three industries was 1) the • Who invested in your company? overlap between finance and technology has • Who was your mentor during the growth increased, and it is difficult to disaggregate the and development of your company? two; 2) manufacturing drives large portions of • Have you founded other New York City green technology; 3) expertise and founders tech companies? in life sciences firms are largely distinct from • Which of your former employees have those in information technology businesses. gone on to found New York City tech All companies included in this study met companies? three criteria: 1) information about them was publicly available; 2) they were founded in one We use the responses to these questions of the five boroughs (Manhattan, Brooklyn, to create an edgelist of connections among Bronx, Queens, and Staten Island) of New York companies, along with a corresponding set City; and 3) they had received investment and/ of five outbound connection types, each of or had revenues at the time of data collection. which is represented by a different colored Using these definitions, we created a list of arrow. 45 New York City tech companies using Crunch- Where an entrepreneur has founded mul- base, AngelList, the Made in NY Digital Map, tiple companies, his or her most prominent and the portfolio companies of all major ven- company based on an index of founding date, ture capitalists, incubators, accelerators, and number of employees, total investment, and co-working spaces active in New York City. We exit sizes represents his or her influence on the added to this list additional companies men- map. tioned by entrepreneurs, who we define as Companies are oftentimes connected by company founders, in the course of interviews. more than one type of connection. Where In total, we reviewed 3,609 companies a purple “founder” arrow connects any two to determine if they met the aforementioned companies, the only other arrow that can criteria and identified 2,593 New York City tech appear is the blue “former employee” arrow. companies. These companies were founded Likewise, where mentorship and investment between 1980 and 2013, although 96.58% of occur simultaneously between two compa- How New York City Became the Role Model for Other Urban Tech Hubs / 23
nies and their entrepreneurs, we only include Where we do not have year information for the green investment arrow. In the former an inspiration, former employee, invest- case, we assume that inspiration, mentorship, ment, or founder connection, we assume and investment are encompassed within the that the year of the connection between the act of serial entrepreneurship represented source and the target companies is equal to by the purple arrow. In the latter, we assume the year the target company was founded. that angel investment comes with a degree of To estimate when a mentorship relationship mentorship. Otherwise, multiple arrows can started where we are lacking a start year, we connect two companies. reviewed mentorship relationships where We calculate the size of a company’s circle we do have start year information. For the based on directed closeness centrality for un- 273 mentorship relationships where this in- connected graphs. In layman’s terms, the size formation is available, we find that the mean of a company is a function of the number of elapsed time between company founding first-, second-, third-, etc. degree connections and mentorship is .5 years. We then set the the company and its entrepreneurs have to mentorship year equal to the year the target others in the network. company was founded, and add .5 years Each ring represents a time period and to it, rounding to the nearest year. In this companies are located on a ring according model, a company’s circle and influence to the year they were founded. Connections grow over time as it and its entrepreneurs accrue to a company based on the time period become more connected to other New York in which the connections occurred. Where we City tech companies. For other analyses, do not know the year a connection occurred, all percentages are calculated using a 95% we take one of two different approaches. confidence interval. 24 / How New York City Became the Role Model for Other Urban Tech Hubs
APPENDIX 1 Interviewees LISTED BELOW are all 645 entrepreneurs who participated in interviews. We list entrepreneurs based on the rank of their most influential company. Ranks are listed in parentheses, and compa- nies with no outbound connections are listed in alphabetical order.
DoubleClick (1): Dwight Merriman, Kevin Ryan Tremor Video (169): Jesse Chenard Likeable Local (344): David Kerpen Right Media (3): Jonah Goodhart Mediabistro (170): Laurel Touby Wicked Start (345): Bryan Janeczko Group Commerce (4): Jonty Kelt, David Rosenblatt Stack Exchange (173): Joel Spolsky Howaboutwe (348): Brian Schechter, Aaron Schildkrout Hunch (5): Caterina Fake Zocdoc (174): Cyrus Massoumi Ewatch (350): James Alexander iVillage (6): Robert Levitan Demdex (175): Randy Nicolau Activecause (353): Damion Hankejh AppNexus (10): Brian O’Kelley Panther Express (176): Ryan Nitz, Pablo Mayrgundter Recordsetter (354): Dan Rollman PulsePoint (11): Matt Keiser Blip.tv (177): Dina Kaplan, Jared Klett Booker (355): Daniel Lizio-Katzen, Josh McCarter Olo (12): Noah Glass Internet.com (180): Tristan Louis Adbuyer.com (357): Tim Ogilvie Mimeo (13): John Delbridge, David Uyttendaele, Jeff Stewart Kinetic Social (182): Don Mathis Dejamor (358): Rodrigo Fuentes Buddy Media (14): Michael Lazerow Squarespace (184): Dane Atkinson Coursehorse (359): Nihal Parthasarathi Tracks (15): Daniel Klaus Poppin (185): Chris Burch Just Sing It (361): Alec Andronikov Dstillery (17): Joe Doran, Kathy Leake, David Honig AppAddictive (187): Michael Onghai Ordergroove (364): Greg Alvo Dimestore Media (19): Doug McFarland Imagineeasy Solutions (191): Neal Taparia Fast Society (368): Matthew Rosenberg Pando Networks (21): Laird Popkin Vault (193): Samer Hamadeh Insparq (371): Richie Hecker, Veronika Sonsev Invite Media (23): Scott Becker, Nat Turner, Michael Provenza- Amie Street (195): Joshua Boltuch Thinkup (372): Gina Trapani no Onswipe (199): Andres Barreto, Juan Pablo Buriticá Have To Have (374): Carla Holtze LocalResponse (25): Nihal Mehta, Michael Muse Inphonic (201): David Steinberg Kleverbeast (375): Dinesh Moorjani LivePerson (29): Robert Locascio M5 Networks (205): Dan Hoffman Sizeseeker (381): Ian Campbell, Mona Safabakhsh Lendkey (33): Vince Passione Barkbox (207): Henrik Werdelin, Carly Strife Voxy (386): Paul Gollash, Gregg Carey Mojiva (35): Miles Spencer Yodle (208): John Berkowitz, Ben Rubenstein Iamplify (387): Murray Hidary Adaptiveblue (37): Alex Iskold Rent The Runway (209): Jennifer Fleiss Plated (388): Nick Taranto Axial Market (40): Peter Lehrman Pontiflex (210): Zephrin Lasker, Geoffrey Grauer Flavorpill (389): Sascha Lewis Quigo Technologies (42): Yaron Galai Songza (211): Elliott Breece, Eric Davich, Elias Roman, Peter Nu-Kitchen (391): Mark Newhouse Olx (43): Fabrice Grinda Asbill Peeriscope (392): Ambar Shrivastava Interclick (44): Michael Katz Azoogle Ads (213): Joe Speiser Shutterstock (394): Jon Oringer Big Fuel (45): Avi Savar Philo (215): David Levy Appboy (403): Jon Hyman, Bill Magnuson Healthination (47): Tony Estrella Shelby.tv (217): Reece Pacheco Fanbridge (407): Spencer Richardson Bonobos (48): Andy Dunn Contently (222): Joe Coleman, Shane Snow Memoir (414): Lee Hoffman, Angela Kim Noodle Education (49): John Katzman Lua Technologies (224): Michael Defranco Amplify (416): Joel Klein Warby Parker (52): David Gilboa Panelfly (225): Stephen Lynch Cheapism (422): Max Levitte Collective (54): Joe Apprendi Evidon (226): Scott Meyer Fashism (424): Brooke Moreland 33Across (55): Eric Wheeler Youare.tv (228): Josh Weinstein Squidoo (426): Gil Hildebrand Admeld (56): Ben Barokas, Brian Adams Launch.it (229): Brian Cohen [L]earned Media (429): Nick Kaye, Sam Zises Yipit (58): Vinicius Vacanti Stylecaster (230): Albert Azout, Ari Goldberg Compstak (432): Michael Mandel Floored (59): Dave Eisenberg Datemyschool (231): Jean Meyer, Balazs Alexa Harvest (433): Danny Wen Totsy (60): Guillaume Gauthereau, Christophe Garnier Fueled (234): Rameet Chawla Architizer (438): Marc Kushner Site59 (62): Damon Tassone, Michelle Peluso, Josh Feuerstein, Opensky (236): John Caplan JMT Apps (439): Jean-Marie Truelle Richard Harris Sailthru (237): Neil Capel Paddle8 (440): Alexander Gilkes, Aditya Julka Hyperpublic (63): Doug Petkanics, Jordan Cooper Health Guru (239): Christopher Bruno Crisp Media (446): Xavier Facon Spinback (64): Andrew Ferenci Brandyourself (240): Patrick Ambron Socialguide (447): Sean Casey Send The Trend (65): Divya Gugnani Picturelife (241): Nate Westheimer Lean Startup Machine (449): Trevor Owens Gilt Groupe (68): Michael Bryzek, Phong Nguyen, Alexis Rock The Post (242): Alejandro Cremades, Tanya Prive Little Borrowed Dress (450): Corie Hardee Maybank ExpoTV (250): Bill Hildebolt MyCityWay (451): Puneet Mehta, Archana Patchirajan Behance (71): Scott Belsky Carrot Creative (253): Mike Germano Innovid (452): Tal Chalozin Linkshare (73): Stephen Messer, Heidi Messer Keepideas (254): Phil Michaelson Food52 (453): Amanda Hesser Vonage (75): Carlos Bhola Pingg (255): Lorien Gabel Retailmls (454): Ben Zises Mr. Youth (77): Matt Britton Tutorspree (256): Aaron Harris L’Idealist (456): Fabrice Le Parc Meetup (84): Greg Whalin, Scott Heiferman Appssavvy (261): Chris Cunningham Pay With Cover (461): Andrew Cove Doodledeals (85): Caren Sinclair-Kay Snapgoods (263): Ron Williams Ad60 (464): Jason Reposa Knewton (88): Jose Ferreira Next Big Sound (267): Alex White Getmaid (466): Steven Gutentag Collective[i] (89): Tad Martin Bunny (270): Alexander Torrenegra Onewire (467): Skiddy Von Stade Casahop (90): Florent Peyre, Paul Berry Arc90 (271): Robert Ziade Rockerbox (474): Ron Jacobson Jibe (91): Joe Essenfeld Parse.ly (274): Sachin Kamdar, Andrew Montalenti Twistage (479): David Wadler Nomi (93): Wesley Barrow Spreadsave (275): Andrew Fox Wanderfly (480): Evan Schneyer, Christy Liu Irrive (98): Steven Cohn Artsy (276): Carter Cleveland Nlytics (485): Hide Harashima Optimost (100): Mark Wachen Adtuitive (278): Isaac Oates Zazoom (486): Jay Dedapper Lot18 (102): Philip James Mongodb (283): Eliot Horowitz Blinq Media (487): Luis Caballero Digital Railroad (104): Evan Nisselson Wander (288): Keenan Cummings, Jeremy Fisher Youlicit (488): Asif Rahman Keep Holdings (106): Maryann Bekkedahl, Scott Kurnit Image Space Media (291): Kevin Tung Assured Labor (490): David Reich Chatid (109): Dan Herman Internetcash (292): Yiannis Tsiounis Milewise (491): Sanjay Kothari Heavy (110): Simon Assaad, David Carson Birchbox (294): Katia Beauchamp, Hayley Barna Crowd Play (492): Brian Newman Localvox (112): Trevor Sumner Work Market (297): Jeffrey Leventhal, Jeff Wald Leadspend (493): Craig Swerdloff Razorfish (113): Jeff Dachis, Craig Kanarick V Bespoke (298): David Whittemore, Vik Venkatraman Piiku (494): Jim Rice Next Jump (115): Charlie Kim Monaeo (300): Nishant Mittal, Anupam Singhal Niftythrifty (500): Topper Luciani Movable Ink (117): Vivek Sharma, Michael Nutt Guest Of A Guest (301): Rachelle Hruska Visual Revenue (502): Charlie Holbech, Dennis Mortensen, Motionbox (124): Josh Grotstein Seatgeek (304): Russell D’Souza Alex Poon Crowdtwist (125): Irving Fain, Josh Bowen Fab (309): Bradford Shellhammer, Jason Goldberg Ordr.in (503): David Bloom Fotolog (128): Adam Seifer Instinctiv (310): Peter Brodsky Stylefactory.com (505): Sebastian Reichelt Blog Talk Radio (131): Robert Charish Topi (311): David Aubespin Socure (509): Bradley Leinhardt Thankster (135): Paul Geller Dailyworth (312): Amanda Steinberg Thefuture.fm (511): David Stein Outside.in (137): Cory Forsyth Playpower Labs (324): Kishan Patel, Derek Lomas Ruby Ribbon (512): Deborah Uri, Anna Zornosa Orchard (138): Kevin Kim, Art Chang Fieldlens (326): Doug Chambers Lenddo (514): Richard Eldridge Tra (139): Bill Harvey, Mark Lieberman Pictela (327): Sanjay Jain Adstruc (521): John Laramie, Josh Warrum AppCard (141): Yair Goldfinger OkCupid (328): Christian Rudder, Max Krohn Dimensionu (526): Ntiedo Etuk Cookstr (146): William Schwalbe Mobile Commons (330): Benjamin Stein, Jed Alpert Socialfeet (527): Nathaniel McNamara Next New Networks (150): Fred Seibert, Jed Simmons CPXi (331): Michael Seiman Test Prep International (528): Nilanjan Sen Patentory (154): Fatih Ozluturk Stellaservice (335): Jordy Leiser Myclean (534): Michael Brody [x+1] (157): Ted Shergalis Invision (337): Steve Marshall Salemove (538): Daniel Michaeli, Justin Dipietro Internet Media Labs (159): Peter Bordes Photoshelter (338): Allen Murabayashi Phreesia (539): Evan Roberts Adheretech (160): Michael Morena Socialflow (339): Frank Speiser, Mike Perrone Gridpop (541): Avishai Weiss Offerpop (161): Prakash Mishra, Wendell Lansford Shapeways (341): Robert Schouwenburg Tervela (545): Barry Thompson Theladders (164): Alexandre Douzet Buywithme (342): Andrew Moss Classtivity (557): Payal Kadakia Drop.io (167): Darshan Somashekar Ideeli (343): Paul Hurley, Mark Uhrmacher VocalizeLocal (558): Philip Krim How New York City Became the Role Model for Other Urban Tech Hubs / 25
True Office (561): Adam Sodowick Divvy (unranked): Jeremy Greenfield Optier (unranked): Amir Alon Ufora (562): Braxton McKee, Alexander Leeds Dmind (unranked): Tom Kwon Panjiva (unranked): Josh Green Imrsv (563): Jason Sosa Docasap (unranked): Puneet Maheshwari Patch (unranked): Warren Webster Upfront Digital Media (564): Ran Cohen, Yiftah Frechter Doodle.ly (unranked): Evan Vogel, Darren Paul Peoplehunt (unranked): Adrian Avendano Monterrubio Enchanted Diamonds (565): Joshua Niamehr Doubleverify (unranked): Oren Netzer Persado (unranked): Alex Vratskides Jamplify (566): Andy Pickens, Moses Soyoola Easy Pairings (unranked): Darren Wan, Peter Lada Pickie (unranked): Sonia Nagar Designer Pages (567): Jacob Slevin Eatdrinkjobs (unranked): Jason Miller Pictorious (unranked): Michael Park Artstar (573): Chrissy Crawford Ecarediary (unranked): John Mills Pixafy (unranked): Uri Foox Centzy (575): Jeremy Clemenson Edamam (unranked): Victor Penev Placeiq (unranked): Steve Milton, Duncan McCall Seedinvest (576): Ryan Feit Edealya (unranked): Chaim Zucker Plenishable (unranked): Jeff Freedman Market Publique (579): Jonathan Berger, Pamela Castillo Edition01 (unranked): Jessica Kamel Plexx (unranked): Yscaira Jimenez Panvidea (581): Chris Cali Educlipper (unranked): Adam Bellow Policymic (unranked): Christopher Altchek Sense Networks (584): Tony Jebara Electnext (unranked): Keya Dannenbaum Poshly (unranked): Bradley Falk, Doreen Bloch Meegenius (588): Wandy Hoh Enstitute (unranked): Shaila Ittycheria, Kane Sarhan Postable (unranked): Scott Potash Exelate (595): Elad Efraim Equametrics (unranked): Christopher Ivey Powhow (unranked): Viva Chu Pixable (599): Inaki Berenguer Estimize (unranked): Leigh Drogen Preo (unranked): Richard Liang Keywordsmart (601): Josh Haas Everplans (unranked): Abby Schneiderman Proper Cloth (unranked): Seph Skerritt Boonty (603): Mathieu Nouzareth Eyeview (unranked): Tal Riesenfeld PuzzleSocial (unranked): Jeb Balise Nuskool (604): Abran Maldonado Faithstreet (unranked): Sean Coughlin, Ryan Melogy Ranku (unranked): Kim Taylor Undertone (610): Eric Franchi Falcon Expenses (unranked): Brooke Sugarman Rap Genius (unranked): Mahbod Moghadam Buzztable (612): John Brennan Fanduel (unranked): Tom Griffiths Readrboard (unranked): Porter Bayne Moonit (617): Dana Kanze Fantasy Buzzer (unranked): Simon Pettibone Realdirect (unranked): Michelle Pae Sunrise (627): Jeremy Le Van Farmersweb (unranked): David Ross Redstapler (unranked): Sandro Pugliese Merchantry (628): Edward Shenderovich Feengo (unranked): Stephen Theogene Renthop (unranked): Lawrence Zhou, Lee Lin Code Climate (629): Bryan Helmkamp Felt Tip (unranked): Lucius Kwok Rentshare (unranked): Christopher Toppino, Ian Halpern Grade Spotter (630): Christopher Kennedy Fiverr (unranked): Micha Kaufman, Shai Wininger Revtrax (unranked): Jonathan Treiber Kindling (634): Timothy Meaney Flint And Tinder (unranked): Jake Bronstein Run (unranked): Seth Hittman, Dan Schwartz Newscred (639): Shafqat Islam Fluidinfo (unranked): Terry Jones Salonpulse (unranked): Greg Ratner Tripology (641): Douglas Krugman Foliodynamix (unranked): Aaron Schumm Savored (unranked): Benjamin McKean Off Track Planet (651): Freddie Pikovsky Force Therapeutics (unranked): Bronwyn Spira Scanbuy (unranked): Olivier Attia, Chai Outmezguine, Didier 42Stats (unranked): Dinyar Mistry Foretuit (unranked): Michael Liebow Frantz 72Lux (unranked): Heather Marie Funding Gates (unranked): Ismail Colak SeamlessDocs (unranked): Jonathon Ende, Chachi Camejo Abbeypost (unranked): Cynthia Schames Gallerama (unranked): Aleksandr Yampolskiy Shake (unranked): Abe Geiger Acquaintable (unranked): Joel Rodriguez Gamblino (unranked): Frank Wilson Shopcube.com (unranked): Reid Covington Adcade (unranked): Rob Cromer Gertrude (unranked): Kenneth Schlenker Sidetour (unranked): Vipin Goyal Advizr (unranked): Mustapha Baassiri Gigzolo (unranked): Henry Tseng, Nathan Meeks Simplereach (unranked): Eric Lubow Aftersteps (unranked): Kfir Shay Goaloop (unranked): Lori Terrizzi Singleplatform (unranked): Wiley Cerilli Agolo (unranked): Mohamed Altantawy Grouper (unranked): Michael Waxman Sketchfab (unranked): Alban Denoyel Alley Interactive (unranked): Matt Johnson Handshake (unranked): Glen Coates Skillshare (unranked): Michael Karnjanaprakorn Alleywatch (unranked): Reza Chowdhury Hark.it (unranked): Ryan Matzner, Mae Karwowski Slader (unranked): Kyle Gerrity Alluring Logic (unranked): Dane Arpino Hatch (unranked): Anastasia Leng Slate Science (unranked): Guy Vardi Altah Net (unranked): Elizabeth Golluscio Heybubble (unranked): David Amsallem Socialbomb (unranked): Adam Simon Amicus (unranked): Seth Bannon Heykiki (unranked): Joe Vadakkekara Spanfeller Media Group (unranked): Jim Spanfeller Amplience (unranked): Rory Dennis Honestly Now (unranked): Tereza Nemessanyi Sportaneous (unranked): Omar Haroun Angelpolitics (unranked): Ricardo Garcia-Amaya Hoppit (unranked): Steven Dziedzic Spotflux (unranked): Chris Naegelin Animoto (unranked): Tom Clifton, Jason Hsiao, Stevie Clifton, Hopskoch (unranked): Marty Monaco Stereotypes.fm (unranked): Jason Keck Brad Jefferson Hukkster (unranked): Katie Finnegan, Erica Bell Stray Boots (unranked): Scott Knackmuhs, Avi Millman, Noemi AppArchitect (unranked): Ilya Zatulovskiy Hullabalu (unranked): Suzanne Xie Millman Arkadium (unranked): Jessica Rovello Humanity.tv (unranked): Gaston Blanchet Stunable (unranked): Samantha Radocchia Article One Partners (unranked): Cheryl Milone Iareanet (unranked): James Decrescenzo Jr Stylyt (unranked): Jenny Wu Artsicle (unranked): Alexis Tryon Indiewalls (unranked): Ari Grazi, Gavriel Wolf Suitey (unranked): David Walker, Phil Lang Audio Network (unranked): Robert Hurst Integral Ad Science (unranked): Will Luttrell Sumall (unranked): Korey Lee Aviary (unranked): Avi Muchnick, Israel Derdik Inttra (unranked): Kenneth Bloom Systems Forge (unranked): Peter Bell BA Insight (unranked): Guy Mounier, Martin Muldoon JW Player (unranked): Dave Otten Taboola (unranked): Adam Singolda Bar & Club Stats (unranked): Benjamin Silbert Joor (unranked): Mona Bijoor Take The Interview (unranked): Danielle Weinblatt Basno (unranked): Nicholas Thorne Jukely (unranked): Bora Celik The Loadown (unranked): David Renard Baublebar (unranked): Daniella Yacobovsky Kaltura (unranked): Shay David Theatermania.com (unranked): Darren Sussman Bcontext (unranked): Massimo Scapini Kapitall (unranked): Gaspard De Dreuzy, Serge Kreiker Thinknear (unranked): John Hinnegan Beautybooked (unranked): Hillary Hutcheson Karma Mobility (unranked): Stefan Borsje Tickpick (unranked): Brett Goldberg, Chris O’Brien Bettercloud (unranked): David Politis Kinsa (unranked): Inder Singh Timehop (unranked): Benny Wong Bib And Tuck (unranked): Sari Azout Krossover (unranked): Vasu Kulkarni Tip Card (unranked): Gregory Wright Bindo (unranked): Brad Lauster Liazon (unranked): Timothy Godzich Tiqiq (unranked): Jesse Lawrence Bitehunter (unranked): Gil Harel Lifedots (unranked): Rafael De Haro Topshelf Clothes (unranked): Katie Nadler Black Lapel (unranked): Derek Tian, Warren Liao Lit Building Directory (unranked): Stephen Klenert Trendabl (unranked): Jon Alagem Blank Slate Factory (unranked): Kael Goodman Littlebits (unranked): Ayah Bdeir Trendalytics (unranked): Karen Moon Blue Apron (unranked): Matt Salzberg Local Bigwig (unranked): Ray Madronio Tresensa (unranked): Robert Grossberg, Rakesh Raju Bmobilized (unranked): Bjorn Holte Locket (unranked): Yunha Kim Triplelift (unranked): Ari Lewine, Eric Berry, Shaun Zacharia Bombfell (unranked): Bernard Yoo Logic Product Group (unranked): Jill Taft Truveris (unranked): Aj Loiacono Bomoda (unranked): Brian Buchwald Luckydiem (unranked): Andrew Landis Tutonic (unranked): Kyle Cromer Bonusly (unranked): John Quinn, Raphael Crawford-Marks MMI Broadcasting (unranked): Teemu Airamo Tutorialize (unranked): Leo Shemesh Boomset (unranked): Kerem Baran, Cem Kozinoglu Machinio (unranked): Dmitriy Rokhfeld Twochop (unranked): Mo Lam Branch (unranked): Hursh Agrawal, Cemre GüNgöR Magnetic (unranked): James Green Umami (unranked): Bryan Slavin Brewster (unranked): Steve Greenwood Markerly (unranked): Sarah Ware Uncommon Goods (unranked): Dave Bolotsky, Thomas Epting Broadstreet Ads (unranked): John Crepezzi Marshad Technology Group (unranked): Neal Marshad Uplanme (unranked): Sean Barkulis Capture Your Flag (unranked): Erik Michielsen Maxwell Health (unranked): Veer Gidwaney Uprise Art (unranked): Tze Chun Caribbeing (unranked): Shelley Worrell Meddik (unranked): Benjamin Shyong Useful Capital (unranked): Alok Tandon Caseable (unranked): Marvin Amberg Mediabrix (unranked): Ari Brandt Vaunte.com (unranked): Leah Park Charitybuzz (unranked): Coppy Holzman Mediamorph (unranked): Michael Sid Vee24 (unranked): James Keller Chatalog (unranked): Natalie Gonzalez Mentormob (unranked): Vince Leung Verbalizeit (unranked): Ryan Frankel Citymaps (unranked): Aaron Rudenstine Merchantfuse (unranked): Dan Merns Vhx (unranked): Jamie Wilkinson Clothes Horse (unranked): Will Charczuk Mirror (unranked): Daniel Mattio Vidbid (unranked): Patrick Boze Cognitive Match (unranked): Alex Kelleher Mixee Labs (unranked): Nancy Liang WeDidIt (unranked): Bryan Liff, Ben Lamson, Su Sanni CollaborativeHealth (unranked): Elliot Turrini Modalyst (unranked): Jill Sherman Weespring (unranked): Allyson Downey, Jack Downey Colormodules (unranked): Asmau Ahmed Modelinia (unranked): Nicole Esposito, Liane Mullin Wirelawyer (unranked): Matthew Tollin Consignd (unranked): Neil Parikh, Luke Sherwin Mojo Motors (unranked): Paul Nadjarian Wishi (unranked): Lia Kislev Contract Room (unranked): Emil Stefanutti Music Xray (unranked): Mike McCready Workfolio (unranked): Charles Pooley Craft Coffee (unranked): Michael Horn My Damn Channel (unranked): Rob Barnett, Warren Chao Yieldbot (unranked): Jonathan Mendez Creativeworx (unranked): Mark Hirsch Neverware (unranked): Jonathan Hefter Yieldex (unranked): Tom Shields Crowdtap (unranked): Brandon Evans New Healthcare Enterprises (unranked): Peter Henderson Zipmark (unranked): Jay Bhattacharya Customer.io (unranked): John Allison Newlywish (unranked): Amanda Allen Zipments (unranked): Garrick Pohl Custora (unranked): Corey Pierson Newslook (unranked): Fred Silverman Zola Books (unranked): Michael Strong Dada (unranked): Beatriz Ramos Nimbusbase (unranked): Alex Volodarsky Dailyburn (unranked): Andy Smith Nrelate (unranked): Neil Mody Dance Online (unranked): Andrea Sferes Ogmento (unranked): Oriel Bergig, Ori Inbar Datadog (unranked): Alexis Le-Quoc, Olivier Pomel Olapic (unranked): Jose De Cabo Datorama (unranked): Ran Sarig Onetok (unranked): Ben Lilienthal Dietbetter (unranked): Jamie Rosen Open Air Publishing (unranked): Jon Feldman Digital Ocean (unranked): Mitch Wainer Opprtunity (unranked): Janis Krums 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 Endeavor The following investors and support organiza- Insight, created this report in November 2014, tions assisted in connecting us with founders: with research assistance from Jeff Chambers, Incubate NYC, 500 Startups, Projected Spaces, Alex Coburn, Joni Cooper, Charles Dolan, Alley New York City, Consigliere, Socratic Labs, Matthew Echelman, Sravanthi Kadali, Nina Varick Street Incubator, Founders Institute, Tip- Kamath, Max Leonesio, Joyce Lin, Ricky Lopez, ping Point Partners, The Hatchery, and WeCre- Nihal Mehta, Austin Mertz, Alba Sophia, Pablo ate NYC. Suarez, Neby Teklu, Chris Veasey, and Linda In addition to connecting us with their 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. “The New York Tech Scene Sees Almost $10 Billion Invested Across 2,206 Deals in Last Five Years.” CB Insights. 30 July 2014, accessed 5 November 2014 < https://www.cbinsights.com/blog/new-york-tech-investment-report/>. 3. 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% (+/-4.21%) of companies with a top-performing inbound connection are successful, 7.56% (+/-2.85%) of companies with no top-performing inbound connections are successful. Analysis excludes 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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