Every so often New York makes me mad.
No, it’s not the congestion or the people or the Yankees (though they truly are insufferable).
It’s New York’s insatiable appetite to be perceived as players on the world stage of tech. I was reminded of this frustration this week when Seattle venture capitalist Chris DeVore emailed me a story from Crain’s New York Business with the headline “Tech Takes Over,” and a subhead declaring that New York is the “sector’s official second city.”
“New York has now hooked its economic future to the tech sector — the most dynamic aspect of the American economy — and is emerging as the second headquarters of the whole industry,” the story proclaimed.
Good for New Yorkers for adorning themselves with this “official” HQ2 status, but maybe they should — and I know it’s tough when you live on an island — look beyond the Hudson River.
This newfound status should be viewed as skeptical as one of those New York pizza parlors that claims to be the original.
There are five (though New York University professor Scott Galloway claims four) dominant players in technology today. None of them are headquartered in NYC.
Three are in the San Francisco Bay area: Apple, Google and Facebook. And two are in Seattle: Amazon and Microsoft. All five have major operations in both Silicon Valley and Seattle, creating what I’ve dubbed the West Coast tech megalopolis.
Together, they create their own weather systems — entire ecosystems that drive the tech economy in ways that are unimaginable. Just look at the consequences when Amazon — perhaps the most feared of the bunch — quietly declares its intentions to go into healthcare or delivery or entertainment. It rattles markets.
Each of them, with market values topping $500 billion, could probably gobble up the entire New York tech economy if they wanted to.
The tech industry’s power shifted West decades ago, for a multitude of reasons. The most important: There was no goofy buttoned-up establishment in Seattle or San Francisco, places that celebrated business oddballs, weirdos and misfits (also known as tech entrepreneurs).
Can you imagine Bill Gates building Microsoft in the fashion capital of the world in the 1970s and 1980s? Or Steve Jobs — a dropout from Portland, Ore.’s counterculture Reed College — selling the idea of Apple on Wall Street in the early days?
There’s a reason why Jeff Bezos left his hedge fund job in New York to build his tech startup in Seattle.
Sure, Bezos is now looking for a second headquarters for Amazon — likely east of the Mississippi River. But it’s more about mining talent and creating redundancies than building a business from scratch. (For what it’s worth, I think New York is a long shot to win Amazon’s HQ2, but not quite as much of an outsider as Newark. As I mentioned in my analysis of the 20 cities, is New York really a place where anti-social coders and geeks want to hang out?)
If you were to expand the list of the dominant tech players beyond the five mentioned above, you’d head east all right — to what was once referred to in Euro-centric terms as the Far East.
Baidu, Tencent, Huawei, Alibaba and Xiaomi, all of which are based in China, are the real up-and-coming powerhouses of technology. And, if you think that artificial intelligence will usher in the next wave of technological change, you’re better off hanging out in Shanghai than Soho. The Chinese government is pouring massive amounts of money into AI with a plan to dominate the emerging industry by 2030.
The reporters in The Crain’s piece do make some important points about New York’s vibrancy as a tech market, and they do point out some of the city’s weaknesses.
WeWork, Etsy, Warby Parker and other New York-based startups are interesting, and a few actually may reach titan status over time. Even so, a number of New York attempts to create that next tech giant — whether FourSquare or Guilt Groupe or Tumblr — have fizzled.
New York also has plenty of capital sloshing around — after all, it is a place built on money.
More than $12 billion in venture capital was invested into startups in the New York metro area last year, compared to $1.7 billion in Seattle. Of course, New York’s population base is far bigger, with more than 8.5 million people. That compares to just over 700,000 people in Seattle proper.
But venture capital doesn’t always translate to the biggest ideas, the best entrepreneurs, or world-changing innovations. On a relatively small base of capital, Seattle, for example, has produced far more home runs in tech than any Yankees-loving New Yorker.
And really, that’s what matters.
Even so, this imbalance of money (and prestige) just frosts people like DeVore, who runs the Techstars Seattle accelerator and investment firm Founder’s Co-op. DeVore says Seattle’s “reputation for modesty is killing us on the investment front.” He notes that Los Angeles and New York City — which he called “relative deserts of tech leadership” — have successfully made the case to investors that “they’re the next most important tech markets after the Bay Area.” That’s just laughable, he says.
Until New York claims one of the big titans of technology — fostering the rather unusual ingredients that it takes to cultivate one these seedlings from startup to stardom — let’s call New York what it is. It’s not the second headquarters of tech, but a promising up-and-comer.
We know New Yorkers will just hate that designation.