My prayers have been answered! There is now an official NYC Startup Job Fair scheduled for Friday, April 9th, from 1-5p. The event will take place at the AOL Headquarters in Grenwich Village (770 Broadway) in the Village.
This is an awesome development! I expect a lot more events like this to be happening in the future. It's exactly what we need.
Kudos to Alex Horn, who is running the event in collaboration with the Columbia & NYU Venture Communities.
Stowe Boyd of True/Slant has a new blog on the NYC Startup Scene called Hotbed. This is an awesome development. Cody Brown asked, I seconded, Chris Dixon approved, and now it seems we have all received. Awesome. Welcome Stowe!
Now that you're here, there's something I wanted to clarify. From your inaugural post:
New York City’s tech scene is expanding at an astonishing rate these days, which raises the obvious question: why now? And, if New York has all the right ingredients to create a rich and deep technology culture, why didn’t it appear earlier?
My theory is that New York lacked, until recently, a critical factor: smart early stage investors.
The other parts of the puzzle were in place: great schools, brainy entrepreneurs, and abundant media and PR people. But without the manure that VCs provide, what looked to be a great greenhouse was cold, and very little would grow.
It is manure that makes greenhouses hot, that makes them hotbeds, and the critical factor is now being provided by folks like Chris Dixon, Fred Wilson, and John Borthwick.
via trueslant.com
I think you have it backwards, my friend. NYC has an abundance of entrepreneurs, for the reasons you mentioned and more. In particular, lots of tech savvy would-be media folk like me and Cody have opted out of the media ash-heap and are deciding to do the startup thing. But there's a relative scarcity of capital relative to demand. Early stage investing in NYC is a small pond with not a ton of players.
This dynamic of abundant demand, scarce supply makes early stage investors feel that they can be choosy and risk-averse. They know there’s not a lot of competition, so why take lots of risk? Yet at the systemic level, people like me see the dynamic in action and consider heading West. But at the same time, folks like Ron Conway see the supply/demand imbalance and head East. Good deals are to be had, perhaps more so than on the West Coast.
What the NYC scene needs is more of this outside capital to flow inward. As it is, I myself am in California for 10 days playing this very game.
Also, umm, Fred and Chris are cool peeps and all, but let's get one thing straight right now: Startups happen because entrepreneurs make them happen. Entrepreneurs are the real fucking heros in this story, not VCs. We lead, they follow. Don’t forget that.
Obviously, Chris Dixon is an entrepreneur himself (Hunch). But based on blog visibility, it’s easy to get the impression that the NYC startup scene is happening because Fred Wilson and Chris Dixon are blogging about it. They are high-visibility champions and wonderful contributors to the community, giving us all an added sense of pride and support. But in so much as they act as a source of capital, they only enable.
It is the little guys you’ve never heard of who struggle, take risk, fail and create. Remember them, always.
Stowe, welcome to New York. We should grab beers sometime.
Funny thing happened last week.The post I wrote, NYC vs Silicon Valley, kinda blew up and set off wave of dicussion in the blogosphere. Silicon Alley Insider republished it and Chris Dixon, Caterina Fake, Roger Ehrenberg, and now ReadWriteWeb all responded. Some folks got pissed, but I think some productive conversations started as a result, and I'm proud of that.
But there's a little detail I wanted to clarify: that SAI Headline, yeah, I didn't write it.
My original headline: NYC vs Silicon Valley. Neutral. Reflective. Non-inflammatory.
SAI headline: Face It, New York Isn't the Best Place to be a Startup. Provocative. Inflammatory. Declarative.
Here's how it happened: On Thursday, I tweeted out "Working on Epic Blog Post RE: Silicon Valley vs NYC."
Nicholas Carlson of SAI @ tweeted me asking to tell him when I was finished with the post. Background: I previously had blogged for SAI and am on good terms with the crew over there. "I want to bait Chris Dixon," Nicholas told me via IM. Cool. Whatever. I stayed up until 4am writing the post and didn't think much of it. I figured he was gonna re-tweet the post and @cdixon it.
The next morning, Nicholas sent me an IM: "Check out SAI." And there was my post, with a new headline. No one had asked me directly if they could republish it.
Now, I say all this and want to make it clear that I don't begrudge Nicholas or SAI. I actually worked for them briefly as a blogger and am on great terms with Dan, Joe, and the rest of the team over there. But I do want to make it clear to those of you who might have seen that headline on SAI and think that I wrote it. A subtle difference, I know, but I just wanted to set the record straight.
Also, some of you, including now our friends at ReadWriteWeb, seem to develop the impresession that I am moving to Silicon Valley. As of today, this is not true. I am taking a 10 day trip to California––not moving there! Big difference. I MIGHT move there later and I'll definitely be thinking about it while I'm here, but it's far from a done deal.
Truth be told, my argument in that post is a working hypothesis. I think what I said is true, but I'm not 100%. And so I'm here in California to explore and figure things out.
Cheers from Palo Alto!
-Matt
I can say that personally, I learn about NYC tech news almost purely from a collection of blogs I find through Twitter. There is Silicon Alley and Tech Crunch articles about NYC startups but most of the time, I’m leaning about NYC Tech from prominent investors like Fred Wilson and Chris Dixon. Despite how much I devour their work, it comes from a particular POV. If I’m anything like others in NYC who are looking for local tech news, I’m starting to think that too much of this POV is holding us back. The issues with personal blogs break down like this:
Mission
It’s clear why Fred Wilson blogs, he does it because it’s good for him and it’s good for Union Square Ventures. Fred has reason to care about the larger NYC tech scene, but the interests of USV will always come first.
Transparency
A personal blogger gets to decide, with every post, how transparent they want to be. Any VC blogger worth anything will disclose companies they have investments in when they blog but transparency is much deeper than financial disclosure. Political and personal calculus all come in to play. This is evident anytime a founder/investor talks about existing technologies or companies. When Jason calacanis dropped his rant against ComScore, it could be because he’s genuinely intellectually curious or because he is going to announce his own metrics system in 4 months.
Restraint
A personal blogger isn’t responsible for talking about what conversations they are avoiding. This is where it gets really hairy and I think most detrimental to the community. Imagine a situation like this, a prominent NYC founder/investor invites his friend, another prominent NYC founder/investor to an event he is hosting that will be attended by many in the field. The friend arrives and quickly notices the event is an utter disaster. The projector broke, the moderator is horrendous, and everyone is 15 minutes late because the directions to the location were wrong. If the friend were to honestly describe the event it would not be favorable. What’s your bet? Is this friend going to blog about this event the next day? Probably not. Even when you
I love the work of many personal bloggers and value what they add to the NYC startup community, but a seemingly essential part of the ecosystem is missing.
NYC Needs a Startup Blog. It needs brutal, unnerving, critique from an entity without a mesh of financial interest conflicts.
After my last couple posts regarding Pay-to-Play at NY Angels and NYC vs Silicon Valley, I got shit on by Charlie O'Donnell of First Round Capital and, to a much lesser and dramatically more civil extent, Nate Westheimer of NY Tech Meetup. Actually, nix that. Nate critiqued and did so fairly and honorably, he did not shit. Charlie shat.
Regardless, most founders and proto-founders aren't going to open their mouths and speak freely about their experiences if this is what happens to them when they dare utter a frustrated or honest word. I'm in a pretty good position visibility wise with regards to SpeakerText and am more of a street fighter than most, so I am willing to take stick my neck out. But I wouldn't expect others to.
Social media is cool, but it suffers the same limits as regular social interaction: people are afraid to piss each other off. The emperor is never told about his clothes, or lack thereof. Dollars are at stake, after all.
Hence the need for an independent press who has a financial incentive to say it like it is. Amen, Cody.
The reason we charge a fee is because we're between a rock and a hard place. The unfortunate but accurate fact is that 90% of all companies requesting funding are simply not fundable, by anyone, anywhere...no matter how earnest the entrepreneur might be. The larger VC funds get upwards of 10,000 plans each year, but that's ok for them because they either completely ignore over-the-transom submissions, or have them read by a paid associate.
Since all of us are volunteers with day jobs who are doing this in our spare time out of love (and bit of masochism), we simply can't process that kind of deal flow. So our choice is either to take the route that many VCs and quite a number of other angel groups do, and ONLY accept deals as referrals, or else TRY to have some kind of system which will at least dampen the flow of deals that should never have applied in the first place.
Charging $150 is a pretty poor way of making sure that an entrepreneur at least stops and takes the time to read our criteria before applying, but as Churchill said about democracy, "it's the worst form of government there is...except for all the others." I plead guilty to having contributed to making the problem worse by developing Angelsoft, which is now used by virtually all of the world's angel groups to handle their deal flow. Since it functions much like the CommonApp for colleges, it is now very easy to apply to multiple angel groups for funding, whether you really should or not. The current flow through Angelsoft is around 40,000 applications annually. Should I have not done that, but instead gone out of my way to make it harder to apply?
With regard to Nate's comment, he's not quite correct. There are several ways to get to present before New York Angels, but the 'free' one is what we call our "EZPass" system: if one of our members is *already* committed to investing in a company, and there is a completed term sheet that other investors can sign on to, that member can bring the opportunity directly to the monthly meeting without a charge (because, if you think about it, this is exactly the kind of deal most likely to be fundable by other angels.) So absolutely, we will all tell you that by FAR the best way to get funded by NYA is for you to network your way to one of our 75 members, get them enthusiastic enough that they agree to invest individually, and then have them present you to the whole group. However, by offering an alternative, open-door policy that allows 'un-connected' entrepreneurs to at least apply, we thought we were being helpful, not harmful.
But at this point we have taken so much criticism that I'm beginning to think it's just not worth trying to be good guys any longer. So we're currently thinking about simply dropping the fee entirely, but also dropping people's ability to directly apply to us. In that way, we'd function like many (most?) of the "savvy" investors you mention: no charge, but also don't bother applying directly. Just use your entrepreneurial mojo to convince someone we know to recommend you to us...otherwise, if you can't figure out how to do that, we probably shouldn't be funding you in the first place.
Would that be rational? Yeah it would. But I think that ultimately the ecosystem would be poorer for it.
Got this comment earlier today from David S. Rose, the Chairman of the New York Angels. Very thoughtful and well-reasoned. Gotta say the man is winning me over a little bit. Still ruminating...
This is a response that came from the comments on my previous post: Is NY Angels a Pay-to-Play Scheme?
Comfortable with Uncertainty
Posted on: Friday, February 26th, 2010
When do you know? I mean, really know?
Slumped into my couch, pale from a lack of sleep, nose red from the cold he can’t shake, the CEO shook off my suggestion about this being the time to hire an assistant.
“I know, I know,” I said, “you’re a cheap bastard,” and we both laughed.
“It’s not that,” he said after a pause, “it’s just that—well I know we should be hiring for what the company is going to look like in six months but what if it turns out I have to fire them down the line. What if I’m ahead of the game?”
I told him: “You’re at that point when, if you don’t hire enough firefighters, you’ll never get out of firefighting mode.”
“This little start-up of yours,” I continued, “is about to become a company.”
And he looked at me with a mix of relief and sheer terror—and just a touch of nausea.
Later that week, I got an email from another client returning from a board meeting.
“We’re not dead,” he said in a slight nod to Monty Python. They’d given him one more quarter before they’ll decide if they’ll fund that last half million everyone thinks will take the company to break-even. Of course the problem is this is the third “half-million to break even” the company has needed in the last year.
Still another client calls. He’s preternaturally calm. Spooky, even.
“Well my man…we’re burning a quarter million a month and I’ve got a million in the bank. If we don’t close this deal [a deal that will net the company a few million as the result of a sale of an asset], then it’s all over.”
But then he says the really spooky thing; he says: “I think.”
When do you know it’s time? When do you know it’s really time to start the business, shut the business, expand the business, invest in the business, quick your job, end the job search and take the offer on the table, leave your spouse, marry your girl/boyfriend, move to Australia, come home from Australia? When do you know?
“A warrior accepts,” writes Pema Chodron in Comfortable with Uncertainty, “that we can never know what will happen to us next. We can try to control the uncontrollable by looking for security and predictability, always hoping to be comfortable and safe. But the truth is that we can never avoid uncertainty. This not-knowing is part of the adventure. It’s also what makes us afraid.”
I think the only answer to the plaintive poignant question of “When do you know?” is embedded in the bit of Buddhist wisdom: You can’t know–not really, anyway.
Maybe the hardest part of leadership—be it leading a company, a family, a relationship or simply your own life—is that often times you don’t know and you have to still have to act. Leadership in some ways is built on learning to be comfortable with not knowing, with imperfect knowledge, with the inherent uncertainty of it all.
via www.themonsterinyourhead.com
this came from Jerry Colonna, Fred Wilson's old partner at Flatiron Partners.
UPDATE: David S. Rose, Chairman of the NY Angels, responded in the comments below and I broke it out into its own post.
In the comments of my previous post, Nate Westheimer, the NY Tech organizer and former EIR at Rose Tech Ventures, wrote this as part of a long, thoughtful comment:
I was wondering when someone would bring this up. Here's the thing: it's not about me or what I can finagle because I have connections. It's about the guy who has no connections and is a broke nobody. And for that guy, the price to apply to MAYBE get a chance to pitch some of New York's richest people is $150. And that's not cool.To start, the NY Angels isn't a pay-to-play scheme. Come on. If you networked with any of the members -- many of whom devote their lives to helping entrepreneurs (David Rose, Jeff Stewart, Roger Eherenberg, Brian Cohen, etc) -- I bet you'd get in without a charge. The "shmoes" who pay are those who haven't had the sense to meet up independently with its members, excite them, and have you get in front of their colleagues without having to pay the administrative fee. [Emphasis added]
See, I've got a bit of a chip on my shoulder regarding this particular point. I wasn't poor, but I didn't grow up with money. When I was a student at Columbia, I worked as a paramedic in Harlem and the South Bronx to pay for school. Two jobs. Two very working class jobs. I started off doing it cuz it was fun, and ended up having to do it because I needed to eat. I was a poor boy in a rich man's world. No connections. No network. Another schmoe.
And yeah, I've gotten myself into a place where I'm a little bit of a somebody since then. But that doesn't matter. What matters is how we treat the least among us.
Unfunded entrepreneurs should not be asked to pay investors to pitch. Period. It's exploitative and just wrong.
And if you're right and the members are in fact truly devoted to helping entrepreneurs, then I challenge them here and now to drop their $150 pitch application fee and to instead embrace the model pioneered by the Open Angel Forum and fund their efforts by charging service providers instead of entrepreneurs.
Honestly, I think there's more than just a moral imperative involved here. By killing the application fees, they'll get savvier founders, better startups, and improved deal flow––a true win-win for the New York ecosystem.
There's been a lot written lately about the NYC startup scene. It's exploding. It's hot. Etc. And all that is true.
But as a first-time founder trying to raise capital and achieve product-market fit, the question for me is not "Is NYC hot?" or even "Is NYC becoming a better startup hub?"so much as it is "Is NYC the best place to locate my startup?" And on that question, I'm not sure the answer is yes.
See, here's the thing: As far as I can tell, startups face two main environmental challenges:
1) Raising Capital
2) Finding Talent
Here's how NYC scores on this...
Raising Capital
Good: Folks like Chris Dixon, Betaworks and Fred Wilson are here. Smart, visionary investors.
Bad: Folks like Chris Dixon, Betaworks, and Fred Wilson are a TINY fraction of the market.
In reality, the capital markets in NYC are flooded with Wall Streeters turned venture capitalists. These are people who know how to analyze and pick in assets, not people who know how to build companies. These are people who do dumb shit like ask about pricing for a premium version of a genuinely novel product (in a category with no existing market) that hasn't even launched yet...in the first meeting. #VCFAIL (Ok, there's some exceptions, but not tons...)
And in this environment, the entrepreneur-investors stand out in sharp contrast to the platoons of walking checkbook geniuses that roam Manhattan. Yet the founder types are few and far between.
So what does this mean for the Founder/CEO trying to raise money in NYC? Well, from what I can tell, a few things...
a) Weak Angel Network
Good luck finding angels in NYC who understand early-stage tech investing. Technically, they're out there...somewhere. But they're fucking hard to find.
And let's get real: Smart founders want angels, not VC's! Angels are the ones who invest at the earliest, most risky stage. They're the startup equivalent of breast milk. And NYC has a big fat shortage. (e.x. "NY Angels" is one of those pay-to-pitch schemes that Jason Calacanis is crusading against)
b) Only a few bullets
A corrolary to the weakness of NYC's angel network: There's only a handful of top-tier folks in the nieghborhood and if you don't get one of them excited, you're SOL. This means you better wow 'em right out the gates. No learning on the job.
c) Harder to create competition around a deal***
As my peeps at Venture Hacks have so adamantly advised: Founders should ALWAYS try to create competition around a deal. The more competitors in a market, the easier it is to get the swarm mentality going. And of course, the converse is true as well: the smaller the number of players, the lower your chances of gettting someone excited and tripping off the investor feeding frenzy.
This is especially true at the seed and angel stage, which remain stubbornly local as far as capital markets go.
Think of it like going to a party: the more women at the party, the more likely one of them likes you, the more likely it is you get laid. Lesson: Go to parties with more women...err, VCs.
d) Lower valuations
The logical outcome of this dynamic: lower valuations and shittier deal terms. Now, to be clear, I'M NOT SPEAKING FROM EXPERIENCE at this point. But it makes sense: If you're a young startup with an unproven team targetting a big market, the good investors are investing as much in you as they are in the product/market/idea. If you have fewer sources of capital investing in this type of good (because so few of them made their money in tech, where this is normal), a simple economics model will tell you that the cost of capital will rise––ie lower valuations and shittier terms.
e) Slower deal cycles
So...if it's harder to raise angel money and create competition around a sale of your startup's equity (ie a "deal"), then it's probably gonna take more time to raise money.
f) Competetive disadvantage
In startups and war, SPEED KILLS. And let's get real: Raising money is a gigantic waste of fucking time. Each minute you spend hobnobbing with and strategizing RE: investors is a minute you don't spend on product or customer development. This is why at SpeakerText we've developed a hierarchy regarding our priorities as a company (actually, we just ripped it off from Johnson & Johnson): Customers > Employees > Society > Investors.
Essentially, raising capital is a gigantic-if-neccesary waste of time. Having to spend more time on this task puts you at a strategic disadvantage versus your competition.
Finding Talent
Good: NYC has gobs of technical talent from amazing schools. Many now unemployed.
Bad: NYC has gobs of technical talent from amazing schools that are used to being paid inordinately high wages and don't value stock options.
a) Wall Street has been a huge talent suck for a long time.
If you're a hotshot software engineer, the default dream varies depending where you go to college:
-West Coast: Work for Google.
-East Coast: Work for Lehman.
So what's the problem? Google's a lot more entrepreneurial, gobbles up and spits out a lot more founders than our dearest Goldman Sachs (birthplace of the CDS). The mythology is all wrong.
b) Wall Street Quants make A LOT of money.
This is a problem because founders make barely earn a living wage before they exit. While it might average out better in the end for startup Founders, the delta in wages is pretty hard to stomach. It requires a fundamental change in lifestyle for people of who take the leap. This is especially hard when there's not a mythology of garage-to-riches built up in the engineers' minds.
c) Silicon Valley has a bunch of Googlers who got rich from stock options. New York, not so much.
It's about the existence of a mythology. In the Valley, there are lots of engineers who just do startups. They get it. They understand it. The huge payoff down the road is a very real prospect. It's their thing.
While there are definitely engineers in NYC who are into the whole startup mythology, they tend to be outliers as opposed to the mainstream.
d) Specialized technical talent is harder to find in NYC than the Valley (or Boston).
I hate Boston. Would never live there. So ignoring that city, where are you going to find, ohh, let's say Speech Engineers? Theoretically, you can find stragglers from the old Bell Labs days in New Jersey. But they're not exactly easy to find. On the other hand, the Valley is teeming with peeps w specialized skillsets and advanced degrees who WANT to work for startups. So if you're shoping for talent (as we are), it seems––yet again––that the Valley is a better place to shop.
Conclusion
New York is great if you're Chris Dixon or Dennis Crowley or anyone else who's already built a successful company and had a real exit under their belt. These people have their own angel and seed capital networks that transcend locality. And since they have no problem raising capital, they have no problem attracting top tier talent. Realistically, the amount of resources they have access to means they could be in any minor startub hub and make it work.
But if you're a schmoe like me and you've got a big, world-changing dream, NYC is not the best place for you. The odds are already stacked against you. Being outside the Valley just stacks them higher.
Ok, so I don't know if this conclusion is actually true, so I'm heading out the California on Monday to test it. Honestly, I hope I'm wrong, because I hate driving, hate the suburbs, and love urban living, but we'll see.
UP NEXT: My trip to Silicon Valley: Testing the Emerging California Thesis
I wanna pitch this guy. Just, umm, yeah. My kind of dude.
(Wish Vimeo's API could play nice with SpeakerText. Sadness...)
After spending a considerable amount of time scouring the scene for startup-oriented law firms in New York City, I think I've picked up some solid intel for fellow founders.
Just a reminder, all the usual caveats apply to this post: I am (mostly) just a clueless, self-promoting hack––not an expert on legal matters. Any actual knowledge or insight contained in this post is entirely incidental....in all seriousness, I really am just learning and making stuff up as I go along, so please be skeptical of my advice. I am a newbie founder trying to make my startup work, not a guru or industry veteran. BUYER BEWARE.
Founder/CEO of SpeakerText
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