New York to displace Silicon Valley

Within a decade, New York could displace Silicon Valley as the epicenter of the technology world

There’s been a lot of discussion in the past couple of years about the resurgence of New York City as a tech center (I actually called the comparison to Silicon Valley a silly one about a year ago). In the past couple of years, however, a lot of factors seem to be pointing to New York not only becoming an important force in the technology space but also finally achieving its potential not as another tech center but more as its epicenter, displacing Silicon Valley after almost three generations.

The rise of New York to prominence is, first and foremost, due to a series of happy accidents. While the technology world was long dominated by hardware and algorithms, the current phase (often referred to as “the social web”) is all about people.

In order to full back those assumptions, I’ve created five lenses, each with its own post:

  1. Monocultures have negative impact. Polycultures take longer to create powerful organisms but inherently build ones that are more adaptable.
  2. Living in a city is inherently a social experience. Living in a car-driven society isn’t.
  3. Everyone poaches techies – the New York tech scene was born of those people that can’t be poached and found ways to attract like-minds.
  4. Don’t look at adversity as something that can be overcome with brute force, deal with it as a normal condition and you will find innovative workarounds.
  5. Businesses are ultimately about money so to continue fostering success, valley startup might do well to act a little more like New York ones if they want to build sustainable futures.

A historical setting

The New York dotcom scene of the 1990s was vibrant but ultimately flawed. Its own hubris killed it (and I should know as I was one of those people) and along with it killed the chance of New York displacing Silicon Valley as the epicenter of the technology world. A decade after its implosion, New York is being given a new chance to pick up the mantle, along with some distinct advantages this time around.

With many veterans still being part of the scene, it seems the lessons of the past have not been forgotten so the challenge to Silicon Valley’s supremacy will be substantially stronger than it has been in the past. I hope this series will give both groups chances to think about the different issues facing their own environment and work on dealing with those.

At the end of the day, if both Silicon Valley and New York were to emerge stronger than they are today, this conflict could leave the US more prepared for the next set of challenges that will push both coast to pull together and fight against the rise of cities in foreign locale to try to take the leadership away from the USA. If you are reading this, you probably have a dog in that fight and it is up to you, as well as everyone else in the field, to ensure that this competition ends up turning each location into the best it can be.

Note: This post is part of a series of why New York may gain the top position in the tech world, displacing Silicon Valley. The whole series is now online: IntroCulture Part 1Culture Part 2TalentAdversityBusiness. Please read the whole series before making snarky comments (once you have, you’re free to make those comments).

About the Author

Tristan Louis

Writing and working on the internet since 1993, I've launched six companies, of which two went public and three were sold. This is my personal site and all opinions here are mine.

  • Commenter

    Ten minutes driving around Silicon Valley or San Francisco’s SOMA should be enough to convince anyone that the author is hopelessly wrong.

    • http://www.tnl.net Tristan Louis

      Actually, the last time I was in the Valley (back in November), I was surprised by how negative the mood was.

      However, 10 minutes reading all the points I’m making in details in the related entries might change your mind :)

      • Fakir

        You completely ignore what makes the Valley work as startup central, and then propose bullshit as game changers. Car-driven societies aren’t social? really? That’s the best you have?

        NYC will displace Silicon Valley when two things happen:

        1) It gets top-notch tech universities. Boston has a better startup scene than NYC, and for good reason.

        2) Rent isn’t retarded. When you’re building a company with 25k to last you 6 months, it’s much easier to do so when rent doesn’t eat all of it.

        • http://www.tnl.net Tristan Louis

          I fully agree with your points in terms of the longer trends. The first one is an essential component and that is something I covered in the entry on talent.

          I’m not sure about the second point. Rent in the valley is not cheap (I’m not going to argue that rent in New York is) so I suspect that if you were to look, it’s become a non-factor. Rent in both areas is expensive and that seems to be part of the price of entry.

          • http://www.facebook.com/people/Raj-Kumar-Dash/617328091 Raj Kumar Dash

            It isn’t cheap here in Silicon Valley but it’s not absurd like in New York. The woman that cut my hair told me how her son, the executive sous chef at a famous tavern in New York, was spending $2200 /month for a STUDIO apartment that he had to share. That’s nuts.

            Other factors: Everyone out here seems pretty “chill” here compared to NYC (I’m originally from Toronto). I have a ton of family friends who love living in NYC but personally, I have no desire to have to share an apartment with anyone. ALL of these friends are single, by the way. Hard to have a social life when you share small, expensive living quarters.

            As a long-time techie, I really don’t see NYC displacing SV. I’ve only been here just under 2 years and I can feel the difference in attitudes down here. Entrepreneurial spirit seems part of the air here.

          • http://www.tnl.net Tristan Louis

            Raj,

            I’ll grant you to rents are high in manhattan but New York has 5 boroughs the last time I checked and it seemed that a lot of the people who are currently doing interesting things in New York live in those outer boroughs (explaining why DUMBO in Brooklyn is moving up as a tech neighborhood). Rents in those boroughs are not as high as they are in Manhattan.

            I’m not sure about the “chill” factor. I guess that’s something that comes down to personal preference. As a long-time New Yorker, I tend to prefer some of the intensity of New Yorker but I think that’s neither here nor there in terms of the long term success of New York as a tech center.

            Entrepreneurial spirit is part of the air in the valley because it is a monoculture based on technology and that goes to the core of my argument: the next generation needs influences OUTSIDE of tech in order to be successful and that’s why New York may have an advantage.

        • http://www.facebook.com/people/Alex-Buran/100001649621716 Alex Buran

          I live in NYC for the last 10 years so I am technically a native New Yorker. I saw a lot of change in those years. Primary change occurred in 2008 when Lehman Brothers collapsed. NYC began to quickly lose the status of a financial center, so the business began moving now into the new tech direction.

          I see such suburbs as Brooklyn and Long Island are destined to emerge in the next 10 years as main tech hubs. There is a great high speed Internet infrastructure, wireless coverage and cost of living is lower. Although I work in Manhattan for the last 3 years, I don’t know anyone who is actually renting apartments in Manhattan. Everyone commutes from Brooklyn, Queens or Bronx. Manhattan itself is not livable. It’s a city of ghosts: unbelievable rents, tourists, students, extra rich foreigners who buy second homes, or subsidized ethnicities that are not interested to work for anyone. So, in terms of suburbs, yes, I would agree with the author. They have a big shot.

          As to the colleges, Brooklyn College is a great tech community. It took a major leap forward in 2003 when its facilities and library were brought up to modern standards. Now it produces very capable engineers.

          Plus, the rate of smart phone adoption is very high. People use Foursquare to check-into places like crazy.

          In addition, NYC is very revenue driven city. There are very few start-ups who attract money for the sake of spending it. Everyone looks at the bottom line: what is your product, who is going to buy it, how soon you will make money back, etc. It’s not like tech bubble. It’s sane.

          NYC is a way to go, man!

          • http://www.tnl.net Tristan Louis

            I suspect NYC losing its status as the central town in finance actually pre-dates 2008 but that’s just a detail.

            If you take into account an area the same size as the valley, we’re talking about roughly Stanford, CT to Princeton, NJ. So there’s a lot to grab from. I think the last few years, there has been an increase in the number of outstanding engineers coming out of local schools but I have to admit that that is still an area where the Valley has an advantage. That’s an area where we still have some catching up to do.

            There are a number of new hubs around Brooklyn and other places also picking up, as you rightly point out, but I would hardly call them suburbs.

            NYC all the way!

  • Ballsack

    NYC is a finance town. There’s billions if not more at stake. It’s insignificant at best.

  • http://www.tnl.net Tristan Louis

    Shame you’re hiding behind a rather sophomoric handle.

    There are indeed billions if not more at stake but if NYC is only a finance town to you, you haven’t paid attention. Yes, the financial sector will continue to be strong in New York and I suspect the media sector and other areas where NYC is dominant will continue on their current course without any issue.

    What is different is that the web is now more social and social innovation is something that, historically, has always favored cities over suburbs. Many will say SF will take care of that but I would counter-argue that the best definition of a city is a place where one can live without a car (due to heavy investment in public transportation or car-alternatives). The valley (and many claim SF is not really part of the valley – as I’ve discovered recently) is generally considered to be the lower bay and the lower bay, as far as I see it, is more of a set of suburbs and business parks.

    Even if you were to include SF in the Valley range, you have to realize that some of the major social players (Facebook, Foursquare, Flickr, GroupOn) were born outside the valley and that doesn’t seem to be a trend that’s stopping.

  • http://www.mattmireles.com/ Matt Mireles

    To displace Silicon Valley, you need actual in-the-flesh technologists, the pool of which is very shallow in New York. Hard to build a tech scene without engineers.

    Btw, how’s Diaspora doing? They get an office in Union Square? Oh, that’s right, they moved to SF.

  • http://500startups.com/ Dave McClure

    ummm, nice try, but… no.as an investor in over 70 companies in the valley, and perhaps 7 in NYC, it’s certainly up & coming, but your projections of “displacing” the valley are a wee bit off.now if you want to replace “NYC” with “Beijing” in that headline, it might be worth a longer conversation.

  • http://www.tnl.net Tristan Louis

    I fully agree with your point about the need for more in-the-flesh technologists but that advantage seems to be disappearing in the valley as a result of the way for talent (see the sub-entry on talent in the series to see why that matters).

    BTW, how are Google and Facebook doing? Oh, that’s right, they’re building bigger offices in New York.

    • http://www.facebook.com/people/Raj-Kumar-Dash/617328091 Raj Kumar Dash

      Yeah but that’s not for developers (at least not for Google). They have different operations going on up there.

  • http://www.tnl.net Tristan Louis

    Dave,

    I agree that it is off in terms of timeline. It’s not something that will happen this year but I would venture that it has a strong chance of happening in the next decade.

    I’d love to hear more about why you think Beijing is the place you’re betting on in terms of displacement (I personally see Honk Kong or Shangai as the more likely emergent players in China).

    • http://disqus.com Peter

      Perhaps when NY produces a Stanford or Berkeley engineering program, or perhaps produces an HP, Intel, Cisco, Yahoo, Google or Oracle, all startup factories in their own right, or perhaps when Facebook relocates to NYC, or perhaps when Sand Hill Road changes it’s zip code, then perhaps NY might have a prayer of someday displacing Silicon Valley.

      • http://www.tnl.net Tristan Louis

        I fully agree that the creation of a Stanford or Berkeley-like engineering program will be a step to that displacement but I suspect that we are not too far away from that.

        As far as relocation, I doubt that’s important. The companies you cite are all companies that are tied to the current model.

        What I am trying to point out (and where I think people miss the nuance because they haven’t read the linked stories) is that the historical advantages that helped create and sustain the valley for several generation are eroding. As such, I think NY not only has a chance but its chance is increasing because of the environmental conditions (increasingly as hard for startup to recruit engineering in the valley as it is in New York; or the move to social, which the valley is struggling with).

    • Bridgette

      Ha Ha Ha …. You’re insane. I lived in NY for 10 years and after just spending 2 years in Palo Alto, I am thoroughly convinced that I wasted good 10 years of my life in NYC. Where do I start – Oh… How about WEATHER WEATHER WEATHER … ON *any* given day, I can go swimming and play tennis OUTDOORS! I never *ever* check to see what the weather is like before making plans. In NYC, you’re essentially stuck inside 9 months out of the year. It is simply depressing. But if you like being stuck indoors and getting drunk in bars to forget about the horrific conditions you live under … and claim that you’re happy because you’re drunk … well, I guess NYC is for you.

      God… just thinking about those horrific 10 years of intolerable humidity and intolerable blizzards is making me sick … btw – Foursquare – founded in NYC – is opening up shop in … gues where? Silicon Valley :=) http://www.executiveofficespace.net/news/foursquare-takes-up-office-space-in-san-francisco-silicon-valley-826

      They had no choice. If you want to move ahead, you have to go to Silicon Valley. Even Groupon is opening up shop in Palot Alto.

      • http://www.tnl.net Tristan Louis

        Weather is nice but it’s hardly a gage for success (if it were, more startups would be located in the carribeans, for example.

        As far as opening up secondary office, it’s true that Foursquare decided to go and get some engineers from the Valley. But, by comparison, Google bought a huge building in New York, and Stanford wants to open a campus in New York. Are they hedging their bets? (oh, and for the record, Groupon has had an office in New York for a year too, as does Twitter)

  • Tim Case

    New York’s culture is all about finance that once was and will never be again. New York was great once, but it’s over, it’s glory is sealed for history. Because you are good at one thing does not mean you are good at another, and New York will never be a tech capital. São Paulo however…

    • http://www.tnl.net Tristan Louis

      I’d suspect that there’s more to New York than you can gather. Yes, finance has been a part of it but New York’s main success, historically, has been in its ability to reinvent itself.

  • Christian

    News Flash: The Moon to displace the Sun.

    I have wrote 6 articles of why this is… mainly tho it is because we do not live in space ships.

    I think its great you are writing… but it may be best to spend time on things with actual meaning. AKA not viral titles with a completely opinionated ideas.

    • http://www.tnl.net Tristan Louis

      OK, I’ll bite. What are your logical arguments for your contention that the moon will displace the sun?

      Maybe you ought to read the underlying articles before you so thoroughly reject them with non-sense.

    • http://www.tnl.net Tristan Louis

      OK, I’ll bite. What are your logical arguments for your contention that the moon will displace the sun?

      Maybe you ought to read the underlying articles before you so thoroughly reject them with non-sense.

  • Why Facebook Left Coast

    Resurgence? New York was NEVER a tech center.

    • http://www.tnl.net Tristan Louis

      Never? Where was electricity fist implemented? How about where was the first mobile phone tested? How about the first movies in the United States.

      Those are kind of basic techs that first made their way in New York.

      I’m sure television and radio don’t count either in your view.

      In your view, companies like Meetup and Foursquare also came out of a non-tech center.

  • http://www.facebook.com/people/Raj-Kumar-Dash/617328091 Raj Kumar Dash

    Tristan, do you know who Dave McClure (who commented above) is? I’m pretty sure he knows what he’s talking about, given how much money he has invested in recent SV startups.

    You can say what you will, but as someone who has had several dozen recruiters calling me to do iPhone development in New York for the past 2+ months, I happen to know that they’re all having a very hard time finding anyone who wants to leave SV and work in NYC. In fact, at least one very large New York-based company is in the process of moving their mobile dev team to SV because no one wants to work there.

    I know that’s only one example, but it’s a significant one. I have written in my resume that I don’t want to work outside Cali and I still get regular calls for NYC because it’s difficult to find developers who’ll move. So some NYC clients are starting to allow for work-from-home options for S.V. developers. I had a call for Web-based game development too, not just mobile.

  • Fujiyo

    NY cannot displace Silicon Valley. It is all about culture. Without living here, you may not know how different it is. You should read Regional Advantage by AnnaLee Saxenian then make a comment.

  • http://www.tnl.net Tristan Louis

    Yes, I know Dave (both online and offline). He’s a super smart and sometimes brash guy who sees the valley as the epicenter of technology so I’m not surprised he’s defending his territory. The fact that he’s investing outside of the valley could be seen as a telling sign (5 years ago, few valley-based VCs would invest in New York).

    I’ll grant you that New York still has a substantial deficit in terms of developers but where I see it eventually reaching parity with the valley is that New York has always had that deficit and is used to dealing with that constraint. The valley has seldom has it but, with Google and Facebook sucking up talent left and right, that constraint may start arising and that restores parity between the two markets. So long term, I suspect that the current advantage of the valley over NYC may not be that strong (see the post on talent wars for more details on this).

  • http://www.tnl.net Tristan Louis

    Actually, Google is hiring developers left and right in NYC. Google goggles, for example, is run out of the NYC office. The Google team also has large development groups around apps, maps, and search quality. Their reasoning is that talent is getting hard to acquire in the valley so they’re expanding to other areas.

  • http://www.tnl.net Tristan Louis

    Thanks for the recommendation. Didn’t know about it and will definitely go and read it.

  • Anonymous

    Where are the hardware vendors? What are the NY parallels to HP, Apple, Oracle and Intel? I don’t see anything like that coming out of NY anytime soon.

    • http://www.tnl.net Tristan Louis

      Actually, I’ll grant you that the hardware vendors will stay in the valley (at least those that don’t end up moving to cheaper production centers like China). The lens I go through is that of web-based software.

      So I believe that the valley will continue its influence in hardware design (a few New York based companies like Makerbot and buglabs exist but they are more of an anomaly) but my view is that the advantages the valley has for web-based software is shrinking and THAT is the area where I see New York eventually toppling the valley for the top spot (albeit only temporarily as some non-US entity will probably topple the winner of that fight within a generation).

  • skeptical

    So, to simplify the argument in this article, I think you’re saying new york will replace sv because the whole industry will be social software and new york is a more social environment.

    No.

    • http://www.tnl.net Tristan Louis

      That’s an over-simplification. To simplify the argument:

      – The pendulum has swung in the direction of leveraging technology in non-technology business sectors. New York has an advantage there.
      – A substantial portion of the new software is based on social components. Cities in general and New York specifically has an advantage there.
      – SV used to have an advantage in terms of providing talent. However, the current talent war between Facebook, Google, and other large players is lowering that advantage as far as startups are concerned. Scarcity of development resources is increasing in the valley. NY’s advantage here is merely that startup consider that normal, instead of being shellshocked by it.
      – Adversity is built in to the New York ecosystem and New Yorkers tend to look at ways to co-opt adverse situation instead of removing them altogether. When it comes to mobile development, adversity is part of the ecosystem on a global basis (little bandwidth, dead spots) so New Yorkers are getting and advantage there because of their mindset.
      – New York’s obsession with money means startup look to build sustainable businesses in order to be taken seriously. In the valley, exits through M&A are considered part of the business model, something that may not be sustainable over the longer run.

      So because of that summary, I think the conditions are getting ripe for New York to make a go of it.

  • http://twitter.com/FreeAssocNET Michael Murray

    I’m sorry but this is typical NY-centrism from New Yorkers (I’m one BTW as well although I live and work on the left coast now).

    Here’s why you’re wrong:

    1. As noted above, universities are typically the nexus for tech industries. Boston has MIT, Harvard etc., the Bay Area has Stanford and Berkeley. From an engineering perspective, NY has, um, Cooper Union, which is a fine school, but not a nexus in the way the other schools are. Look at the some of the software and ideas that have come of out these other schools (various flavors of *nix, the initial ‘Big Data’ research etc.). There really is no comparison. There is a reason why NYC is now trying to create an engineering-centric university right now: http://goo.gl/UEdlM — because you don’t have one there.

    2. The historical tech advantages you attribute to NYC really came mostly from NJ — Edison’s labs, AT&T’s System V work, Kernigan and Ritchie’s C etc.

    3. All the other advantages you mention — transit, stuff within walking distance, cultural nexus — exist in the major European cities and many Asian ones, but they haven’t displaced the Valley yet either.

  • jimbob

    The only people talking about NY as a tech center are NYers. I know this because I grew up in NYC, and now live in SF. NYers hate it when they’re not the center of the universe. One reason I left.

  • http://smoothspan.wordpress.com Bob Warfield

    Peeps in places like NY or Silicon Valley love where they are. There is a lot of adversity of one kind or another to get there and stay there. They want to believe whatever their choice was is right. Such places have a lot of success, and it’s easy to point to that in confirmation you were right.

    None of that makes it so. Moreover, we constantly in the West insist there can only be one. Somehow we can’t master the subtlety of keeping two ideas going at once. That’s the real BS right there.

    Forget NY vs the Valley. NY and the Valley are both here to stay.

    Cheers,

    BW

  • http://www.facebook.com/people/David-Henderson/503454660 David Henderson

    or… the Jets will beat the Patriots….. same odds

  • http://www.tnl.net Tristan Louis

    1. It is true that the conditions are not there, which is why I haven’t called the article “NY IS displacing SV”. However, the fact that efforts are now under way to create the educational base is another component in the longer trend.

    2. OK, I’ll grant you that one. Should I have called it “Tri-state area to displace Silicon Valley”. Or should I have called it “New York to displace Mountain View”?

    3. Once again, true that those advantages exist and the displacement hasn’t happened yet. However, the piece is projecting that it will happen, not reflecting that it has.

  • http://www.tnl.net Tristan Louis

    I guess we’ll know what those odds truly are on the 16th :)

  • http://www.tnl.net Tristan Louis

    Good point.

  • http://www.tnl.net Tristan Louis

    I guess I’ll take those odds…