NYConvergence ORIGINAL

Two metro-area Twitter users took home awards last night at the Second Annual Shorty Awards, Newark, NJ Mayor Cory Booker, who won a Shorty Award in the "Government" category, and Sesame Street, which tied for an award in the "Best Brand" category.  Sesame Street's award was accepted on the television show's behalf by Grover, who began "reading" a list of 140 fictional characters until the evening's host, CNN's Rick Sanchez, cut him short as he was over the 140-character limit for his acceptance speech.  The ceremony was held at The Times Center, located in Manhattan's Times Square neighborhood and video is available on Livestream here.

The Shorty Awards, which were first held last year at Galapagos Art Space in Brooklyn's DUMBO neighborhood during NYC's Social Media Week, aim to honor "the best people and organizations on Twitter."  In addition to voting by tweet, members of the recently-formed Real-Time Academy of Short Form Arts & Sciences also had a hand in selecting the winners although that role wasn't clarified.  Local members of the Academy include radio host Kurt Anderson, Hunch's Caterina Fake, The New York Times' David Pogue, and Columbia Journalism School's Sree Sreenivasan.

A full list of the winners is available online here.

I attended tonight’s Social Recruiting Meetup, and heard a talk by venture capitalist Fred Wilson on "Recruiting with Social Media" .  This was a highly condensed version of his presentation at the Social Recruiting Summit (video available on that site). 

My brief notes:

Social web has vastly connected the number of people you can connect with every day. 

I got into VC in the mid 80s.

At the time we would seek out investments by going to conferences, walking halls, collecting business cards, and then work the phones.  We would talk to a dozen people a day.

Then with email we could talk to 10x as many people.

Then with social media we can talk to another 10x as many people.  My blog AVC.com reaches thousands of people every day. 

One of our regular portfolio questions: how do we hire great engineers?   This presentation summarizes my answer.

I tell recruiters to go to Meetup.com, e.g., the PHP Meetup. 

One of the event attendees runs Jibe (spelling), a new service that shows you jobs with which you have a social connection. 

StackOverflow is a great place to get quality engineers, and evaluate their reputation. 

Q: Do you use social media for sourcing deals?

A: One of my best leads are the comments on my blog posts.  I have a rule: when I hear about a company 2x I write it down.  When I hear about it 3x, I write the CEO.  We use social media for due diligence.  We contact influencers to get their opinions. 

Q: How do you recommend introductions to people?

A: I believe in the ‘double opt-in intro’.  I ask both parties if they want to be introduced.  I do this because that’s how I want other people to introduce me, because i get introduced to too many people to whom I don’t want to be introduced. 

Teten: How should traditional high-end recruiters respond to social media taking away their competitive advantage of a candidate database?

A: i’ve come to believe that the cultural fit of the candidate within the small company is critical, so we prefer to recruit via the social web.  We go to the recruiters only after trying our own network. 

Q: What large companies are using social media well?

A: I cant point to any.  Maybe it just doesn’t scale.

Q: How do you get more followers?

A: You put value out , you get value back.

Q: What do you think of recruiting internationally on social media?

A: It should work.  I read Russians are greatest users of social media in the world?

Q: Are there tools like Radian6 or a Visible that you think are helpful for assessing sentiment?

A: I dont use any of those sophisticated tools, but I’m sure they’re very valuable. 

Q: Talk about how you use LinkedIn.

A: We use it heavily, but not the way LinkedIn would like.  We’ve never been a paying customer.  We’ll use it to find a certain profile.  We don’t ask for a reference list.  We just connect with people on LinkedIn and look for the shared connections. 

Q: Do you do searches for a portfolio company?

A: We don’t drive searches; the company does.  We recommend company hire an in-house recruiter when they get to 20-25 employees.  We’re a member of the hiring team. 

Colleagues, I am very excited to report that the state of the NY early stage technology ecosystem is strong. Very strong!

In an analysis of every major component of the NY technology ecosystem, our industry scores nearly straight As; and, where we score below an "A," we have a clear path to improving and succeeding. Let's review:

Let say that in every major early stage technology ecosystem, one needs a healthy mixture of the following:

• Supply of Great New Entrepreneurs
• Foundation of great second and third generation entrepreneurs
• Efficient capital markets
• Access to large and diverse customer set
• Unidirectional flow of Human Capital through local universities into the startup ecosystem
• Bidirectional flow of Intellectual Capital between local universities and the startup ecosystem
• A media industry interested in reporting on the innovations of the industry
• Value-driven services infrastructure (lawyers, rent, etc)
• High quality of life
• Strong industry community infrastructure

In more detail, let's address and grade each of these issues:

Supply of Great New Entrepreneurs - A

One doesn't have to throw a stone very hard in NYC to hit an up and coming entrepreneur. This is a city full of ambitious risk-takers, most of them may not have what it takes to succeed, but many do and are laying the foundations of incredible careers. New Entrepreneurs in New York come from diverse backgrounds. Many have spent time working in one of NYC's Big Industries, which means they have exposure to business at a large-scale. However, they also tend to have strong connections to their local economies, making them aware of the "status on the ground," which is where many of their ideas for innovation come from.

Foundation of great second and third generation entrepreneurs - B+

For much of the last decade, this has been the biggest issue of some of the smartest observers in NY Tech. Every healthy ecosystem needs an old guard bringing up the new, and Boston and San Francisco have been great examples for why this is important (can you say "PayPal Mafia?").

But in New York the questions is, "As a New Entrepreneur, can I find a veteren to help show me the way?" I think we're on our way here. Certainly I've had that experience -- seeing that I've had the opportunity to co-found a company with serial entrepreneur Aaron Cohen, who's had multiple exits in the space. Elsewhere, media veterans like Strauss Zelnick have helped mentor first-time CEOs Sam Lessin and Ben Lerer. Now Ben and Sam have begun mentoring New Entrepreneurs like Andrew Kortina and Justin Shaffer. The waterfall of mentorship is at work here.

And the examples don't stop there. NY-centric mentors, all of whom have made themselves accessible to other entrepreneurs for guidance, capital, and/or management leadership, include: Steven Messer, John Maloney, Scott Heiferman, Andrew Raseij, Team Betaworks, Esther Dyson, David S. Rose, Jeff Stewart, Albert Wenger, Josh Kopelman, Dennis Crowley, Evan Korth, Howard Lindzon, Mike Lazerow, Darren Herman, David Kidder, Nancy Pedot, and on and on and on.

The point being, no matter what you're doing in this city, if you can't find an industry to get excited, you're not looking in the right places. While New York will be better off when the next generation of mentors come into the picture, things are quite healthy here and only getting better.

Efficient capital markets - A-

Let me echo something Charlie O'Donnell said the other day on his blog. If you can't get funded in New York City, your company shouldn't be funded.

Why is that okay for Charlie and me to say? For two reasons: 1) Because both of us had startups which were unable to raise VC money (while both had some level of friends and family/Angel money). We both know "it's okay" if you do a startup and fail. Us not getting money was as healthy for the ecosystem as Etsy or 10Gen getting money.

The second reason is that in 2010 global capital markets are very efficient. In New York there are dozens of investors -- VC to Angels to Friends-and-Family -- with direct experience in virtually every area of the industry. And where there's not clear point-of-contact (say, for semiconductors) are many more firms or people (from Chris Sacca to my friends at Flybridge) who operate in New York and bring that expertise into the ecosystem.

Wherever it comes from, dozens of millions of dollars get deployed at every level of the early-stage ecosystem in New York, and I have yet to hear of a deal -- including my own -- which deserved to get funded and didn't. Can you name one?

Access to large and diverse customer set - A+

Let me just name streets and neighborhoods, and you let me know if you have access to customers in New York City: Madison Avenue, Wall Street, Orchard Street, Chinatown, Upper West Side, Upper East Side, Williamsburg, Restaurant Row...

For all the talk about its Big Industries, New York's economy is also a great example of diversity. Have a platform for restaurants? No better place but here. Something for tiny shops? New York is your place. Something for house keepers? Banks? Political campaigns? DIYers? Mega-fashion? Time-tracking? There's no better place than New York City to get access to these customers.

Unidirectional flow of Human Capital through local universities into the startup ecosystem - B

The dynamic between startups and universities can be broken down into two parts. The first is the mostly unidirectional flow of human capital into universities and out to the innovation industry.

In order for this to work out, our local universities have to recruit top talent on a global level. In the case of early stage technology, we need this to be a healthy mix of engineers/hackers and "business kids."

In New York, our universities are doing great jobs of recruiting, educating, and feeding (into the startup industry) folks on the business side of the equation. Little improvement is needed here.

However, on the engineering side of the equation recruiting top engineering students -- on a graduate and undergraduate level -- and then getting them excited about joining or starting startups has been tough. Right now, professors like Evan Korth (NYU) and Chris Wiggins (Columbia) are too few and far between, and their departments and schools pay too little attention to the great work they are doing.

At the same time, startups pay too little attention to their opportunity to foster relationships with students at early ages. While folks like Evan and Chris push students to intern with startups, startup too often think of internships of as too expensive to provide -- the short-term output doesn't outweigh the salary and training expenses, they think -- and so often shrug it off, or offer positions without pay.

On this matter, we all need to step up to the plate. Universities need to do a better job attracting startup-minded talent and a better job of steering students away from Wall Street (or even big, established tech companies) and point them in the direction of the startup community. Meanwhile, those in the startup community need to make investments in this talent. While we can't compete with alternatives, we can pay decent salaries and invest the time into mentoring students.

We can do a better job, and must.

The good news is stuff is happening here. The NY Tech Meetup is now attracting dozens of student hackers each month through our Student Group, and Chris Wiggins, with a group of dedicated community members, is independently spearheading an exciting new project around internships (which I won't unveil too much of). NY Tech Meetup is also about to focus a lot of of its resources in the area of internships and recruitment.

Bidirectional flow of Intellectual Capital between local universities and the startup ecosystem - C

The second pilar of the University/Startup relationship is the bidirectional flow of intellectual capital.

I've given New York a "C" grade in this area because there are far to few people and startups working in this space. However, its the area we can most improve upon.

To make this bidirectional flow of intellectual capital work, we need more entrepreneurs and investors going on tours of university labs, diving into the great research projects already going on here, and thinking about how to commercialize the technology. I've been to both NYU and Columbia multiple times in the last year, but feel like I haven't done enough by not seeing the labs at Pace, Stevens, Poly, and other institutions. On the flip side, more tech transfer offices need to be visible in the startup community. David Lerner, who run's Columbia's office, is on the Board of the NY Tech Meetup, and is one of the most accessible people in the city. We need more people like him -- but we also need to do a better job seeking his counterparts out and bringing them into the fold.

Meanwhile, researchers should  also be paying attention to what's going on in the "real world" more often. While I appreciate and respect the separation between capitalism and academics, the truth is a lot of research is influenced by government DARPA and IARPA grants already -- so why shouldn't private companies, namely startups, be a bigger influence too? Researchers need to get out of the labs and into Meetups and VC offices to hear about the problems confronting real startups today.

A media industry interested in reporting on the innovations of the industry - A

The media lives in New York City and is paying attention. Not much to say here, except that I know of two stories coming out of two of the biggest news outlets about the startup community. Of course we'd love more attention, as an industry, but also our startups need to do more to deserve it. If you're finding something to complain about here, now you're really stretching.

Value-driven services infrastructure (lawyers, rent, etc) - A-

If one more person cites "rent" as a reason it's tough to do startups in New York City, I'm going to personally kick them out of New York. It's one of the most absurd statements anyone ever makes. It is the go-to issue of the shrill and unimaginative. First of all, rent is a relative cost. You live and work here for all the benefits listed above. The premium on NYC rent is far less than the premium you gain for your business. I have never met a single company who has not made it here because they couldn't find insanely cheap office space. In fact, every startup I know of finds exactly what they need at a price they can afford.

On the issue of other services (namely lawyers), again, this is where people are totally wrong. First of all, if you can't afford NY lawyers hire elsewhere. For BricaBox, I was able to use a law firm in Cincinnati. They have Associates and Partners admitted in the NY State Bar too! But you also don't have to go outside New York. As Chris Dixon wrote, if someone tries to make you pay more than $10k for your first round, tell them you'll go elsewhere.

High quality of life - A+

Nothing to say here. The fact that you can live a life of luxury AND have a lower carbon footprint than anywhere else in the country speaks for itself.

Strong industry community infrastructure - A+

Lastly on my list is the community infrastructure. I may be biased, here, but remember I've still spent more time in this community without my leadership role at NY Tech Meetup than with it. So aside from having the largest monthly meeting of technologists in the world (yes, that's true), we also have amazing people leading amazing groups like, nextNY, Y+30, Entrepreneurs Roundtable, Founders Club, Feedback Forum, Ultra-light Startups, Girls in Tech, New Work City, Video 2.0, TechAviv, Fashion 2.0, Gaming 2.0, Semantic Web Meetup, IxDA, and so on.

Conclusion

I said it before and I'll say it again: The State of the NY technology industry is strong. Yes, there are major things we need to work on, but at least we have focus here: I believe we should be doing everything possible around the flow of human capital through universities into the startup ecosystem, and the flow of intellectual capital between universities and the startup ecosystem.

If we could just focus on this alone, we could create tremendous value here.

Meanwhile, it will continue to be wasted breath to gripe and moan about the capital market or costs of doing business here. Those complains are from the unimaginative and are simply not true.

So, let's celebrate our successes as a community and rally around what's next to come. There's a lot we can do if we focus our energies on the right things.

It’s really difficult for me not to get into the thick of discussions about whether or not you can and/or should build a company in New York City.  I grew up here, went to school here, and have worked hard over the last 5+ years to help build up the NYC innovation community.  I’m extremely passionate about the topic and so when my city gets picked on, I tend to respond confidently and with the same (and sometimes greater) force than I perceive the complaint to have.  And sure, there’s a little bit of bull in a china shop in me—but if I didn’t have that, I wouldn’t work nearly as hard, and frankly, I wouldn’t be me.

What gets frustrating is that I tend to hear the same arguments over and over again from new entrepreneurs, and many of them are just completely unfounded.  Unfortunately, they tend to resonate really well with frustrated entrepreneurs and a lot of dust gets kicked up over them.  

Here’s my best attempt to shed some light on the most common misconceptions about building a company here in NYC:

 Misconception #1: There’s no money in NYC for startups… and the money that’s here isn’t smart or experienced money.

Response: Ask 100 entrepreneurs seeking funding whether there’s enough money here for startups, and 98 of them are going to tell you that there isn’t enough.  You know what—it’s supposed to work like that!  The simple fact of the matter is that most startups seeking angel or vc capital just don’t receive it—and that’s just anywhere.  Why?  It’s often some combination of the idea not being big enough to sustain a venture exit or the company just not being appropriate for venture financing.  Content companies, for example, should be able to amass traffic and sell advertising on a bootstrapped budget before they come close to seeking equity financing—because you can, and because that’s the market expectation and that’s what your competitors are already doing.

Other times, and look, I hate to tell anyone that their idea isn’t well thought out or well executed, but sometimes your idea/company/prototype just isn’t very good.  I was there, too.  My company was not well executed enough to achieve venture capital financing—and that wasn’t the city’s fault, it was mine.  As the CEO I take full responsibility for that, and I’m hearing a lot of entrepreneurs blame their lack of traction on everyone else but where the buck stops.  “If only VCs were smart, they’d fund me.”  Sure, it’s possible… in fact, very very possible that you have some insight that I don’t and that I’m totally wrong, but I’d rather not back someone whose first response is to blame challenges on others and stall in the face of adversity. 

In terms of who is here and what does get funded, the average entrepreneur spends way too much time doing after investors that have a shingle on their door that says angel investor or VC.  Much of the equity investment that goes on happens through people you’d never think of.  Do you have a Bose radio at home?  I know a startup that got hundreds and thousands in funding from the Bose family…and you know what, those people know how to run a pretty decent business.  They’re not “dumb Wall Street money”.  Startups need to find the most successful people in their space—the people who know those industries best, and seek financing from them.  If you have a website about food, and you can’t get any of the top restaurateurs or grocery chain entrepreneurs to write you even so much as a 10k check, then why, as a VC, should I jump in on it?  I certainly don’t know more about the food industry than they do.

New entrepreneurs need to learn how to turn over rocks better.  Just because there’s only a handful of VC bloggers in NYC doesn’t mean there aren’t 100’s… and yes, I mean 100’s of smart, experienced places to turn for investment in NYC.  If they *all* turn you down, then I strongly advocate that you either try to get revenues to prove them wrong, bootstrap user traction, spend your own cash, go with friends/family, or maybe, just maybe, take another look at your model.  Perhaps actually listening to the feedback you get from them might be helpful.  Just because Union Square Ventures, First Round Capital, and NY Angels turned you down doesn’t mean “there’s no money in NYC and investors are stupid.”  

I think the other thing people fail to understand is how important relationship building is.  People told me that it was unfair or too easy for me to raise angel capital because I was already tapped into a network of investors.  Well, that wasn’t always the case—and many of those people I knew for years and years before I started a business.  It’s the same advantage that your competitor has if they come out of your industry and they don’t.  It’s an advantage, but not an “unfair” one.  It’s also one that you can work around by actually getting to know people over time.  It might take you six months to get to know an investor well, so don’t expect a check on the first pitch.

If your first resort when you have trouble raising money is to complain about New York on a tech blog, you’re really doing yourself a disservice in the relationship building area.  It’s going to make the people who are working hard in the community—people who have the connections you need—that much less interested in helping you.

Misconception #2: There’s no tech talent in NYC/Wall St. sucks up all the good programmers.

Response: Wall St. often gets vilified in the pursuit of a good developer, but think about things from the perspective of your average hardcore developer ninja.   Someone offers you a secure job with lots of responsibility to build some piece of trading software that billions of dollars will run on and thousands of people will use.  Should they work on your “real time” web startup or write code that processes a million trades a minute? 

On top of that, why should someone work for you versus working at Foursquare, Square, Meetup, Tumblr, drop.io, or any one of the hundreds of other cool funded companies that have open developer positions?

Great technical talent rarely looks for work—work looks for them, and it doesn’t just look for them, it actively recruits them.  You need to build a relationship with someone over time before they’re convinced to go join your startup.  I think most new entrepreneurs severely underestimate the time it takes to recruit talent.  Even after we got funded, it took us three months to hire our first two developers at our prior companies—and I consider us pretty visible and well-networked.  That’s why recruiters make so much coin.  Even in the Valley, it will cost you over 20k to pay to recruit a developer.  If it was so easy there, do you think recruiters would make that much?  Over there, on top of everything else, you have to convince someone that it’s cooler to work for your startup than it is to work for Twitter or Facebook.  If anything, it should be *easier* to pull someone out of a bank in NYC than to pull someone out of Twitter or compete against them head to head on hiring.

Most new entrepreneurs don’t even know where to look for talent or how to attract it.  They show up at the NY Tech Meetup or post a job on the nextNY board and expect the developers to just come rolling through—when most of those groups are actually filled with other entrepreneurs looking for the same thing.  You need to broaden your horizons, and again, turn over way more rocks to find good developers.  There are user groups, gaming meetups, meetups in security or agile development—lots of places entrepreneurs rarely tread.  How about doing what Gilt Groupe did?  They flew in Leah Culver and the founder of Github to come speak—and that brought in 100 developers whose names, emails, and websites they all captured through Eventbrite.  So, instead of trying to find a developer who will do something for you, why don’t you attract a few by doing something for them?  I got my first developer by literally spending a whole week on LinkedIn, e-mailing, individually, hundreds of people in my extended network.  I got my second one because it was someone who I knew already for a year and had a compelling tech challenge for her that was right in the sweet spot of what she wanted to work on—and the timing was right, too.

Misconception #3: New York is prohibitively expensive to build a company or live in

Response: A lot of things are expensive here, as they are in other cities.  If you want to build your startup in the middle of nowhere and optimize purely for low burn rate, then sure, I’m sure you could work more cheaply elsewhere. 

That being said, is low burn rate really what you should be optimizing for?  How about considering the following:

> If you have to bootstrap, you’ll find way more opportunities to make money here doing side projects than anywhere else—working for bigger companies, agencies, other startups. 

> As an interesting place to live for a younger person, I’ll put NYC up against any other city—unless you don’t like having seasons in your weather, than I can’t help you.  NYC helps with recruiting because it’s a place people want to come and live in.

> You don’t have to live in the West Village.  There are plenty of places within a 40 minute commute of the city that are quite reasonable and even might I say cheap (compared to other cities, not compared to Kansas).  If you lived in SF and you worked at Facebook or Google, you’d have at least a 40 minute drive ahead of you everyday, so if you’re going to compare apples to apples, don’t limit the price of housing just to Manhattan. 

> You don’t need a car here.

> Lifestyle has value.  If someone really wants to live here because of the lifestyle, they find ways of making it work.  How in the world do all my actor friends live here if you’re saying you can’t hire a developer because you have to pay them too much? 

> Are their annoying costs, like the cost to publish an LLC notice?  Yeah, totally, and that sucks… but if you consider how much you’ll save in airline tickets when you don’t have to fly to find your clients because they’re right here in the same city, I’m pretty sure it nets out.

> Office rents?  I’m still waiting to find a company who had to go under or couldn’t launch because office rent was too high.  People are always going to be your #1 expense in a startup—not that you even really need an office before you get funding.

> Life is a tradeoff.  It’s more expensive to live here, but if you could run into people who can really help your business in the local community, what’s that worth to you? 

Misconception #4: The media never covers startups here.

Response: Startups get covered all the time here—just not necessarily when the launch or simply because they’re a startup.  There’s more media here in NYC than anywhere and it’s up to the startup to get themselves in the thick of the conversation as a relevant player innovating in a space.  No, you don’t get extra credit and a pat on the back for being a startup here, but if you get to know the people covering your industry, they’ll tell you that they’re always looking for stories about companies doing new and innovative things. 

On top of that, tech blogs like TechCrunch, Mashable, GigaOM, and Venturebeat all cover NYC tech startups.  They’re national and they all have local people on the ground here covering companies. 

In fact, it’s probably easier to get media coverage for your company here than any place else, because you can literally run into a relevant reporter at your average tech event and go for coffee because they work down the street from you.

Misconception #5: NYC is only good for media startups.

Response: Some of the most successful  and visible companies in NYC—Gilt Groupe, TheLadders, Meetup.com, and Etsy aren’t media startups dependent on the advertising industry.  On top of that, some of the biggest/most popular  tech companies out there—Google, Facebook, Twitter, YouTube… are, in fact, media companies.  Hell, there are even companies like EnergyHub, Peek, Square, and Phreesia in NYC that made devices.  They’re all doing pretty well.

Just because there are a lot of startups living off of a certain ecology in a city doesn’t mean you can’t build a different kind of company in that place.  In fact, most companies need a lot of the stuff anyway—and if you’re different, perhaps that works to your advantage.  Maybe you meet a CTO who is tired of working with ad agencies.  New York City is so damn big, that if you can’t find 10 people doing interesting stuff in your space, perhaps your market isn’t big enough or you’re too early.

Look, New York City isn’t for everyone.  I love this city, but there are things that I can understand don’t mesh well with people’s priorities and values.  However, when someone says they can’t build a company here for any of the above reasons, I get really frustrated, because the resources are here and I already see the best and most experienced entrepreneurs taking advantage of them.  I’m not trying to say it’s better than the Valley—it’s not better, it’s different.  What I am trying to say is that anyone can build a company here—anyone.  Now, maybe this current idea of yours isn’t the right one.  Maybe you have more to learn as an entrepreneur—I certainly do.  But, I’m a firm believer that the tools are in place for a well executed company to succeed here.  Let me know if you need help finding them, but keep an open mind that perhaps you also have more work to do to get your company to a point where it’s investable or attractive to work at.