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Appleseeds And NYC Startup Culture




A conversation about New York City’s startup culture, or lack thereof, has repeatedly bubbled up on the nextNY listserv over the past few months. Specifically, the focus returns again and again to the difficulties in attracting NYC tech/developer talent willing to work long hours on pipedream visions for non-existent-to-laughable wages, plus equity.

The challenge peculiar to the five boroughs is the same challenge faced in any profitable organization, be it a single corporation or a complex socio-economic organism, aka the New York Metro Area GDP. That challenge is how to siphon resources from the cash cow, in this case Wall Street, and use them to create Question Marks (aka startups) that will become the thought and business leaders of the future.

Here’s my reply, verbatim from the discussion, and taking my own advice, a concrete proposal that I believe would positively impact the “culture” for web2.0 entrepreneurs in New York City:

Starting and growing successful businesses is hard, full stop.

If we were having this conversation in the Valley, chances are some of us (okay, me) would be “wondering aloud” whether GOOG would’ve bought our company if one of our founding partner’s wives was the daughter of one of the region’s premier VCs…  Any entrenched social hierarchy carries its own baggage, whether it’s aligned with entrepreneurship or not.

If you’re a web2.0 entrepreneur with “a big idea”, and furthermore a first-time/unproven entrepreneur with limited access to capital, and you can’t put together a demo/alpha/beta with a team (and the pooled capital) of 2-4 committed individuals who sign up based on nothing more than worthless equity and buy-in on your vision, then may I suggest this post and a re-examination of your plans.

If you’re an operational startup starved for developers and committed to growing your business in NYC, you need to look elsewhere for near term talent. For empirical evidence see Fred Wilson’s review of the USV portfolio. Also, “think outside the box” to bring people in over the long term.  Princeton, Brown, Harvard, Penn, MIT! — and I’m sure a few others I’m forgetting — all have top-tier CS programs and are within a day’s drive… they all have career services offices and they all have student bodies who are >50% on facebook… plugin, logon and blow some rising senior’s mind (too late to get the recent crop of grads) with your roadmap to web2.0 world domination.

As long as 280K of our friends on Wall Street continue to average >$5,000 per week while sitting atop $90B in gold, startups will never be the principal route to wealth for the NYC community, and resources will continue to be dear. How about a conversation that accepts that as the operating reality and looks to brainstorming on opportunities or sharing notes on what works. Focusing on “the culture” is putting the cart before the horse…

Business incubators came out of bubblicious web1.0 somewhat tarnished. But, as smart people have already observed, the economics for the first three years of a viable startup have changed, with the most dramatic change in the first year of operation, and in that first year, the cost of a startup’s first three months has fallen into the range of effectively anyone (or at least the pooled resources of 2-4 anyones). The cost of building most web applications is now on par with the capital any committed hobbyist, say an audiophile or an integrated circuit enthusiast ca. 1980, devotes to their moonlight-and-weekends obsession. And it is in these earliest periods of affordable access to new tools (think Jobs and Wozniak) that world-changing (and stupendous wealth-generating) ideas can take flight.

Web1.0 incubators lacked this low-cost environment for development, and further lacked any foundation of successful business models to key off of, and so their portfolio “diversity” was more a reflection of the sector’s massive overcapitalization than a systematic approach for generating wealth.

But web2.0 gives us scalable and non-stigmatized (eg. non-pornographic) ways to make money online, and an abundance of free-to-cheap platform technologies to build on. In response, business incubators are springing up which employ true portfolio theory — microcapital investments spread across a diverse array of web applications — as well as ancillary support in the form of “startup bootcamps,” which seek to transfer knowledge and values correlating highly with startup success to selected entrepreneurs. The bootcamps are roughly modeled on the two “knowledge economies” which have had the greatest impact on tech startups in the US, the universities of Stanford and MIT and their tech-tranfer/startup ecologies. Big surprise then, that these are also (roughly) where the premier example, Y Combinator, hosts its two bootcamps each year (I believe the east coast session uses resources from both Harvard and MIT). Now TechStars, with backing from successful web entrepreneur Jared Polis and VC digeratus Brad Feld, has copied the formula and transplanted it to Boulder, CO. Their About page lays out a simple mission: “TechStars was founded by a collective of Colorado-based entrepreneurs as a way of promoting entrepreneurial activity in their home state.”

large_seeds.jpgAll of this is to say “Why not here? Why not now?” We, the membership of nextNY, have access to resources at NYU, Columbia, Fordham and Cooper Union, as well as the NYC offices of numerous tech and net colossi. Further, we have contacts, if not members, involved in the New York Angels organization and the city’s prominent A-round VC firms: Union Square Ventures and First Round Capital. It’s likely too late for summer 2007, but how about assembling a leadership team for AppleSeeds 2008? I’ll wager the amount of money involved (My guess? $225K investment capital using the TechStars model, plus the ~$100K or so for accommodations and StartupCamp overhead) would not prove to be the chief obstacle in making this happen. If this was to demonstrate traction, there are more than enough funds and/or individuals for whom a 1/10th or 1/12th share in a venture of this sort would be a rounding error. Companies and financiers contribute to Chambers of Commerce and other business-oriented civic institutions every year, the AppleSeeds StartupCamp could be yet another recursive investment for the NYC business community, and go miles towards building and evangelizing a “startup culture” born and bred in the Big Apple.

So, call to action, who likes the idea? Who wants to talk about it some more? Who has alternative proposals? Sign up for nextNY’s Feb 28 Community Conversation and let’s help make this happen!



PS - If you’re not a part of the above-mentioned nextNY discussion group, then you need to be. You’re missing out on the smartest conversations being had right now about entrepreneurship and best-in-class tactics and strategies for making a startup happen in NYC.

Jonah Keegan is an entrepreneur with a business, a blog and a few other things.


Posted on Sunday, January 28, 2007 at 05:27PM by Registered CommenterJonah Keegan | Comments4 Comments

Reader Comments (4)

Nice post Jonah -- very well thought out. This AppleSeeds concept is definitely worth exploring further.
January 28, 2007 | Unregistered CommenterNate Westheimer
Thanks for the thoughtful post. I hope we'll see more "Question Marks" turn into "Stars" in NYC.
January 28, 2007 | Unregistered CommenterDavid Chen
my only thought is that the salary comparison noted is a little skewed. startup's here - or anywhere for that matter - aren't competing for those same people making the Wall Street money. Heck, the biggest problem with comparing to the Wall Street numbers is that there is a massive difference between the averages and medians when you dive deeper into the numbers. Goldman was a perfect example with their 20/20 club - 20 people who made over $20mm with a couple of commodities focused people who made between $80mm and $100mm.

I guess what I'm trying to say is that the NYC tech community shouldn't look at itself as the red headed stepchild.
January 30, 2007 | Unregistered Commenterrob
Great post, Jonah. IMHO,focusing on culture is the key to establishing New York as a start-up hub. I agree that we're in need of talented developers who want to help start-ups scale to critical mass, but without the right culture no one will generate the ideas to require those developers. I wrote a longer post about this here:

February 1, 2007 | Unregistered CommenterChris McAleenan

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