Why Did The New York Tech Scene Grow?

When one contemplates the meteoric heights achieved by the New York tech scene, it’s easy to forget the humble beginnings it started from. In just a relatively short six years, New York has exploded into a tech powerhouse that is now beginning to rival Silicon Valley.  I say six years because, by my estimation, the turning point for NYC was the year 2007, when three particular historical forces came together to create a perfect storm of tech expansion.  Those three factors are:

  1. Google’s growing presence in New York
  2. The smartphone revolution driven by the iPhone
  3. The Global Financial Crisis

My perspective is an inherently personal one, as my growth in the tech industry feels parallel to the city’s growth.  In January of 2007, I began my New York life in earnest – I had just moved to the Italian section of Williamsburg from Cape Cod, with barely enough savings to pay for the fees and first and last month’s rent for my apartment.  I had roughly two months of expenses left, and I had no job prospects.

I feverishly began my job search, as I had arrived in the city with no plan to speak of; I just knew that I had to be here, to experience life in the beating heart of the world.  I figured I’d find a position when I got here, that the job hunt would be a piece of cake, considering how easily I’d found jobs just by working my contacts at tech companies in the very tech-friendly state of Massachusetts.  I had no idea how tough it would be to land even an entry level job in the big city!

It seems almost unbelievable to write that today, considering the insane job crunch in tech everywhere (especially here).  But at that time the only people hiring in New York were the big banks.  They wanted quants, and they only wanted to hire the best of the best, people who already had significant experience in the financial industry and with high volume, rapid transaction processing systems.  Every interview with a bank or hedge fund or startup that served the needs of the big banks went nowhere.  When I did manage to get interviews at some of the more prominent NYC-based Internet companies of those early days (Meetup.com and BarnesAndNoble.com, to name just a couple) it turned out that they also had very specific hiring requirements, and weren’t interested in having to train up someone on the tools and technologies they were using.

I eventually found myself a gig working as an hourly billable consultant for a large firm, and still couldn’t do anything to convince the client company I was working for to hire me permanently.  Ultimately this forced me to become an entrepreneur and start my consulting business, which worked out well for a couple of years and was the lead up to my startup adventures.

But back to the forces of history!  In the Spring of 2007, Google acquired DoubleClick for $3.1 billion, a move that injected a ton of capital into New York and geared things up for investors.  Google continued hiring and growing its office in Chelsea, and those new Googlers ended up moving into places not too far from the L train.  A number of Google’s established employees relocated from the West coast and took up residence in Williamsburg.

The best thing about Google is that it spawns entrepreneurs who fly out of the nest to do their own thing – NYU ITP poster child Dennis Crowley left Google in April 2007, right around the same time as the DoubleClick acquisition, though he wouldn’t start Foursquare until a bit later.  And although they were not directly related to Google (but possibly they achieved greater success as a result of a “halo effect” of Google’s growth), the seeds of other successful companies were sown that same year.  David Karp created Tumblr early in 2007, and by the Summertime Etsy would start to see a sharp climb in revenues that would continue through the year; both of these companies of course are now enjoying tremendous successes of their own today.

Speaking of Summer, do you remember waiting in line at the Apple store in 2007 for your first iPhone?  I waited for the lines to die down before getting mine, but I was so excited by this gamechanging tech that I ended up going to my first WWDC the very next year to learn more about building my own iOS apps. The App Store Gold Rush was on, because I certainly wasn’t the only contracting developer out there who saw the possibilities.  But the real revolution of the iPhone wasn’t that the device itself was a gamechanger – it was the new method of seamless software distribution and the almost nonexistent barrier to entry for new iOS developers.  Any enterprising developer with a bit of gumption could start a business around an app, and even get funding to do so.

Which brings us back to those financial institutions with their finicky hiring practices.  The final piece of the New York tech puzzle fell into place in the late Summer of 2007, when Lehman Brothers announced the layoff of 1,200 employees.  That lit the fuse of the Global Financial Crisis, and the chain reaction of layoffs from every major financial institution in New York that continued week after week turned many thousands of fat and happy quants into hungry entrepreneurs.  More than a few of these financial industry refugees had nest eggs that they used to start new businesses, and all these amazing new tech opportunities were right there waiting for them.

Most people probably remember the rest of history from that point forward – Year Zero of New York’s Tech Era, a mere 80 months past.  I know how hard it is to recall what things were like before then; I certainly couldn’t function without my mobile devices and all their apps today, and it really does feel like ages and ages ago.  It’s definitely a lot easier and much more exciting to look forward to the blindingly bright future of the NYC tech scene, with up and coming stars like Kickstarter moving to Greenpoint, the massive investment in Shapeways and their facility in Queens, and the rumored opening of a larger Amazon office on the Williamsburg waterfront.  Go New York!!