Panel asks: What’s driving NYC’s tech boom?

New York City may need to up its connectivity and it may need more engineering talent. In fact, it may get partly washed away as sea levels rise. But one thing it doesn’t have to worry about is cool.
No one really argued that point at a panel earlier this month, Cracking the Code: What’s Behind The NYC Tech Boom, which featured an entrepreneur, an academic, a bureaucrat, an investor and a reporter doing the moderating.
The conversation was driven in part by a February guest post on TechCrunch from the event organizer, Bateman Group, on the tech boom. From the post:

The biggest single indicator that NYC tech is rocketing, however, is its venture capital deal flow. Venture capital has taken a huge leap in NYC, signaling a wave of new opportunities particular to the Empire State.
Venture capital investments jumped 138 percent to $1.7 billion in the New York Metro region in the third quarter compared with a year ago, according to PricewaterhouseCoopers and the National Venture Capital Association.

As Dmytro Pokhylko, a VP at economic development agency NYCEDC, said during the panel, “I feel that the interesting part of the ecosystem is that once you are done tinkering and coding, you are still in NYC.” In other words, you get to step out into a place that’s bustling with energy and creativity, much of it in sectors that have been going strong since long before the tech boom, such as the arts, cuisine, theater, media, advertising and fashion.
Plus, just being in NYC is fun, which is why Betterment CEO Jon Stein likes operating his company here, he said. It isn’t at all hard to persuade young, talented people to come work for his company, which is now at 90 employees.
“I feel like it’s just the right place to build the future of finance,” he told the crowd at Dumbo Loft. Later in the conversation, he quipped that building in fintech in NYC is especially good, because he can recruit quants from the banking sector and give people work helping people, rather than stealing from them.
During the audience Q&A, one person raised the point that New York does itself a disservice by constantly comparing itself to Silicon Valley. This is a point Technical.ly has often made across its markets. As long as companies are growing and, as a sector, technology is making more money than it’s losing, is it really a problem if another place is more widely associated with innovation?
That said, even if all New York wants to focus on is doing this work better, Stein did point to gaps. He said that because New York City doesn’t have a history of big exits, he would need to do a national search to find an executive who’s been through rapidly scaling up a company. To find someone to help do that, a CEO here is going to have to do a national search, he said.
Alan Patricof of Greycroft Partners, a $600 million VC fund, didn’t think New York City had a problem, per se. He called New York probably the most creative city in the world, and said he’d recently been part of some high-level conversations where he saw data that said the city produced more Ph.D.s than any other city in the country. He said the place has three great strenghts, content, ecommerce and advertising. That said, he’d like to see more hard-tech companies like MongoDB, rising up here.
InfluxDB did, for example, but then it left.
Patricof also likes biotech as a sector. The Brooklyn Army Terminal is a space to watch as that sector grows.
Stein and Pokhylko both agreed that government is an area where technology could bring real gains. Stein said, “If I had my way, I’d have tech attack government,” though he didn’t mean it quite so aggressively. NYCEDC was on the same page, saying that New York City government does a lot of business with technology, but it could do much more.
Technical.ly Brooklyn took part in a recent presentation by Accela (not the trains) in lower Manhattan. The provider of cloud-based government services just raised $143 million, and the conversation suggested there would be real progress in terms of technology improving services here.
At some point the real metric is: can these companies make money? Which led to the inevitable question of whether or not we’re in a bubble.
In the conversation that followed, Stein offered cautious optimism about the tech sector’s prognosis, saying, “Companies that are highly valued today have business models behind them, rather than just clicks, like in the original dot-com era.”