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Episode #14

Debate: Is New York City in a Tech Bubble?

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Tuesday, December 18, 2012

Jobseekers line up to speak with recruiters from Spotify at the third annual NYC Startup Job Fair. (Stan Alcorn)

New York City is now the number two hub for tech companies in the nation after Silicon Valley. Twitter, LinkedIn, Facebook and eBay have all opened offices here, and the Bloomberg administration is partnering with Cornell University to build a new computer science grad school on Roosevelt Island. 

The startup scene is thriving, too. According to SeedTable, more than 40 New York startups have been acquired so far in 2012. 

This week on WNYC's New Tech City, Manoush Zomorodi hosts a debate on whether the Silicon Alley tech boom is sustainable or whether New York could see a repeat performance of the dot-com bust of the late nineties.

On one side of the table is Greg David, former editor of Crain’s New York Business and now director of the business and economics program at the CUNY Graduate School of Journalism. 

In a recent blog post for Crain's called “Time to Start Worrying about a Tech Bubble,” he cites a drop in venture capital investments in New York companies in the second and third quarters as one cause for concern. 

"The tech story in New York has been bullish for a couple of years now. It’s time to start looking at the sector with much more skepticism," he writes.

On the other side of this debate is Laurel Touby, founder of mediabistro, which she founded in 1996 and sold for $23 million 11 years later. She invests in and advises small Internet companies.

Guests:

Greg David and Laurel Touby

Hosted by:

Manoush Zomorodi

Produced by:

Daniel P. Tucker

Editors:

Charlie Herman

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Comments [11]

KA

Both made good points... but both seemed condescending toward the other.

Dec. 18 2012 05:42 PM
Andre

The premise of the article as to whether there is a bubble... Well I tend to agree with Laurel that there of course will be a shaking. That is the natural process. Not every Silicon Valley company has billion dollar IPO's either... and many fail. So I'm not sure what ax Greg David was trying to grind.

Janet Stites - you make very good points. As far as Zuckerberg... if Facebook was launching today... there is no guarantee he wouldn't have launched it in Boston or New York. Things change quickly.

Also to go back further than Hewlett Packard.... Fairchild Semiconductor didn't start with "out of pocket" money. It actually came from east coast industry.

For a further thought - it's really impossible to compare Silicon Valley to New York or Boston or anywhere else. SV was specifically started for the purpose of entrepreneurship... it was agricultural land prior to that. It's only fairly recently that San Fran proper is being melded into that entreprenurial set. Tech will never be as big a share of the economy of NY for that reason... but that doesn't mean it can't/wont be big.

Dec. 18 2012 03:01 PM
Janet Stites from New York City

I am the cofounder of AlleyCat News, which was the first magazine to cover the intersection b/t tech and venture capital in NYC--from 1996-2001. I also wrote a column for the NYTimes on the New York tech industry. I know Greg and remember when Crain’s first started covering the sector (a bit late to the game, fortunately for my business) and remember when Laurel launched her impressive company.

One problem NY has in terms of seed/angel financing and venture capital investing is that many of the people with the money to invest or managing the VC funds have never raised money themselves for an "IP" based business (kudos to those who are). They have never pushed the rock up the hill, invested their own money in a business, forgone a salary for an extended amount of time, balanced developing a core product while trying to sell it, sweated payroll, and dealt with the challenging HR and operational issues of a growing company (no matter the business or sector). Early stage funding in Silicon Valley grew out of the pockets of successful entrepreneurs--a la Hewlett and Packard. NY has very few people in the same position.

Those people who do have serious money in NY are often loathe to part with it. Bloomberg, our mayor now, was a successful entrepreneur then, already a billionaire and clearly understood finance and technology. But I don’t remember us writing an article about him making an angel investment for launching a venture fund.

Silicon Valley has major universities focused on science and technology, pouring out graduates who understand the concept and history of genetic algorithms, machine learning, and artificial intelligence. I think until we hear more about Columbia’s engineering students than its business school, or NYU’s physics department gets as much attention as its film school, it’s going to be an uphill battle. Even with Cornell’s new campus.

In Silicon Valley, the entire business eco-system has an interest in making sure the tech community flourishes. In New York, commercial landlords are thrilled to take your money while you’re doing well, but in a hurry to kick you out for the next yoga studio when you are not. Ditto the professional services firms, accountants, lawyers, PR firms.

To all the points above, Mark Zuckerberg grew up in Westchester County, launched Facebook while at Harvard, but he did not choose to locate his company in New York.

Listening to some of the stories on WNYC and following the sector via Crain’s and NYTimes, I think that many entrepreneurs sound very naïve as they have come-of-age in an era when launching a company and being an entrepreneur is painted as “glamorous.” It seems like they are operating in a DisneyWorld-type environment and don't want to make any sacrifices. Sure Kevin Ryan is enjoying a new kind of limelight now with Gilt Group, but why don't you ask him about the early days, when he launched the "Internet Advertising Network."

Dec. 18 2012 10:52 AM
fred chong rutherford

I found the segment a bit alarmist, and also unbalanced. I think there needed to be an investor who is less bullish on the New York tech scene, either as a 3rd guest or a replacement for Greg David. I found him shrill, and also a little uninformed. I think that helped drive Laurel Touby in the direction she went.

Overall, not a good segment, but should be revisited with something more than a reporter with some goofy opinions.

Dec. 18 2012 10:27 AM
glork

Very taken aback with the decision to air such a poorly executed segment. Both guests became very shrill very quickly and it sounded like a workplace dispute, which obscured the essence of the report.

Dec. 18 2012 08:47 AM
Aldo from New Jersey

Where you stand depends on where you sit, as they say. David and Touby have positions that are governed by their self-interests. One comes from academia, and criticizes the bubble while fearing the potential to distract investment from a new education industry; the other comes from a new-tech-inspired media company whose survival depends on a growing stable of new ventures. These are hardly independent observers

Dec. 18 2012 08:46 AM
Mike

In general, I agree with Jeneba's comment. Too much forced "point, counterpoint" theatrics. As for the content, Greg David is wrong in his assessment of a local bubble. This is entrepreneurship and venture capital. While there is some level of speculative optimism (otherwise, you wouldn't have entrepreneurs), most go in wide eyed with concern to the risks.

A bubble, such as the recent real estate and credit bubbles, usually concerns a broad swath of society mindlessly buying assets based on unrealistic fundamentals. The case with technology in NYC is one of attempting to merge NYC strengths, such as finance, media, and advertising, onto technology platforms and digital business models. This is the process of creative destruction often ascribed to dynamic economies. The eventual demise of these companies is just part of the natural learning process. But this is not a mindless approach. There is a difference.

Dec. 18 2012 08:31 AM

Greg David was so rude and condescending to Laurel Touby that I couldn't listen to him. I hope you don't invite him back until he learns to be civil to people who disagree with him. Also, someone should teach him how to pronounce Silicon. Wishing Laurel all the best.

Dec. 18 2012 08:09 AM
deborah from croton-on-hudson

The two commentators were saying the same exact thing, only the optimistic one was optimistic about it and the pessimistic one was pessimistic about it. This was an unusually (for NPR) frustrating conversation in which neither side listened to the other and the host did not shed navigating light on the situation. Please don't use Fox News as your model.

Dec. 18 2012 08:02 AM

Greg David is a rear view mirror man, Laurel is more of a visionary/doer. to counter Laurel's rosy position, a negative view investor would have been the right counter-guest.

Dec. 18 2012 08:01 AM
Jeneba from Brooklyn

I really love the content of the broadcast but I find the SOUND of it to be really irritating and grating. If I wanted to listen to brash talkradio, I wouldn't be a WNYC member. This is NOT what I want to hear when I wake up in the morning.

Dec. 18 2012 06:01 AM

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