Just as it’s dawned on cities that there will never be another Silicon Valley (no matter how many Silicon Beach, Silicon Prairie, Silicon Shore etc. labels regions slap on themselves), a new aspirational model has emerged.
New York City is the best role model for other urban tech hubs, according to a new report from Endeavor Global, the entrepreneurship nonprofit. What’s more, according to the report, unlike Silicon Valley, the success of the Big Apple can be replicated by other cities, many of which already contain the necessary ingredients.
We encourage you to read the report (the graphics are great!), but here’s a quick summary if you don’t have time:
How NYC is killing it
New York is the largest truly urban center for tech companies and the second-largest tech hub in the world. Between 2003 and 2013, the NYC tech sector grew twice as fast as Silicon Valley’s in terms of dollars invested with most of that growth coming in the last decade.
Between 2010 and 2013, the number of NYC tech employees grew by more than 26 percent annually. At that rate, assuming techies earn $100,000 annually, the city could add nearly $160 million annually in new income tax receipts by 2019 and more than $500 million by 2024.
“The Virtuous Cycle” – or why NYC is killing it
Never mind New Yorkers’ reputation as cold and selfish. Not true, at least not in the tech scene. According to the report, New York’s rapid rise as a tech hub is due largely to the generosity, helpfulness and relentless networking of its entrepreneurs.
The report tracks three successful tech companies – DoubleClick, Buddy Media and AppNexus – to show how they have accelerated growth of the tech hub. The founders of those three firms influenced 75 other NYC tech companies; those 75 influenced 177 other companies, which then helped 227 others, the “virtuous cycle” karma rippling out across the city’s tech community.
That “influence,” in the form of investment, networking and mentoring, is invaluable. The report found that companies that have been influenced by top performers become top performers themselves more than twice as often as those that do not have a connection to a top performer.
In fact, those connections to successful companies are more important than affiliation with entrepreneurship institutions like universities, incubators and investment firms. “Highly connected companies do better and, in turn, successful companies give rise to more connections,” the Endeavor report states.
What other cities should do
I know what you’re thinking, Jacksonville and Indianapolis, Albuquerque and Charlotte: That’s fine for New York City, but those conditions could never be replicated in your non-Big Apple towns. Not so, according to Endeavor, which recommends cities do these four things to create their own versions of NYC’s success:
1. Make a big deal out of entrepreneurship – Promoting entrepreneurial success, through public recognition, advertising, events etc. encourages startups and attracts more entrepreneurs.
2. Mentor – Structured, high-quality mentoring, ideally from successful entrepreneurs, is invaluable and doesn’t have to cost an equity stake.
3. Invest – Startups need money to survive and they go where the money is. Encourage angel investors to back the most promising companies.
4. Encourage serial entrepreneurs and spinouts – Establish networks that make it easy for serial entrepreneurs to engage with each and for startup employees to break off and start their own companies.
Other interesting facts
• NYC entrepreneurs aren’t kids; the average age of a founder between 2003 and 2013 was 31, someone with considerable industry experience.
• Most of NYC’s talent comes from outside the city. Of the tech founders, 82 percent graduated from high school outside the city while nearly 90 percent went to college elsewhere. (The most popular undergrad school for tech founders? The University of Pennsylvania.)
• Nearly 65 percent of NYC tech founders studied non-STEM fields. Among the 42 percent of founders who attended grad school, nearly two-thirds earned non-technical degrees like MBAs and JDs.