Sunday, April 14, 2013

High Tech Start Ups and New York City

Now I have done almost a dozen start ups and half a dozen turn arounds. In addition I was born in New York City and worked there as well. The new Cornell center as described in the NY Times is:

Though Cornell and the Technion are taking it further, the relationship between most engineering and computer science schools and the business world is already so fluid as to startle someone with a liberal arts background. Professors routinely take breaks from academia to go into business. Former students and professors create companies based on work done within university walls and reach back into them to collaborate and recruit talent. Universities often own pieces of new ventures. 

This kind of cross-pollination helped create thriving tech sectors in the areas surrounding the Technion, Stanford, the University of Texas and the Massachusetts Institute of Technology — something Mayor Bloomberg wants for New York. And it is of growing importance to universities, not just for their ability to draw top faculty and students, but also for their finances. “Technology transfer,” the private-sector use of university-born innovations, has become a multibillion-dollar source of revenue for schools. 

When Mayor Bloomberg asked business leaders about the city’s economic prospects, the complaint he said he heard most often was a shortage of top-notch talent in computer science and engineering. The hope was that a new graduate school could turn the tech sector into another pillar of the city’s economy, like finance, medicine and media. In 2010, the mayor announced a contest, offering city-owned land on Roosevelt Island worth hundreds of millions of dollars, and up to $100 million worth of capital improvements. 

Now New York is NOT Cambridge, it is not Silicon Valley and it is cer6tainly not Tel Aviv. It is New York. It costs a fortune to live there, the taxes now beat even California, getting around is impossible, and the ability to get start up spots is just zero! 

Also start up folks are born, not made, and they are often with one leader and a few good followers. I have always seen teams but I have always seen the leader. I was with my first start up in 1969, funded by EG&G venture arm and it went belly up. I was just a technical consultant but I learned more from that failure than almost anywhere else. There were lots of reasons, but the primary one was not paying attention to details.

I also found on my third return to MIT, or it may have been my fourth, that my doctoral students by the mid 2000s thought that to do a start up you needed a Harvard MBA and/or lawyer to head it up, that engineers could not do so. My reply, "What do I look like, chopped liver!" I still do not know how that would be translated to Mandarin.

What is needed is a critical mass of the right technical people in an economically livable environment with access to good ideas and capital, as well as a technical support network. And New York City is in my opinion the last place in the world to find that!

One need just look at the MIT area. There is a wealth of talent, plenty of low cost facilities, plenty of capital, and plenty of places where one can live on a low budget.  To some degree that is also the case in certain areas of Silicon Valley, at least for those renting. Yet New York City would at best require a substantial commute, and that back and forth eats up a great deal of the creative spirit. Brooklyn is becoming more costly and the Bronx is still a long commute on almost any train, and the office space is costly, and that does not include the union problems. One must remember that one cannot attach a nail to a wall, almost everywhere, without union labor at extreme costs.

Go across the river to New Jersey and the world does change on several fronts. Lower cost real estate and living conditions and easier travel. Yet the symbiotic melding of like minds is not there. In New Jersey there are no MITs or Stanfords. So where in New York will this work, Roosevelt Island, in my opinion that is more than highly unlikely.

New York is great for finance and entertainment, for deals and dealers. It would hardly in my opinion be great for high tech start ups. On the other hand there are tremendous opportunities there which can be monetized elsewhere. It is a gold mine of such opportunities, but actually doing a raw start up is more than problematic.