Commentary

East Coast Vs. West Coast: Where's The Momentum Now?

by Dave Morgan , Featured Contributor, September 3, 2009

The East versus West Coast debate revisited; I love it. Earlier this week, New York City venture capitalist Fred Wilson wrote a blog post defending the past and future of New York City as a home for technology-based start-up companies. He was responding to another blogger's post proclaiming that New York might see "revival" as a home for start-up companies, but also claiming the city had been "irrelevant" in the 2002-2008 Internet boom. Fred took issue with that judgment -- and so do I.

First, the disclosures: I have founded and run several technology start-ups in New York, the second of which, TACODA, was started in 2001 and was sold in 2007, so I take the "irrelevant" tag a bit personally when it comes to NYC companies with a vintage between 2002 and '08. Further, Fred Wilson and his firm Union Square Ventures were investors in TACODA, and are also investors in my current company Simulmedia, so I have some biases in taking sides with Fred as well. However, I am not going to use this column to compare West Coast (Silicon Valley) versus East Coast (New York City, Boston, et al). There is no question that the Valley has done a much better job of attracting, incubating and producing more and bigger technology start-ups over the past 25 years than New York, and the gap between the two is very significant. On the other hand, I believe that the gap between New York and Silicon Valley is beginning to close, and that we have the momentum. Here is what I wrote in the Comments on Fred's blog, AVC:

Not only does NYC have a strong start-up scene, but it's getting better all of the time.

When I started Real Media in 1995, NYC lacked a lot of the basic infrastructure, services and institutional culture that Silicon Valley had in spades -- we didn't have real estate folks that knew how to deal with start-ups. Our law firms and accounting firms didn't understand the unique needs of start-ups. There weren't pools of tech-savvy talent ready to take start-up risks. When I started TACODA in 2001, it had gotten much better, but it was still far from where the Valley was in terms of start-up "friendliness." Having revisited these issues once again when I started Simulmedia late last year, I can say that a lot has changed; a lot has improved.

NYC real estate brokers and landlords now understand us and offer leases with the kinds of flexibility start-ups need. Many professional service firms in NYC are now very start-up-savvy and -friendly. We now have lots of talent eager to join start-ups, and more is coming into the city every day. And, just as important, the city government and the local and business media now focus on start-ups and start-up investors and now celebrate the successes of the start-up community and recognize that NYC is not just about Wall Street. Silicon Valley has provided a great environment for start-ups for many, many years, [but] I suspect that it hasn't improved that much over the years, certainly not to the extent that New York City has.

New York is improving more and more as a home for technology-driven start-ups. Whether it will rival the Valley in that area, I don't know. But, as technology-businesses become more and more about how you apply technology in innovative ways to solve business or consumer problems, rather than what pure technology you can invent, I believe that New York city will become an even better home for technology start-ups. So much global business is conducted here. Of course, like so many New Yorkers, I am parochial and biased about my adopted home. What do you think?

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4 comments about "East Coast Vs. West Coast: Where's The Momentum Now?".

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Norm Page from Grapeshot, September 3, 2009 at 7:14 p.m.
This is great Dave - hit the nail on the head. It's not a direct competitive comparison, but rather a study in how things are changing. And you couldn't be more accurate. There are more interesting things happening in NYC today than ever before. Particularly in the start-up space (which I very loosely define as technology-based, versus, to coin a oft-used and abused phrase, the ubiquitous "dot com" - which to me implies media-based company with advertising-based revenues and little more than audience composition as its value proposition. I write that completely objectively).
But if that break out rubs you the wrong way I'll be more specific: there are more interesting technology start-ups in NYC today than ever before. And really great ideas too!
One thing to add to the list of ingredients that define West Coast (BTW, I assume San Francisco is being lumped into Silicon Valley?) start-ups versus East Coast start-ups is culture. I want to say this as delicately as possible: SF/SV culture feels like one based on the value of ideas whereas corporate culture in NYC feels like one based on the value of stature (i.e. "I'm bigger/more important/have a better title/yell louder than you so you listen to me"). Or something to that degree.
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Rick Falls from RGIM Intl, September 3, 2009 at 10:28 p.m.

Interesting question Dave.

You trying to start trouble or what?

The usefulness of the recent tech innovations are more likely to be put to wider use more creatively in NYC.

As far as innovations go, I believe that America in general has an edge and favorable tax policy and business/job creation friendly government (if there is such a thing) will provide the most significant advantage for the ultimate leader.

New Yorkers may tend to take action while West Coasters are surfing and getting tans.

I don't think NY cares who made what possible they're just willing to try a lot more things that might work.

Both spots could use some fiscally responsible incentives that lean towards liberating funding capital and growing the newest technological advantages.

It truly is a great time to be a big kid !

John Jainschigg from World2Worlds, Inc., September 4, 2009 at 8:57 a.m.

Two notes:

1) Agreed: Calling NYC and the East Coast 'irrelevant' to the internet revolution is lamebrained. Most of the actual VC was based here (though Sand Hill Road guys in sunglasses got excessive attention). Most of the IPOs were underwritten in NYC. Most of the telecom companies that actually carried the bits were either headquartered in or near NYC or had an East Coast operational bias. Pipeline, the first 'real' ISP, was founded in NYC. The SIP protocol, which now accounts for something like 98% of global IP phone traffic, was invented by Henning Schulzrinne at Columbia University. The model for standard internet 'presence' was worked out on Long Island. Most of the paradigm of contemporary internet mobility came out of MIT (the Media Lab and other places), and essentially the whole present model for internet streamed media, online gaming and etc. was worked out by East Coast-based companies, institutions and thinkers. A great deal of US-originated non-YouGen content is still being produced out of traditional journalistic engines based in NYC and on the East Coast; much of the aesthetic of the 'advertising web' was developed in FlashHausen based in NYC and environs. Doubleclick was founded here, and much of the wherewithal whereby most of the web is now monetized (for better or worse) came out of this neck of the woods. Not to diss the Valley, which was certainly the source and epicenter of the revolution in its purest form, and remains the Athens of computer science; nor the Redmond Metropolitan Axis. But it's not like us New Yorkers have been sleeping for the past 15 years.

2) While I share your geographical bias in sentiment, I'm not sure the actual geography is relevant any more, except as a way of mapping fantasy elements -- e.g., "the East Coast is where the money comes from, and the media and culture, and the traditional markers of merchant status; and the West Coast is where the uber-geeks go and assume titles like 'Marketing Warlord' to mock old institutional pretensions." In actual fact, since about 1996, me and most of my friends and business associates have lived in the world of the web and instant messaging, and more latterly in the world of social network and virtual world and massively-multiplayer online gaming scenarios, and the only time anyone actually thinks about real-world geography is when writing contracts, or a couple times a year when we meet at trade events and someone asks: So where'd you fly in from?

You want to know how weird this can get: Last night, I held an office-hours session on teaming and simulation in Second Life as part of a project we're doing at ZiffDavisEnterprise under IBM sponsorship; and I decided to demonstrate my point (which was that virtual worlds provide huge benefits for teaching, learning, and socializing complex ideas and activities using accurate simulations of the physical world) by teaching 30 people to race simulated one-design sailboats in less than an hour. So there we were at 2 PM Pacific/5 PM ET/10 PM BST/11 PM GMT, racing around my island under spinnakers and calling 'room at the mark,' and the winners on corrected time were a couple of software engineers from Copenhagen, followed closely by a London-based journalist.

In fine, I think the 'idea of the neighborhood' is still powerful (maybe never moreso). But the attachment of neighborhood to physical geography is eroding.

Kevin Dwinnell from Brand Thunder, September 4, 2009 at 5:29 p.m.

Here in Columbus OH, we're doing our best to make a case for No Coast.
The State supports us here: http://www.techcolumbus.org/
The Community if vibrant here: http://techlife.pbworks.com/