Brad Hargreaves | Building Things

Brad Hargreaves on entrepreneurship, community and life

NY Tech Lives and Dies by the Social Graph

with 7 comments

There have been a lot of words flying around recently about why the NY startup scene is starting to get real traction and attention. Today, Stowe Boyd at True/Slant launched Hotbed, a new blog covering the NY tech scene. In his inaugural post, he claims that smart early-stage investors were the missing ingredient in the NYC startup world until this point. I’m sure David Rose is thrilled about that.

Later today, Matt Mireles, who has been making a bit of a name for himself recently, fired back with a claim that entrepreneurs are at the core of NYC’s tech renaissance and investors are just along for the ride.

The emergence of industries in particular cities is a complex problem that has been studied at length by economists and policy experts, of which I am neither. But it still seems like a massive oversimplification to claim that a certain group of people showed up one day and decided to make things happen. If that were the case, it absolutely begs the question of why it didn’t happen sooner. It’s all related — money follows companies and companies follow money, and I don’t believe that one really gets too far out of balance with the other on a local scale.

But that doesn’t mean the volume of investors (or entrepreneurs) doesn’t matter. In fact, a large startup network is particularly important for New York, a city with notoriously siloed industries. In the past, media guys didn’t talk to finance guys, tech wonks didn’t talk to policy wonks, creatives didn’t talk to quants, et cetera. If you showed up at a startup event, finding someone you knew was tough — and it was even tougher to find someone who had a broad base of connections and could introduce you to someone helpful.

This is distinct from the Bay Area, where the volume and density of people interested in startups created a very tight social network. If you were a, say, entrepreneur in New York from Conde Nast working on a startup in the fashion industry, it was tricky to meet the right people in the tech world. There were few “connectors”, since there were simply fewer people to connect — entrepreneurs, investors, executives, engineers, service providers and such. The connectors that did exist — for example, guys in NY Angels — were fairly inaccessible, as angel investors are wont to be.

Thus, the emergence of “smart early-stage investors” is important. But it’s important because they are bringing social capital to the table, not financial capital. First Round Capital could do zero deals in New York over the next 12 months and they would still have a major impact on the NY startup scene because they’re paying Charlie O’Donnell to hang out in the Ace Hotel Lobby and chat with any entrepreneur who walks up to him. Charlie and the rest of the emerging investor class in NYC are guys who can and will connect the finance guys to the media guys, the tech wonks to the policy wonks and the creatives to the quants. And that’s huge.

And let’s not forget the entrepreneurs. As I wrote a week or so ago, the Celebutante Entrepreneur is a dying breed in New York City. And that’s a great thing for entrepreneurs, as celebrities are (almost by definition) inaccessible. I couldn’t go to Julia Allison for advice about getting my startup incorporated, nor would I want to. But guys like Chris Dixon, O’Donnell and Mireles are easier to track down.

The startup social network density has reached a tipping point in New York City. And that’s all that matters.

Written by Brad Hargreaves

March 2nd, 2010 at 3:27 pm

  • Pingback: Identification of the Phr-dependent heat shock regulon in the … | Biochemistry Material Geek()

  • http://problematicsets.com Robert Tsai

    Hey Brad,

    Great catching up with you at Y+30 Future Of Food the other week.

    I like your concept about social capital. Connecting people with shared interests who benefit from working together is hugely valuable, and it takes a special skill to do it well. It definitely reminds me of Malcolm Gladwell’s Tipping Point (your fund is aptly named!), where he describes the story of Paul Revere, the uber connector, who was able to ride from town to town and draw attention to the biggest issue of the time – “that the British are coming.” If only Facebook existed back in 1775, it would be cool to see the social graph that connected him to all the various leaders.

    And yes – Charlie is a pretty cool dude – and perhaps he should add the title “social capitalist” to his many other hats. While I don’t know him from his Ace Hotel office hours, I am happy to know him through the group he organized who are learning to code Python in their spare time. And when you think of it, learning is key to personal and professional growth, and New York needs more supportive networks like that to foster collaboration and innovation.

    Rob

  • Brad Hargreaves

    @Robert Tsai Great points, and thanks. Your Paul Revere comment reminds me of this:

    http://www.collegehumor.com/article:1802364

  • http://problematicsets.com Robert Tsai

    That’s a good one Brad. I never saw the Facebook version of World War II before!

  • Pingback: Perhaps a slight oversimplification of my job, but I’ll take the compliment « Don Hecker Lawyer Message()

  • Pingback: New York Gaming Meetup Case Study()

  • Pingback: Welcome to New York, Paul Carr()