Why You Should Start A Company In NYC

Fast Company is doing a five part series on startup hubs outside of Silicon Valley. Part one was Boulder, Colorado, featuring my friend Brad Feld. I know there is a piece coming on Seattle and two other cities that I can't recall right now.

Part two was published yesterday and is about NYC. I talked to Laura Rich last month and she did a great job of capturing my thoughts on why you should start a company in NYC.

If you are in the startup sector in NYC or are thinking of relocating here to do a startup, you should read the piece.

I'd like to highlight one part of the article. Startup hubs take time to develop. You do need infrastructure and that takes time to build, but more importantly, you need mentors and role models. And that's what we have now in NYC that we didn't have ten years ago:

we're into the second decade now, and what the second decade is really turning out to be is serial entrepreneurs who've done it one, two, three, sometimes four times now, who can bring teams together very quickly, often teams that have worked together very quickly, can get on opportunities fast, can get money raised fast, can build companies pretty fast.

And now you have role models. So the first time entrepreneurs can find angel investors. It's exactly what has been going on in Silicon Valley for three, four decades now. Marc Andreessen becomes hugely successful, makes a bunch of money, becomes an angel investor, backs a bunch of people, mentors them, becomes a VC. That migration path is now playing out here in New York, and so most of the investments we do at the first angel-round stage is ourselves and a bunch of serial entrepreneurs in New York who are now making twenty-five- to fifty-thousand dollar investments as angels in these companies, sometimes acting as informal advisers and mentors to the first-time entrepreneurs.

So now we have the best of both worlds. We can back first-time entrepreneurs and have mentors and role models for them and we have those role models in their second, third, and fourth startups and that's the magic–that creates a sustainable startup economy that Silicon Valley has had for four decades now. We're three or four years into our second decade and I think it's going to be a great period for New York. I feel like we have just taken it to another level sometime in the past couple of years.

I'm very pleased to see Fast Company highlight startup hubs like NYC, Seattle, and Boulder. All three cities have nicely developing startup communities that are poised to produce some big companies in the coming years. Entrepreneurs and developers don't have to move to Silicon Valley to chase their dreams anymore. They've got options to fit their work to their lifestyle. And that's a good thing.

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Comments (Archived):

  1. AlanPearlstein

    I couldn’t agree more (sure, I am biased being from NYC). While NYC is not the best place from a tax perspective, I thnk that the benefits far outweigh the tax disadvantages and cost of labor in NYC. It is great to see more and more seed money investing in NYC area startups and as more seed money becomes available, I think the pace of startups in NYC will continue to grow. I have been in 3 meetings this week with co’s that were all funded by First Round Capital. I like their model and I hope more VC’s put their efforts into early stage investing.

    1. fredwilson

      i’m seeing a lot of early stage investment capital flowing in NYC right now

    2. paramendra

      I heard some great things about the First Round Capital people at the last NY Tech MeetUp. Early stage is a very important stage.

  2. reece

    Ironic proof: my recent meeting with a West Coast angel/VC at the W Hotel in Times Square.

    1. andyswan

      Indeed. The WORLD is our infrastructure, now.

      1. awaldstein


  3. kidmercury

    i see an opportunity to spoil the mood with some bad news, so here goes:1. 9/11 was an inside job, so you do have the state-sponsored terrorism risk. next time they will probably go elsewhere just to scare the mainland and west coast, but the NYC risk is still high.2. NYC is for rich people. if you’re not rich/funded by rich people, you should seriously consider doing your startup elsewhere. i lived in NYC for 10 years, moving to a new place when i started my business definitely helped me (and continues to help) in terms of keeping costs as low as possible.

    1. TheHoff123

      Conspiracy theory AND class warfare, all in the same comment!

      1. kidmercury

        the real conspiracy theory is class warfare, so they always appear in the same comment.

        1. paramendra

          People who really, truly believe 9/11 was an inside job – and I have met a few, some in Union Square with stalls and all – inhabit a very specific segment of the political spectrum. There are Christians who believe all non-Christians are waiting to be saved. There are Hindus who believe the white people belong in some fifth caste. Oh yes Sir, there are a ton of those too.

          1. kidmercury

            lol do you believe this boss…..i mean i got a lot of work to do but i saw this comment come through and i just couldn’t resist….clearly we have a youngster on our hands……paramendra my friend, today, january 21, 2010, is the day you will find the truth that sets you free. now whether you will choose to accept the truth that sets you free, and in doing so become the hero you were born to be, or whether you will choose to be an ignorant stupid ass like most people, is entirely up to you. my job is simply to be the messenger.so here are some folks that are not christian fundamentalists or anti-white hindus or anything like that that will tell you 9/11 was an inside job. make sure next time you make a comment about who believes in 9/11 truth you mention these people.700+ Engineers and Architects dispute the notion that two planes crashing into two buildings can cause THREE buildings to fall at near free fall speed. WTC 1, WTC 2, and WTC 7 are the buildings that fell. they try not to mention WTC 7 too much because that’s the big smoking gun. the original plan was for flight 93 to crash into WTC 7, but then flight 93 got shot down in shanksville, PA (i’m not entirely sure what happened there, it looks like some honest people in government tried to sabotage the operation, or there was some type of logistical mix up….i’m not sure, but that plane was meant for WTC 7…..this is their big mistake that blows the whole thing wide open).250+ Pilots and Aviation Professionals will tell you that the story of a bunch of arab dudes who could barely fly a plane hijacking commercial aircrafts and precisely crashing them into two buildings is not plausible.300+ 9/11 Survivors and Family Members are educated enough to know the truth about 911. remember they are family members, so they are actually going to care, unlike everyone else who just pays lip service and thinks whatever will help them make money. i know many of the family members personally.and that’s just the tip of the iceberg. ask fred and other people who read this blog regularly for the past few years, i have dropped so much evidence on 9/11 being an inside job it is ridiculous.of course, you can always provide proof of who you think was responsible for 9/11. if you can find any evidence that a guy in a cave managed to get past the world’s most powerful air defense and then defy the laws of physics by taking down three buildings with two planes, i’d love to see it. i’m sure the family members of the 9/11 victims would love to see it as well.

          2. Mark Essel

            Ok so I read the wikipedia version of 9/11 conspiracy theories.That lead me to read up on the counter arguments (some of which are put together well by Popular Mechanics). Have you checked those counter args out Kid?

          3. kidmercury

            wikipedia is good for some stuff, but its weakness come through in the conspiracy niche. last i checked the JFK page was still denying that JFK was killed by the CIA.popular mechanics is owned by hearse publishing. if you look into their history, you’ll see a shady background; they are the pioneers of yellow journalism. but their arguments dont stand even if we do regard them as legitimate journalists. the physics, the government whistleblowers, an analysis of who has the means, motive, and opportunity….all of that points to a criminal network operating across multiple national governments (primarily intelligence agencies) and multinational corporations (CIA front companies like american airlines, whose planes were used as part of hte plot)then of course there is operation northwoods, declassified shortly before 9/11 (i think it is likely that it was declassified by honorable people who were trying to warn us). northwoods was a plan proposed during the kennedy administration to crash planes into buildings and blame it on cuba as a pretext to take down castro. lol, sound familiar???? of course kennedy put an end to that plan, so the CIA responded by putting an end to kennedy…..

          4. paramendra

            It is amazing to me how you truly, honestly believe 9/11 was an inside job. You sound like Bush sounded at times. If the facts did not fit his ideology, the facts be damned.You have a right to your ideology and your opinions, but I don’t know what 9/11 conspiracy theories have anything to do with this Fast Company interview with Fred Wilson. The whole 9/11 talk takes away from the wonderful conversation that is taking place in this comments section. So please stay on topic so as not to take away from this blog’s comments sections. A lot of people here would appreciate that. Thanks.

          5. kidmercury

            lol, remember i am the one who presents the facts. you have presented none.9/11 is related to this topic because it explains the risks of being in NYC. i always stay on topic so that no one can call me out on being off topic. granted, i do have a knack for tying virtually every topic back to 9/11. but it is the centerpiece of our reality, so it’s not really that hard.so, to clarify, i do present facts about 9/11, and i do stay on topic.again, though, i invite you to educate me about 9/11. you are welcome to provide evidence for you who think is responsible for the crime. this is very related to the discussion as it helps us assess the risk of starting a business in NYC.

    2. Joe Yevoli

      I’m just gonna leave the first comment alone, in the interest of staying out of conspiracy theorist debate. However, I have to disagree with your second point.Sure, living in NYC is expensive, and it’s definitely not for everyone. But I have been part of an NYC startup, Overtime Media Inc., for almost 3 years now. I am in NO way rich, and I scrap each month to make my rent. What does this do for me? It forces to me to focus, work hard, and grow the company as fast as I can. Had I moved to another place in the country where rent was $300 a month, would I have felt the same pressure I do now? Would the company be as far along as it is today? Probably not… I love NYC, I love it’s startup scene, and I plan on staying here for some time to come. Rich, or otherwise.

      1. kidmercury

        1. feel free to stay out of the “theory” debate (and by “theory” i mean that which has been validated by a peer-reviewed scientific process, not to mention countless other pieces of evidence). but most folks think they are better off ignoring this, so you are far from alone, for better or worse.2. i hear ya on #2. poverty can in fact be a blessing. personally my original plan was to build my company up a bit more before leaving my corporate job, but i couldn’t take it any more so i quit without the type of security i had hoped for. but the pressure helped bring out the best in me, or rather helped me learn how to bring out the best in myself.

        1. andyswan

          “burn the ships”

          1. Mark Essel

            But who’ll pay for the wedding and mortgage? I need those damn ships… until I get “traction”.

    3. Adam Wexler

      i’m with ya on #2. NYC can be a great resource to many. i think it has a great startup ecosystem brewing, but it’s really hard for entrepreneurs without money in the bank, especially those in school or right out. and oftentimes, those are some of the most creative & ambitious types you’ll find!

      1. fredwilson

        that’s not what we see

        1. Adam Wexler

          it’s definitely an outsider’s perspective so take it with a grain of salt.i agree with @joeyevoli’s scrapping mentality above, especially if you need to make rent. you’ll find a way…you better…are there a wealth of part-time positions available to bootstrapping startupuers** can focus a large portion of their time developing their own companies? how does the NYC unemployment rate compare with the rest of the country (or the other startup hubs)?as it stands, i think funding options are a lot more plentiful in NYC than say Atlanta (where i’m from). yet, those discussions can drag out and i haven’t had enough money in the bank to really consider a move since i’ve been shoestring bootstrapping http://GoRankEm.com for close to 2.5 years!without acquiring funding right away, could you briefly give examples how somebody like myself could stay afloat up there. i would really be interested to hear your take. thanks in advance, fred.

          1. fredwilson

            most developers/entepreneurs get a gig doing freelance work or working at aplace like betaworks while they work on a project on the side.

          2. ShanaC

            Don’t give me ideas…I still need to focus primarily on my ba…stress…

  4. im2b_dl

    Yeah. Fred there are huge pros… but after living and doing companies in Boston, NYC, LA … Portsmouth NH (Newburyport MA) we are literally just moving back to. It is the perfect locale. Taxes, Pease renovated airbase, Cambridge 40 minutes without the overhead. The best downtown 30 fantastic-restaurant-theater-music-bar-shooting locations-quarter-mile- of anywhere I have seen in the country.Philips Exeter/Philips Andover Academy provides access to some of the genius that will be going to MIT, Yale and Harvard.and once again…you can not beat the taxes…for what you get. People/Companies like David Cancel JoshPorter Chris Brogan etc… all live here now in the general area which includes Newburyports tech scene as well.NYC is great. and exciting and crowded…and a very specific lifestyle… but as far as choosing a company where you wake up and look out at water you can swim in, trees, green, bike trails to the beach, hike mountains, ski within 15 minutes. ..and great schools for kids. and access to all the lectures in Cambridge.it’s not a hard sell. Boston was my home…LA was my post college time of my life…NYC is fun to visit…SF is beautiful but all of those places economically couldn’t compare…to the quality of life you get from the coolest little city in America. Portsmouth NH I was shocked when I found it post NYC and LA

    1. fredwilson

      well said. the title of this post was simply a repetition of Laura’s headline. but my main point is that there are multiple startub hubs now, NYC, Boulder, Seattle, and of course Boston that you can choose from

      1. im2b_dl

        lol. sorry fred. I know. I am running for Ms Portsmouth NH. ; )

    2. paramendra

      You are making a great point. Geography is less and less relevant. You can work from anywhere, or most places. A lot of Indians are betting on it. ๐Ÿ™‚

  5. Nick Giglia

    I look forward to reading the piece, and I definitely believe there is something happening in the startup ecosystem of New York. It’s certainly expensive to live here, and I understand concerns like that, but to me the positives far outweigh the negatives. You have that built-in entrepreneurial spirit that seems to lay dormant in every New Yorker, and you have what I’ve seen as a very supportive startup community. I think people realize New York is not as far along as San Francisco or Boston, and people tend to root for one another, knowing that a rising tide lifts all boats.We’re seeing more VC firms that traditionally don’t do business here either funding deals or opening their own offices. I’m excited to see where this goes in the next 5-10 years, and I’m even more excited to be a part of it.

    1. fredwilson

      not as far along as SF or Boston is rightbut closing the gap quickly now

  6. George Howard

    Fantastic piece. I know it sounds crazy, but post-Katrina New Orleans is starting to evolve into something of a welcome place for start ups (tax credits, movie business, music business, some small tech). Beyond all of the crucial elements listed by Fred and the NYT article (admittedly, New Orleans is far from being on par with a NYC or Boulder, but there are some developing), New Orleans has a quality of (to paraphrase Tyler Cowen) nothing left to lose. That is, people realize that entrepreneurship is not just their best chance, in some respects it’s their only chance. (The best, though not terribly instructive, example of this is what the Cash Money label has done, and continues to do.)When you couple that with the nascent infrastructure of entrepreneurial support and several universities (disclosure: I am a prof of management/exec in residence at Loyola’s College of Business), something is starting to happen.We, do not yet have that “second wave,” as the first wave is just starting to get some traction. I am, however, guardedly optimistic that a few New Orleans start-ups might pop.Here’s hoping. It truly is the only thing that will “save” this unique and magnificent city.George

    1. fredwilson

      be patient. it takes decades

  7. andrerib

    The lack of entrepreneurs who made it to the “mentors and role model” level is the main reason why a startup hub in Portugal has not yet happened. There are some startups doing very interesting things but not in a “hub” environment.There are some good conditions here including lots smart technical people with great skills (fresh out of tech universities). The quality of life is high enough (culture, restaurants, etc.) for people to want to stay here and the weather is nothing short of California’s.The biggest problem however is the lack of a big enough local market which makes it harder to have a stronger base before venturing to other markets. That’s the reason most startups (like mine) start by addressing the US, Europe or UK market from the start.

    1. fredwilson

      israel is your model then. they have built something fantastic serving markets other than their own.

      1. greenskeptic

        Israel is the original Start-up Nation, and they have had to innovate their way out of some pretty steep challenges (geography, strife, natural resources). There’s a good new book on the story called “Start-Up Nation” by Senor and Singer.As a person of Portuguese descent (Pereira, on my mother’s side), I’d love to see Portugal be the new Israel. Andrerib – how can I help?!

        1. andrerib

          I’ll be buying that book so I can get some inspiration and ideas. Portugal has some of the conditions to be the new Israel specially because of the highly skilled tech workforce but it lacks the organization (and “partneships”) that have helped put Israel where it is today.There’s a way you can help. I’m a co-organizer of tech/business/life conference SHiFT ( http://www.shift.pt ). Would you be interested in coming over to Portugal to give a talk ?

          1. greenskeptic

            Absolutely. Connect with me via email: greenskeptic[at]gmail[dot]com and we’ll try to make that happen.

          2. paramendra

            Is Fred’s comments section amazing or is it amazing?

          3. greenskeptic

            More powerful than the blog posts, even!

          4. Mark Essel

            It’s Network Candy ๐Ÿ™‚

        2. ShanaC

          I just started to read that book. Interesting book. Doesn’t describe the country as I remember it, though it is also true.

      2. Chang

        I don’t know about Portugal, but countries like Korea are in the middle ground which is an awkward position because they got a decent, but not huge domestic market. If you are in China or Japan you can be the king of the hill in your country and live just fine. If you are in Israel there’s no domestic market so you have to get out. But if you are in countries like Korea things are not that simple.

  8. andyswan

    I love NYC…I really do. Big buildings, big dreams, big bank accounts and “hungry”, hustling people everywhere. On the flip side, those things are happening more and more everywhere, and geography is becoming less and less important by the innovation-cycle.But, I’m considering it.It would be an epic downgrade in lifestyle, and I’d have to hire one hell of a tax attorney….so the question is, as always….”is it worth it?”Pending….

    1. fredwilson

      bring a case of pappy if you come

      1. andyswan

        Lolย awesome.By the truckload. ย Maybe thats’s my startup!

    2. Deena Varshavskaya

      I’m in the same boat. For me, it’s a lifestyle decision. If I move it will be for personal reasons rather than for my startup. But NYC seems to be changing, and not necessarily for the better. A lot of big box stores there now on every corner; the overall feeling seems to be more mainstream than in the earlier days. I could be romanticizing the earlier days, of course.. the only way to find out is to live there for a chunk of time. I visit a few times a year, but need to spend a month or so there.

  9. oakmad

    It was a big day for Austin startup publicity yesterday, with articles from both Business Week http://www.businessweek.com… and ReadWriteWeb http://www.readwriteweb.com… They both do a good job I think of summing up the Austin mindset and how its different.

    1. fredwilson

      austin may be one of the five startup hubs that fast company is profiling. thanks for the links. i read them both.

      1. Adam Wexler

        fred-outside of the aforementioned cities & austin, what would be your next 5 emerging startup communities that you’ve noticed?-adam

        1. fredwilson

          no sure what has been mentionedhere’s the top ten in my book (for web stuff)SFNYCLA/So CalSeattleBostonBoulder/DenverAustinChicagoDCtossup between Philly/Atlanta/Portland

          1. Satish Mummareddy

            I’m surprised LA is that high up on the list. Is there an ecosystem and some good existing companies there already?Does a philly startup benefit from the NYC ecosystem?Do you mean the Norhern VA area when you say DC or does that mean Baltimore, DC, Northern VA? More specifically does a startup in Baltimore which is 40 mins from DC benefit from the DC ecosystem?

          2. fredwilson

            DC in my book is all the way from Baltimore to Northern VA.LA has Overture and MySpace talent now moving on to new stuff. it’s a veryvibrant community.

          3. paramendra

            LA is news to me.

          4. Satish Mummareddy

            I dug up Mark Suster’s blog a little to see if he lists activity in LA and this is what i found:LA not only produced the obvious โ€“ MySpace โ€“ but also created the whole category of sponsored search (Overture), AdSense (Applied Semantics), Local Search (City Search), comparison shopping (PriceGrabber, Shopzilla) and lead generation (LowerMyBills). In SoCal we are also leaders in affiliate marketing (Commission Junction), Internet video (Hulu) and bringing local businesses online (ReachLocal). We are also home to DemandMedia (Richard Rosenblatt) and Mahalo (Jason Calacanis).We have accomplished much yet have much work to do. There are now a second generation of entrepreneurs and companies that have learned from their last successes and are producing great new companies like TopSpin Media, Sometrics and GumGum.

          5. fredwilson

            that’s a great list. i feel like LA and NYC are in a similar and very goodplace right now

          6. Deena Varshavskaya

            I’m building a startup in LA, together with a UX design agency, and am finding LA to be a great place for a startup. My development team is in India, and the talent, opportunities, costs in LA seem very manageable.However, I desperately miss the energy of NYC and am actually considering a move back. Not sure how I’ll decide. May need to try living in NY for a month or two to make the decision.

          7. Adam Wexler

            interesting to see your take. (assuming that was in order) along with @satish, i’m also a bit surprised you placed LA (and seattle) above boston. you would know better than i would though ;)in terms of cost of living, i think it’s important to note that austin seems to be the only one that seems affordable for those looking to bootstrap an operation for a significant amount of time. agree/disagree?

          8. fredwilson

            for web stuff, i would place LA and Seattle above Bostonnot for tech in generali don’t really know what an apartment in austin costsbut two or three guys can rent an apartment in brooklyn for $1000/month ifyou are willing to live in bushwick or bed stuy

          9. paramendra

            “but two or three guys can rent an apartment in brooklyn for $1000/month ifyou are willing to live in bushwick or bed stuy” and get broadband, work from home, and save 100% on office space. ๐Ÿ™‚

          10. kidmercury

            if you are willing to live in bushwick or bed stuyand who wouldn’t want to live in such fine neighborhoods???? it was always so pleasant visiting my friend who lived in bushwick and turning down all the offers from crack dealers and street prostitutes on the way

          11. fredwilson

            whoa. my brother lives there.

          12. fredwilson

            and remember, he was the AVC bouncer before you

          13. kidmercury

            lol, now that’s great training for being a bouncer!

          14. Dan Cornish

            An apartment in a similar neighborhood to Bushwick in East Austin is $300-400/month. A nice 1 bedroom condo is around $250k in a good area near downtown.

          15. greenskeptic

            Competition is a good thing (says the former hockey player). Philly needs to figure out how to get higher on your list. @bjennelle (founder of Philly Startup Leaders and Anthillz and most recently of TicketLeap) is starting the conversation here: http://bit.ly/5Wkhh9

          16. paramendra

            Is NYC number two already? I doubt that, but I don’t doubt it will get there fast.

          17. valto

            would be interesting to see list with international cities added. Would any of those fit in your top 10?

          18. fredwilson

            Tell AvivLondonProbably one or two in India and China

      2. kidmercury

        austin is like the kook capital of the world…..being a kook there is practically normal.

        1. fredwilson

          that’s why i love it thereboulder is similarand so is new orleansthose are the cities with character outside the big centers of NY and LA

  10. Brian Breslin

    Fred, I’m gonna have to go with Miami, FL on this one. Not because I think its a better place for a startup than NYC (I think its easier to get connected in nyc, sf, and bos), but because it has a certain number of advantages too. I’ll write a blog post about it and ping here. It does help that its 72 degrees today and sunny… just sayin.

    1. kidmercury

      you know it! when i moved to miami i quickly realized what an idiot i was for living in the northeast the first 28 years of my life. good weather is one of the most undervalued assets IMHO. plus it’s close to all the cool islands and stuff. that’s awesome.it is a lazy culture here though. i sometimes get the impression i spend more time working than the rest of my apartment building combined. and service is f’ing slow. i was spoiled a bit by the hustling of nyc, everyone there works their tail off so they can pursue their dreams of paying rent and taxes. in miami there is less incentive to work, rent is tolerable and the beach is right here.

      1. Brian Breslin

        actually i think the lazy culture is a misrepresentation of REAL miami. Real miami is filled with hustlers (not the bad kind, though there are plenty of them too). Look at the tens of thousands of people who work multiple jobs, and come to miami for new opportunities and work. They are the ones who are filling the highways at dawn every day commuting hours to work, just to make a buck.the beach community is a lot of foreigners, and northeasterners who come to slow down. not the real “working” miami community IMO.

    2. Mark Essel

      I enjoyed the beach, listened to a great story about the history from a gentlemen that lived on the beach. Then he demanded I pay for the story so I left.

  11. ShanaC

    I wish they would do Chicago…go pitch at the students at IIT (School of Design) and U of C and Northwestern…don’t let them leave you….*sigh* I think the cold could make people work harder, what else are you going to do…

    1. andyswan

      Chicago wins in the end.

      1. ShanaC

        yay! I know so many great people out there. I just always get shocked when I see the list of who is recruiting from school. Very uhhh, finance heavy (though I did just see Nielsen, but not Comscore -even though oddly, Comscore is based out….Chicago!)

  12. Keith B. Nowak

    Now that the resources and infrastructure are in place, what makes NYC the best place for a startup in my opinion is the diversity and the unique energy of the city. Being able to get out of the groupthink that exists in the Bay Area (as mentioned in the full interview on Fast Company) enables entrepreneurs to see new opportunities and be exposed to many different worlds. Also, what I don’t think should be overlooked is the energy of New York. There is just a different feeling in the city than any place else in the world and it is truly inspiring.

    1. paramendra

      “Also, what I don’t think should be overlooked is the energy of New York. There is just a different feeling in the city than any place else in the world and it is truly inspiring.”Keith. I think you nailed it for me.

    2. Mark Essel

      If I could only get a nice backyard…and some breathing room. Piling up all those people makes it ok for me to visit but a tough place to live and think in.

      1. Keith B. Nowak

        I live in Middletown, NJ which is a 40 minute ferry ride to Manhattan. Best of both worlds.

        1. Mark Essel

          Hadn’t considered a ferry from NJ, will ping my better half ๐Ÿ™‚

  13. daryn

    Absolutely agree, from everything I’ve seen NYC is a fantastic place to start a company. As are Seattle, Boulder, Boston, and other cities around the country and around the globe.That said, whenever I visit the bay area, I’m always energized by the exposure to everything that is going on down there. I spent two days there last week, and met lots of great people and heard lots of great (and not-so-great) pitches and ideas. Nice place to visit, even if you’re operating elsewhere.Also, good discussion of this topic over on Quora:http://www.quora.com/q/Why_

    1. fredwilson

      can’t login to quoraseems like its invite only

      1. daryn

        Sorry about that! I’ll send you / anyone else an invite if you’d like;nicely executed Q&A site by a few former Facebook guys.

  14. Dan Cornish

    We moved out of NY for a number of reasons1. High Taxes2. High cost of living3. High barriers due to regulation4. Competing with Wall St and Large Fortune 500 Companies for talent drives up cost. Developers can make over $150k easily on Wall St. 5. Most (Fred excepted) VCs are financial guys, no operating experienceMoved to Austin TX1. No State income tax2. Low cost of living3. Large pool of very talented developers/business folks at reasonable cost4. No long Winter5. SXSW6. Better Barbecue than NY7. Lots of great technology companies8. Investors have lots of operating experience

    1. fredwilson

      no doubt austin is a fantastic startup hub. but its different than NYC. neither is better. just different.

      1. kidmercury

        i don’t know about that boss sounds like dan just straight up dissed you and said austin is objectively superior to nyc. damn. you gonna take that boss????

        1. fredwilson

          i don’t think that’s what he said. he said it was superior for him. i wouldnot be superior for me as much as I’d like to hang with JLM and Ben Kwellerall the time (and dan too).

          1. kidmercury

            well boss you can twist his words however you want but i think we both know what he meant. that’s cool though, you’re willing to look past a highly personal insult. i applaud you for that.

          2. Dan Cornish

            I did not mean to diss NYC. I lived there for 20 years I agree with Fred. NY is the greatest place in the world until it isn’t for you. No other place in the world can reinvent itself like NY can. I love NY, but I also love Austin. Fred, any time you are in town I would love to hang with you.

          3. fredwilson

            you got it Dan

    2. Mark Essel

      I was thinking of checking out the Bay Area due to weather, and easy access to outdoorsy stuff. BBQ is compelling though.

    3. peterwguy

      Completely agree. Our “startup” has office in San Mateo, Boston, and New York City. I split my time between NYC and our clients in Austin and it’s easy to see the draw of Texas. In fact, the Economist did a profile on Texas v. California for starting businesses about 6 months ago that made the case. If/when I start a company it will be headquartered in Montreal with a team in Austin. The capital partners can stay in NYC. Maybe that’ll be me, actually.

  15. Kevin

    Interested to know how much people think (or know) that incubators / co-working buildings help build the communities and synergies so important to success. In Cities where there isn’t an obvious start-up culture it seems to me that there is opportunity to create and promote the relationships through a physical place. Even though much of the work is done in the cloud, there is a reason why these Cities are good for start-ups. We’re working on a co-working space now in Philadelphia for start-ups in creative and sustainable industries and we hope that it helps foster the kind of community that is needed for many of them to succeed. If interested: http://bit.ly/6M3HrW

    1. fredwilson

      i’m a huge fan of co-working spaces. i don’t like incubators very much (except in rare cases like idealab and betaworks). but co-working is a fantastic concept.

      1. Kevin

        anything in particular that you have seen work very well — or poorly — with them? are they a place you would scout companies or people through events?

  16. paramendra

    Saul of SeedCamp (@cape) was at the MeetUp headquarters yesterday with 12 hot startups from Europe. http://technbiz.blogspot.co… He said Ron Conway put 60% of his money last year on the East Coast. I mean, that is an ultimate Silicon Valley guy. A lot has changed in the past 12 months. No offense to my banker friends, but capitalism’s creative destructions might have been a boon to the NY tech sector.New York for the longest time stayed a bottom tier tech destination. Now it is showing signs it might become a second tier tech destination. But Seattle won the Windows round, and Silicon Valley won the dot com round. New York is not going to become a top tier tech destination if we keep wanting to come up with the next dot com. We are going to have to go for Web 3.0. Now that is an ill-defined term if there is one. Many think that is the semantic web. I have a friend who owns a mobile apps company, he thinks Web 3.0 is the mobile web. Web 1.0 was sites that were posters. Web 2.0 has been about populating sites. Web 3.0 is about getting the rest of humanity online. No place quite like NYC where you can meet people from every little town on earth. http://technbiz.blogspot.co

    1. fredwilson

      not sure web 1, web 2, web 3 is the right frameworkbut you are right that NYC has to put up or shut up

      1. paramendra

        I understand your qualms about the Web 1,2,3 stuff. There seems to be general agreement on the term Web 2.0. But beyond that it gets wild. There are those who think of it as chronology. Scoble went all the way to coining the term 2010 web. But I have more of a Periodic Chart Of Elements in mind. And so there is Web 1.0, 2.0, 3.0, 4.0 and 5.0. It stops at 5.0. But then there can be 2.1, my term for the semantic web. http://technbiz.blogspot.co…I think it is important to compete for the Web 3.0 definition because the journey to making NYC the center of gravity in global tech starts with it. Half a century ago the Bay Area was famous for fish, not chips.

  17. iguide

    1. taxes2. ugly bureaucracy3. some of the most expensive employees in the world4. great place to learn the ropes of tech, vc, etc5. network with other company owners

  18. Paul

    couldn’t agree more. have had no problem building a great company here over the last 2.5 years. love it because our employees, interns, founders, landlord, bankers all WANT to live here and will go the extra mile to stay here. Starting our business in a recession has also been helpful; lots of resources. The others are right, NYC isn’t for everyone but more and more of us are happy to pay the price for the opportunity and enough opportunity/resources to appeal to talent is the beginning of a hub.

  19. Mark Essel

    Is the geolocation more important for recruiting, meetings with finance, or legal connections?Is the real selling point of being in a fixed spatial location weekly face to face mentoring by folks that have built successful startups before?I’d like to get at the critical aspects of startup location.

  20. muratcannoyan

    Any suggestions on how to find a mentor in NYC that has not invested in your company?

    1. fredwilson

      you have to network. a good place to start is the NY Tech Meetupsyou should subscribe to charlie’s email with tech events in NYChttp://bit.ly/81SnuY

      1. muratcannoyan

        I recently subscribed to Charlie’s email, good stuff. Thanks.

  21. awaldstein

    I’ve done numerous start-ups in the Bay Area and LA and recently traded the Audi S-4 in for a subway pass and am in NYC.Honestly I’d choose LA over the Bay area–the intersection with the entertainment industry and an incredible freshness and openness amongst the VC and tech leaders is really refreshing and infectious.But I chose NY. Beside being home for me, it’s got the density of population to act as a sandbox for mobile/social apps like Foursquare and it has the deepest most concentrated sense of local that just works for me. There is a overt sense of ‘let’s meet and talk’ here that is inspiring and drives ideas forward with NY spirit and intensity.You know what they say..it’s a waste of time to complain about the weather, the cost, the noise or the dirt in NYC. They are just the backdrop for the character of this place.

    1. fredwilson

      yeah, but you are bailing for aspen i believe (foursquare knows all)

      1. awaldstein

        You caught me;)Ajax calls and I couldn’t refuse.

        1. fredwilson

          i hope you get a couple feet of powder and if you do, ski the ridge of bellfor memy favorite on mountain powder run anywhere in the world

          1. awaldstein

            When the powder arrives, consider this done.

          2. fredwilson

            photos please!

          3. awaldstein

            Sorry no photos.Another foot of snow in Aspen but a whiteout all day on Ajax.I did ski your fav spot twice today. Challenging with no visibility but fun nonetheless.Nothing beats powder. Highlands tomorrow!

          4. fredwilson

            i love highlandstry hiking up the bowl and skiing it in powder conditions

          5. awaldstein

            Next time. Visibility and winds were bad although alot of powder in the trees.Fun time. Back to work tomorrow.Vail in a month.

  22. wsmco

    Small business is under siege in NYC. When office lease is up next december may well move the business out of here to escape the taxes and the full scale assault by the gov’t. First, you can cross using freelancers off your list here unless you provide them with unemployment, disability, etc. I have been under siege from dep’t of labor for 3 months now for using freelancers and not knowing of a retroactive law back to 2008 which requires they get unemployment and disability and more paid. And yes this means for people who work 3 or 4 days ever for me – and for you too. By under siege, I mean people from dep’t of labor show up in my office without appiointment, demand all records for years, demand entire days of your time and they have subpoena power and if you do not immediately stop anything to do with actually running your business and set aside entire days then you are subpoenaed and will go to court or prison immediately. The dep’t of labor supervisor told me only solution is to immediately pay 12k fine, face 500k fine, or “hire 10 or 20 ppl full time and just let them sit around when no work.” <-That is a direct quote. I have asked for appeal, no word on it and if I get one it is with them. Weekly I receive more letters from NYC and NY State about more taxes, fees, fines, regulations, etc..Run, don’t walk, to get out of NYC. I love the energy here but I really don’t want to be treated like a war criminal for being a small business owner.

    1. fredwilson

      i’ve never had that problem in any of the businesses i’ve invested in overthe years in NYC. probably fifty or more.

  23. Ben Tang

    Fred, I wanna get an opinion from another VC for quite a while on the topic of VC community in Boston, having to work at a failed startup recently. Do you feel that the VC community in Boston have more like a “Country Club” type of mentality while the rest of the VC community in the rest of the country, especially in SF or NYC have more of an open-minded approach? Thanks.

    1. fredwilson

      it may have been that way at one time, but i do not think it is like thatanymore

  24. a.j. lawrence

    Building my 4th company here in NYC, though moved to DUMBO for this one. Sure rent and talent cost more, but those cost differences between NY and elsewhere are relatively small. What I don’t find as easily elsewhere are super smart 22 year kids who want to take over the world and are willing to work around the clock for a chance to live a dream, I don’t find the huge density of business experience (thank you Wall Street, advertising and publishing industries layoffs) for my managers, and no matter where you go, there is something about being from NYC that impresses so many people. In the end the services that cost too much in NY, I can outsource from elsewhere (my San Diego IP lawyers are great and much, much cheaper).We live and work in NY for the chance to dream and old blue eyes sang it right, “If I can make it there/ I’ll make it anywhere”

    1. Deena Varshavskaya

      Thanks for sharing. Very relevant.

  25. gorbachev

    I don’t know about this one.I’m a software developer living in New York. I’ve been here for about 10 years now.I love startups, I’ve always preferred them to bigger companies and especially to financial industry jobs. I used to work for startups when I was starting out my own career. They rocked.However, every time I’ve been on the market for a new job in the New York area, the financial industry jobs have won.There’s one very simple reason for it. It’s VERY expensive to live in New York. I have a mortgage…I can’t pay it with stock options. I tried…I was miserable stretching every penny. And it’s not like I bought a mansion either. The damn thing is slightly bigger than a doghouse, but it’s mine.I now work for a hedge fund (again), and have managed to build up my emergency savings again after the house purchase wiped them out. I would never have been able to do that should I have continued working outside of investment banking.The sad thing is that my personal interests are much more aligned with startups, many of which are highlighted on this blog. But because of family and financial responsibilities I do work that pays the bills.The only opportunity for me to participate in the startup world right now is to it after hours. There’re a couple of problems with that, too. First, technically speaking my contract with my employer prohibits it (yay!) and secondly I struggle to find enough time, let alone quality time, between work and taking care of two very small kids.Oh well, maybe in another life.

    1. fredwilson

      sadly, it seems that you never got an equity payday on a startupi know many developers who joined early and got between 1-5% of the companythat was worth millions even in a nice but not outrageous exityou are right about cash comp. wall street pays morewhen i got out of business school in the mid 80s, all my friends went towall street and started earning hundreds of thousands of dollars a yearright awayi never made more than $100k for ten years.it wasn’t until 1999, when we started to get distributions on internetdeals, that i made any realy moneybut in the past 10 years, well i’ll just say i think i’ve done better thanmany of my MBA classmatesstartups and VC requires patience and a belief that the equity will pay outand it doesn’t alway pay out

      1. paramendra

        I’d love to see this comment in the form of a full-blown blog post. This looks like one juicy story.

      2. mike

        Fred, When you graduated did you go straight into the VC business. Also, do you think there are opportunities for non technical entrepreneurs to do comparably well versus going to wall street. Obviously, there are always exceptions but it seems to me that if you are not a programmer, the number of positions in the start up industry are limited and usually the Biz Dev guys outside of the founders are not gonna bring home big bucks in cash or in stock. I understand not every startup is technical in nature, nonetheless I am interested in getting your opinion. Also, if you had to pick a totally new field to work in what would that be today.

        1. fredwilson

          i did go straight into VC and i should not havei think the BD job in a startup is a great way to pave the road to VC

  26. dorothy_mcgivney

    Hi everyone, Late to the game with my comment – but for those who are interested and in New York, I’m hosting a breakfast for New York startups in Williamsburg. It’s free, and will hopefully be a monthly event. Hot Potato is co-sponsoring, and there should be some interesting folks present, as well as a reporter from New York Magazine who’s covering the tech scene here in the city for a story.There’s definitely a creative tech community in New York, especially in Brooklyn – come join us! http://www.meetup.com/North-Brooklyn-Breakfast-

  27. daveschappell

    Agree with Daryn’s earlier comment — getting to the Bay Area every few weeks is an awesome experience, reminding you what it takes to succeed (how hard you need to work, how good the competitors are, the energy/passion, etc.). But I’ll admit that I also get that feeling now when I get to NYC — probably because I’ve become friends with more folks, but there’s just more out there, in every way (Outside.in, Etsy, Gilt, Betaworks, Square, and more… not to mention investors ๐Ÿ™‚ ) — Austin feels similar to me in some ways, because of friends & startups. Really simply, I think vibrant startup communities need multiple active funders at all levels (angel, early-stage vc, mid/beyond-stage vc (what most of them are, by the way…)), lots of technical talent, experienced hands-on product people (often with multiple-company experience), and probably a good dose of ‘youth’ (has to be said). Finally, I think another way to think about it is, “what cities would I be comfortable moving to, to start a company/live?” Right now, obviously Bay Area’s a yes. Seattle’s where I live. NYC is a yes. Austin’s a yes.Some “no’s or places that make me wonder” (at least from my impressions)… Boston? San Diego? Chicago? Everyone’s perspective’s different, of course… but the more successes each city has, the more alternatives we’ll all have… very exciting.Fred — one question — do you know who the Fast Company reporter’s talking to in Seattle?

  28. fredwilson

    can you recruit developers or hire them in Lancaster?

  29. paramendra

    “I do miss NY, though.”Just when I was waiting for the punch line. ๐Ÿ™‚

  30. kidmercury

    absolutely. elance, craigslist, indeed, etcthe question is why on earth would you want to live in lancaster….i mean i’m all for cost-savings but lancaster?!?!?!?! no need to torture yourself too……

  31. fredwilson

    who knew?that’s awesomei thought mapquest was in albany NY

  32. paramendra

    “etc”You mean Etsy?

  33. paramendra

    Home is home. Can’t argue with that. There is no one size fits all. I don’t think New York is the best place for a-l-l startups. But I do want to see the center of gravity in tech shift to New York in a decade or so.

  34. kidmercury

    you know charlie i think there is a reasonable chance you will have the last laugh…..kooks will tell you the most dangerous place to be are cities, as they can easily be shut down and taken over by the government…..in many ways you’re safer than the rest of us ๐Ÿ™‚

  35. paramendra

    Hello Ryan. Long time.

  36. kidmercury

    i meant et cetera, as “in other things too”…..meaning other services similar to the ones i noted, services that have a job market component

  37. fredwilson

    volume and quality are both higher