Why Yahoo Buying Tumblr Is Not Great For NYC's Tech Scene(forbes.com)
forbes.com
Why Yahoo Buying Tumblr Is Not Great For NYC's Tech Scene
http://www.forbes.com/sites/ciocentral/2013/05/24/why-yahoo-buying-tumblr-is-not-great-for-the-nyc-tech-scene/
5 comments
Its an interesting thesis. I too have noticed that there are many fewer 'tech billionaires' in NYC than in the Bay Area. But the investment percentages of money are what really seem telling to me. People tend to invest in what they know, and if banking and trading are the things that made people wealthy, they are more likely to invest in new banking/tradiing schemes than tech schemes which they don't have a deep understanding of the mechanics for.
We hit this cognitive wall here in these discussions all the time, which basically is the difference between how difficult something looks versus how difficult something is. And while I've done some Angel type investing in the past I only have done so with other tech startups because that is something I've done from the ground up so I really feel like I can understand it, but I would never feel comfortable funding a new trading scheme or HFT algorithm because I could not dive down to the bottom of the idea if I was uncomfortable and re-assure myself. It would feel way too much like the gambling it is and so I don't do it.
We hit this cognitive wall here in these discussions all the time, which basically is the difference between how difficult something looks versus how difficult something is. And while I've done some Angel type investing in the past I only have done so with other tech startups because that is something I've done from the ground up so I really feel like I can understand it, but I would never feel comfortable funding a new trading scheme or HFT algorithm because I could not dive down to the bottom of the idea if I was uncomfortable and re-assure myself. It would feel way too much like the gambling it is and so I don't do it.
"Another way to put it is that there are lots of billionaires, just no tech-billionaires." False.
From your hedge fund list, at least James Simons and David Shaw are tech billionaires and probably some more that I don't recognize. Also, one of the most successful NYC tech billionaires your forgetting: Michael Bloomberg. Although all of these guys are finance/tech it is still tech.
Comparison of the size of venture capital funds is probably accurate, but that is changing as well.
From your hedge fund list, at least James Simons and David Shaw are tech billionaires and probably some more that I don't recognize. Also, one of the most successful NYC tech billionaires your forgetting: Michael Bloomberg. Although all of these guys are finance/tech it is still tech.
Comparison of the size of venture capital funds is probably accurate, but that is changing as well.
Relevant biographical info: "David Elliot Shaw (born March 29, 1951) is a Jewish-American computer scientist and computational biochemist who founded D. E. Shaw & Co... A former faculty member in the computer science department at Columbia University, Shaw made his fortune exploiting inefficiencies in financial markets with the help of state-of-the-art high speed computer networks."
D. E. Shaw & Co. also hires a ton of STEM folks. Also: "D. E. Shaw Research (DESRES) is a computational biochemistry research laboratory based in New York City. Under the scientific direction of David E. Shaw, the group's chief scientist, D. E. Shaw Research develops technologies for molecular dynamics simulations (including Anton,[1] [2] a massively parallel special-purpose supercomputer, and Desmond,[3] a software package for use on conventional computers and computer clusters) and applies such simulations to basic scientific research in structural biology and biochemistry, and to the process of computer-aided drug design."
D. E. Shaw & Co. also hires a ton of STEM folks. Also: "D. E. Shaw Research (DESRES) is a computational biochemistry research laboratory based in New York City. Under the scientific direction of David E. Shaw, the group's chief scientist, D. E. Shaw Research develops technologies for molecular dynamics simulations (including Anton,[1] [2] a massively parallel special-purpose supercomputer, and Desmond,[3] a software package for use on conventional computers and computer clusters) and applies such simulations to basic scientific research in structural biology and biochemistry, and to the process of computer-aided drug design."
I used to work for DESCO. Some seriously smart folks there and especially in the DESRES group.
That's the thing though. The top engineering talent goes to financial companies in New York because that's what's fashionable there. There's an actual cultural difference.
There's one other big cultural difference that has an affect on who wants to do tech startups. In SV people care about "What can you do?/What have you done?" where in NY it's more "Where did you go to school?/What's your pedigree?" and in my experience, Ivy Leaguers are generally funneled into Finance. There is a lot of money spent on recruiting them, so it's easier to just take the hedge fund job out of school than go work for or found a startup.
When Jeff Bezos, who used to work for DESCO, founded Amazon, he didn't do it in New York.
That's the thing though. The top engineering talent goes to financial companies in New York because that's what's fashionable there. There's an actual cultural difference.
There's one other big cultural difference that has an affect on who wants to do tech startups. In SV people care about "What can you do?/What have you done?" where in NY it's more "Where did you go to school?/What's your pedigree?" and in my experience, Ivy Leaguers are generally funneled into Finance. There is a lot of money spent on recruiting them, so it's easier to just take the hedge fund job out of school than go work for or found a startup.
When Jeff Bezos, who used to work for DESCO, founded Amazon, he didn't do it in New York.
> The top engineering talent goes to financial companies in New York because that's what's fashionable there. There's an actual cultural difference.
Right, and in Silicon Valley the top engineering talent tends to go to advertising companies (Google, Facebook, Twitter, etc). What does that matter? Advertising and finance are both industries flush with relatively easy cash right now, of course people are going to seek out jobs in those areas.
> There's one other big cultural difference that has an affect on who wants to do tech startups. In SV people care about "What can you do?/What have you done?" where in NY it's more "Where did you go to school?/What's your pedigree?"
That's true and is probably a bigger substantive differnce. Though, ever since Google made it a thing to recruit heavily from Stanford, tech has been a lot more pedigree-sensitive. I don't know if it's necessarily a bad thing, but it's certainly different.
Indeed, if aversion to pedigree-sensitivity is a concern, I'd argue that a better place to focus your startup-founding energies would be D.C. There's good bootstrapping opportunities vis-a-vis government contracts and contracting to established defense/telecom players in the city, and the "old guard engineer" mentality in this industries places very little emphasis on pedigree (even though D.C. is otherwise an extremely prestige-conscious city).
Right, and in Silicon Valley the top engineering talent tends to go to advertising companies (Google, Facebook, Twitter, etc). What does that matter? Advertising and finance are both industries flush with relatively easy cash right now, of course people are going to seek out jobs in those areas.
> There's one other big cultural difference that has an affect on who wants to do tech startups. In SV people care about "What can you do?/What have you done?" where in NY it's more "Where did you go to school?/What's your pedigree?"
That's true and is probably a bigger substantive differnce. Though, ever since Google made it a thing to recruit heavily from Stanford, tech has been a lot more pedigree-sensitive. I don't know if it's necessarily a bad thing, but it's certainly different.
Indeed, if aversion to pedigree-sensitivity is a concern, I'd argue that a better place to focus your startup-founding energies would be D.C. There's good bootstrapping opportunities vis-a-vis government contracts and contracting to established defense/telecom players in the city, and the "old guard engineer" mentality in this industries places very little emphasis on pedigree (even though D.C. is otherwise an extremely prestige-conscious city).
> Right, and in Silicon Valley the top engineering talent tends to go to advertising companies (Google, Facebook, Twitter, etc). What does that matter? Advertising and finance are both industries flush with relatively easy cash right now, of course people are going to seek out jobs in those areas.
Right, I'm not saying it matters at all other than if you're a competing business, you're going to have a hard time recruiting against these firms. It's not always just a money thing either.
I don't think SV is any better than NY though. I work for an SV-based company remotely. Both cultures are kinda terrible and both cities are only chasing after 'easy money' industries without trying to bring in other business. If the money suddenly dried up in advertising, the Valley would be in a bad way just as much as a slump in Finance would crush New York.
Politically, New York has to do a lot more to attract other business. Maybe an incentive to financial companies to fund/start businesses in STEM fields. Otherwise it's never going to happen.
Right, I'm not saying it matters at all other than if you're a competing business, you're going to have a hard time recruiting against these firms. It's not always just a money thing either.
I don't think SV is any better than NY though. I work for an SV-based company remotely. Both cultures are kinda terrible and both cities are only chasing after 'easy money' industries without trying to bring in other business. If the money suddenly dried up in advertising, the Valley would be in a bad way just as much as a slump in Finance would crush New York.
Politically, New York has to do a lot more to attract other business. Maybe an incentive to financial companies to fund/start businesses in STEM fields. Otherwise it's never going to happen.
The top engineering talent goes to financial companies in New York because that's what's fashionable there. There's an actual cultural difference.
I think that was the case, but it certainly isn't now.
I think that was the case, but it certainly isn't now.
As much as the Occupy movement made a splash in the news, I haven't really seen an impact in the employment prospects of my circles in NY. I haven't seen a single person leave finance other than on the grounds of being overworked and burnt out.
Not sure what the Occupy movement has to do with it- I'm talking about engineers in the startup industry. NYC barely had a startup industry a few years ago, now I know a great many talented engineers employed by it.
People might not be leaving finance, but I'm not sure how many engineers are going to it. It's definitely not "cool" here any more.
People might not be leaving finance, but I'm not sure how many engineers are going to it. It's definitely not "cool" here any more.
I think maybe it's just a difference in experience/perspective. While I'll agree there was barely a startup industry a few years ago, it doesn't really seem to be all that much bigger to me now; it's just that they've got some more attention now. The community is more connected. We collaborate and socialize more than we used to.
That said, I don't really know enough new engineers to say who is going into what these days, but I still see plenty of the 23-35 crowd at financials, all with advanced degrees and all wishing they were doing something else.
That said, I don't really know enough new engineers to say who is going into what these days, but I still see plenty of the 23-35 crowd at financials, all with advanced degrees and all wishing they were doing something else.
It was never cool, unless you were going to be a Master of the Universe or BSD trader. It just paid really well. It still pays well.
Exactly. It's only ever been cool to people looking to get "Fuck You Money".
But it still goes back to the pedigree thing. NY is an extremely pedigree-sensitive city and it's way more impressive to talk at cocktail parties about what financial you work for than what no-name-startup/consultancy/generic-design-shop you're working for.
My social circle shrunk noticeably when I left my hedge fund gig in 2008 and worked as a bike messenger; New Yorkers only care about (potential) money.
But it still goes back to the pedigree thing. NY is an extremely pedigree-sensitive city and it's way more impressive to talk at cocktail parties about what financial you work for than what no-name-startup/consultancy/generic-design-shop you're working for.
My social circle shrunk noticeably when I left my hedge fund gig in 2008 and worked as a bike messenger; New Yorkers only care about (potential) money.
Having lived there and worked both inside and outside of finance, I don't think it's so much pedigree-focused as paycheck-focused. New York is the only city where you can say you're a banker, and someone you just met will ask "what kind of banker." There are circles where your college / private school matter but I'd argue that's still less true in NY than in London or even Boston. I felt like I was rarely asked what schools I went to.
The funny thing is that the NYers in finance or law will often tell you how much they'd rather be working at a startup. (Or, well, anything else.)
The funny thing is that the NYers in finance or law will often tell you how much they'd rather be working at a startup. (Or, well, anything else.)
> The funny thing is that the NYers in finance or law will often tell you how much they'd rather be working at a startup. (Or, well, anything else.)
Yuuup.
I can't even count on two hands the number of people I know who left finance and went on to physical jobs they thought were more satisfying. Bike messengers (like I did) were common, but so were roughnecks, delivery drivers and all sorts of other odd jobs.
Yuuup.
I can't even count on two hands the number of people I know who left finance and went on to physical jobs they thought were more satisfying. Bike messengers (like I did) were common, but so were roughnecks, delivery drivers and all sorts of other odd jobs.
it's way more impressive to talk at cocktail parties about what financial you work for than what no-name-startup/consultancy/generic-design-shop you're working for.
Well then this must be a perspective thing, too. I suppose if you go to cocktail parties with Wall Street types then that might be true, but in the social circles I run in (a mix of tech, fashion and media) working for a financial company is instantly seen as very boring.
Well then this must be a perspective thing, too. I suppose if you go to cocktail parties with Wall Street types then that might be true, but in the social circles I run in (a mix of tech, fashion and media) working for a financial company is instantly seen as very boring.
The work itself is boring to talk about, yeah, but I always got invited out. All my friends are the same types of people.
When I didn't have that job anymore and instead had a low-status non-career job (bike messenger), a lot of people simply just wouldn't talk to me anymore. I'm not saying that's definitively the cause of it but I've seen similar things happen to other people there.
When I didn't have that job anymore and instead had a low-status non-career job (bike messenger), a lot of people simply just wouldn't talk to me anymore. I'm not saying that's definitively the cause of it but I've seen similar things happen to other people there.
I agree, back in 2007, even at Stanford, i-banking and consulting were still very popular and glamorous.
The economy has changed, and the tech industry is booming while the finance industry has shrunk. I wouldn't attribute this to OWS, but to the general realization that the finance industry was too big, and many of its services didn't add value. For example, people will be much more skeptical of hedge funds with magical ways to make money, even though there will still be some genuine hedge funds that can outperform the market.
All these changes mean that the tech industry can compete with finance even in terms of salary.
The economy has changed, and the tech industry is booming while the finance industry has shrunk. I wouldn't attribute this to OWS, but to the general realization that the finance industry was too big, and many of its services didn't add value. For example, people will be much more skeptical of hedge funds with magical ways to make money, even though there will still be some genuine hedge funds that can outperform the market.
All these changes mean that the tech industry can compete with finance even in terms of salary.
Jeff Bezos worked for D.E. Shaw before starting Amazon.
You're obviously correct, but as Michael Arrington not long ago said, "Oh come on, Bloomberg doesn't count." And I feel like 90% of HN would agree w/ that sentiment.
That's rich, given that Bloomberg has a degree in electrical engineering while Arrington has ones in economics and law. Bloomberg made his fortunate literally selling computers.
Cool story? I don't see how that negates my point that 90% of HN don't consider Bloomberg to be a tech company.
90% of HN-ers are wrong. Bloomberg was all about using computer technology to efficiently deliver business information to finance people. If it's not a tech company just because the target audience is finance people, then Facebook, Instagram, etc, are not tech companies but rather entertainment companies focused on teens and 20-somethings.
I actually agree with you. Bloomberg is a tech company, and a very very successful one at that :). I was just pointing out the perception.
This is as good an illustration as any of how myopic HN is. Bloomberg isn't just a tech company; they're more technical than most (word chosen carefully!) of the companies YC funds.
Yeah, it's not just Bloomberg. Most technology companies whose users are employees of medium to large companies are not seen as relevant here.
The Tumblr acquisition was the best possible outcome for the NYC startup scene.
The author is right that for NYC to really try to claim competitiveness with the Bay Area they need some big exits that establish anchor tenant companies. They need their own Google, or Sun, or Facebook.
But let's be honest, Tumblr was never that company. They didn't, don't, and probably will never have the kind of revenue required to be a Google or a Facebook. Tumblr took Yahoo's offer because a massive IPO and becoming a giant amongst NYC's tech companies was clearly not going to happen.
So they did the next best thing: they showed that large, successful exits are possible in NYC startups.
We're still waiting for a Google here, and it'll probably take years to get one, but Tumblr was anything but bad for the local tech scene.
The author is right that for NYC to really try to claim competitiveness with the Bay Area they need some big exits that establish anchor tenant companies. They need their own Google, or Sun, or Facebook.
But let's be honest, Tumblr was never that company. They didn't, don't, and probably will never have the kind of revenue required to be a Google or a Facebook. Tumblr took Yahoo's offer because a massive IPO and becoming a giant amongst NYC's tech companies was clearly not going to happen.
So they did the next best thing: they showed that large, successful exits are possible in NYC startups.
We're still waiting for a Google here, and it'll probably take years to get one, but Tumblr was anything but bad for the local tech scene.
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Or Tumblr could have gone under. In which case it would have been moot.
At least this way there's now some focus on the NYC tech scene, which I think is pretty exciting.
At least this way there's now some focus on the NYC tech scene, which I think is pretty exciting.
Tying an entire ecosystems vitality to one company that was making a blogging platform, wrong and boring. That is all.
There's so many interesting companies that are both in the black AND have neat tech challenges in NYC. You just have to take the time to look. Admittedly most of these businesses are boring or opaque to those who don't deeply know tech or aren't familiar with the specific vertical, but all the better for those businesses! They get to focus on their customers and product and evade a publicity circle jerk with folks who don't understand their business.