How Tech Became Cool Again
Last week, over cheese sandwiches, Caesar salads and a cauldron of French press coffee, The New York Observer sat down at the Ace Hotel with a cross section of New York’s tech clique to find out how they relaunched the city’s tech scene. There was the classic financier, Dan Allen, principal at Bain Capital; the social media guru, Ben Lerer, founder of Thrillist; the Ivy League wunderkind, Alexa Hirschfeld, CEO of Paperless Post; and the photo-sharing whiz, Jon Oringer, founder of Shutterstock. As Cat Power’s voice drifted through the cavernous hipster hub—itself an emblem of New York’s tech renaissance—we talked about how engineers became cool and why Silicon Alley might be the new Wall Street.
%strong NYO: What’s the new lay of the land here? Is the tech scene in New York more interesting now than it used to be?
Dan: Well, three things have changed. One is that starting a company is cool again. And going to work at a hedge fund or bank is no longer a guaranteed salary for life.
%strong Nor is it cool.
Dan: I don’t know if it’s less cool necessarily, but people who came out of college in the past few years, who in the past may have only thought about going to an investment bank or hedge fund or large organization in New York are thinking about starting businesses. That’s the first thing.
Second is that all the sudden you can hire great tech talent in New York, which you couldn’t do five years ago.
Third is that there is a lot of infrastructure in New York for starting businesses that didn’t exist 10 years ago. So, all of a sudden, it’s not clear why you’d start it anywhere other than New York.
%strong How does the sort of vibe and density and energy of New York inform the kind of companies that start up? Yesterday, we were talking about Apple, and how Apple could never live in New York City because of the kind of company they are and kind of aesthetic it is. Then there are companies that couldn’t live anywhere else, like The New Yorker. How does that translate to the kind of company that would start here, that can only be here? Could your company have really thrived anywhere else?
Alexa: That’s a good question. Companies come out of cities and people with a certain perspective. We were East Coast people with an East Coast perspective.
%strong Does New York breed a certain type of company?
Alexa: There is a stereotype that things are more design-focused in New York, but I don’t know. Just because of the advertising agencies and the fact that it’s not specifically engineering focused.
%strong Are there any talent or technical bottlenecks in New York that are a problem to you?
Jon: It’s hard to find programmers here. We actually don’t do any outsourcing; we have all the programmers in our office. It’s not easy to find them here, and often we have to seek them out and bring them in.
[Ben walks in.]
%strong We’re just talking about starting companies in New York, and if there are any bottlenecks here?
Ben: I guess I grew up here, so it’s sort of tough for me to have a lot of perspective because everything I know is New York. But, there’s absolutely a bottleneck. I think it’s hard to find good people particularly, as the economy has gotten better and things have picked up. There’s so much competition for the best guys.
%strong But wouldn’t that be the case if you were in San Francisco?
Ben: I guess it’s probably the case in any market where there are a bunch of companies growing really quickly all in a similar space.
%strong Why go to Silicon Valley if New York is such a great place?
Jon: Because it’s cold outside.
%strong Is it lonelier to start a company here than in San Francisco, because there’s a larger population of start-ups out there?
Alexa: I think initially when you’re starting out it is because no one knows what you’re trying to do and you don’t have that many examples of people who have done this before. The thing I have noticed from people who are in Silicon Valley is that they are all speaking the same language and have the same buzzwords. Here it’s a little more challenging.
%strong Where do you see the tech business fitting in that galaxy of industries that make up New York? Do you still feel like another planet?
Ben: Here the community is quick to accept new people. When anyone starts anything that’s remotely interesting, it’s just seen as more, more, more. Come on in! It’s not a very hard world to break into because people just want more contacts and more friends in this little space.
%strong Do you all care either way whether the rest of the media catches on to what you’re doing?
Dan: Jon’s an example of one of the most successful businesses started in New York in the past five years. There haven’t been many great articles about it.
Jon: We’ve kept a low profile on purpose.
Jon: We didn’t really need any press to be successful. It’s nice always to get validation, but we’re doing fine.
%strong How much interest do you have in being a business celebrity?
Jon: I don’t really care that much.
Ben: The overwhelming majority of the top entrepreneurs in New York are low key and don’t seek out press. On the flip side, their businesses would benefit greatly from the publicity that comes with a New York Times article.
%strong Tell me a company other than your own that you’re really focused on.
Dan: Paperless Post.
Alexa: Venmo is really cool. Text your friends money.
Ben: Andrew Cortina. He was at OMG Pop when it was Iminlikewithyou. Now he started his own thing, and he’s much more technical than a lot of the people. He’s young and hungry.
Dan: Jon Caplan started a business called OpenSky Project. He ran Ford Models before that.
Alexa: An obvious one is Gilt Groupe. It’s an awesome technology team.
Dan: Rent the Runway is doing extraordinarily well; that launched two months ago. Oyster, which is hotel travel site, but we’re investors in it.
%strong What about the IPO question? Who’s going to be the first? Gilt, foursquare?
Ben: Foursquare has zero dollars of revenue. It’s a good model.Dan: I think it’s funny that people complain there’s not enough money in New York for entrepreneurs to start businesses, and it’s so clearly, to me, the opposite. There’s too much money! Great ideas with great entrepreneurs will always creatively find money.
%strong Who among the big media executives do you think understands technology and your world?
Ben: I’m scared of all those guys. I’m not saying anything
Dan: Tim Armstrong at AOL. He understands what it takes to build a big business, and he has a physical deck of cards that he has taken over.
%strong You’re bullish on AOL?
Dan: I’m bullish on Tim Armstrong. He’s completely transforming the business.
%strong Anyone else?
Ben: I think that everyone [in the big media companies] theoretically is headed in the right direction. I think everyone’s woken up and realized that it’s important, but I don’t think a ton of progress has been made anywhere that I can put my finger on. I mean, AOL is in a pretty good position because they don’t have any of these old media assets that they have to deal with. Everything they’re doing is already digital. I feel the same about IAC.
%strong Who is hopelessly headed in the wrong direction? Do you see The New York Times turning itself around?
Dan: Gosh, I hope so. I really don’t have enough familiarity with what’s going on there, but it’s a really, really tough one to turn. But they’ve done a better job online than anyone.
Dan: They just have! Everybody reads The New York Times online.
Ben: But nobody pays for it
Dan: But they’ve made it something that everyone does. At least people are consuming the content online. Other companies can’t even get people to use the digital properties that they have.
Dan: The most ridiculous question in big media companies that people are trying to solve is how to get people to pay for content.
%strong We did a story last week on how Newsday only got 35 subscribers after they put up a paywall.
Alexa: Are you serious? That’s terrible!
Ben: Did they tell people that? It’s not a great PR move.
%strong The question is still, how do you get people to pay for content? A lot of the different models, one of which is for magazines, is that a bunch of magazines have tried to get together and start their own standard. It’s hard to imagine how the magazine industry is going to get together.
Dan: It’s hard to imagine Condé Nast or Time Warner solving the problem on their own. I helped launch Fandango, the movie ticketing site, and it was an interesting example of how the theater industry never could solve that problem on their own. We brought the industry together and proposed a solution where a tech company basically built a solution for them, went into partnership with them. That’s the model for the newspaper or magazine industry.
%strong What do you think about the iPad?
Dan: I think it’s gonna be awesome! [laughing] I mean, you can see all the bad buzz, ‘Oh, my iPhone tortures me, drops my call,’ etc., etc., but then I buy [the iPad] the day it comes out and use it every day for the rest of my life.
%strong What media do you consume? What do you look forward to reading?
Alexa: I almost exclusively do all my reading from links on Twitter
%strong Do you read anything hard copy? Magazines? Newspapers?
Ben: People read The New Yorker. That’s the only thing I see people holding on airplanes.
%strong Anything else? Help me out here.
Dan: The Economist
%strong You read that hard copy?
Dan: I just grab 25 newspapers and 45 magazines at the beginning of the day
%strong You get 45 magazines?
Dan: Yeah, I get 45 magazines, so I’m helping the industry. I don’t know if that will continue with the iPad.
%strong What do you think of the Daily Beast and the Huffington Post? Is there any online media that you guys are excited about, that does it right?
Ben: I mean, I’m a realist. I love the Huffington Post; I have that political slant, so it’s for me. But I think what you find that is the people who are finding success are the ones who aren’t trying to go so mainstream. They have a specific angle or approach. Online, it costs so much less to be a publisher, so you can write about a very specific type of business and be profitable and build something there. Whereas in print, it’s a lot harder to do that.
Dan: I think in our kind of world, it’s all about voice. That’s the only way you can distinguish yourself. You guys are a good example.
Alexa: One of the great things now with distributing content is that you can really be more niche. So figuring out how to get people to care about the niche is what’s important. I would find in The Observer what I would not find in The Times or CNN. And I would like to read it. What matters to me is the city I live in.
Dan: I think if the content is unique, people will be glad to pay for it
Alexa: You were talking about brand issues. I believe in an aesthetically superior experience. I think you can expect in these few years to have technology move more towards you. Like the iPad, it will be really useful in making things look more interesting, in graphics, in not losing anything. So when that happens, you won’t have any problems just being text on a page. Consumers would love a glossy New Yorker or New York Times in a machine, so I wouldn’t fret about that. Just as long as it’s all centralized.