New York City: Home of Wall Street and … a Tech Boom?

Nearly every U.S. city these days brags about becoming “the next Silicon Valley.” New York actually is.

David Karp, founder of the micro-blogging site Tumblr, opens the NASCAQ Exchange on July 11, 2013 in New York City. Tumblr was bought by Yahoo! for $1 billion in May; Karp is estimated to be worth $200 million.
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Nancy Cook
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Nancy Cook
Oct. 16, 2013, 8:48 a.m.

So many U.S. cit­ies now pin their eco­nom­ic hopes and dreams on build­ing a bur­geon­ing tech­no­logy sec­tor and be­com­ing a mini-Sil­ic­on Val­ley, with an abund­ance of jobs and well-edu­cated res­id­ents. Even New York City, whose res­id­ents and lead­ers rarely ad­mit to any feel­ings of in­feri­or­ity, is no dif­fer­ent. It wants those hot tech start-ups for it­self.

And in the last dec­ade, New York has suc­ceeded in cul­tiv­at­ing, at­tract­ing, and boost­ing its loc­al tech tal­ent. Just ask the founders of Tumblr, Etsy, BuzzFeed, or Warby Park­er — all com­pan­ies headquartered in New York. Tech and in­form­a­tion com­pan­ies, in­clud­ing me­dia prop­er­ties, now make up the second largest sec­tor in the city’s eco­nomy, sur­passed only by fin­ance, ac­cord­ing to a new study pro­duced for the Bloomberg Ad­min­is­tra­tion. Since 2007, those types of jobs grew by 11 per­cent, or ap­prox­im­ately 26,000 po­s­i­tions.

Na­tion­al Journ­al re­cently sat down with Robert Steel, New York’s deputy may­or for eco­nom­ic de­vel­op­ment, to talk about New York’s tech push and why the city is dif­fer­ent—maybe even bet­ter—than its Cali­for­nia rival. Ed­ited ex­cerpts fol­low.

You worked for Gold­man Sachs for years as a banker. Did you ever think you would see a day when the tech sec­tor would be­come New York City’s second-largest driver of jobs, trail­ing only fin­ance?

Fin­ance is still an im­port­ant part of the New York City eco­nomy and in­dustry. It’s an im­port­ant jobs con­trib­ut­or and even more im­port­ant in terms of tax rev­en­ue, so it’s still im­port­ant to fo­cus on. What you see is that tech­no­logy isn’t just an in­dustry. It’s a skill that’s spread­ing through all in­dus­tries. New York City needs to have start-up com­pan­ies that are be­gun here like Tumblr or Etsy, but we also want the very large es­tab­lished com­pan­ies to come here, wheth­er that is Ya­hoo or Google. All in­dus­tries, wheth­er it’s ad­vert­ising, com­mu­nic­a­tions, pub­lish­ing, or re­tail, are be­ing changed by tech­no­logy. They’re not tech com­pan­ies, but every in­dustry needs the skills of know­ing how to use data and man­age it ac­cord­ingly.

How can New York com­pete with Sil­ic­on Val­ley, which out­ranks New York with the amount of ven­ture cap­it­al fund­ing it has and with its built-in ad­vant­ages, such as its close ties to uni­versit­ies like Stan­ford?

I think the real ques­tion is how Sil­ic­on Val­ley is go­ing to com­pete with us. What you’re see­ing with tech­no­logy is that as it moves from be­ing hard­ware-driv­en, it’s all about how you use the tech­no­logy. I would ar­gue quite strongly that NYC has much bet­ter skills be­cause the in­dus­tries in which it’s go­ing to be used—ad­vert­ising, com­mu­nic­a­tions, pub­lish­ing, re­tail, fash­ion — these are here. So, I don’t know how Sil­ic­on Val­ley will be able to keep up, as the fo­cus of how tech­no­logy is ap­plied moves to New York. If you look at the com­pan­ies that are be­ing suc­cess­ful here, they are ba­sic­ally ap­plic­a­tion-based. I don’t think the soft­ware that en­abled en­ter­tain­ment is go­ing to be birthed in Sil­ic­on Val­ley. I like New York’s odds in those com­pet­i­tions.

What can oth­er cit­ies learn from New York’s mul­ti­year quest to build a tech sec­tor?

Every city has to fig­ure out its game plan. Our job — and May­or [Mi­chael] Bloomberg led us with this — is to look at the cards in our hand and de­cide how we can best play them. So we have trans­port­a­tion. We have the wa­ter. How can we play our hand? I think the may­or’s vis­ion — to say that we are go­ing to double the num­ber of Ph.D.’s and en­gin­eers in ap­plied sci­ences in the next dec­ade — is put­ting a thumb on the scale to change something. Oth­er cit­ies have to fig­ure out what is in their port­fo­lio.

Of­ten, when I hear city of­fi­cials talk about build­ing a tech sec­tor, there is little dis­cus­sion about how to plug less-skilled work­ers in­to those types of jobs. What’s your plan?

The two most im­port­ant trends in my life­time af­fect­ing eco­nom­ic de­vel­op­ment would be glob­al­iz­a­tion and the ad­vent of tech­no­logy chan­ging things. Both of those have the byproduct of po­ten­tially ex­acer­bat­ing in­come in­equal­ity. I think it’s a tricky is­sue, but my best single plan is about a com­pre­hens­ive pro­gram with edu­ca­tion and train­ing con­nec­ted to jobs that we think will be there.

We’ve already done it — if you look at the IBM col­lab­or­a­tion with P-Tech [a pub­lic school in Brook­lyn]. They have in­tense ment­or­ing and coach­ing between the kids and IBM, and they guar­an­tee that every kid gets a first-round in­ter­view job with IBM. It’s in pro­cess and hap­pen­ing right now with about 600 kids. It’s not go­ing to be one thing, but we have ex­amples of things that are work­ing, and it’s get­ting on it at an early age.

What do you want the New York tech sec­tor to look like a dec­ade from now?

I think this will be un­help­ful to you, and you won’t like this an­swer, but I think our job is to cre­ate the en­vir­on­ment where things nat­ur­ally hap­pen. We want to be a city where people want to be. We’re not go­ing to de­cide: “This guy wins, this guy loses.” It’s not for us. In­stead, it’s Brook­lyn Bridge Park. It’s the pub­lic safety. It’s us mak­ing sure the cobble­stone streets look great. The No. 1 suc­cess­ful as­pect for eco­nom­ic de­vel­op­ment is qual­ity of life, and the qual­ity of life is edu­ca­tion, clean wa­ter, and clean air. All of those things — that’s the con­stel­la­tion.

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