Now that you know that I think you may want to consider quitting your job Monday and invest in a New You this new year, I wanted to tackle the
issue of location. Specifically, does location matter? Does it matter
where you start your business?
Having started businesses in Chicago, DC and New York, I think it does matter. If you can, start it in New York City.
I was recently at a breakfast event at the Harvard Club put together by a money-manager friend named Ken Shapiro. The topic was something along the lines of managing businesses in today's global environment.
The CEO of a local tech company gave a 2 minute speech in the form of a rhetorical question about why New York City was a difficult place to start and run a business. He said the employment market was tough, you needed to overpay for talent and rent and the taxes were outrageous.
Fred Wilson turned to me and asked what I thought. I then went through a list of reasons why New York City was the best place in the world to start a technology or internet-enabled business. (I think Fred agrees!) I'd argue that the same holds for many other types of businesses. Here's my list:
- NYC has a talent base that is unique. Many technologists have great business judgment as well. I have to look no further than Ira Tau, Patrick Stokes and Matt Zarzecki on my own team at Buddy Media.
- Many business models going forward will be based on free or freemium. This often times involves advertising. NYC is the advertising capital of the world and being so close to Madison Avenue is a huge strategic advantage. This has always been true. But now that business is done at meet ups, tweet ups, networking events, parties and other "non work" environments, this is even more true today. Without being in New York City, my own Buddy Media would not be at the scale we're currently at with 50+ clients, 30 employees and nice cashflow for a fledgling company.
- New York City does not have the most number of investors - VCs, institutional or angel. Silicon Valley holds that distinction. But I'd argue passionately that they are among the best in the world. On the angel front, I look no further than my good buddy Roger Ehrenberg. He is both strategic and tactical. And he has the battle scars of someone you want next to you in battle. On the VC front, names like Union Square Ventures, Softbank, GreyCroft Partners in New York City are all awesome and Boston firms like Spark Capital, Prism Ventures, Venrock, General Catalyst and Polaris Ventures are a short train ride or plane away. While I expect the larger companies to cut back on their cash investments in 2009 and 2010, New York's leading media companies have been active investors and acquirers (Leigh Zarelli and her group at Disney, the corporate dev and investment team at Time Warner, the NBC fund and Quincy Smith at CBS). All in all, New york City is a hotbed of tech investment.
- East Coast versus West Coast mentality. I find my peers on the west coast thinking as follows: let's scale this business and build technology and lock down users and then worry about making mone. I find my colleagues on this coast thinking: let's find a way to make money and build the technology to support the revenue. You probably know which side I prefer, specially in today's "your next round is NOT around the corner" environment. Buddy Media is an example of the latter, as was GOLF.com and U-Wire and Student Advantage, my other businesses.
- It goes without saying that NYC is also a great place to live. As of right now I wouldn't want my 3 kids to grow up anywhere else.
You may be thinking. Wow. It's easy for me to say this now that I'm "in the inside." But the reality is that I've only lived here for 3 years and many of the names listed above took meetings with me because they are good people who are open to new ideas and meeting new people. No one is really from NYC. We all found our way.
To be sure, NYC has one big disadvantage. It's expensive. Very expensive. I've lived in NYC, Chicago and DC. NYC is double those other cities. In addition to being expensive for you to live in, it's expensive for you to start a business in. Taxes are higher than any other city and rent, professional services and payroll will cost you more.
Net-net, I think the people you will meet, the revenue you will generate and the scale you will reach justifies the increased costs. NYC is the ultimate meritocracy. Perform and you will be rewarded. If you're going to start a business, you may as well add another zero and do it in NYC!
While the city is expensive, there are ways to mitigate the expenses. You can live outside the city. Hoboken and other shoulder locations are much cheaper. Public schools continue to get better, though there's still a ton more room for improvement. And, lastly, there are definitely ways to enjoy the city on the cheap. For example, our favorite Thai joint, Land Thai Kitchen on the UWS, offers an $8 three-course lunch! Broadway is expensive. Shows like Asssscat at the Upright Citizens Brigade theater and other off-off-off Broadway venues are not.
Do you want to start a business in NYC but don't know where to start? Here's one idea to get you thinking. Real estate prices are down from their peaks. So you can now rent space much cheaper. Open a bar. Open a dog spa. Open any service company. Landlords will negotiate for the first time in a while. Just do it.
amy pohler seth meyers
