Silicon Valley vs. New York: Business

As part of a series about the advantages New York has over Silicon Valley and why it may become dominant, let’s examine the difference in dealing with business generation.

New York startups tend to be more focused on building stable businesses. If they happen to revolutionize the world, great, but it is not a pre-requisite. Valley startup want to create value by changing the world.

Business first, party later

I was sitting on the board of advisor for a technology conference a few years ago. The conference had been successful with valley people so they were considering bringing it to New York. In the first advisory meeting, which covered some of the difference between New York and the valley, someone said “here in New York, we are more focused on revenue lines.”

A discussion ensued as to why that was. What came out is that, to be cool in New York, having a startup isn’t enough. When the social metric in the city elite is largely based on commercial success (even going back to its founding days, New York has always been a largely capitalistic city, looking at the almighty dollar as an indicator of status), acceptance arises out of business success. When your internet startup is set side by side with Wall Street businesses or large corporations, you better have your story straight about how you too will soon turn into a member of the big guys club.

So New York startup tend to be very focused from the get-go on revenue models, client acquisitions, return on investment, and other things that many in the valley see as things to worry about in the future.

The concept of business viability is so deeply engrained among members of the New York tech community thatbusiness questions had to be banned at the NY Tech meetup, the monthly tech demo fest. Many have wondered why such questions were booed and the truth is that they used to dominate early meetup, turning the focus away from the original concept of demo-ing interesting new tech.

It’s a problem few have in Silicon Valley. Outside of discussions when raising funding, a lot of valley startups can go through an evolutionary track that goes from founding a company to launching a product and being acquired without having to worry about building a business (this can be reserved to the acquirer to figure out). A typical example is the response the founders of Quora, the current valley shiny object, recently gave to a question about business model (emphasis is mine):

It’s hard to plan ahead too far on the internet because things change so quickly, but there’s a good chance that advertising will end up as some component of our business. There are a lot of other options, too, but our focus as a company is on building Quora as a product, and our costs are low enough now that we can afford to delay worrying about monetization until later.

While Quora may become a huge standalone business, such statements only increases its chances of being acquired rather than becoming a long terms concern. And that’s part of the challenge for many silicon valley startups: they are built to sell, not build to run.

Takeaway: Businesses are ultimately about money so to continue fostering success, valley startup might do well to act a little more like New York ones if they want to build sustainable futures.

Update: This post is part of a series of why New York may gain the top position in the tech world, displacing Silicon Valley. The whole series is now online: IntroCulture Part 1Culture Part 2TalentAdversityBusiness

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