Fred Wilson

NYC = Start-up City

At an event called Start-up City, Fred Wilson, co-founder of Union Square Ventures, a New York City-based venture capital firm with investments in Twitter, Tumblr, Foursquare, Zynga and 10gen, and known by some as the godfather of tech in New York City, outlined the need for New York City to push the envelope of coding and broadband.

Notes from Start-Up City

Wilson started off highlighting New York City’s progress noting that 10 years ago it had at most 20% of start-ups as did Silicon Valley, but that today NYC has 50% of the start-ups. He also talked about tech as a generational thing and that Silicon Valley is in its 6th or 7th generation while New York City is in its 2nd or 3rd. However, the advantage may be shifting to New York City.  While the digital revolution started with transistor, and was built by routers and other infrastructure, it is now about deployment: new ways of doing things.E3Think notes that New York City has the largest building stock with over 5 billion square feet of floor area, and the most varied transportation ecosystem in the nation.

However, to realize full potential as a technological epicenter for start-ups, Wilson said that the next New York City mayor needs to focus on workforce development, infrastructure and regulatory reform.

1. Workforce development

Wilson praised Harvard Professor Clay Christensen, best known for disruptive innovation and his book the Innovators Dilemma. According to Wilson, Christensen says we subsidize education in fields where there are no jobs. Marc Andreessen of Netscape fame says two kinds of jobs in the future.  One kind of job instructs the computer what to do.  The other kind is instructed by the computer. Wilson says we want to tell the computer what to do and New York City needs to get ahead on the right type of education fast.  Wilson noted Mouse, the Academy of Software Engineering (Washington Irving High School), Code NowGirls Who Code as success stories.  Cornell on Roosevelt Island is another good example of what cities need to do. Adult retraining includes Skill Share, General Assembly and the Flatiron School. But the game is moving very fast: the next Mayor needs align workforce development with the jobs that will be out there.

2. Infrastructure

While transportation and the electric grid are critical, Wilson highlighted the urgency to improve broadband. This includes both the wired fiber to home/business as well as wireless, Wi-Fi and cellular data). A major roadblock is the incumbent duopoly of Verizon and Time Warner Cable. With this duopoly NYC will lag behind places like Chattanooga which are turning broadband access into a competitive advantage. But how can the next mayor break that duopoly? One is to bring Google Fiber to New York City just like in Provo, Utah, Kansas City and Austin, Texas. But that may be difficult (event though Google is here). Wireless even more difficult as it is auctioned off at federal level. One thing within the mayor’s general power is free open Wi-Fi in every subway tunnel, subway cars. Wilson called this a shot across bow. Kids can do homework. Wilson says this could be accomplished for below a billion. E3Think notes that Inventropolis participant Governing Dynamics is a leader in this space.

3. Regulatory reform

New York City present regulatory regime is permission based: you need to ask permission to do something. Wilson said one thing that makes the internet economy so powerful is that it is permission-less. Entrepreneurs can invent things without being hindered by the bureaucrats. In contrast to New York City Wilson gave the example of cabs in San Francisco.  Once upon a time it was difficult to get a cab. However, with the advent of Uber and Sidecar, that has changed. Unfortunately in New York City upstarts Uber and particularly Hailo have been hindered by regulations.  The Black Car Association has sued city to stop evolution. It isn’t just the black cabs: Skillshare received a cease and desist order because it is not licensed. airbnb is illegal, not licensed hotel. airbnb could bring in $1 billion dollars to the New York economy. In contrast, the large hotels are owned by non-New York City and possibly non-US entities. Not only are these regulations bad for the immediate economy, it also shows NYC to be inhospitable for innovation. Incumbents use regulators to stop innovation.

New York City is becoming increasing relevant in technology. But Wilson notes the Pandora’s Box; once out there is no turning back. He notes that people are afraid, technology is hurting jobs, hurting profits. All true, but Wilson says this is inevitable. It is far better for New York City to recognize these global trends and ride them. Get out in front and lead.