It Started With a Jolt: How New York Became a Tech Town

February 22, 2019

 

Euan Robertson started his job with New York City’s economic development team at an ominous moment. It was Monday, Sept. 15, 2008, the day Lehman Brothers filed for bankruptcy and ignited the financial crisis.

 

Mr. Robertson made his way through City Hall’s sprawling open office to a conference table, where he huddled with top advisers to Mayor Michael R. Bloomberg.

 

“No one knew what was going to happen or how bad it would be,” Mr. Robertson recalled. “But everyone agreed we’d better come up with a plan.”

 

The plan that emerged called for developing tech start-ups and tech workers in New York. The goal, Mr. Robertson said, was to “build a talent engine” that would help make the city a magnet for coders and companies.

 

A decade later, there is ample evidence that the city is well on its way to achieving that goal. Amazon’s sudden decision last week to abandon its plan to build a big campus in Queens, in the face of protests from some local politicians and community activists, is a setback — but not one that reverses tech’s climb in the city.

 

Amazon already employs 5,000 workers in New York, and the city’s talent pool was the main reason, the company said, that it selected New York in November. In December, Google announced a major expansion that could double its New York work force to 14,000 over the next decade, without the rich government incentives that proved a lightning rod for the Amazon deal.

 

Today, the city is home to thousands of fledgling companies, and the New York region regularly ranks second to the Bay Area in attracting venture capital, the lifeblood of the start-up economy. The city’s tech sector has become a wellspring of jobs paying more than $150,000 on average, a major part of the local economy.

 

The story of tech’s ascent in New York stretches back nearly two decades. It was a bumpy path, with progress both by design and serendipity. DoubleClick, a survivor of the dot-com crash and a digital advertising pioneer, and Google, which made an early bet on the city, played key roles. And the Bloomberg administration also made smart policy moves.

 

In the early 2000s, start-ups clustered in the Flatiron district of Manhattan, an area known as Silicon Alley.

 

In the early 2000s, start-ups clustered in the Flatiron district of Manhattan, an area known as Silicon Alley.

 

But tech in New York took hold mainly because entrepreneurs, technologists and corporations chose the city as the place to work and live, just as the city’s industries were undergoing digital transformations, according to interviews with more than two dozen people who contributed to the city’s evolution into a tech center.

 

“The truth is, we caught a wave,” said Seth Pinsky, the president of the New York City Economic Development Corporation from 2008 to 2013.

 

Many of the city’s tech jobs are not in technology companies. Instead, they are tied to industries where the city has long been positioned as a world leader — like finance, advertising and media. Those businesses face threats from the rise of the digital age, and have adapted to compete, helping to revitalize the city’s economy in the process. There are twice as many technology jobs in non-tech industries in New York as there are in technology companies, according to Emsi, a labor market research firm.

 

In terms of economic, political and cultural impact, the finance industry dominates. But tech is gaining fast, and is where much of the growth is.

 

New York’s confidential proposal to Amazon, code-named Project Clancy, which is filled with detailed data on the city work force and labor market, points to the change. Amazon asked, for example, which companies had the most job openings in machine learning, a fundamental artificial intelligence skill. The top four, according to the proposal, were JPMorgan Chase, Goldman Sachs, Citigroup and KPMG. Tied for fifth place were Amazon and Google.

 

Skilled tech workers now flock to New York from everywhere. But the homegrown talent engine that city officials sought to jump-start a decade ago is also revving up. The new Cornell Tech graduate school campus on Roosevelt Island, a product of the city’s development plan, has 300 students, with expansion plans for a student population of 2,000 over the next two decades. And new courses, buildings and research institutes are underway at Columbia, New York University and the City University of New York.

 

And they are being lured by urban amenities — museums, theater, opera, dance, jazz clubs, art galleries, bars and restaurants — that offer a clear alternative to life in suburban Silicon Valley.

“The main resource in technology is smart people,” said Kevin Ryan, a longtime tech entrepreneur. “The New York tech sector is succeeding largely because New York is succeeding.”

 

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