What are the challenges that the New York tech scene needs to address? This topic kicked off the conversation this morning between TechCrunch founder Michael Arrington and venture capitalist Bill Gurley at TechCrunch Disrupt NY 2013. Gurley’s VC firm, Benchmark, has invested in some of the most disruptive technology companies over the past 10 years, including Dropbox, Zillow, Uber, Twitter and Snapchat. He says that New York needs more iconic companies, and worries about the Wall Street influence on the New York tech community.
Gurley noted that what really put Seattle on the map were companies he described as “four pillars” of the Seattle market – companies that people identify as being associated with Seattle: specifically, Microsoft, Starbucks, Amazon, and Costco. He says that all of these were originally venture-backed and have remained throughout the years.
New York has the entrepreneurs and the engineers, says Gurley. Now the city needs its own “iconic” companies to put it on the map, as well. There’s no precedent for that here just yet, he adds. But when pressed on whether or not New York didn’t have “big” companies, Gurley admitted that VC’s think of DoubleClick as one of the big exits here, and more recently, he says, there was the exit of Connecticut-based job site Indeed.
“[Indeed] had a great business model, a huge consumer brand…and they sold it,” scoffed Gurley. “I think in general, in the venture business we have this problem – this kind of anti-IPO attitude – that I think prohibits companies from hitting the long ball, but it seems like maybe that’s even more acute here.”
Venture capitalists are dependent on huge home runs – big wins. He said the system dynamic in New York prevent companies from reaching that point. The mentality in New York is one that’s still associated with that found on Wall Street, Gurley said. That is, Wall Street is not loyal to companies, but is more focused on the dollars and bottom line. This can prevent companies from growing large, turning into the kind of iconic firms that could one day become pillars of the New York tech community, the way that Microsoft et al. have become synonymous with Seattle.
Earlier this morning, Andreessen Horowitz’s Chris Dixon spoke of other, but somewhat similar, concerns, when comparing the general climate for startups in New York to those in San Francisco. “There are plenty of great investors here and attracts lot of entrepreneurs,” he had. But he saw challenges in the “whole mid-level layer” when companies have a hit product and now need to scale.
“I hope it will all change,” Gurley concluded on this front, addressing the audience, but he honestly didn’t sound all that hopeful.