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The Innovation Bubble: Copycats and “me too” startups

Tim — Tue, 23 Sep 2008 12:44:15 GMT

When I talked earlier about why it might be better to start a tech company outside of Silicon Valley, perhaps the biggest point was avoiding the echo chamber. The fact that Yammer, a Twitter clone for the enterprise, had won the TechCrunch 50 conference, reinforces this point.

Therese Poletti had a great column in Marketwatch that discussed this a little.

Product features and improvements are important to keep technology evolving, but some of these seemed like incremental extensions to existing products and ideas, and not really "new, new things," to quote the popular Michael Lewis book of the same title.

She goes on to question whether these are sustainable businesses by themselves.

So the variety of startups I saw makes me wonder: are many of these companies long-term horizon plays that are not yet obvious winners? Or are many just flash-in-the-pan startups, looking for a quick exit via an acquisition by a larger company, since the initial public offering market is pretty much dead in tech right now? Maybe a little of both.
…
"These businesses may not appear to be large opportunities because the issues they solve are just appearing in the marketplace," Ressi said. "Give it a few years, and at least five of the companies will be really large, operating in markets that nobody would predict to be interesting."

Suffice it to say, I don’t think that something like Birdpost, a social network for bird watchers, will ever be anything but a lifestyle business with modest growth. It’s a niche community site – which can certainly make money – but there are simply not enough birdwatchers in the world to achieve the scale that most VCs would look for.

Jason Calacanis has said that one of the big reasons they chose Yammer is that it’s Twitter with a business model. The only issue is that I think it’s a very flawed model. The problem, I think, is that many of these people on both sides of the startup equation think the answer is “selling to the enterprise” – after all, enterprises are willing to pay for things that consumers are not – but they have no enterprise experience themselves (working in one or developing for one) and don’t fully appreciate the dynamics here.

Therese puts it more tritely: the biggest innovation at TC50 is that the winner asked “What are you working on?” instead of “What are you doing?”

Ironically, Jason discussed on TWiT 161 how big problem with the first bubble was everyone was pursuing the same opportunity; he says that today we’re in a similar situation - “there are tons of copycat sites” just like the first bubble - except that they haven’t taken 100 million in VC funding.

In other words, we’re not in a funding bubble, but it sure looks like we’re in an innovation bubble.

Remembering September 11th

Tim — Thu, 11 Sep 2008 14:41:47 GMT

I will again repost what I wrote in 2006, on the 5th anniversary of the attacks.

On the morning of September 11th, 2001, I went to work at 1 Liberty Plaza across the street from the World Trade Center. We happened to have a global department meeting that morning, so I had passed through the transit hub at the base of the WTC earlier than usual - 7:45 instead of 8:45.

I still remember the sound of the first plane. I was in a conference room on the 12th floor facing south, so we couldn't actually see what was going on at the time. The paper and ash looked like confetti, and our first reaction was that it was some sort of ticker tape parade.

Without television or radio, we had no sense of what was going on. I called and woke my girlfriend who was living a few blocks south at the base of West St. My plan was to come down to her apartment and figure out what to do. I watched the second plane hit, and by the time I got to her building it had already been evacuated.

Standing in Battery Park, I stared at the burning towers. It was only as I watched the first tower fall that I began to understand the gravity of the situation. I simply stood there in shock with countless others as a cloud of dust and debris and God knows what else enveloped us.

I was on the FDR ramp on my way uptown and did not see the second tower fall. At this point, everything was pretty much a blur. Things hadn't quite sunk in, but all I could think about was where my girlfriend (now fiance) was. I finally got through to my parents on a landline. Tara was ok. She wisely ran to the ferry terminal and managed to get on the last ferry off of Manhattan and was making her way to a friend's apartment in Jersey City.

All trains leaving the city were closed, so I eventually ended up at Chris' apartment, a good friend who I worked with and who left the office with me. We eventually met my father for dinner who was still in his office a few blocks away coordinating things. I don't remember what I ate or what was said that night. The only thing I really remember was how grateful I was to be sitting with my father and a few close friends, knowing my mother and sister and girlfriend were all safe.

The greatest gift was waking up on my birthday the next morning at home with those I love and learning that none of my family and friends had been taken. There were 2,749 other families that were not so lucky, and my heart goes out to each and every one.

I still don't fully understand the impact that day had on my life and I don't know that I ever will. I do know, however, that I never forget September 11th, 2001.

Announcing the inaugural meeting of the New York ALT.NET group

Tim — Tue, 09 Sep 2008 18:02:47 GMT

I’m pleased to be able to announce the inaugural meeting of the New York City ALT.NET User Group will be held Thursday, September 25th, 2008 @ 6:30pm. We will meet regularly on the 4th Thursday of every month. The first meeting will focus on both the philosophy behind and tools for Object-Relational Mapping. (We’re very big fans of SubSonic ourselves).

Are you passionate about the profession of Software Engineering, always looking for new learning experiences, stimulated by engaging in conversation with peers who challenge your preconceptions, and looking to improve your software development skills and practice? Then ALT.NET NYC wants YOU!

What is ALT.NET ?

ALT.NET is a loose confederation of like-minded, self-organizing .NET-focused software developers that delight in challenging the expected norms, experimenting with new and creative ways to solve problems in software engineering on the Microsoft platform, and aren't afraid to challenge convention.

We will be meeting monthly to discuss issues that interest us in a loose, informal discussion-style environment. All software developers of every stripe are hereby extended an invitation to participate in the discussion or just come and see what all this ALT.NET stuff is about.

Meeting Topic: Object-Relational Mapping: the philosophies and the tools

To get things started, our initial meeting will be focused on a discussion of the pros and cons of different Object-Relational Mapping technologies. With the recent releases of the Microsoft ADO.NET Entity Framework, NHibernate 2.0, and SubSonic 2.1, the .NET Object-Relational Mapping space is hotter now than ever and the choices facing .NET developers in this area are widely-varying in their focus, capabilities, principles, and goals.

Participants will be on-hand to discuss their experiences with tools like NHibernate, SubSonic, The ADO.NET Entity Framework, and more offering attendees a unique opportunity to ramp up their understanding of where each of these kinds of tools may fit into their developer's tool belt and also to share some of their own experiences with these tools and frameworks with other attendees in a relaxed, conversational atmosphere.

To ensure proper access to the building, all attendees are required to register no later than 48 hours prior to the meeting. For additional information regarding registration, location, and other meeting details, visit http://nyalt.net/view/events.aspx

We at Notches are big proponents of the ALT.NET movement and are happy to be involved and support the group. We hope to see you there on Thurs!

Announcing the Notches Toolbar

Tim — Fri, 05 Sep 2008 23:09:41 GMT

We released the first version of the Notches Toolbar today.

From the start, we’ve always felt that reviews need to be delivered contextually and thus have emphasized partnerships over simply aggregating reviews. At the same time, we recognize that partnerships are not always possible for a variety of reasons.

To that end, I’m very excited to be able to finally announce the Notches Toolbar, a Firefox 3 extension that enhances your browsing experience by adding reviews to sites that don't have them. Of course, this functionality builds on the Notches platform, so any reviews written on other partners (such as Facebook and Microreviews) will also be visible through the Toolbar (and vice versa).

I hope you’ll try it out today and let us know what you think.

Friday Fun: Wait, Favre isn’t God?

Tim — Fri, 05 Sep 2008 17:36:00 GMT

A church sign in Wisconsin makes an amazing admission that Favre is not, in fact, God.

On a related note, I can’t wait for this NFL season. The Giants looked great last night – when I get a chance I’ll post some pictures from the game as well. It’s a little premature, and I’m not saying either team will be able to do it, but how awesome would a Jets-Giants Super Bowl be?!!

Friday Fun: Betting with weed

Tim — Fri, 08 Aug 2008 14:37:00 GMT

iPhone - Custom Application Upgrade = Data Loss?

alex — Wed, 06 Aug 2008 14:00:00 GMT

I don’t know if many people have reported this but upgrading your applications on the iPhone is a hit or miss procedure. Sure it is easy from an iTunes or a AppStore icon on the device. This isn’t the first time it has happened as some of the applications in question have had multiple updates. The main problem(s) I have seen are as follows:

Loss of login information (FaceBook, NetNewsWire, Todo, WordPress)
Loss of Data (Todo – I spent 30 minutes entering data and then noticed that an upgrade was available. You get the picture…)

Now the one thing I would like to see out of Apple is a way of backing up each individual application’s data independently so I don’t lose all my data again. At least with ToDo they sync with Toodledo so I can at least sync online so I was able to go back to a previous days entries.

Anyone else seeing similar issues?

Friday Fun: Fun with Teleprompters, or the Worst Sportscaster Ever

Tim — Fri, 01 Aug 2008 12:33:00 GMT

This is just painful to watch.

"Passes it to the man, and boom goes the dynamite"

Is Live Mesh constantly crashing? Try removing Silverlight

Tim — Wed, 30 Jul 2008 18:51:08 GMT

On two of the four machines I’m running Live Mesh on, I found the Mesh Operating Environment (moe.exe) repeatedly crashing. It was completely stable on the other two machines, but on these two machines it would just crash, restart, and crash again a few minutes later.

The crash details were fairly sparse (only the Windows Error Reporting logs, not direct entries from Mesh), but I noticed they referenced mscorlib (the .NET runtime object library). I also noticed that both of these machines had Silverlight installed, while the two machines that were working fine didn’t. Silverlight does include a .NET CLR implementation, so I figured it was possible there was some conflict.

Sure enough, the crashes stopped on both machines once I uninstalled Silverlight. In fairness, I’ve installed a number of alpha versions of Silverlight on my machine, so it’s possible this was not a general incompatibility with Silverlight and Mesh and just remnants of those previous versions.

In any case, hope this saves some of you some time and frustration. I still highly recommend Mesh for file sync – I will write up a post on my experiences with various tools shortly.

Incidentally, Silverlight was also responsible for Firefox crashes on GoDaddy.com.

Oh, and the error details if you’re interested.

Fault bucket 281906332, type 5
Event Name: CLR20r3
Response: None
Cab Id: 0
Problem signature:
P1: moe.exe
P2: 0.9.3103.2
P3: 486d7249
P4: mscorlib
P5: 1.1.0.0
P6: 47a94131
P7: c91
P8: 10
P9: System.ArgumentException
P10:
Attached files:
Additional Details:
Version=1
EventType=CLR20r3
EventTime=128617313073500000
ReportType=1
Consent=1
UploadTime=128617313104130000
Response.BucketId=281906332
Response.BucketTable=5
Response.type=4
Sig[0].Name=Problem Signature 01
Sig[0].Value=moe.exe
Sig[1].Name=Problem Signature 02
Sig[1].Value=0.9.3103.2
Sig[2].Name=Problem Signature 03
Sig[2].Value=486d7249
Sig[3].Name=Problem Signature 04
Sig[3].Value=mscorlib
Sig[4].Name=Problem Signature 05
Sig[4].Value=1.1.0.0
Sig[5].Name=Problem Signature 06
Sig[5].Value=47a94131
Sig.Name=Problem Signature 07
Sig.Value=c91
Sig[7].Name=Problem Signature 08
Sig[7].Value=10
Sig.Name=Problem Signature 09
Sig.Value=System.ArgumentException
DynamicSig[1].Name=OS Version
DynamicSig[1].Value=6.0.6001.2.1.0.256.6
DynamicSig[2].Name=Locale ID
DynamicSig[2].Value=1033
UI[2]=C:\Users\Tim\AppData\Local\Microsoft\Live Mesh\GacBase\Moe.exe
UI[3]=Mesh Operating Environment has stopped working
UI[4]=Windows can check online for a solution to the problem.
UI[5]=Check online for a solution and close the program
UI=Check online for a solution later and close the program
UI[7]=Close the program
State[0].Key=Transport.DoneStage1
State[0].Value=1
FriendlyEventName=Stopped working
ConsentKey=CLR20r3
AppName=Mesh Operating Environment
AppPath=C:\Users\Tim\AppData\Local\Microsoft\Live Mesh\GacBase\Moe.exe

You don’t change the world with a marginally better mousetrap

Tim — Wed, 30 Jul 2008 15:40:07 GMT

For those of you paying attention, Cuil, a new search engine taking aim at Google, launched with much hype. Much of that hype comes from the fact that it was founded by former Google search architect Anna Patterson and her husband, Stanford professor Tom Costello.

That hype and good press didn’t last long though. WebWare says they showed us how not to launch a search engine.

Forget the hype and whether Cuil is or isn’t better or different or whatever than Google and all the rest – the real point is that it just doesn’t matter.

As Jeff Nolan puts it, “you don’t beat Google just by being marginally better than Google”. I wrote recently that technology only matters when it creates new possibilities. Here, Cuil doesn’t really bring anything new to the table. Cuil claims to be be “bigger than Google” in terms of what it indexes, but it doesn’t really matter since most us of never get past the first page of results. Even though the

This also underlines part of why Microsoft and Yahoo! can’t seem to put a dent in Google’s market dominance - even if they’re improving marginally over Google in recent iterations. Google is “good enough”, and improving marginally over doesn’t beat something that is “good enough”.

On this point, Seth Godin had a timely post about icons.

Markets love icons. We seek them out. Placeholders, shorthand for a bigger idea or a shortcut to a good enough solution.

Marilyn Monroe is an icon. You can use her image and say a lot, instantly. Same with the Mona Lisa.

Is it possible to be more of a blonde bombshell than Monroe? Of course you can be better looking or more blonde or more married to intellectual celebrities or dour sports stars. Is it possible to paint a better painting than the Mona Lisa? Definitely.

It doesn't matter.

Seth concludes

The challenge for organizations is this: the easiest projects to start and fund are those that go after existing icons. The search for the "next" is easy to explain and exciting to join because we can visualize the benefits. But success keeps going to people who build new icons, not to those that seek to replace the most successful existing ones.

Instead of trying to beat the market leader at its own game, you’re better off trying to change the game. (You know, kind of like Google tried to do with OpenSocial).

Revisiting (and rethinking) the Twitter “Pay to Listen” business model

Tim — Sun, 27 Jul 2008 16:46:33 GMT

Personally, I thought Charlie was spot on when he said that Sermo’s “Pay to Listen” business model might be the answer for Twitter and similar services.

This was before the acquisition of Summize, which Allen thought was a short-sighted move.

When Summize presented at the NY Tech meetup, they spoke about very large aspirations to track the real-time conversational Web, not just Twitter. If Twitter acquires the service, that goes bye-bye.

As I said in comments, this makes more sense if “their monetization strategy is with analytics and reporting as Charlie has suggested in the past. In that case, Summize's technology is more than just a fix for the search and replies - it's the engine by which Twitter can make their money.”

Recent chaos allegedly caused by the the new Twitter anti-spam bot gives me even more reason to suspect that this is the model.

First, let me start off by saying that I don’t really see spam as a problem with Twitter. In fact, that’s the whole point of the followers model (which of course may be part of the reason they’ve had scaling issues) - spam bots may follow me, but that just means they can listen to me. They can’t send me direct messages and I don’t see their broadcast messages. If they flood me with @tmarman messages, it might get annoying but then I can block them.

So maybe, this isn’t really just an anti-spam bot. As Sarah went on to discuss in that RWW article, some of the most affected people here are those using Twitter for customer service.

[M]any companies are using Twitter for customer service, meaning that they will be following people at higher rates than regular Twitter users due to the fact that they follow back those that follow them. This is certainly a legitimate way to use the service and one that should not be punished through a blind algorithm that can't distinguish a community manager from a spammer.

Twitter is most valuable (in terms of being willing to pay) to companies – Comcast can (and likely would) pay more than all of the super users combined; if you charged Scoble, he would just go elsewhere. Spammers and community managers do characteristics in that they both follow a large number of users, but in both cases some of their value is stunted by not being able to communicate back (whether spam or something valuable).

While I still think there’s plenty of money in a richer analytics tool, maybe the model isn’t so much “paying to listen” but “paying to participate”.

As it stands today, the two primary ways of targeting a response is by sending a direct message or sending a reply (which shows up in search and in the Replies tab). Direct messages can only be sent to those who follow you, replies are delivered regardless.

Now imagine a scenario where the latter was blocked based on the nature of the account and its ratio. (I think ratio is a better model here than pure numbers, because it captures implicitly some of this value equation). If you want to deliver a message to this particular user, you will have to either upgrade to a premium service or pay $0.25 delivery charge.

There’s even a scenario where these premium users could pay to deliver direct messages even if the recipient is not following them – though Twitter would obviously need to tread lightly there or else it could have a real spam problem.

What do you think? Is Twitter better off charging for usage beyond a certain point, or is a pay-to-listen or pay-to-participate model better? Should restrictions be done on the nature of the account (i.e., there’s a difference between @ComcastCares and @Zappos), tied to the absolute numbers a user follows, or tied to their ratio in some way? Or perhaps a combination of all of these factors to dictate price?

Friday Fun: Unnecessary Censorship in Sesame Street

Tim — Fri, 25 Jul 2008 18:59:00 GMT

Hilarious.

(via Matt Zarzecki)

iPhone 3G

alex — Sun, 13 Jul 2008 10:05:00 GMT

Well it isn’t launch day but I have done it. I have two black iPhone 3G 16GB phones in hand.

Unlike last year, the lines were shorter, with good reason, the wait was much longer. I would say there were about 100 people in front of me and it took an estimated 4 hours to finally walk out of the store with the phone in hand. Last year I think there was at least 200-300 people in front of me and the wait was an hour less. But with that aside, once I got to the store the process was pretty straight forward. I was able to walk out of the store with a newly activated iPhone, and two unactivated iPhone 1.0s, unlike the ordeal I went through last year. ;)

One thing I though was pretty interesting was the psychology of people, me included, while waiting in line for something you really don’t know if you are going to get. First we started in the line and an Apple employee came out and said, no more Black 16GB phones. Then everyone around me in the line started rationalizing the White 16GB phone or got off. Then an hour later the same Apple employee came out and said no more 16GB phones period, now people had to make hard decisions, get off and throw away time spent or wait it out and get one 8GB version and come back another day for the 16GB…Well you know what I finally walked away with, but this was due to a UPS delivery and a subsequent FEDEX delivery between 11am and 12pm. After we were alerted to the restock of iPhones, everyone around me decided since they have been waiting four hours and that getting the top of the line iPhone 3G in Black with 16GB was in order. So my question Apple is, why no 32GB iPhones, I am sure you will have sold them all even at higher prices. ;)

My 3G impressions:

Much better phone audio quality! The speaker and ear piece sounds much better and is louder.
The same AT&T reception and audio issues
3G is much better than EDGE albeit shorter battery life (Although at home 3G reception isn’t there, no big deal as most people will use WIFI at home. The main problem with WIFI is that Exchange PUSH email doesn’t work over WIFI as there is no sleep option in the protocol and enabling it will dramatically reduce your battery life. I guess there is mobileme.)
The curved shape is much more comfortable to hold.
Not scientific but it seems overall battery life seems shorter that with iPhone 1.0
Screen has yellowish tint in many circumstances (Not very good for showing off your photos)
Phone seem lighter in the hand (Maybe this is due to shape since it is only .1 oz less, 4.7oz compared to the original 4.8 oz)
Seems a bit faster overall, maybe due to the new 620MHz ARM processor

The Exaggerated Death of Voicemail

Tim — Wed, 09 Jul 2008 19:37:27 GMT

Mike Arrington said “voicemail is dead”, and I used to agree. I hated voicemail forever but it was a reality we had to live with. (I’ve made my suggestions in the past on how to leave good voicemail).

The thing that changed that all for me was voice-to-text voicemail conversion. I couldn't live without SpinVox - it's invaluable for all of the reasons that Paul lays out. (E.g., Corey uses PhoneTag, formerly Simulscribe). Best yet, it's helped me achieve a single inbox with my voicemail and e-mails.

Paul highlights an important piece at play here - for most of us, it's a lot faster to consume voicemail after being converted to text. It allows me to process messages quicker, it ties into my existing Outlook workflow, and it allows me to read messages when I couldn’t otherwise (e.g., in a meeting, a loud bar, etc). At the same time, it's often easier and quicker to generate that message. If you’re driving, don’t have a full QWERTY keyboard on your device, or whatever, it could very be impossible or much more time consuming to type out a message.

Despite his attention-catching title, Mike acknowledges this reality in his article.

More mobile carriers are offering text conversion for a monthly or per-message fee. It’s my guess this will become more and more common. Voice is here to stay as a data input method, but listening to messages will certainly become an increasing luxury, to be reserved for loved ones or those messages that aren’t transcribed properly (or you need to hear it for tone or emotion).

In other words, voice is often more convenient for the person leaving the message, and text is often more convenient for the person receiving the message. Voice-to-text conversion services fill an important gap by letting both parties interact in the way that’s most convenient for them.

Voicemail is not going away, but having to listening to them is - and that's an important and subtle difference.

Why you SHOULDN’T start a tech company in Silicon Valley

Tim — Tue, 08 Jul 2008 13:00:00 GMT

There’s been a bit of back and forth on what the best place to start a technology company is these days. The conventional wisdom these days is that the place to start and run a technology company is Silicon Valley. The key reasons put forth to justify this is money, talent, and expertise. If you’re initially choosing where to move and start a company, Silicon Valley seems to be the right choice based on the confluence of these factors – but I would argue that in some cases these advantages are not that strong and there are just as good reasons to start it elsewhere.

Money

Most of the time when people are talking about money in the context of startups, they’re talking about access to capital, particularly in the early stages of a company. Menlo Park has perhaps the highest concentration of VCs around, at least those focused on technology companies, but for the most part they don’t limit investments based on geography. Sequioa says it is "helpful" if seed and early stage companies are close, but in the last year they've done Series A investments in companies in Shanghai, Honolulu, Virginia, and Israel. The Foundry Group has long said they invest in themes, not geography, and Chris Wand has a great article about how geography is overblown. In any case, there are no shortage of VC regional offices in places like Boston, New York, Austin, Pittsburgh, and Boulder.

The more relevant piece is that there is more early stage capital available. The area is stock full of entrepreneurs with previous successes willing to pump that money into potentially new successes. But there’s also a dark side to this. First, Silicon Valley is one of the most expensive places around - and if you factor in the need for a car (or two, if you’re a married couple and work in different place) and so on, it can even be more expensive than New York (which is usually one of the biggest knocks on our beloved city). Contrast this to raising a small friends and family round in Austin, Pittsburgh, or Colorado – you may have less available cash, but talent and office space (by far the two biggest drains) are a small fraction of what they are in NYC or Silicon Valley.

In other words, there may be less early stage money available, but you need less.

To put price in perspective, you can buy a beautiful new 4 bedroom home in Pittsburgh for $250,000 - a fraction of what you would spend a studio apartment here or in San Fran. The going rate for a small office that can house 5-6 people here seems to be around $3,000 plus utilities - that same space in Pittsburgh seems to be going for $800-1,400. That's a big difference.

Talent

Talent is a funny thing. There's obviously a lot of startup-minded technical folks who either went to Stanford or Berkley or move to Silicon Valley because they were interested in working in a startup. They know what they’re getting themselves into as far as potentially deferred compensation.

Again, though, that doesn't mean that there isn't great technical talent elsewhere. The cities I mentioned before - Pittsburgh, Austin, Boulder - all have great engineering programs producing local, young talent.

There’s also great talent in NYC - you should see some of the engineering that goes on at financial institutions, with people used to working with large datasets and so on. The problem is that New York is not built, financially and otherwise, to support the startup lifestyle. Now, as Charlie mentioned, not everyone here is an investment banker or lawyer who makes $300,000 – in fact, we have a thriving struggling artist scene with cheap rent, etc. Of course, good development talent doesn’t typically associate with that “poor” mentality. That said, with such a focus on the corporate lifestyle, being able to come to the office in shorts and a t-shirt and work flexible hours is a nice draw, and people are willing to make a little less with that equity upside to live that lifestyle. And remember, no one gets rich working for a boss - they get rich through entrepreneurship (or being involved in a startup early enough to reap the benefits of an exit).

Going a step further, I think some cities like the ones I mentioned already – given how inexpensive they are – are really viable epicenters for technology companies. I’m not sure if it makes sense to move to Austin or Pittsburgh to start a company, but if you graduate from UT or Carnegie Mellon, it certainly makes sense to stay. Pittsburgh in particular has been working very hard to try to keep their engineering talent and foster a high-tech scene, offering lots of tax and other incentives to get people to stay. Rodrigo of Sonya Labs talks a little about the dynamics of Pittsburgh trying to become a startup hub, and the opening of Alpha Lab should help there.

One thing I will say that I’ve noticed is that, unlike Silicon Valley, very few people move to NYC to start a company. Rather, they happen to be here (for whatever reason) and decide to stay and start something.

It’s interesting to me that there doesn’t seem to be any real incubators here in New York City. It seems like this would be a big start for getting people to start more companies here, especially given how expensive office space is. People like Charlie and his team at Path101 have been able to use donated office space, but there’s no YCombinatator or TechStars program here, or even something like AlphaLabs. There’s Rose Tech’s SparkSpace, but I struggle to put that in the true incubator space - “starting at $200/month for a virtual office for starving entrepreneurs”. Granted, they don’t take an equity stake, but contrast this to the incubators in Boston, Silicon Valley, Boulder and so on. The NYSIA Incubator closed earlier this year. I’m not really familiar with any others – though feel free to point out anything I’m missing in the comments and I will update the post accordingly.

Expertise

Someone mused recently that there’s plenty of early-stage money in New York, but not as much what we would call “smart money”. And it is certainly true that less of the wealth in NY was created by those in the technology/Internet space as compared to Silicon Valley – but as I’ll talk more about later, not only might this not be a bad thing – it might actually be a good thing.

Misconception #1: We are not second-class citizens

One big misconception I want to clear up is the idea that in Not Silicon Valley, you’re a second-class citizen when you’re in a tech startup. That’s simply not true. As Charlie put it,

I have to be honest—I’ve felt that way several times, but mostly from people outside NYC. Within the city, I’ve actually felt really supported. Most of my 21 angel investors are not only in NYC, but they’re either NYC natives or have lived most of their lives here. Among my large diverse group of friends (I grew up here, went to school here, never lived anywhere else, and know tons of people doing very different professions), I’ve received fantastic support. No one ever asks me why I don’t just go into investment banking or trading.

And this isn't just within the NYC tech community. None of my former colleagues have "looked down on me" for leaving to this - in fact, many have said they wish they could do something like this as well. I would imagine the feeling is the same elsewhere.

In his Cities and Ambition article, Paul Graham said Silicon Valley is all about startups. “What matters in Silicon Valley is how much effect you have on the world. The reason people there care about Larry and Sergey is not their wealth but the fact that they control Google, which affects practically everyone.” I tell you what – power matters just as much as money in New York!

Avoiding the Echo Chamber

In fact, I would put it another way: In Silicon Valley, you’re just another guy or gal with a startup. You’re a small fish in a medium-size pond that thinks it is the only pond out there. It’s really no secret that the tech community – and Silicon Valley especially, it seems – are huge echo chambers.

Mark puts this well in his discussion of bubbles and business models.

I've been noticing a common theme in the Valley the past few weeks and it got me to thinking. We finally have some proof that things are changing here in the Valley. In fact, we may be at the end of our nice little bubble. Sure, lots of people don't think we're in a bubble, but I do, and I have for quite a while. At least now I have some proof.

So what's been happening lately that makes me think this? It's all of the startups who are "changing their business model". Company after company has been singing this tune of late. Why? Well, for one, just having tons of users isn't going to bring in the cash like they thought it would. Monetizing these users has been a challenge.

I usually hate making broad statements like this, but in general we’ve noticed an interesting pattern: when we meet with West Coast-based investors, they tend in general to gloss over our “monetization” slide. “Lead generation, advertising and data analytics? Ok, done, let’s move on.” Almost every one of these folks was more concerned with how we’re going to get traction. They wanted to see how we’re going to get 10 or 100 million users.

This is in stark contrast to some of the discussions we’ve had with NY-based firms. NY firms don't ignore traction and growth, but they are also more concerned with how. In some cases, these were investors targeting much earlier stages – like, the “2 guys with a company and no employees and maybe a prototype stage” – who were pushing us much further on the actual revenue strategy. (Not specific numbers, but they clearly wanted us to focus more energy there).

One of Corey’s favorite quotes is that “you should stay in New York but leave before it makes you hard, and stay in California but leave before it makes you soft.” Put another way, it’s easy to become complacent and tied up in the “local mindset”.

Don’t start "West Coast companies" on the West Coast

I would say the Notches mind-set is distinctively West Coast. As I’ve written about here on occasion, we’re free because we want to disrupt - our model is built around getting traction and generating data and “figuring it all out later”. I initially approached these business-minded questions with some skepticism but I’m quickly starting to appreciate those challenges. Just because our assumptions are being challenged doesn’t mean they’re wrong or that those challenging them "just don't get it" – in fact, the reason we have bubbles in the first place is this unchecked optimism.

You should start a company in an environment where it is not an echo chamber for you. Start a company where the people in the community bring a different perspective, because this will ultimately help you get a better picture of the world. If you’re a finance guy, you’re probably best not starting a tech company in NYC. As location matters less, maybe it’s better to start a company where you don't feel comfortable and see eye-to-eye with everyone.

Plus, from an expertise perspective, we have a lot more models on how to get traction than we do on how to make money. The bigger concern now for a video site is not how to get traction, but how to make money once they do. If anyone is going to figure that out, I sure wouldn't be surprised if it was in NYC.

Maybe the fact that NYC is so focused on money isn't a bad thing. After all, we're not building technology, we're building technology companies. As much as I subscribe to the "business models happen" philosophy, there's some merit to being focused on the money earlier - or at least being challenged on it.