In 2003, New York City was home to just a handful of tech companies. The sale of DoubleClick to Google for $1.1 billion two years later initiated a decade of explosive growth that has positioned New York City as one of the fastest growing tech ecosystems in the world. Between 2003 and 2013, more than 4,000 local entrepreneurs founded at least 2,200 tech companies. Collectively, these firms employ more than 53,000 people, 1% of the city’s labor force.
How did New York City supersede cities like Boston and even San Francisco to create a world-beating tech sector? Endeavor Insight sought to answer this question, and over the course of more than a year, interviewed and surveyed nearly 700 local tech entrepreneurs to create one of the single largest datasets on an entrepreneurship ecosystem. By layering on top of these interviews data from Crunchbase, LinkedIn, and AngelList, Endeavor Insight created a comprehensive picture of thousands of companies and entrepreneurs.
We used this wide-ranging dataset to explore potential factors driving the sector’s growth. First, we looked at the common entrepreneurship myths and found that, contrary to popular belief, neither youth, nor technical skills, nor even homegrown talent have driven the sector’s growth.
- Experience trumps youth: New York City tech founders were, on average, 31 when they founded their companies. Rather than recent graduates, most had deep experience in their industry before they found a company.
- Tech talent isn’t necessarily homegrown: Ninety percent of New York City tech founders graduated from college outside of the city. In fact, the University of Pennsylvania, 100 miles to the South, is the number one producer of future New York City tech founders.
- Founders are poets and quants: Entrepreneurs don’t need to have deep technical skills to apply technology to business challenges. In New York City, two thirds of entrepreneurs graduated from university with a non-STEM (science, technology, engineering, and mathematics) degree, while just a third graduated with a STEM one. These founders are as likely to study economics as engineering or political science and math.
It’s not how old New York City’s tech founders are, or what they studied that has made the city’s tech sector thrive. Instead, it is the incredible extent to which New York City’s most successful tech founders have re-invested their financial, social, and human capital back into local early-stage entrepreneurs. Endeavor Insight looked at five connection types—inspiration, mentorship, angel investment, serial entrepreneurship, and former employee spinouts—and uncovered an important pattern.
- Successful entrepreneurs are influential entrepreneurs: Entrepreneurs whose companies exit for a lot of money are more connected to other entrepreneurs than those whose companies don’t have a major liquidity event.
- Success passes from one generation to the next: Entrepreneurs who are connected to one of these top-performers become top-performers twice as often—22% of the time—as those who don’t connect to a top-performer.
Over time, this pattern has driven the growth of a dense network of over 2,000 connections among New York City tech entrepreneurs. In turn, this network has served as the city’s most important platform for growth, enabling entrepreneurs to recycle resources like money and expertise into the next generation of companies.
Looking to New York City, other cities can support the growth of their local tech sector. Instead of focusing on specific types of entrepreneurs or industries, these cities can create an entrepreneur network of their own, and in the process create the conditions in which a local tech sector can flourish. For more information, visit www.nyctechmap.com.
Contributed by Mike Goodwin.