My bet on NYC

I made a personal and professional bet on NYC this year. After founding a company in CA and two in Boston, I was apprehensive about moving to a city in which I had never worked, and perceived as a finance town. As I left a tech event last week, I thought to myself, this has been the best decision of my life. The NYC tech ecosystem is a work in progress, but I’m happily here for the long haul.

NYC tech is welcoming and collaborative

There is a fair amount of clique-ness to venture capital. There are times when it reminds me of my high school. Most of the time, however, I have found the atmosphere in NYC to be collegial and collaborative. Within our portfolio, I’ve been amazed to see how many founders know each other and regularly connect. We hold a number of events for our portfolio and they ask for more, often following up with each other on various topics.

Historically, the tech ecosystem was an afterthought in the broader NYC economy. The funny thing about venture capital in NY is that most folks here lump it in with Wall St (imagine that in the Valley!). The tech community still feels like it has something to prove. My favorite example is the “Made in NY” logo co-opted from the film business now imprinted on virtually every NY company’s website.

The east coast corridor is a real strength

Much is made about Boston vs NYC.  However, the ease with which you can get between the cities has made for some pretty interesting cross-pollination. Some of the best VC firms originated in Boston and have expanded to NY.  Moreover, I’ve connected NY companies with really capable engineers from Boston who have joined those companies. Similarly, we often recommend NYC PR and design agencies to our Boston companies. There’s no doubt that NYC and Boston are amazingly complementary when it comes to company building.

NY is young but lacks a deep bench

I think I’ve seen only two blue blazers since I’ve started at Founder Collective NYC! The average age of entrepreneurs I meet in NY is late 20s. My observation is that NYC lacks a “deep bench.” There are some real standout entrepreneurs, but I’ve seen a fair share of CTOs with less than 5 years of commercial experience. My view is that the VP corps of a company are often the most impactful in a venture. These are the folks whom, after an exit, go on to start the next great cohort of companies. That hasn’t quite happened yet in NYC, but it does feel like its coming.

Entrepreneur-friendly, but expensive

I can take 7 meetings a day, grab a drink with a portfolio company and be home before my kids go to sleep. This is a real structural advantage of NYC. I bump into entrepreneurs and investors in SoHo, Flatiron and even on the Upper West Side. NY lends itself to a lot of f2f which is important for a business that, at its core, is very f2f.

Many lament the cost of living and working in NYC. There’s no question that this makes it difficult to have a family and work in a start-up. That said, I’ve been amazed at how scrappy NYC entrepreneurs can be; I’ve seen companies that have a dozen employees working out of the founder’s living room. Many of our companies leverage co-working space, offshore labor and contractors while keeping their core in the city.

The NYC tech scene is evolving at a start-up pace. Like any venture, it’s iterative. The venture world is changing in many ways and this bodes well for NY. I bet we will look back in a few years and marvel at how the NY tech scene is as much a part of the NYC economy as fashion or media today. Who knows, maybe a successful entrepreneur will become mayor someday!?

The accelerator dilemma

Accelerators have become an amazing asset for the tech ecosystem. For start-up founders, however, picking an accelerator is like deciding to go to grad school. First you have to decide if its right for you, and then make sure you’ve picked to the right one. Just like grad school, attendance is not a guaranteed ticket to success. 

At Founder Collective we have invested in some really exciting companies that have gone through these programs. SeatGeek (DreamIt) and Contently (TechStars) are great examples. I expect us to continue to invest in accelerator graduates.

That said, prospective companies should be aware of the realities facing accelerator companies and how to maximize their likelihood for success. These include:

Investor fatigue

Recently, I’ve noticed fewer and fewer investors in attendance at Demo Days. Personally, I’ve found it difficult to attend many of them due to conflicts and the long time commitment (usually most of a day). Instead, I swing by the accelerator during the class “semester” to give a talk or hold office hours. I’ve heard some investors say they’re not stopping by a given accelerator, instead hoping to hear about buzzy companies through their network. Start-ups seeking capital should work pre-demo day to warm investors to the team and opportunity.

Challenging mentor recruitment

It’s getting harder for companies to sign-up great investor mentors. Investor fatigue is one reason, but also many investors have never invested in a company they’ve mentored. In the early days of TechStars, I mentored one company per class (e.g. StepOut and ThinkNear). These days I tell accelerator companies that I’m available to help out, but won’t mentor a single company. Industry or entrepreneur mentors are generally more valuable for companies at the early stage and thus, start-ups should focus their recruitment there.

Post Demo Day Thaw

Companies underestimate the pressure to raise capital before or immediately after Demo Day. There’s about a 60-day halo. Once the halo is gone, investors grow weary of companies that haven’t raised capital. There’s a negative signal that forms if a company is more than two months from a given Demo Day and has not secured capital. Early conversations with investors represent one hedge against this. More importantly, before applying to an accelerator founders should think hard about whether they expect to accomplish the requisite milestones during class to secure funding.

A positive sign for accelerator graduates

A growing number of investors are revisiting companies two or three classes removed from graduation.  Investors (and hopefully accelerator organizers) have realized that not all companies mature at the same pace. Some of the real gems, in fact, may have been out of the accelerator for a year or two. So, even for companies that don’t get funded right out of the gate, the future remains bright.  

One year with an Android

I don’t usually blog about my thoughts on products. However, I recently concluded a one-year “experiment” with a DroidPro from Motorola, and switched back to an iPhone.

I think some of this debate is psychological in that the iPhone feels more like holding a cup of Starbucks while my Droid was more like holding a Dunkin Donuts. They’re both coffee and each have their pros/cons (I actually prefer Dunkin) but in the end you feel differently with each. Lastly, having just finished Jobs’ book I couldn’t help but appreciate the little piece of art/technology that he had worked so hard to put in my hand.

Several asked me to provide some specific feedback on my decision so here goes…

Why I switched initially:

  • I really missed the Blackberry keyboard with my old iPhone 3GS and the Droid Pro had a similar feel with the Android OS
  • I was curious about the Android OS since it was gaining popularity and was a more “open” system
  • At the time, I was using Gmail exclusively as my email client and liked the native Gmail app (e.g. being able to star emails)

What I liked about my Android phone:

  • More customizable – I was able to set up a bunch of widgets to quickly scroll through Twitter updates, news and emails
  • Better integration with social media – for example, whenever I initiated a call to someone, I could see their last tweet, facebook or linkedin update and this sometimes came in handy
  • The native gmail app was better – I could easily change “from” email addresses, and it was very quick to send/receive emails

What I disliked about my Android phone:

  • When we moved our start-up to a hosted exchange server, the Android would regularly lose connection to the server. This became very frustrating.
  • The phone crashed often. It did feel a bit more like a Windows OS than an Apple OS. Apps would freeze and I would have to kill the app. (in fact there are many apps that help you do this which says something about the phone)

Why I’m happy to be back on the iPhone (so far):

  • I had really forgotten how integrated the universe of devices and software was with an iPhone. From little things like stereos in hotel rooms to the ease of backing stuff up with iTunes or iCloud.
  • Apps are just better on the iPhone. The user experience, likely due to the control of the OS, just seem to look and work better than their counterparts on the Android.