NYC vs Silicon Valley
metamorphblog.com
metamorphblog.com
Actually, there is a bigger talent suck than Lehman. I can easily see the appeal of working for a startup rather than Lehman: don't wear a suit, don't deal with bureaucracy or MBAs, technology rules the day. Less money, but a lot more fun.
Now, consider many small hedge funds: don't wear a suit, no bureaucracy, maybe one or two MBA's who handle clients, technology rules the day. Bring your dog to work, but the CEO's dog gets veto power.
Both seem like fun places to work, but the hedge fund can compete on price.
One two-person team I got to work with was doing something resembling stat-arb, and was pushing about $250 million of trades in the last 10 minutes of the market. Beyond getting to be hands on with some crazy math, building a system to make that happen isn't exactly trivial.
Hedge fund work tends to be more quantitative than most startup work, and tends to focus on different issues (less UI, latency vs scaling, minimizing transaction costs vs minimizing EC2 costs). Having looked at both hedge funds and startups, I'd say the work can be interesting at both.
To make a completely loaded comparison, I think programming a computer to beat the market is much more interesting than building a facebook/twitter "me too" site.
To make a less loaded comparison, I also find algorithmic trading more interesting (as a technical problem) than connecting $LOCAL_SELLER to $LOCAL_BUYER in $LOCAL_MARKET, or solving the problem of crappy restaurant websites (both of which I think are great business models).
I made this change. I'm 26 and have no kids. My girlfriend's in school but will be able to support both of us when she's out. It's mildly annoying not to have a maid and nice vacations right now, but working on interesting problems is more important than having those comforts, which are disposable for now (you don't need help until you have kids, really). Then again, I can also still afford basic necessities; if I couldn't, I'd have to go back to Wall Street.
The major problem in New York is that rent is ridiculous. Most "lifestyle" factors (vacations, alcohol) are flexible and can be deferred for a few years, but rent is non-negotiable. If it stays this high, the city will bleed talent too fast to reach "critical mass". You want the freshly unemployed quants (although quants are among the last to be let go) to stick around in the city for 6 months, not move back in with their parents because of New York rent.
Regarding lifestyle expenses, any guess as to where top traders spend most of their leisure income? Gambling. I never thought I'd meet people smarter than me who find "games" like Roulette and Craps to be interesting and worth playing (because I'm a game designer and a Euro-snob who'd rather play Tigris than Poker) but I have. This is because it's visceral and not intellectual-- people with the "gambling gene" make great traders but I wouldn't want one as a co-founder (long digression omitted).
I'm going to bet on the Midwest as the startup hub of the 2010s. There are a lot of brilliant graduates of schools like Chicago, Northwestern, Carleton, Michigan, and Grinnell whose graduates (for geographic reasons) are not nearly as likely to go to Wall Street (or Silicon Valley) as their coastal counterparts. Most of them go into graduate school, seeing that as the best option for them, because often it is. Wall Street under-recruits the Midwest, and there aren't a lot of cutting-edge companies out there-- yet. If you want to hire talent on the cheap, buy a set of winter clothes and head out to the Great Lakes region.
I'm fairly certain nobody has ever attend Berkeley or Stanford and said "Oooh I can't wait to move to Cleveland when I graduate!"
Maybe I got lucky with the group I ended up with, but I don't wear a suit to work (and actually like dressing "business casual") and technology certainly rules the day here (large distributed systems executing millions of orders a day with sub-millisecond latencies, etc).
Sure there's more bureaucracy but it's hardly "Office Space" and I'll trade that for 2-3 times the salary any day (with no cap... there are developers here making $500k/year)
- NYC is 30% more expensive than Silicon Valley / SF
- you don't need a car in SF but you probably do in SV
- you might need a car if you live in the inconvenient neighborhoods of SF.
- the bay area is sort of automatically healthy, you have to work hard to be unhealthy
- NYC is automatically unhealthy, you have to work hard to be healthy
- the weather is better in California
- the women are better in NYC
- if you are decent looking and have a job, you can get a date in NYC
- you can be good looking and rich in SV/SF and still never get a date
- there are better options for outdoors activities in California
- anything besides outdoors activities is more convenient in NYC.
- hedge funds / finance can be more interesting than a dumb startup and will certainly pay more
- working for a dumb startup is bad for your career
- you can get trapped in a startup career spiral in SF/SV where you never make any money, even if you're a great programmer
- you'll eventually make decent coin in NYC even if you're only an average programmer
- there are interesting people in NYC with varied careers ranging from UN analyst to fashion designer
- in SF/SV there are tech industry people and weirdos
- counterintuitively, even though NYC is more money oriented, the programmers often have very interesting outside interests. the meetup scene in NYC is intellectual, there's math, machine learning, functional programming, etc
- in SF/SV most of your fellow programmers will only claim road cycling and guitar hero as interests. the meetup scene is usually about source control or social media tweeting
I could go on and on. Thinking about where the best place is to build your startup is kind of silly. You want to think about what you want to build, and build it. You can always move later if needed. These lists are also dumb, although it was fun to write. Really the only way you can decide where to live is to experience places yourself.
We are comparing this to Silicon Valley, where the freeway is packed with traffic both ways every morning and evening. That same commute in NYC means you could live in very affordable places in Brooklyn, Harlem, Queens, and NJ.
Another founder I know, after exiting his company, moved to NYC from SV mainly because he couldn't stand being stuck in traffic all day.
Commuting in via the subway or NJ Transit is no longer than the time a lot of people spend in traffic in SV.
And the best part? You can read a book. I just finished another chapter in Founder's at Work on the subway back from a meeting. Awesome.
And since when was SF and Palo Alto that cheap anyway?
Plus in SV you need to own a car and car insurance. That is expensive. I couldn't afford that so I had to borrow a bike. That bike had to get me EVERYWHERE. Want to go to a meeting in SF? There goes half your day because you're at the mercy of the caltrain.
Anyway, I could go on, but you get the point. I would argue that NYC will save you time and money when it comes to transportation and rent. OK /rant
ps SV and Palo Alto will always have a place in my heart :).
Right, because asking about pricing (you know, the process by which you charge actual money for a product, thus generating revenue and hopefully profit) is a completely unreasonable thing for an investor to ask about.
The other investors here (the wall streeters turned VCS) just don't get it. They're not investing, as you say, in "change the world" ideas. They're investing in stuff that can make money right away, which is probably why they ask about pricing prematurely.
NYC is frustrating in this respect, and it's easy to see why you're thinking about the West Coast. They're just way more intelligent, early-stage investors. That's changing though, I believe. It just sucks to be a startup in this sort of purgatory. The more Ron Conway's that come to the east the better!
Why hate Boston? I would disagree. Boston's a great city to live in. It's much smaller than NYC so you can walk from one end to the other, is a lot more scenic, and my favorite part of all is that it isn't gritty/dirty like NYC is (unless you head out to Boston's outskirts like Ashland/Brighton/Somerville). Whenever I've visited NYC, all of the pretty parts (outside of Central Park) were tucked away in some place most people can't afford. Being rich in NYC looks like fun, but most people aren't rich.
NYC feels like an extension of an office cubicle to me. Crammed buildings. "Rat Race" economics in full effect. No nature, no beauty. You're insulated inside a sea of cement and brick. The only thing that's missing are the metal bars.
IMHO of course. Boston isn't perfect either, but I wouldn't dismiss it as a startup hub. Great universities, plenty of talented people available. No, it's not Silicon Valley, but an admirable alternative none-the-less. NYC certainly is too, regardless if I personally like it or not.
While Manhattan might feel crammed, it's part of the appeal for us. Everything is always open, everything you need is within a couple blocks, you can get anywhere anytime in the city via 24 hour public transit. You walk down the street and hear tons of different languages constantly. The diversity in ethnicity, cultural backgrounds, and experiences is mind-blowing. It's one of the world's cultural centers. Art and music is everywhere all the time. We have enormous, beautiful parks all over the place, Central Park only being one of them. Gorgeous brownstone neighborhoods with tree lined blocks. Old factory neighborhoods repurposed into everything imaginable.
Is there trash on the ground? Yes, everywhere. That fades from your perception into the landscape within weeks of living here.
Maybe Brooklyn would be more your thing (it is for me) -- it's more laid back here and less crowded, but gives you easy access to all the amazing parts of being in NYC.
'No beauty' really is hard for me to swallow -- I look around me here all the time and am always amazed at how beautiful and diverse this city is.
I'm curious, but what racism did you see or experience in Boston? I'm likely shielded from it (white American english-speaking male), so it's not something that I've ever experienced.
Will check out Brooklyn the next time I visit. I've only ever spent a lot of time in Manhattan.
Duuuude, NO! Or at least, that's what I want to scream at you after reading this. But it is hard for me to refute your logic around investors. Of course, SV has a larger and older network. Can't deny that. But, of course, in SV there are also waaaay more entrepreneurs vying for VC dolla bills. Having spent time in both locations, I wouldn't say it's any easier to raise funds in SV, although they do have more smart money for sure.
But now with FRC, Flybridge, and Founder's Collective (among many others) stepping up in NYC, I think we're just seeing the beginning of an awesome growth curve.
Plus, haven't you been reading Dave McClure's blog? It's not about the tech, it's about the design and marketing. Which NYC has in SPADES.
Alright dude, enjoy SV!
Brooklyn Heights is close to Manhattan and beautiful-- probably one of the nicest neighborhoods in New York-- but it's almost as expensive as living on the island. There are also affordable, beautiful places in the outer boroughs, but an hour's commute away.
Brooklyn Heights is a terrible example. It's where the executives who work across the water live. Of course that is going to be super expensive.
There are lots of places that you can find, that are comparable to SF & Boston, and sometimes cheaper. Let me know if you need help here!
The best values IMO are in the NJ suburbs, where you can catch a 40 min direct train into Penn Station, but pay half the rent of Manhattan, Hoboken, Astoria, etc. But that's obviously not quite as sexy and appealing.
I think a point everyone's missing is that even if you both live and work in Manhattan, you could have a 45 minute commute each way.
Overall, I would agree. NJ seems to have the most cheap places.
Great point about 45 commute just inside Manhattan.
EDIT: I live in fort greene and I pay 735 a month -- for validation purposes.
With roomates or 1BR/Studio?
Defining "reasonable rent" as 30% of after-tax income (which is about the point at which governments should limit rent levels, IMO) and noting that an entry-level job in New York pays about $3500/month after tax, reasonable rent would be $1050 for a starter apartment.
It's not impossible to find a decent apartment for under $1000/month in "the greater New York area", but it is impossible to do so with less than a 30-minute commute.
"Defining "reasonable rent" as 30% of after-tax income (which is about the point at which governments should limit rent levels, IMO)"
How on earth would that work?
Now the glut of idiots (and parentally-funded schmucks who currently live in $4000+/month apartments while working unpaid marketing/fashion internships, who would be forced out of the city) willing to destroy their finances in order to live in New York is gone; they're forced by law out of the auction. Our rents are high because we have to compete with these assholes. So let's take them out.
Landlords will either lower their rents to reasonable values or accept vacancies.
In Brooklyn you can find places to live along the N that are 3 or 4 stops to Union Square.
And yeah, Brooklyn Heights is nice, but other than the promenade and some large apartment buildings, there is nothing there that set it apart from Cobble Hill/Carroll Gardens/Park Slope/etc (although those places are expensive in their own right, but nothing like the city).
Places like Prospect Heights, Crown Heights, and Clinton Hill are gentrifying quickly, and rents are getting up near the $2k month for a 1 bedroom mark. It's just not sustainable.
I think on of the biggest problems is looking for a reasonable place to live in NYC is a total beat down. It takes time, and diligence and you can become disillusioned very, very quickly. You can also get screwed if you are new and don't know the various neighborhood profiles. And brokers... I don't even want to get started on brokers.
I live in a 1BR in Brooklyn (Carroll Gardens), but I work remotely for a startup. I still live here because it's easily on the short list for best city in the world. If I had to take a hit in salary to work at a local startup, I'd probably look at Sunset Park or Bay Ridge. Living in the boonies (by Manhattan standards, they are perfectly nice neighborhoods) is a trade off you have to make to interact with such a great city on a budget.
In most cities, you can raise a family in a $1275/month apartment.
I do, however, feel your ecosystem pain. NYC is such a money town, and while there are pockets of sun, air, & water here and there, they don't instantiate enough to be completely nourishing.
That said, culture evolves and history re-writes itself with every passing second. Given time, I can see the city reaching her potential as a startup hub; she will make her inexorable way forward. Certainly it's time that neither you nor I can afford to let slip by, but if it's not people like you and I (& other like-minded folks) who help move this city forward, people who give a damn and follow passion up with action, who's it going to be?
I realize that you've got to put your company first, but the two (help NYC/grow company) aren't mutually exclusive. For instance Mouse.org -- I'll be chatting with them soon, & if SpeakerText is still in town, would love to place a capable high school intern from one of their squads with you.
We (NYC entrepreneurs & investors alike) might make more progress if we could set aside more than a couple hours a month to work concertedly on building culture and making history.
There's plenty of good angels here - largely entrepreneurs who have been successful with their own businesses. I talked to a number of them one-on-one and never paid to pitch.
There's plenty of good early-stage venture capital firms here - yes, fewer than Silicon Valley, but there's fewer startups to compete with.
Raising money from early-stage firms here was a relatively straightforward process. The deal terms were clean, and the valuation was adequate. (Trust me, you want clean terms and an adequate valuation over a high valuation under a ton of preferences anyway. Keeps your options open.)
Recruiting was also easy - I largely hired people I'd worked with before at other startups, or who came recommended to me by people I'd worked with before at other startups.
The differentiating factor, I suspect - because personally, I'm nothing particularly special - is that I worked at a few startups in NYC and got to know people over a few years before founding my company. (Like Chris Dixon wrote a while back, there's a time to learn and a time to earn.) I suspect this is largely true for Silicon Valley as well.
I lived in SF for a number of years, and the mix of impressive to unimpressive start-ups is fairly similar in both places.
If you can't find anything interesting it's just because you aren't looking.