The City of Founders Without Hackers

"The problem is, most people in NYC don't understand the value of stock options."

The problem is actually the number of times people have been burned. Most of the really good, senior level tech talent has been through the blender the first time around. Options always seem to get screwed up somehow, and once someone has put in 70 hour weeks with the idea that their equity will blow up one day, it becomes quite a challenge to do that again as anything but a founder (which a lot of people really don't have the desire to do). Combine that with the amount of finance (read: under educated) money in the investment pool, and the people who bring it (ex-bankers) and their relationship to hackers, the value of equity is really usually quite shitty.

edit: one other point:

Many of the graduates who don't know about the startup scene actually wont be qualified to work in it (those who are into it will mostly be qualified and are a small minority). Generally speaking, you need to really be able to pull your weight in an early stage startup. This is not something most people who have not been hacking on side projects (or working at startups as an intern etc.) for the last 4 years are generally capable of doing. You really need to have had some "real work" experience, and after 4 years of coursework and coffee/xerox internships unfortunately a lot of these kids just don't. We all want to believe the myth of the college kid startup genius, but the simple fact is it usually takes a few years before someone is really capable of the work required in a startup. By that point they already have the golden handcuffs.

So I'm not sure it's as simple as academia and startups don't talk, there is a real reason startups aren't recruiting from NYU and Columbia undergrads.

I'm in Boston and we have a slightly similar problem. There are a ton of non-technical cofounders out there, but it is rather difficult to find good developer/technical founder/engineer.

I should clarify that, finding a good developer isn't hard. Yet finding one that is available, willing to work for equity and interested in what you're doing is rather difficult.

Let's break those down:

- Available: Good developers have often been snapped up already. Its rather like dating, in that you generally have to find people between things. Top grade developers will probably already have something lined up before they quit another gig, making that gap effectively zero. You need to convince someone that you know is already on the way out that your startup will be better than whatever they are already doing.

-Cash/Equity: I see people talk all the time about the value of equity. Honestly, it generally isn't worth the paper it is written on from what I've seen. There is a huge chance that you'll work on it for a few months and little will come of it. Yes, you could start the next Google/Twitter/Facebook, but it is unlikely.

Equity does not pay the bills. You're talking about people in NYC here. They might have a 2K/month studio apartment in SoHo. You probably won't be doing much for founders salaries even on an angel round, so suddenly this looks to be a really long time without cash flow if you're talking equity only. For people in their 20's that haven't already been through a successfully exited startup and don't have a nest egg (or trust fund) this isn't possible.

They understand the value of risk and stock, but knowing the value of it and being able to realistically quit your job/graduate and work without a paycheck is really hard. If the value was there, then the investment capital would be there. The concept of value is there, but not the value.

- Selling the idea: At this stage, you're generally selling an idea of an idea. 95% of the time when people talk to me about some startup they are doing I'm thinking, "This will never work", "I know 6 people doing the same thing and they are a year ahead of you" or "Where is the money?".

Rare is it that someone has an idea like GroupOn that is an instant, 'duh' moment and you think you'd want to be instantly part of and owning a large portion of. I'm not going to work for a company (and take mainly equity) that I don't believe in.

All of this creates an impression of a bottleneck of developers and technical talent in a city. Throw in Google and a few other large companies (and academia) that can and will pay for top level talent and things really start looking dry.

But here's the thing, <i>I don't think there is a lack of technical talent</i>. Rather there is a lack of top level non-technical co-founders out there will killer ideas, vision, experience, connections and fund raising ability. What are they bringing to the table if not those things? While an early stage startup can run with technical talent only, it can run without a 'biz guy' just fine while things get off the ground.

<b>So what to do as a non-technical co-founder?</b>

- Get technical! A little over a year ago few hard programming skills. Then I started picking up Ruby stuff on the side. I'll never be a top level engineer, but through pain and blundering I can get the job done and get something mocked up in a reasonable amount of time to show that there's something more than just an idea. This also gives me the ability to make better decisions as a business person and understand the rest of the company

- Get money! Paying people gets stuff done. If your ideas are so killer, you can surely raise 50K or so to get them done. I've had friends (in NY) raise 50K to start things that would never scale or go big like PR firms. They did this through networking and knowing the right people. Its a big city with a lot of money floating around. Find it and pay to get your base level prototype made. Developers will blow you off if you're waving your hands and talking about an idea, but if you say you'll pay $125/hr to have a prototype made, then they listen.

- Have better ideas and bring more to the table: There are a few non-technical people that I'd follow anywhere and its because they do have consistently great vision and ideas. Show people that you can lead and followthrough. One of my good friends Tim Hwang can't code at all (AFAIK), but I've seen him execute with the Awesome Foundation, ROFLcon and the Web Ecology Project. I know that if he gets a great idea, that he will hold up his end. Do things like this and you'll have no problem finding developers and technical co-founders.

There are some good engineering schools in the NYC area that could supply the talent they need (Cooper Union, Stevens Tech, Rutgers, RPI, etc.). The problem is most grads don't know about the startups. I went to Stevens ('02) and at the senior career fair it was all banks, gov't agencies, military contractors, and telecoms. There's a lot of (well-paying) competition in NYC that's competing over a well-indebted population of engineering grads.

you know what's similarly painful in nyc? apartment hunting. they eased that pain with brokers, and now at least you can find a place, even though it costs you a bit more.

someone needs to become a "broker" for engineers. find startups the talent they're looking for in exchange for x% of that talent's salary/equity/whatever.

Engineers won't want to work in startups (especially in NY where rent=2500+1000*num_bedrooms) until they see a lot of other engineers getting rich due to having worked in startups. People follow incentives and respond to stories of others' success. In NY thus far, these success stories are rare.

I don't think many NYC founders are looking for a technical co-founder. So if not a co-founder, then a highly rewarded developer, right? Nope, I don't think many of them are looking to part of with significant amounts of equity in their ideas unless you are an investor giving them money. Basically I think a large number of NYC founders are mostly idea-men that undervalue the role of strong technical employees, much less co-founders. It's probably culturally endemic to business in NYC and I think there is a gulf between to the two camps because of it.

The OP goes on to look to academia for a solution... in reality I think the business side should be looking at themselves for a solution, and that would involve giving up the goods.

The author has ignored the fact that most companies founded or run by by non-technical people don't usually do that well. (citation needed) At the very least, a company run by a non-technical person is oftentimes not a terribly exciting prospect for a hacker.

I went to NYU. If I were back in NYC, I'd start a meetup just for startups and student hackers to meet. The NYTechMeetup is becomming an institution - any students reading this in NYC should regularly attend.

Two words: real estate.

Silicon Valley became disgustingly expensive after building substantial momentum in technology, gaining enough strength that entrepreneurs would live there in spite of the quality-of-life/cost-of-living problems.

New York needs something short of a miracle to become a startup hub. It's not "golden handcuffs" that keep people in the banks. It's the fact that the cost of rent for what would pass as an average apartment in most of the country is more than the median American's after-tax income.

Also, although finance is contracting, it's not quants who represent the bulk of the layoffs, but floor traders and M&A types. These people are useless to a startup, unless that startup wants to target the financial industry (which has sufficient resources to develop NIH syndrome, so good luck). Quants are generally being kept.