But in February, he decided that being so far away from the nation’s big
media companies was stifling his start-up’s growth. So he moved back to
New York, bringing the company with him. Qwiki, with 15 employees, now
operates out of a SoHo loft space.
“We went to Silicon Valley because they understood how big we wanted to
get,” Mr. Imbruce said, “and we moved back to fulfill that promise.”
The recent burgeoning of New York’s Internet industry has forced some
entrepreneurs — who, just a few years ago, might have felt they had
little choice but to head west to pursue their dreams — to make a
difficult choice. New York is now enough of an attractive alternative
that a few West Coast-born start-ups are even packing up and moving
east.
Much of this change has to do with the way that the technology industry
has shifted toward creating consumer products and applications, rather
than building the basic framework of computing and the Internet. Many
new start-ups benefit from proximity to the media, advertising and
fashion industries, New York’s strengths. And as the city’s industry
grows, entrepreneurs say, it is offsetting some of the traditional
disadvantages of being outside Silicon Valley.
There is little talk of New York overtaking the Bay Area as the hub of
the country’s technology industry. And the concept of New York as a real
rival to Silicon Valley can make some Californian eyes start rolling.
“You can definitely build great companies elsewhere, but I have not seen
anyplace in the world that builds true global franchises —
technology-based franchises — like this place does,” said John
O’Farrell, a partner at the venture capital firm Andreessen Horowitz,
based in Menlo Park, Calif. Though the firm has invested in several New
York-based start-ups, Mr. Farrell said, it sets the bar higher for them,
largely because it believes they are less likely to succeed.
A lack of venture capital financing outside of Silicon Valley has
traditionally been a prohibitive barrier for start-up founders who might
have wanted to put down roots elsewhere. But that is changing. Almost
500 start-ups in New York received venture financing from 2007 to 2011,
according to a recent report
from the Center for an Urban Future, a New York-based public policy
organization. The number of venture capital deals in the city has risen
32 percent since 2007, while the figures for other areas, including the
Valley, have dropped. And several major venture capital firms have
recently opened offices in New York.
When Mr. Imbruce sought investment for Qwiki in New York in 2009, his
pitch fell flat. He did eventually find a California-based investor who
offered to back the company, but only if Mr. Imbruce moved west and
immersed himself in the Silicon Valley scene. He agreed, and soon found
investors to be much more receptive, to the tune of $10.5 million in
financing.
What eventually drew Mr. Imbruce back to New York was the gravitational
pull of the major media companies. Soon after arriving in New York,
Qwiki began meeting regularly with ABC to discuss how the network could
use Qwiki’s tools. Last week, the two companies announced a partnership.
Such collaborations are New York’s biggest draw. The biggest drawback is
hiring. Silicon Valley has the deepest pool of qualified engineers in
the country, because of Stanford and the major technology companies that
are based there. On the East Coast, many talented engineers gravitate
to finance, which offers salaries that start-ups cannot compete with.
Aaron Harris moved his company, TutorSpree,
from Silicon Valley to New York last year. He said he was so concerned
about finding engineers that he held open the possibility of moving back
to Mountain View, Calif., where he had participated in the prestigious
incubator program at Y Combinator. But Mr. Harris found that he did not
have to rely on hiring New York-based engineers. Instead, he found them
elsewhere and convinced them to move.
The woes of the financial industry have also benefited New York’s tech
start-ups, which have been able to poach some engineering talent. But
Mr. Harris, who worked for a hedge fund before starting TutorSpree, is
skeptical that this will continue once the tech industry goes through
its next downturn.
“We’re seeing résumés from people in finance all the time, and that’s
awesome,” he said. “We’ll see how long that lasts.”
