What's New York City's Secret to Fostering a Tech Startup Boom?
There's no doubt that Silicon Valley is the hub of innovation in the tech industry. But recently New York City’s tech/information economy has flourished--especially in the city's most diverse borough, Brooklyn. In fact, according to a new report, Brooklyn’s tech/information sector has grown faster than every other large county in the nation other than San Francisco.
In Building a Digital City: The Growth and Impact of New York City's Tech/information Sector, author Dr. Michael Mandel, chief economic strategist at the Progressive Policy Institute and president of consulting firm South Mountain Economics, mined data released by the U.S. Bureau of Labor Statistics and the Conference Board, and found that the tech/information sector of New York City's economy has grown 11 percent since 2007. This uptick, he estimated, was responsible for roughly one-third of the job creation in New York City’s private sector since 2007. Today, it provides jobs to 262,000 workers throughout the city and contributes nearly $30 billion annually in wages to the local economy.
So what's going on here? Mandel sat down with Inc. staff reporter Abigail Tracy and discussed why New York City has seen so much growth in the tech/information sector and what other cities can learn from the city’s progress.
New York City’s share of the nation’s private sector employment has reached its highest level in 20 years. Did this surprise you?
Yes. The most startling thing that came out of this for me was how much New York City out performed the rest of the economy after the financial crisis. Much of this growth we are seeing is due to a lot of small companies starting up in the city. We always talk about how downturns are fertile times for start-ups and small companies and I think the New York City example really proves this. The downturn offered a chance for smaller companies to come in and start growing. It turned out to be very powerful.
The first question I had to answer was, 'what types of companies should be included in the tech/information economy?' To me, the tech/information sector includes start-ups, established technology companies but also, companies that are rapidly going mobile, online or digitizing themselves--including media companies like the New York Times and Inc. Magazine. I wanted to get at companies that were in the same ecosystem, so I didn’t include finance, health care or education companies in my analysis. I think it resulted in a very satisfactory picture of what is going on in New York City. It represents convergence. We have been talking about convergence for 20 years but it finally seems to be happening.
What about New York City do you think has contributed to the growth in this sector?
First, I think New York City turned out to be very strong in some of the skills the most recent tech wave needed--such as design and advertising. Second, I think that the Bloomberg administration put in place some very good policies that helped foster the technology boom--for instance the Made in New York campaign and the incubator competition that helped bring the Cornell campus to New York City.
So policy played a role?
I think the Bloomberg administration should be commended for its success but the thing to keep in mind is that the administration was not effective in a vacuum. It was able to build on some real strengths. Part of the implication for other parts of the country is that there may be ways to implement successful policies if they build on the strengths unique to those regions, rather than try to imitate New York City. If a city wants to foster tech growth or tech related growth, they need to figure out what their strengths are, build on them and not get involved with a lot of internal warfare.
What do you think is the greatest lesson for other cities hoping for similar growth?
There are two things. The first is that people have talked about innovation as not generating a lot of jobs. In New York City--it is. That’s extremely important because it sort of tells the rest of the country and even the world what to look for. The second is that good policy works if you are pointing it the right direction. So those are really the two big messages--innovation creates jobs and good policy can make a difference.