Endeavor Insiaght Partnership for NYC Tech Entrepreneurs

7/26/2019 Endeavor Insiaght Partnership for NYC Tech Entrepreneurs

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a report from:

THE POWER OFENTREPRENEURNETWORKS

EMBARGOED

UNTIL 11/11/2014

How New York City Became the

Role Model for Other Urban Tech

Hubs in Just Ten Years


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OVER THE LAST YEAR, our team at EndeavorInsight studied the rapid growth of New York

Citys information technology industry. Wedefine tech companies as those developingan information technology or those whose

businesses are Internet-enabled, excludingfinancial tech, green tech, and life sciencescompanies.1Our goal was to identify lessonsthat leaders in other cities can use to support

the growth of their own tech sectors. In theprocess, we created one of the largest data-sets on a single entrepreneurship ecosystem

in the world. It combines data from AngelList,Crunchbase, and LinkedIn with nearly 700interviews with local tech entrepreneurs. In

total, these founders dedicated more than amonth of their time to this project. Our analy-sis reveals three key findings:

New York City has become the largest truly

urban center for tech companies and the sec-ond-largest tech hub in the world. Between2003 and 2013, the New York City tech sector

grew twice as fast in terms of dollars investedas Silicon Valleys, with its companies raisingmore than $3.1 billion in funding in 2013.2Techcompanies led by local entrepreneurs directly

employ 53,000 people, over 1% of New York

Citys workforce.3Unlike many other urbantech hubs, most of the growth of the NewYork City tech sector has come in the last

decade. Venture funding for tech companiesin New York City increased by 240% from 2003to 2013, and more than 85% of the sectors

current companies and 86% of its current jobswere created during this time.4, 5

NEW YORK CITY IS THE BEST

MODEL FOR OTHER URBAN

TECH HUBS.

1EXECUTIVE SUMMARY

2 / How New York City Became the Role Model for Other Urban Tech Hubs


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How New York City Became the Role Model for Other Urban Tech Hubs / 3

Many people believe that tech founders areyoung, technical experts who studied at a

prominent local university. We analyzed dataon the age and educational history of NewYork City tech founders, and found that these

myths do not tell the full story of the citysfounders or the sectors success. The aver-age New York City tech founder is thirty one

years old when she founds her company and

founders are just as likely to have studied anon-technical subject in university as a techni-

cal one. Founders also tend to be highly mo-bile, with nearly 90% graduating from universi-ties outside of New York City.

Connections between successful founders

and new entrepreneurs are a critical driverof the sectors growth. Data from over 2,500companies shows that top-performing tech

entrepreneurs are more likely than their peersto start companies, encourage their employ-ees to do the same, mentor, angel invest, and

inspire new entrepreneurs. In turn, founderswho are connected to or influenced by other

top-performing founders are on average moresuccessful than other local tech entrepreneurs.A network of top-performing New York Citytech founders has initiated a virtuous cycle of

reinvestment that is now fueling the sectorsgrowth.

DATA FROM NEW YORK CITYS

TECH SECTOR DEBUNKS SEVERAL

COMMON STARTUP MYTHS.

NEW YORK CITY TECH FOUNDERS

REINVEST THEIR SUCCESS INTO

OTHERS, FUELING THE SECTORS

GROWTH.

2 3

The development of this research and contentwould not have been possible without the expertiseand assistance of the Partnership for New York

City. The staff of the Partnership provided criticalfeedback and connections that greatly enhance thereach and quality of this study.

Created with assistance from:


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NYC = ROLE MODEL

AT $1.1 BILLION,the sale of Double-Click in 2005 kicked off a decade of rapidgrowth for the New York City tech sector.Since then, companies like Buddy Mediaand Right Media have followed closely inDoubleClicks footsteps, selling for hun-dreds of millions of dollars.

THE FASTEST GROWING URBAN

TECH HUB.New York Citys tech sectorcreates hundreds of new startups annual-ly. These arent just small businesses, butones that are scaling rapidly in preparationfor IPOs and acquisitions, with at least 27companies exiting for more than $500

million in the last decade.6The sector hasexpanded so rapidly that the growth ofinvested venture capital dollars, at 13.3%annually between 2003 and 2013, is twiceas large as that of Silicon Valley, at 6.4%,and dwarfs that of Massachusetts, at neg-

ative 1.7%.7New York Citys tech sector hassuperseded even Bostons by many mea-sures to become the largest standaloneurban tech hub in the United States.8

POISED FOR GREATER GROWTH.

Between 2010 and 2013, the numberof New York City tech employees grewby more than 26% annually.9At this rate,based on 2013 tax rates and a $100,000average salary, the city could add nearly

$160 million annually in new tech employ-ee income tax receipts by 2019 and over$500 million by 2024.10Assuming each ofthese new employees uses 100 square feetof office space, tech companies wouldneed almost 450,000 square feet of ad-ditional office space annually by 2019 and1.4 million square feet by 2024 to accom-modate them, providing real benefit toindustries beyond the tech sector.

LOOK TO NEW YORK CITY, NOT

THE VALLEY. Silicon Valley may seemlike an attractive template for creating ur-ban tech sectors, but it is unlikely that cit-ies will be able to replicate it. Silicon Valleycommercialized the fundamental technol-ogies of the last half century: the siliconcomputer chip, personal computer, andconsumer Internet. These companies and

technologies emerged in a farming regionin the 1950s, which, over the course offive decades, became a robust suburbantech hub.11Its tech companies may haveexpanded into San Francisco, but the ma-

jority of the regions funding and startupactivity continues to be located in subur-ban areas like Palo Alto, an hour south ofthe city.

Cities dont have 50 years to create atech sector or the revolutionary technol-ogies underpinning the Valleys rise. Mostimportantly, the strategies San Franciscoused to attract neighboring suburban firmsare only useful to other cities that haveworld-class innovation hubs next door.

New York Citys tech sector is a muchbetter role model for other cities. Thecitys tech sector has emerged in just twodecades, with many of its new companiesusing existing infrastructure and indus-tries like advertising, media, and fashion asplatforms for growth. This approach has

allowed the city to set aside the unlikelychance that it will birth the next comput-er chip, and instead focus on making itsmedia companies social and its advertisingcompanies digital. By looking at its ownstrengths, New York City has overcomethe constraints facing post-industrial citiesworldwide to accumulate the talent andcapital at the core of its thriving urbantech sector.

New York City: a model urban tech hub.


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Exit amount

IPOs & Acquisitions

Investment

Companies founded

Jobs

$18.1Bn

336

$14.2Bn

2,206

53,000+



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100

1721 2226 2731 3237 3842 4347 4852 5356 57+

0

200

300

400

500

New York City tech founders age at founding

Note: Assumes founders were 18 years old at undergraduate start year; 1,679 founders with undergraduate start data.

Founders age at founding (years)

Numberoffounders

AVG. = 31 YEARS


IT IS NOT EASY to build a tech sector, andmyths regarding what causes one to grow arecommon. Many of these assumptions right-

fully focus on the entrepreneurs themselves;after all, without them, businesses never startand a sector never grows. We analyzed New

York Citys tech founders to understand severalof these common assumptions and find that,

contrary to popular belief, neither youth, nortechnical skills, nor even homegrown talenthave been central to the growth of New YorkCitys tech sector.

EXPERIENCE TRUMPS YOUTH.En-trepreneurship is oftentimes portrayed as avocation of youth: tech-savvy young people,

it seems, can disrupt whole industries withoutever having worked in them. New York Citys

tech founders, rather than recent graduates,tend to be mid-career specialists with substan-tial industry experience who use their per-

spective to help existing industries innovate.A group of seasoned executives, for exam-

ple, founded Gilt Groupe, a successful e-com-

merce company. One of the founders, Alex-andra Wilkis Wilson, had an MBA and several

years of corporate experience at retailers likeBulgari and Louis Vuitton before starting Gilt.Like Alexandra, Neil Blumenthal, founder ofonline eyeglass company Warby Parker, spent

five years as Director of Vision Spring, honinghis industry knowledge and managerial skillsbefore becoming an entrepreneur. These are

not isolated cases: New York City tech found-ers were, on average, 31 years old before start-ing companies.13

Debunking the myths of New York Citys tech sector.


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4.6%

3.7%

3.6%

3.5%

3.2%

2.3%

2.1%

1.8%

1.7%

1.7%

Percent of New York City tech foundersby undergrad university attended

Note: 1,920 founders with undergraduate university data.

Percent of New York City tech founders


TECH TALENT ISNT NECESSARILY

HOMEGROWN. Cities dont have to sourceentrepreneurial talent from within their bor-

ders in order to create a successful tech sector.Great tech sectors are instead built in one cityby people from around the world. New York

Citys tech sector is no exception, with 82%of its founders graduating from high school

outside of the city.14New York City is home to several world-

class higher education institutions, includingthe recently inaugurated Cornell Techniontech campus. Despite the renown and suc-

cess of these institutions, New York Citys techsector is not strictly a product of talent comingout of these universities, either. In fact, it has

succeeded in attracting the vast majority of itstech founders not from local universities, but

rather from colleges throughout the US andeven worldwide. In aggregate, nearly 90% of

New York Citys tech founders graduated froman undergraduate institution outside of thecity, while 70% of those who attended gradu-

ate school did so elsewhere.15Surprisingly, the

University of Pennsylvania is by far the numberone college destination for future New York

City tech founders.


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40%

20%

0%

60%

Undergraduate majors of New York City tech foundersbroken down by STEM and non-STEM fields

Non-STEM majors

Note: 1,681 founders studied 2,499 majors in undergraduate.

STEM majors

Percentoffounders.

Business

Economics

Other Non-STEM

Finance

History

Marketing

Philosophy

Political Science

Computer Science

Other STEM

Electrical Engineering

Engineering

Mathematics



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Percent of New York City tech founders

by graduate degree studied

Note: 798 of 1,723 founders attended graduate school.

PhD5%

MBA

43%

MS

23%

JD7%

MA

14%Other

8%


FOUNDERS ARE POETS AND QUANTS.

For many, mention of tech entrepreneurshipbrings to mind a programmer hunched overa computer developing groundbreaking new

technologies. This image doesnt tell the full

story, however, of New York City tech found-ers, who are as likely to write marketing copy

as a new compression algorithm. Combiningthese skill sets, these founders have found away to grow both their businesses and the

sector.This dynamic begins as far back as col-

lege, where more New York City tech founders

study non-technical subjects than technicalones. We divide these founders undergradu-ate majors into two categories: STEM (science,

technology, engineering, and mathematics)and non-STEM. This breakdown reveals thatNew York City tech founders study everything

from economics, to computer science, tophilosophy, and more often pursue the artsthan the sciences. 65% of New York City tech

founders studied non-STEM fields, while just35% studied STEM ones during college.16

Its not that New York Citys tech foundersare transitioning into more technical fields of

study after they finish their undergraduate de-grees, either. Among the 42% of New York Citytech founders who attended graduate school,

nearly two-thirds received non-technical grad-uate degrees like MBAs, MAs, and JDs.17

The story of New York Citys rise is aboutmuch more than the background of its found-

ers, the degrees they hold, or even the uni-versity they attended. We dig deeper, and find

that the founders themselves, by contributingto one anothers success, are causing the NewYork City tech sector to grow.


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THE CITYS TECH ENTREPRENEURS look quitedifferent from the stereotypes. They are older,less technical, and more likely to have attend-

ed undergraduate and graduate school else-where. It is not New York Citys mix of foundercharacteristics, however, that other cities

should attempt to replicate. Policymakers whofocus only on certain types of entrepreneurs

risk orienting urban entrepreneurship policytowards yesterdays challenges, as opposed totomorrows opportunities. Instead, cities canfocus on supporting the dynamic unfolding

in New York City: few entrepreneurs who giverise to many generations of spinouts. Throughfive types of influenceinspiration,mentor-ship,investment,serial entrepreneurship, andformer employee spinoutsNew York Citystech sector is benefitting from a virtuous cycle

in which entrepreneurs grow their businesses,

become successful, and reinvest their human,financial, and social capital in the next gener-ation.

SUCCESSFUL COMPANIES ARE IN-

FLUENTIAL COMPANIES.Over the pastdecade, companies like DoubleClick, Buddy

Media, and AppNexus have received hundredsof millions of dollars in investment and exit-ed for several billion more. These resources

have found their way back into the sector, withthe founders of these companies influenc-ing 75 other New York City tech companies,

using their success to mentor, invest, inspire,found new companies, and encourage formeremployees to do the same.18Over time, thecompanies they have influenced have become

successful in their own right, and continueto accelerate this cycles momentum. The 75companies influenced by DoubleClick, Buddy

Media, and AppNexus have gone on to influ-ence 177 other companies themselves, which

in turn have influenced 227 companies.19With-in just three degrees of influence, these threecompanies alone touch over 400 New York

City tech firms.20

As New York City tech companies becomemore successful, their founders are more

likely to connect to and influence other entre-preneurs. Although the vast majority of NewYork City tech companies are still private, it ispossible to look at the over 300 companies

with recorded exits between 2003 and 2013to determine how influential their entrepre-neurs became after being acquired. For every

100% increase in the dollar value of an exit,that company and its founders become 25%more influential.21After selling their compa-nies, founders and employees combine new

wealth with the experience of having built afast-growing company. With this expertise,capital, and visibility, these entrepreneurs

found new companies, accelerate the growthof existing ones, and contribute to the ongoingexpansion of the sector.

SUCCESS PASSES FROM ONE GENER-

ATION TO THE NEXT.The most successful

companies have an important impact on the

performance of the entrepreneurs they influ-ence. To explore this, we look at companiesthat are top performers, as defined by being in

the top 10 percent of all companies founded inthe same year by number of employees, totalinvestment, or exit amount between 2003 and

2013.22Companies that have been influencedby these top-performers become top-per-formers themselves 22% of the time, almost

three times as often as those that do not have

Entrepreneurs who reinvest their success into others

are the foundation of New York Citys tech sector.


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0%

10%

15%

5%

20%

25%

Inbound connection from atop-performing company

No inbound connections from atop-performing company

Percent of top-performing New York City tech companiesbased on connections to other top-performing companies

Percentofcompaniesthat

becometop-performers

Note: 85 companies are top-performers of 386 companies influenced by top-performers; 26 companiesare top-performers of 344 total companies not influenced by top-performers.

22%

8%


a connection to a top-performer, at just 8%.23We look at these same results in a regression

framework and find that companies that havebeen influenced by top-performers are 14%more likely to become top-performing com-panies themselves.24Put another way: being

connected to a successful business makes itmore likely that a business will receive a lot ofinvestment, employ many people, or exit for alarge amount of money.

CONNECTIONS AS IMPORTANT AS

INSTITUTIONS.The prevailing wisdom hasoften been that institutions drive the success

of an entrepreneurship ecosystem. We lookat New York Citys top three investment firms,

incubators, accelerators, co-working spaces,and undergraduate universities based on thepercent of top-performing companies coming

out of each. We compare the percentage ofsuccessful companies founded between 2003and 2013 affiliated with these top institutions

to the percentage of successful companiesinfluenced by other successful companies.

The results are surprising: 22% of companiesinfluenced by another successful companyare themselves successful, compared to 21.9%

with connections to the top three universities,and just 10.9% from the top three incubators,accelerators, and co-working spaces. Only the

top three New York City investment firms havea higher portfolio company success rate, at44.2%, and almost half of these top-perform-ing companies are themselves connected to

other top-performers.25

Companies and founders that connect toother top-performing companies are signifi-cantly more likely to be successful than those

that tap only into existing support organiza-tions alone. New York City tech is not wastingits success; a small handful of companies are

instead multiplying it. Highly connected com-panies do better and, in turn, successful com-panies give rise to more connections.


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Five connection types are accelerating the New York

City tech sectors growth.


GIVING BACK has become the norm for NewYork City tech founders. They inspire, mentor,invest, found new companies, and support

their former employees to do the same. Thesefive connection types bridge the gap betweenthe experienced and the novice, the successful

and the striving. In a city where so many aretransplants, the entrepreneurs included, they

are creating a reservoir of talent and capital fornew entrepreneurs to tap.

MENTORSHIP.High-quality mentorship

relationships among founders to solve criticalbusiness issuesrepresents a unique oppor-tunity to transfer knowledge from one gen-

eration of entrepreneurs to the next. No oneis better positioned to guide an entrepreneurthrough the challenges of scaling a business,growing a sales pipeline, or sourcing talent

than someone who is a bit further along inher journey as a New York City tech entrepre-neur.

With over 400 entrepreneur-to-entre-preneur mentoring relationships, collabora-tion across generations of entrepreneurs has

become the norm in the New York City techsector.26Successful entrepreneur mentorslike Stephen Messer of LinkShare (acquired byRakuten for $425 million in 2005) and Scott

Belsky of Behance (acquired by Adobe for areported $150 million in 2012) are just two ofhundreds investing their time and expertise

in new tech companies.27The New York City

tech sector is increasingly collaborative, andsuccessful entrepreneurs are helping the nextgeneration as a way to pay it forward, stay

tapped into new innovations, and cultivatefuture business relationships.

ANGEL INVESTMENT.Angel invest-ments, typically from $25,000 to $500,000,play a critical role in providing the early capi-

tal and expertise necessary to get a businessoff the ground.28Angel investors are not justsources of capital, but also mentors in their

own right, as well as important sources ofcredibility as new entrepreneurs seek outside

funding. In New York Citys tech sector alone,there have been over 3,500 New York Citytech angel investments made by more than2,000 angels.29

Over 860 of these investments have been

made by New York City tech entrepreneursthemselves, and more than a quarter of NewYork City tech companies have at least one

co-founder who is also an angel investor.30Large numbers of New York City tech found-ers are spurning the opportunity to retire to a

tropical beach and are instead staying com-mitted to the growth of the sector and pro-pelling its growth with the smartest capital:entrepreneur angel investment.

INSPIRATION.Entrepreneurship is notan obvious career choice, and there are easier

ways for talented people to make money, par-ticularly in New York City. Despite these chal-lenges, as New York City tech entrepreneurs

become successful, they are also attracting at-tention. Increased visibility in turn allows theseentrepreneurs to become role models for the

next generation of founders. In fact, successfulentrepreneurs like Alexis Maybank and Alex-andra Wilkis Wilson from Gilt Groupe, Jonah

Peretti from Buzzfeed, and Dennis Crowleyfrom FourSquare, have inspired over 180 futureNew York City tech entrepreneurs.31


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Inspiration

SUNRISE

YOUARE.TV

OUTSIDE.IN

FASHISMFELT TIP

Mentorship

DIMENSIONU

SOCIOCAST

DIET TV STYLECASTSINGLE

PLATFORM

SHOPTIQUES

HAVE TO HAVE

SWAAG POPPINBLUEFLY

MONTAJ


SERIAL ENTREPRENEURSHIPAND

FORMER EMPLOYEE SPINOUTS.

Successful companies and entrepreneurs havetwo more ways that they can impact an eco-

system: serial entrepreneurship and formeremployee spinouts. More than 400 serial en-trepreneurs have founded over 650 New York

City tech companies.32

Its not just the entrepreneurs who go onto found new companies, either. Many NewYork City tech founders promote entrepre-

neurship among employees, inspiring themto venture out on their own and oftentimessupporting them financially when they take

the plunge. In total, more than 500 companieshave been founded by former employees of

New York City tech companies.33The multi-

plicative effect of these two types of connec-tions alone is impressive: on average, everytwo New York City tech companies connected

to this network give rise to one more throughserial entrepreneurship and former employeespinouts.34


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REINVESTMENT IS ACCELERATING.The combined effects of the five connectiontypes cannot be overstated. New York City

tech has become a successful urban techsector in large part because its best entrepre-neurs and companies are accumulating not

just employees, investments, and exits, butalso influence. Over time, a network of 2,340

New York City tech entrepreneurs from 1,297companies has emerged. Between these peo-ple and companies, a dense network of at least2,000 connections has developed.35

Growing at an annualized rate of nearly

25% between 2003 and 2013, entrepreneurand company connections are the pathwaythrough which New York City tech entrepre-

neurs are accumulating the human, social,and financial capital necessary to drive theformation of new companies. Without these

relationships, people, knowledge, and moneywould leave the citys tech sector: the iconicnever inspire, the knowledgeable never men-

tor, and the successful never invest. Ratherthan standing on the shoulders of successfulfounders, young entrepreneurs of each sub-sequent generation would instead start on

the ground floor. In a global economy with

tempered growth and intense competition fornascent entrepreneurs, supporting this cycle

is the only way for cities to capitalize on theirsuccess stories and create successful urbanentrepreneurship ecosystems of their own.

FROM FEW ENTREPRENEURS, MANY.New York City is now home to several groups

of founders and former employeessome-times referred to as mafiaswho have left asingle successful company and founded manymore. These mafias demonstrate that over

time, the strongest companies have an impactthat spills across an entire city, generating jobs,revenue, and new companies. The three firms

we have profiled, DoubleClick, Buddy Media,and AppNexus, are all important financial suc-cesses, but their founders have exceeded this

success by mentoring, investing in, and inspir-

ing the next generation.

Connections among New York City tech companies are

growing rapidly.


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0

1,500

500

2,000

1,000

2003

2009

2006

2012

2004

Numberofconnections

2010

2007

2013

2005

2011

2008

Inspiration Mentorship

Investment Former employees

Serial entrepreneurship

Note: 24.6% connections CAGR, 20102013, 2,070 total connections, 20032013.

Cummulative connections between

New York City tech companies

4587

148

236

359

535

719

1,070

1,503

1,813

2,070

336

428

865

320

121



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WHEN HOUSEHOLDSin the U.S. were just getting their first di-

al-up Internet connections, Kevin OConnor, Dwight Merriman,

and Kevin Ryan mixed technology and advertising to monetize

the consumer Internet. DoubleClick became a leading Internet

ad-server and rode the expanding Internet bubble to an IPO in

1998. When the bubble burst and decimated the tech industry,

DoubleClick managed to survive, losing 70% of its clients but

80% of its competitors.36As the industry slowly regained its

footing, DoubleClick and its founding team managed to resize

the company and achieve profitability before selling it to pri-

vate equity firm Hellman & Friedman in 2005.37At $1.1 billion,

this acquisition was one of the biggest of a New York City tech

company at the time. The new owners would go on to sell the

company to Google for $3.1 billion, and today DoubleClick

is at the center of Googles $50 billion advertising business.

The financial success of this business has been superseded by

its ongoing impact, with Dwight and Kevin Ryan going on to

found eight more New York City tech companies and its former

employees starting 26.38Yahoo! acquired one of these firms

Right Mediain 2007 for $850 million.

MENTORSHIP

INSPIRATION

INVESTMENT

FORMER EMPLOYEE

FOUNDER

Legend:

Size of circle reflects the influenceof the entrepreneurs at eachcompany based on their numberof outgoing connections.

DoubleClick

Connections within two degrees: 146

First degree: 44

Second degree: 102


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SEEING AN OPPORTUNITYto link social media with traditional

advertising, Mike and Kass Lazerow, Aryeh Goldsmith, and Jeff

Ragovin started Buddy Media in 2007. Mike and Kass, having

recently sold Golf.com for $24 million to Time Warner, were

ready for a new challenge. Even as the financial crisis began

to strike down traditional companies, Buddy Media thrived by

offering companies a Software as a Service (SaaS) platform on

which they could easily engage their own customers through

social media.39Buddy Media continued its rise through 2010,

scaling to add several hundred employees and attracting $90

million in investments from blue chip investors including Grey-

croft, Softbank, and British advertising giant WPP.40In 2012,

Salesforce.com, seeing the strength of Buddy Medias man-

aging team and the staying power of its product, acquired the

company for more than $800 million. The story doesnt stop

there. The four founders have become influential investors and

mentors to younger entrepreneurs. They have made at least 11

angel investments in New York City tech companies and have

continued to mentor and inspire several other entrepreneurs.

MENTORSHIP

INSPIRATION

INVESTMENT

FORMER EMPLOYEE

FOUNDER

Legend:


Buddy Media


First degree: 16

Second degree: 43


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WHEN RIGHT MEDIA, which was founded by a former Double-

Click employee, sold to Yahoo! for $850 million, two of its for-

mer employees had an idea for a new kind of digital advertising

company. Brian OKelley and Mike Nolet founded AppNexus

to transform digital advertising by offering real time bidding

to compete with some of the biggest names in the business:

Google, Yahoo!, and Facebook. In just five years, the company

has grown to be one of the largest ad exchanges in the world,

second only to its homegrown competitor, Googles Double-

Click. AppNexus $130 million in revenues and 500 employees

at the end of 2013 helped it to raise $140 million at a valuation

in the billions.41Brian and Mike have already begun to multiply

their impact by investing in at least ten other New York City

tech companies, with a strong focus on ad-tech startups, and

six former employees have gone on to found new companies

themselves. There are rumors of an IPO on the horizon that

may ultimately create new liquidity for founders, early employ-

ees, and investors, but AppNexus is already demonstrating that

success breeds success.

AppNexus

MENTORSHIP

INSPIRATION

INVESTMENT

FORMER EMPLOYEE

FOUNDER

Legend:



First degree: 20

Second degree: 66


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The growth of New York Citys tech sector2003-2013

20111,503 total connections

2008535 total connections











Total connectionsamong entrepreneursin 2013

121 inspiration connections

320 mentorship connections

865 angel investments

428 serial entrepreneurs

336 former employee spinouts


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CITIES AROUND THE WORLD can replicatethe success of the New York City tech sector,and they dont need to seed new industries or

create tech parks to do it. In fact, the publiceffort necessary to recreate the dynamic ofreinvestment now happening in the New York

City tech sector may be much smaller thanmany policymakers think. Most cities already

have many of the components necessary toaccelerate the growth of a tech sector, includ-ing aspiring founders, new startups, and suc-cessful entrepreneurs. By connecting startups,

scaleups, and top-performing companies toone another, cities can catalyze the growthof an entrepreneurship ecosystem on top of

existing local companies, capital, talent, andindustries.

INSPIRE ENTREPRENEURS TO START

HIGH-GROWTH BUSINESSES IN YOURCITY.Successful entrepreneurs are powerfulambassadors and role models for your citys

tech sector, and celebrating them and theirbusinesses can raise the visibility of the entiresector. Promoting these figures can change

the trajectory of people who had not previ-ously considered entrepreneurship as a goodcareer path, and local stories make the possi-bility of launching a successful company much

more tangible.Several New York City campaigns havehighlighted the growth of the sector at large,

as well as the success of specific companiesand entrepreneurs. Made in New York Cityisan ongoing advertising campaign promoting,

among other things, the citys digital indus-tries. A citywide advertising campaign putlocal companies like LearnVest, Etsy, Songza,

Kickstarter, and AppNexus on city buses and

subways. A separate program, now called dig-ital.nyc,is a platform for all things tech in thecity. Its news stories promote local companiesand emerging technologies and celebrate the

growth of the sector with a map of local techcompanies, investors, jobs, and events.

Cities can promote their success storieswithout building a dedicated online platform

or launching a large-scale advertising cam-paign. In Texas, The Dallas 100is an annuallist of the fastest-growing companies in the

city. Over 1,100 executives, investors, universityleaders, government officials, and journalistscelebrate and promote the companies on the

list during an annual award celebration, cre-ating examples of inspirational high-growthentrepreneurs in the process.

MENTOR BUSINESSES AND THEIR

ENTREPRENEURS AS THEY SCALE UP.Successful local entrepreneurs have a greatdeal of expertise when it comes to creating a

business model, raising capital, and scaling abusiness once it has product market fit. Theseentrepreneurs tend to be busy, so creating

opportunities for high-quality, structured men-torship is particularly important and oftentimesdifficult to achieve.

Accelerators like Techstarsand Entrepre-

neurs Roundtable Accelerator (ERA) providetargeted mentorship to help young New YorkCity tech entrepreneurs address critical busi-

ness issues, but both organizations also takean equity stake in their companies. Recentlylaunched public programs like NYC Gener-ation Techwork directly with high schoolstudents, while NYC SEEDworks with veryearly stage companies. New York City may

lack formal programs to promote later stage

Create an entrepreneur network in your city.



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mentorship, but its successful entrepreneurs

have filled that gap and created a robust expertnetwork in their absence.

Not all cities already have the scale or

resources to support programs like ERA and

Tech Stars. However, examples from out-side New York City can help cities to create a

culture of mentorship. In Boston, MITs AdolfF. Monosson Prize for Entrepreneurial Men-

toringpromotes individuals and organizations

that have mentored young entrepreneurs.Recipients tend to include the award in theirbiographies. By elevating the status of men-

torship, cities can encourage the successful tocontribute back to the ecosystem.

INVEST INTO THE MOST PROMISINGCOMPANIES.Encouraging more entrepre-

neur angel investment not only facilitates thetransfer of knowledge and money into newventures, but also keeps successful entrepre-

neurs engaged in the ecosystems success.This is particularly important for entrepreneurswho have exited companies and have enough

liquidity to retire and leave the local ecosys-tem.

New York City has robust networks ofangel investors, as well as the resources andfinancial infrastructure to train recently suc-cessful entrepreneurs in the finer arts of seed

investing. The city has dozens of angel groupsdedicated to investing in early stage startups,including New York Angels(a top 10 most

active angel group in the world with over $95million invested), The Angel Investor Forum,and 37 Angels. Comprised of both entrepre-

neurs and investors, these groups lower the

barriers to becoming an angel, reduce risk, andprofessionalize the practice.

Cities lacking angel investment networks

can still help to spur the practice locally. The

Angel Resources Institute (ARI)is just onesuch organization that conducts training pro-

grams on the investment process, valuation,term sheets, the post-investment relationship,and due diligence. Tax creditsthat enable

recently liquid entrepreneurs to allocate stockoptions to angel investment vehicles can also

increase the quantity of local entrepreneurseed capital.

ENCOURAGE SERIAL ENTREPRE-NEURS AND FORMER EMPLOYEE SPIN-

OUTS.Successful entrepreneurs and theiremployees have experience starting, workingin, and scaling fast-growing businesses. Cities

must not only retain these entrepreneurs andemployees, but also enable them to spin outnew businesses.

The Partnership for New York City runsan Entrepreneurs Councilto give successfulentrepreneurs a platform to engage with each

other as well as local civic organizations andgovernment. These interactions facilitate fu-ture business relationships and wed entrepre-

neurs and their future ventures to the city.Former employees of New York City tech

companies are tapping into a similar network

to create new businesses. New York TechMeetup, an organization dedicated to support-ing the New York City tech sector, has morethan 40,000 members, many of them work-

ing at tech companies. Its monthly gatheringsenable these employees to share and demoproduct ideas with one another, and it is not

uncommon for attendees to meet their futureco-founders, formulate business plans, andlaunch new companies at these events.

Even without a robust network of thou-sands of people interested in tech entrepre-neurship, cities can implement policies to

facilitate serial and former employee entrepre-neurship. According to a study by the Kauff-

man Foundation, non-compete agreementsinhibit the formation of new local companies.42In New York, non-competes are only narrowly

enforceable, and in other domestic tech hubslike California, non-compete agreements arenot enforced at all, freeing employees to be-come entrepreneurs themselves.43



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WE COLLECTED THE DATA for this reportbetween March 2013 and March 2014 usingprimary interviews with entrepreneurs and

publicly available data from Crunchbase, An-gelList, and LinkedIn.

Tech companies are defined as those that

are either actively developing a new informa-tion technology or those whose businesses

are Internet-enabled. We excluded financialtechnology, green technology, and life scienc-es companies from this analysis. Our rationalefor excluding these three industries was 1) the

overlap between finance and technology hasincreased, and it is difficult to disaggregate thetwo; 2) manufacturing drives large portions of

green technology; 3) expertise and foundersin life sciences firms are largely distinct fromthose in information technology businesses.

All companies included in this study met

three criteria: 1) information about them waspublicly available; 2) they were founded in oneof the five boroughs (Manhattan, Brooklyn,

Bronx, Queens, and Staten Island) of New YorkCity; and 3) they had received investment and/or had revenues at the time of data collection.

Using these definitions, we created a list ofNew York City tech companies using Crunch-base, AngelList, the Made in NY Digital Map,

and the portfolio companies of all major ven-

ture capitalists, incubators, accelerators, andco-working spaces active in New York City. We

added to this list additional companies men-tioned by entrepreneurs, who we define ascompany founders, in the course of interviews.

In total, we reviewed 3,609 companiesto determine if they met the aforementionedcriteria and identified 2,593 New York City tech

companies. These companies were foundedbetween 1980 and 2013, although 96.58% of

companies in the dataset were founded af-ter 1996 due to survivorship bias.44We thenidentified and vetted 4,542 entrepreneurs and

found that 4,161 had founded one or more ofthese New York City tech companies.

We interviewed 645 New York City tech

founders representing 665 New York City techcompanies and asked them five core ques-

tions: Who inspired you to become an entrepre-

neur? Who invested in your company?

Who was your mentor during the growthand development of your company?

Have you founded other New York City

tech companies? Which of your former employees have

gone on to found New York City tech

companies?We use the responses to these questions

to create an edgelist of connections amongcompanies, along with a corresponding setof five outbound connection types, each of

which is represented by a different coloredarrow.45

Where an entrepreneur has founded mul-tiple companies, his or her most prominentcompany based on an index of founding date,

number of employees, total investment, andexit sizes represents his or her influence on themap.

Companies are oftentimes connected bymore than one type of connection. Wherea purple founder arrow connects any two

companies, the only other arrow that canappear is the blue former employee arrow.Likewise, where mentorship and investment

occur simultaneously between two compa-

Methodology.


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nies and their entrepreneurs, we only include

the green investment arrow. In the formercase, we assume that inspiration, mentorship,and investment are encompassed within the

act of serial entrepreneurship represented

by the purple arrow. In the latter, we assumethat angel investment comes with a degree of

mentorship. Otherwise, multiple arrows canconnect two companies.

We calculate the size of a companys circle

based on directed closeness centrality for un-connected graphs. In laymans terms, the sizeof a company is a function of the number of

first-, second-, third-, etc. degree connectionsthe company and its entrepreneurs have toothers in the network.

Each ring represents a time period andcompanies are located on a ring accordingto the year they were founded. Connectionsaccrue to a company based on the time period

in which the connections occurred. Where wedo not know the year a connection occurred,we take one of two different approaches.

Where we do not have year information foran inspiration, former employee, invest-

ment, or founder connection, we assumethat the year of the connection between thesource and the target companies is equal to

the year the target company was founded.To estimate when a mentorship relationshipstarted where we are lacking a start year, wereviewed mentorship relationships where

we do have start year information. For the273 mentorship relationships where this in-formation is available, we find that the mean

elapsed time between company foundingand mentorship is .5 years. We then set thementorship year equal to the year the target

company was founded, and add .5 years

to it, rounding to the nearest year. In thismodel, a companys circle and influence

grow over time as it and its entrepreneursbecome more connected to other New YorkCity tech companies. For other analyses,

all percentages are calculated using a 95%confidence interval.


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APPENDIX 1Interviewees

DoubleClick (1):Dwight Merriman, Kevin RyanRight Media (3): Jonah GoodhartGroup Commerce (4): Jonty Kelt, David Rosenblatt

Hunch (5): Caterina Fake

iVillage (6):Robert LevitanAppNexus (10):Brian OKelleyPulsePoint (11):Matt KeiserOlo (12): Noah GlassMimeo (13):John Delbridge, David Uyttendaele, Jeff StewartBuddy Media (14):Michael LazerowTracks (15):Daniel KlausDstillery (17): Joe Doran, Kathy Leake, David HonigDimestore Media (19): Doug McFarlandPando Networks (21): Laird PopkinInvite Media (23): Scott Becker, Nat Turner, Michael Provenza-no

LocalResponse (25): Nihal Mehta, Michael MuseLivePerson (29): Robert LocascioLendkey (33): Vince Passione

Mojiva (35): Miles SpencerAdaptiveblue (37): Alex IskoldAxial Market (40): Peter LehrmanQuigo Technologies (42): Yaron GalaiOlx (43): Fabrice GrindaInterclick (44): Michael KatzBig Fuel (45): Avi SavarHealthination (47): Tony EstrellaBonobos (48): Andy DunnNoodle Education (49): John KatzmanWarby Parker (52): David GilboaCollective (54): Joe Apprendi33Across (55): Eric Wheeler

Admeld (56): Ben Barokas, Brian AdamsYipit (58): Vinicius VacantiFloored (59): Dave EisenbergTotsy (60): Guillaume Gauthereau, Christophe GarnierSite59 (62): Damon Tassone, Michelle Peluso, Josh Feuerstein,Richard Harris

Hyperpublic (63): Doug Petkanics, Jordan CooperSpinback (64): Andrew FerenciSend The Trend (65): Divya Gugnani

Gilt Groupe (68): Michael Bryzek, Phong Nguyen, AlexisMaybankBehance (71): Scott BelskyLinkshare (73): Stephen Messer, Heidi Messer

Vonage (75): Carlos BholaMr. Youth (77): Matt BrittonMeetup (84): Greg Whalin, Scott HeifermanDoodledeals (85): Caren Sinclair-KayKnewton (88): Jose FerreiraCollective[i] (89): Tad MartinCasahop (90): Florent Peyre, Paul BerryJibe (91): Joe EssenfeldNomi (93): Wesley BarrowIrrive (98): Steven CohnOptimost (100): Mark WachenLot18 (102): Philip JamesDigital Railroad (104): Evan NisselsonKeep Holdings (106): Maryann Bekkedahl, Scott KurnitChatid (109): Dan HermanHeavy (110): Simon Assaad, David CarsonLocalvox (112): Trevor SumnerRazorfish (113): Jeff Dachis, Craig KanarickNext Jump (115): Charlie Kim

Movable Ink (117): Vivek Sharma, Michael NuttMotionbox (124): Josh GrotsteinCrowdtwist (125): Irving Fain, Josh BowenFotolog (128): Adam SeiferBlog Talk Radio (131): Robert CharishThankster (135): Paul GellerOutside.in (137): Cory ForsythOrchard (138): Kevin Kim, Art ChangTra (139): Bill Harvey, Mark Lieberman

AppCard (141): Yair GoldfingerCookstr (146): William SchwalbeNext New Networks (150): Fred Seibert, Jed SimmonsPatentory (154): Fatih Ozluturk[x+1] (157): Ted ShergalisInternet Media Labs (159): Peter Bordes

Adheretech (160): Michael MorenaOfferpop (161): Prakash Mishra, Wendell LansfordTheladders (164): Alexandre DouzetDrop.io (167): Darshan Somashekar

Tremor Video (169): Jesse ChenardMediabistro (170): Laurel ToubyStack Exchange (173): Joel SpolskyZocdoc (174): Cyrus MassoumiDemdex (175): Randy NicolauPanther Express (176): Ryan Nitz, Pablo MayrgundterBlip.tv (177): Dina Kaplan, Jared KlettInternet.com (180): Tristan LouisKinetic Social (182): Don MathisSquarespace (184): Dane AtkinsonPoppin (185): Chris Burch

AppAddictive (187): Michael OnghaiImagineeasy Solutions (191): Neal Taparia

Vault (193): Samer HamadehAmie Street (195): Joshua BoltuchOnswipe (199): Andres Barreto, Juan Pablo BuriticInphonic (201): David SteinbergM5 Networks (205): Dan HoffmanBarkbox (207): Henrik Werdelin, Carly Strife

Yodle (208): John Berkowitz, Ben RubensteinRent The Runway (209): Jennifer FleissPontiflex (210): Zephrin Lasker, Geoffrey GrauerSongza (211): Elliott Breece, Eric Davich, Elias Roman, PeterAsbill

Azoogle Ads (213): Joe SpeiserPhilo (215): David LevyShelby.tv (217): Reece PachecoContently (222): Joe Coleman, Shane SnowLua Technologies (224): Michael DefrancoPanelfly (225): Stephen LynchEvidon (226): Scott Meyer

Youare.tv (228): Josh WeinsteinLaunch.it (229): Brian CohenStylecaster (230): Albert Azout, Ari GoldbergDatemyschool (231): Jean Meyer, Balazs AlexaFueled (234): Rameet ChawlaOpensky (236): John CaplanSailthru (237): Neil CapelHealth Guru (239): Christopher BrunoBrandyourself (240): Patrick AmbronPicturelife (241): Nate Westheimer

Rock The Post (242): Alejandro Cremades, Tanya PriveExpoTV (250): Bill HildeboltCarrot Creative (253): Mike GermanoKeepideas (254): Phil MichaelsonPingg (255): Lorien GabelTutorspree (256): Aaron Harris

Appssavvy (261): Chris CunninghamSnapgoods (263): Ron WilliamsNext Big Sound (267): Alex WhiteBunny (270): Alexander Torrenegra

Arc90 (271): Robert ZiadeParse.ly (274): Sachin Kamdar, Andrew MontalentiSpreadsave (275): Andrew Fox

Artsy (276): Carter ClevelandAdtuitive (278): Isaac OatesMongodb (283): Eliot HorowitzWander (288): Keenan Cummings, Jeremy FisherImage Space Media (291): Kevin TungInternetcash (292): Yiannis TsiounisBirchbox (294): Katia Beauchamp, Hayley BarnaWork Market (297): Jeffrey Leventhal, Jeff Wald

V Bespoke (298): David Whittemore, Vik VenkatramanMonaeo (300): Nishant Mittal, Anupam Singhal

Guest Of A Guest (301): Rachelle HruskaSeatgeek (304): Russell DSouzaFab (309): Bradford Shellhammer, Jason GoldbergInstinctiv (310): Peter BrodskyTopi (311): David AubespinDailyworth (312): Amanda SteinbergPlaypower Labs (324): Kishan Patel, Derek LomasFieldlens (326): Doug ChambersPictela (327): Sanjay JainOkCupid (328): Christian Rudder, Max KrohnMobile Commons (330): Benjamin Stein, Jed AlpertCPXi (331): Michael SeimanStellaservice (335): Jordy LeiserInvision (337): Steve MarshallPhotoshelter (338): Allen MurabayashiSocialflow (339): Frank Speiser, Mike PerroneShapeways (341): Robert SchouwenburgBuywithme (342): Andrew MossIdeeli (343): Paul Hurley, Mark Uhrmacher

Likeable Local (344): David KerpenWicked Start (345): Bryan JaneczkoHowaboutwe (348): Brian Schechter, Aaron SchildkroutEwatch (350): James Alexander

Activecause (353): Damion HankejhRecordsetter (354): Dan RollmanBooker (355): Daniel Lizio-Katzen, Josh McCarter

Adbuyer.com (357): Tim OgilvieDejamor (358): Rodrigo FuentesCoursehorse (359): Nihal ParthasarathiJust Sing It (361): Alec AndronikovOrdergroove (364): Greg AlvoFast Society (368): Matthew RosenbergInsparq (371): Richie Hecker, Veronika SonsevThinkup (372): Gina TrapaniHave To Have (374): Carla HoltzeKleverbeast (375): Dinesh MoorjaniSizeseeker (381): Ian Campbell, Mona Safabakhsh

Voxy (386): Paul Gollash, Gregg Carey

Iamplify (387): Murray HidaryPlated (388): Nick TarantoFlavorpill (389): Sascha LewisNu-Kitchen (391): Mark NewhousePeeriscope (392): Ambar ShrivastavaShutterstock (394): Jon Oringer

Appboy (403): Jon Hyman, Bill MagnusonFanbridge (407): Spencer RichardsonMemoir (414): Lee Hoffman, Angela Kim

Amplify (416): Joel KleinCheapism (422): Max LevitteFashism (424): Brooke MorelandSquidoo (426): Gil Hildebrand[L]earned Media (429): Nick Kaye, Sam ZisesCompstak (432): Michael MandelHarvest (433): Danny Wen

Architizer (438): Marc KushnerJMT Apps (439): Jean-Marie TruellePaddle8 (440): Alexander Gilkes, Aditya JulkaCrisp Media (446): Xavier FaconSocialguide (447): Sean CaseyLean Startup Machine (449): Trevor Owens

Little Borrowed Dress (450): Corie HardeeMyCityWay (451): Puneet Mehta, Archana PatchirajanInnovid (452): Tal ChalozinFood52 (453): Amanda HesserRetailmls (454): Ben ZisesLIdealist (456): Fabrice Le ParcPay With Cover (461): Andrew Cove

Ad60 (464): Jason ReposaGetmaid (466): Steven GutentagOnewire (467): Skiddy Von StadeRockerbox (474): Ron JacobsonTwistage (479): David WadlerWanderfly (480): Evan Schneyer, Christy LiuNlytics (485): Hide HarashimaZazoom (486): Jay DedapperBlinq Media (487): Luis Caballero

Youlicit (488): Asif RahmanAssured Labor (490): David ReichMilewise (491): Sanjay KothariCrowd Play (492): Brian NewmanLeadspend (493): Craig SwerdloffPiiku (494): Jim RiceNiftythrifty (500): Topper Luciani

Visual Revenue (502): Charlie Holbech, Dennis Mortensen,Alex Poon

Ordr.in (503): David BloomStylefactory.com (505): Sebastian ReicheltSocure (509): Bradley LeinhardtThefuture.fm (511): David SteinRuby Ribbon (512): Deborah Uri, Anna ZornosaLenddo (514): Richard Eldridge

Adstruc (521): John Laramie, Josh WarrumDimensionu (526): Ntiedo EtukSocialfeet (527): Nathaniel McNamaraTest Prep International (528): Nilanjan SenMyclean (534): Michael BrodySalemove (538): Daniel Michaeli, Justin DipietroPhreesia (539): Evan RobertsGridpop (541): Avishai WeissTervela (545): Barry ThompsonClasstivity (557): Payal Kadakia

VocalizeLocal (558): Philip Krim

LISTED BELOWare all 645 entrepreneurs who participated in interviews. We list entrepreneursbased on the rank of their most influential company. Ranks are listed in parentheses, and compa-

nies with no outbound connections are listed in alphabetical order.



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True Office (561): Adam SodowickUfora (562): Braxton McKee, Alexander LeedsImrsv (563): Jason SosaUpfront Digital Media (564): Ran Cohen, Yiftah FrechterEnchanted Diamonds (565): Joshua NiamehrJamplify (566): Andy Pickens, Moses SoyoolaDesigner Pages (567): Jacob Slevin

Artstar (573): Chrissy CrawfordCentzy (575): Jeremy ClemensonSeedinvest (576): Ryan FeitMarket Publique (579): Jonathan Berger, Pamela Castillo

Panvidea (581): Chris CaliSense Networks (584): Tony JebaraMeegenius (588): Wandy HohExelate (595): Elad EfraimPixable (599): Inaki BerenguerKeywordsmart (601): Josh HaasBoonty (603): Mathieu NouzarethNuskool (604): Abran MaldonadoUndertone (610): Eric FranchiBuzztable (612): John BrennanMoonit (617): Dana KanzeSunrise (627): Jeremy Le VanMerchantry (628): Edward ShenderovichCode Climate (629): Bryan HelmkampGrade Spotter (630): Christopher KennedyKindling (634): Timothy MeaneyNewscred (639): Shafqat IslamTripology (641): Douglas KrugmanOff Track Planet (651): Freddie Pikovsky42Stats (unranked): Dinyar Mistry72Lux (unranked): Heather Marie

Abbeypost (unranked): Cynthia SchamesAcquaintable (unranked): Joel Rodriguez

Adcade (unranked): Rob CromerAdvizr (unranked): Mustapha BaassiriAftersteps (unranked): Kfir ShayAgolo (unranked): Mohamed AltantawyAlley Interactive (unranked): Matt JohnsonAlleywatch (unranked): Reza ChowdhuryAlluring Logic (unranked): Dane ArpinoAltah Net (unranked): Elizabeth GolluscioAmicus (unranked): Seth BannonAmplience (unranked): Rory DennisAngelpolitics (unranked): Ricardo Garcia-AmayaAnimoto (unranked): Tom Clifton, Jason Hsiao, Stevie Clifton,Brad Jefferson

AppArchitect (unranked): Ilya ZatulovskiyArkadium (unranked): Jessica RovelloArticle One Partners (unranked): Cheryl MiloneArtsicle (unranked): Alexis TryonAudio Network (unranked): Robert HurstAviary (unranked): Avi Muchnick, Israel DerdikBA Insight (unranked): Guy Mounier, Martin MuldoonBar & Club Stats (unranked): Benjamin SilbertBasno (unranked): Nicholas Thorne

Baublebar (unranked): Daniella YacobovskyBcontext (unranked): Massimo ScapiniBeautybooked (unranked): Hillary HutchesonBettercloud (unranked): David PolitisBib And Tuck (unranked): Sari AzoutBindo (unranked): Brad LausterBitehunter (unranked): Gil HarelBlack Lapel (unranked): Derek Tian, Warren LiaoBlank Slate Factory (unranked): Kael GoodmanBlue Apron (unranked): Matt SalzbergBmobilized (unranked): Bjorn HolteBombfell (unranked): Bernard YooBomoda (unranked): Brian BuchwaldBonusly (unranked): John Quinn, Raphael Crawford-MarksBoomset (unranked): Kerem Baran, Cem KozinogluBranch (unranked): Hursh Agrawal, Cemre GNgRBrewster (unranked): Steve GreenwoodBroadstreet Ads (unranked): John CrepezziCapture Your Flag (unranked): Erik MichielsenCaribbeing (unranked): Shelley WorrellCaseable (unranked): Marvin AmbergCharitybuzz (unranked): Coppy HolzmanChatalog (unranked): Natalie GonzalezCitymaps (unranked): Aaron RudenstineClothes Horse (unranked): Will CharczukCognitive Match (unranked): Alex KelleherCollaborativeHealth (unranked): Elliot TurriniColormodules (unranked): Asmau AhmedConsignd (unranked): Neil Parikh, Luke SherwinContract Room (unranked): Emil StefanuttiCraft Coffee (unranked): Michael HornCreativeworx (unranked): Mark HirschCrowdtap (unranked): Brandon EvansCustomer.io (unranked): John AllisonCustora (unranked): Corey PiersonDada (unranked): Beatriz RamosDailyburn (unranked): Andy SmithDance Online (unranked): Andrea SferesDatadog (unranked): Alexis Le-Quoc, Olivier PomelDatorama (unranked): Ran SarigDietbetter (unranked): Jamie RosenDigital Ocean (unranked): Mitch Wainer

Divvy (unranked): Jeremy GreenfieldDmind (unranked): Tom KwonDocasap (unranked): Puneet MaheshwariDoodle.ly (unranked): Evan Vogel, Darren PaulDoubleverify (unranked): Oren NetzerEasy Pairings (unranked): Darren Wan, Peter LadaEatdrinkjobs (unranked): Jason MillerEcarediary (unranked): John MillsEdamam (unranked): Victor PenevEdealya (unranked): Chaim ZuckerEdition01 (unranked): Jessica Kamel

Educlipper (unranked): Adam BellowElectnext (unranked): Keya DannenbaumEnstitute (unranked): Shaila Ittycheria, Kane SarhanEquametrics (unranked): Christopher IveyEstimize (unranked): Leigh DrogenEverplans (unranked): Abby SchneidermanEyeview (unranked): Tal RiesenfeldFaithstreet (unranked): Sean Coughlin, Ryan MelogyFalcon Expenses (unranked): Brooke SugarmanFanduel (unranked): Tom GriffithsFantasy Buzzer (unranked): Simon PettiboneFarmersweb (unranked): David RossFeengo (unranked): Stephen TheogeneFelt Tip (unranked): Lucius KwokFiverr (unranked): Micha Kaufman, Shai WiningerFlint And Tinder (unranked): Jake BronsteinFluidinfo (unranked): Terry JonesFoliodynamix (unranked): Aaron SchummForce Therapeutics (unranked): Bronwyn SpiraForetuit (unranked): Michael LiebowFunding Gates (unranked): Ismail ColakGallerama (unranked): Aleksandr YampolskiyGamblino (unranked): Frank Wilson

Gertrude (unranked): Kenneth SchlenkerGigzolo (unranked): Henry Tseng, Nathan MeeksGoaloop (unranked): Lori TerrizziGrouper (unranked): Michael WaxmanHandshake (unranked): Glen CoatesHark.it (unranked): Ryan Matzner, Mae KarwowskiHatch (unranked): Anastasia LengHeybubble (unranked): David AmsallemHeykiki (unranked): Joe VadakkekaraHonestly Now (unranked): Tereza NemessanyiHoppit (unranked): Steven DziedzicHopskoch (unranked): Marty MonacoHukkster (unranked): Katie Finnegan, Erica BellHullabalu (unranked): Suzanne XieHumanity.tv (unranked): Gaston BlanchetIareanet (unranked): James Decrescenzo JrIndiewalls (unranked): Ari Grazi, Gavriel WolfIntegral Ad Science (unranked): Will LuttrellInttra (unranked): Kenneth BloomJW Player (unranked): Dave OttenJoor (unranked): Mona BijoorJukely (unranked): Bora Celik

Kaltura (unranked): Shay DavidKapitall (unranked): Gaspard De Dreuzy, Serge KreikerKarma Mobility (unranked): Stefan BorsjeKinsa (unranked): Inder SinghKrossover (unranked): Vasu KulkarniLiazon (unranked): Timothy GodzichLifedots (unranked): Rafael De HaroLit Building Directory (unranked):Stephen KlenertLittlebits (unranked): Ayah BdeirLocal Bigwig (unranked): Ray MadronioLocket (unranked):Yunha KimLogic Product Group (unranked): Jill TaftLuckydiem (unranked): Andrew LandisMMI Broadcasting (unranked): Teemu AiramoMachinio (unranked): Dmitriy RokhfeldMagnetic (unranked): James GreenMarkerly (unranked): Sarah WareMarshad Technology Group (unranked): Neal MarshadMaxwell Health (unranked): Veer GidwaneyMeddik (unranked): Benjamin ShyongMediabrix (unranked): Ari BrandtMediamorph (unranked): Michael SidMentormob (unranked): Vince LeungMerchantfuse (unranked): Dan MernsMirror (unranked): Daniel MattioMixee Labs (unranked): Nancy LiangModalyst (unranked): Jill ShermanModelinia (unranked): Nicole Esposito, Liane MullinMojo Motors (unranked): Paul NadjarianMusic Xray (unranked): Mike McCreadyMy Damn Channel (unranked): Rob Barnett, Warren ChaoNeverware (unranked): Jonathan HefterNew Healthcare Enterprises (unranked): Peter HendersonNewlywish (unranked): Amanda AllenNewslook (unranked): Fred SilvermanNimbusbase (unranked): Alex VolodarskyNrelate (unranked): Neil ModyOgmento (unranked): Oriel Bergig, Ori InbarOlapic (unranked): Jose De CaboOnetok (unranked): Ben LilienthalOpen Air Publishing (unranked): Jon FeldmanOpprtunity (unranked): Janis Krums

Optier (unranked): Amir AlonPanjiva (unranked): Josh GreenPatch (unranked): Warren WebsterPeoplehunt (unranked): Adrian Avendano MonterrubioPersado (unranked): Alex VratskidesPickie (unranked): Sonia NagarPictorious (unranked): Michael ParkPixafy (unranked): Uri FooxPlaceiq (unranked): Steve Milton, Duncan McCallPlenishable (unranked): Jeff FreedmanPlexx (unranked): Yscaira Jimenez

Policymic (unranked): Christopher AltchekPoshly (unranked): Bradley Falk, Doreen BlochPostable (unranked): Scott PotashPowhow (unranked): Viva ChuPreo (unranked): Richard LiangProper Cloth (unranked): Seph SkerrittPuzzleSocial (unranked): Jeb BaliseRanku (unranked): Kim TaylorRap Genius (unranked): Mahbod MoghadamReadrboard (unranked): Porter BayneRealdirect (unranked): Michelle PaeRedstapler (unranked): Sandro PuglieseRenthop (unranked): Lawrence Zhou, Lee LinRentshare (unranked): Christopher Toppino, Ian HalpernRevtrax (unranked): Jonathan TreiberRun (unranked): Seth Hittman, Dan SchwartzSalonpulse (unranked): Greg RatnerSavored (unranked): Benjamin McKeanScanbuy (unranked): Olivier Attia, Chai Outmezguine, DidierFrantz

SeamlessDocs (unranked): Jonathon Ende, Chachi CamejoShake (unranked): Abe GeigerShopcube.com (unranked): Reid Covington

Sidetour (unranked): Vipin GoyalSimplereach (unranked): Eric LubowSingleplatform (unranked): Wiley CerilliSketchfab (unranked): Alban DenoyelSkillshare (unranked): Michael KarnjanaprakornSlader (unranked): Kyle GerritySlate Science (unranked): Guy VardiSocialbomb (unranked): Adam SimonSpanfeller Media Group (unranked): Jim SpanfellerSportaneous (unranked): Omar HarounSpotflux (unranked): Chris NaegelinStereotypes.fm (unranked): Jason KeckStray Boots (unranked): Scott Knackmuhs, Avi Millman, NoemiMillman

Stunable (unranked): Samantha RadocchiaStylyt (unranked): Jenny WuSuitey (unranked): David Walker, Phil LangSumall (unranked): Korey LeeSystems Forge (unranked): Peter BellTaboola (unranked): Adam SingoldaTake The Interview (unranked): Danielle WeinblattThe Loadown (unranked): David Renard

Theatermania.com (unranked): Darren SussmanThinknear (unranked): John HinneganTickpick (unranked): Brett Goldberg, Chris OBrienTimehop (unranked): Benny WongTip Card (unranked): Gregory WrightTiqiq (unranked): Jesse LawrenceTopshelf Clothes (unranked): Katie NadlerTrendabl (unranked): Jon AlagemTrendalytics (unranked): Karen MoonTresensa (unranked): Robert Grossberg, Rakesh RajuTriplelift (unranked): Ari Lewine, Eric Berry, Shaun ZachariaTruveris (unranked): Aj LoiaconoTutonic (unranked): Kyle CromerTutorialize (unranked): Leo ShemeshTwochop (unranked): Mo LamUmami (unranked): Bryan SlavinUncommon Goods (unranked): Dave Bolotsky, Thomas EptingUplanme (unranked): Sean BarkulisUprise Art (unranked): Tze ChunUseful Capital (unranked): Alok Tandon

Vaunte.com (unranked): Leah ParkVee24 (unranked): James KellerVerbalizeit (unranked): Ryan FrankelVhx (unranked): Jamie WilkinsonVidbid (unranked): Patrick BozeWeDidIt (unranked): Bryan Liff, Ben Lamson, Su SanniWeespring (unranked): Allyson Downey, Jack DowneyWirelawyer (unranked): Matthew TollinWishi (unranked): Lia KislevWorkfolio (unranked): Charles Pooley

Yieldbot (unranked): Jonathan MendezYieldex (unranked): Tom ShieldsZipmark (unranked): Jay BhattacharyaZipments (unranked): Garrick PohlZola Books (unranked): Michael Strong



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APPENDIX 2Acknowledgements

Michael Goodwin, Project Leader at Endeavor

Insight, created this report in November 2014,with research assistance from Jeff Chambers,Alex Coburn, Joni Cooper, Charles Dolan,Matthew Echelman, Sravanthi Kadali, Nina

Kamath, Max Leonesio, Joyce Lin, Ricky Lopez,Nihal Mehta, Austin Mertz, Alba Sophia, PabloSuarez, Neby Teklu, Chris Veasey, and Linda

Zhong.The report could not have come to life

without Matt Lerners deep involvement withboth the data and infographics. Rhett Morris,

Endeavor Insights Vice President, guided theinterviews, analysis, and drafting of this report.Fernando Fabre, Endeavors President, pro-

vided invaluable input during the analysis offindings.

Special thanks to participants of roundtable

discussions held with key investors and sup-port organizations and to staff at The Partner-ship for New York City, New York City Digital,

the Mayors Office, and the New York City Eco-

nomic Development Council for elucidatingthe history of the New York City tech sector.

This study would not have been possiblewithout New York City tech founders gener-ous contribution of over 200 hours of inter-

view and survey time. For more informationregarding this report, please contact MichaelGoodwin at [email protected].

APPENDIX 3Participants

The following investors and support organiza-

tions assisted in connecting us with founders:Incubate NYC, 500 Startups, Projected Spaces,Alley New York City, Consigliere, Socratic Labs,Varick Street Incubator, Founders Institute, Tip-

ping Point Partners, The Hatchery, and WeCre-ate NYC.

In addition to connecting us with their

portfolio companies, the following organiza-tions also participated in roundtable discus-sions of preliminary findings in October andNovember 2013: Bessemer Venture Partners,

DFJ Gotham Ventures, Flybridge, Founder Col-lective, Google Ventures, Greycroft Partners,IA Ventures, Lerer Ventures, DreamIt Ventures,

Entrepreneurs Roundtable Accelerator, FueledCollective, Grind Spaces, IncubateNYC, IngkLabs, InSITE, NYC Seed, and NYC Seed Start.



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ENDNOTES1. See Methodology section for additional information on the definition of New York Citys information technology sector.

2. The New York Tech Scene Sees Almost $10 Billion Invested Across 2,206 Deals in Last Five Years. CB Insights. 30 July 2014,

accessed 5 November 2014 < https://www.cbinsights.com/blog/new-york-tech-investment-report/>.

3. 3.8 million people were employed in New York City in July 2014. New York City Local Area Unemployment Statistics

Program. New York State Department of Labor. Accessed 15 september 2014 . We assume

that companies for which we do not have employment data (1,627 of 2,593) have the median number of employees (10), with

53,430 estimated net employees working at these New York City tech companies as of December 2013.

4. CB Insights.

5. 2,206 companies were founded between 2003 and 2013 of 2,593 companies, all time, or 85.11%. 53,430 jobs were created

between 2003 and 2013 of 62,291 gross jobs, all time, or 85.77%.

6. Nick Beim. The Rise and Future of the New York Startup Ecosystem. 28 February 2014, accessed 27 June 2014 .

7. Ibid.

8. Richard Florida. New York City: The Nations Second Leading Tech Hub. 9 May 2012, accessed 27 June 2014 .

9. In 2010, the New York City tech sector had 26,577 employees and in 2013, 53,430 employees, a 3-year compound annual

growth rate (CAGR) of 26.21%.

10. New York Citys Growing High-Tech Industry. April 2014, accessed 27 June 2014. .; New York City tax rate schedule. New York State Department of Taxation and Finance. 2013, accessed 27 June

2014. .; 2019 estimated taxes collected: 44,845

new tech employees*($1,706+(3.648%*$50,000)) = $158,302,850; 2024 estimated taxes collected: 143,608 new tech

employees*($1,706+(3.648%*$50,000)) = $506,936,240.

11. Rhett Morris. How Did Silicon Valley Become Silicon Valley: Three Surprising Lessons for Other Cities and Regions. Endeavor

Insight. July 2014.

12. 2003-2013 economic impact calculated using two methodologies. For companies founded, acquisitions, and exit amounts,

we count the actual number of companies founded and acquired and the actual dollar amount of exits between January

2003 and December 2013 based on survey and publicly available data. For employees and investment, we assume straight

line growth from the founded year until the close year, acquisition year, or 2013, recording only employees and investments

generated between 2003 and 2013. We assume that companies for which we do not have employment data (1,319 of 2,206)

have the median number of employees (10). All other figures are actuals.

13. 30.64 (+/-.34 years) on average when New York City tech founders found their companies. Assumes that founders are 18 at

undergraduate university matriculation.

14. 81.87% (+/-2.52%) of New York City tech founders attended high school in the five boroughs of New York City.

15. 11.67% (+/-1.44%) of New York City tech founders attended undergraduate school in the five boroughs of New York City.

27.84% (+/-2.91%) of New York City tech founders attended graduate school in the five boroughs of New York City.

16. 64.54% (+/-1.92%) of New York City tech founders studied at least one non-STEM subject in undergrad while 35.46% (+/-1.92%)

studied at least one STEM subject.

17. 41.98% (+/-2.21%) of New York City tech founders have a graduate degree, 64.40% of founders have non-technical graduate

degrees. 42.97% (+/-3.26%) have an MBA, 22.73% (+/-2.76%) have an MS, 14.29% (+/-2.30%) have an MA, 7.14% have JDs (+/-

1.69%), 5.30% (+/-1.47%) have PhDs.

18. DoubleClick has 44 first degree connections; AppNexus has 20 first degree connections; Buddy Media has 16 first degree

connections. Five of these connections overlap.

19. DoubleClick, AppNexus, and Buddy Media have 177 second degree connections and 227 third degree connections.

20. DoubleClick, AppNexus, and Buddy Media have 401 unique connections within three degrees.


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21. R-squared = .1905, n=48, p=0.002.

22. We group companies in cohorts and calculate percentiles based on the year the company was founded.

23. 22.02% (+/-4.21%) of companies with a top-performing inbound connection are successful, 7.56% (+/-2.85%) of companies

with no top-performing inbound connections are successful. Analysis excludes companies with no inbound connections.

24. R-squared = .0404, n=730, p=0.000.

25. 21.93% (+/-6.05%) of top three university connections are top-performers; 10.92% (+/-5.72%) of top three incubators,accelerators, and co-working spaces are top-performers; 44.17% (+/-9.07%) of top three investment firm connections are top

performers. 45.28% of top three investment firm connections also are connected to top-performers.

26. There have been 413 mentorship relationships among New York City tech founders, all time.

27. Romain Dillet. Adobe Acquired Portfolio Service Behance For More Than $150 Million In Cash And Stock. Techcrunch. 21

December 2012, accessed 8 August 2014. .

28. Why Angel Investment Is Important. Organisation for Economic Co-operation and Development. 2011, accessed 27 June

2014. .

29. 3,583 total angel investments made in New York City tech companies by 2,157 total angels, all time.

30. There are 865 company to company investment connections. 665 New York City tech companies have at least one founder

who is also an angel investor, 25.65% of the 2,593 total New York City tech companies, all time.

31. 183 inspiration connections among New York City tech founders, all time.

32. 420 New York City tech serial entrepreneurs founded 656 New York City tech companies, all time.

33. 527 New York City tech companies have been founded by former employees of other New York City tech companies, all time.

34. 627 unique serial entrepreneurship and former employee connections (mutually exclusive) divided by 1,297 companies in

network equals .4834 new companies per company through these connection types, all time.

35. 2,340 unique entrepreneurs have founded these 1,297 companies. Since 2003, we record 1,963 company to company

connections with 2,070 connections among them where any pair can have more than one connection type between them.

36. Josh Zelman. (Founder Stories) Fmr. DoubleClick CEO, Kevin Ryan. Techcrunch. 22 May 2011, accessed 27 June 2014.

.

37. Hellman to buy DoubleClick for $1.1B. San Francisco Business Times. 25 April 2005, accessed 27 June 2014. .

38. DoubleClicks founders founded 8 New York City tech companies, its former employees 29, with 3 companies overlapping.

39. James Altucher. 7 Things Buddy Media Did Right To Become an $800mm+ Company. Techcrunch. 9 June 2012, accessed 27

June 2014. .

40. Josh Zelman. (Founder Stories) Buddy Medias Mike Lazerow. Techcrunch. 27 August 2011, accessed 27 June 2014. .

41. Alex Konrad. New King Of Ad Tech: How AppNexus CEO Brian OKelley Went From Fired To First. Forbes. 15 July 2013,

accessed 27 June 2014. .

42. Jason Wiens and Chris Jackson. Rethinking Non-Competes: Unlock Talent to Seed Growth. The Kauffman Foundation. 25

July 2014, accessed 22 October 2014. .

43. Steven Greenhouse. Noncompete Clauses Increasingly Pop Up in Array of Jobs. The New York Times. 8 June 2014, accessed

22 October 2014. .

44. Survivorship bias in this case is the tendency of our dataset to contain companies that still exist, and not ones that have closed.

45. An edgelist is a data structure for storing connections between nodes, in this case companies.


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ENDEAVORis leading the global high-impact entrepreneurship movement to catalyze long-termeconomic growth. Over the past fifteen years, Endeavor has selected, mentored, and accelerat-

ed the best high-impact entrepreneurs around the world. To date, Endeavor has screened morethan 30,000 entrepreneurs and selected 800+ individuals leading 500+ high-impact companies.These entrepreneurs represent over 225,000 jobs and over $6 billion in revenues in 2012 andinspired future generations to innovate and become entrepreneurs too.

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