For years, living in the San Francisco Bay area seemed like the only option for Matthew Rothenberg if he wanted a career in consumer Web technology.
After graduating with a bachelor's degree in cultural studies and a master's in media studies from New York University, Rothenberg, 31, moved to California in 2004 to get another master's at UC-Berkeley in information management and systems. Eventually, he became vice president of product at Flickr, the San Francisco-based photo-sharing site.
But when he contemplated his next career move earlier this year, he turned his gaze back east. "I always wanted to move back to New York, but it didn't seem realistic until recently," said Rothenberg. "There's been a huge increase in the number of companies doing interesting work out here."
A decade after the rise of "Silicon Alley," a new generation of Internet developers and entrepreneurs are choosing New York City over Silicon Valley to build the Facebooks and Twitters of tomorrow.
Rothenberg, for instance, now works in Manhattan as vice president of product at Bitly, the link-shortening site. Many of his Bay Area comrades have also migrated to New York, including former Flickr colleague Kellan Elliott-McCrea, vice president of engineering at Etsy, the handcrafts e-commerce site.
In 2010, New York City employed more computer programmers, computer systems analysts, and software engineers than ever before in its history, according to statistics from the New York State Department of Labor. In 2000, the city employed an average of 47,220 such workers a month, but by 2003, that number was down to 33,180. This year's monthly average, as of the end of April, is 48,980.
"When I lived in New York a decade ago, if you worked in tech you were a weird computer person," said Rothenberg. "Now there's a lot of weird computer people."
With its combination of Wall Street millionaires, celebrities and bohemian artists, New York is all about status and striving, and that's built into the fabric of mobile check-in service Foursquare. Users collect badges for attending events and stopping by museums, and if they check in more frequently than anyone else, they become the "mayor" of a small part of New York, even if it's just a bar or coffee shop.
"You're constantly advertising where you're going and what you're doing, so there's this idea of micro-celebrity," said Foursquare co-founder Naveen Selvadurai.
Selvadurai and Dennis Crowley, the other co-founder, often say that their company could only have been built in New York. The city's population density and endless pageant of nightlife activities made it the ideal place for them to test, scale and perfect their product.
Crowley created the original version of Foursquare, called Dodgeball, with NYU classmate Alex Rainert while studying for a master's degree in interactive telecommunications. They sold it to Google in 2003, but Crowley became frustrated with what he saw as Google's neglect of the product. He left in 2007 and created Foursquare shortly after.
Around the same time as Crowley and Selvadurai were building Foursquare, two professors, one at NYU, the other at Columbia, were working to develop ways to keep their best math and computer science students from migrating to Silicon Valley or to Wall Street. Evan Korth, a computer science professor at NYU, and Chris Wiggins, applied math professor at Columbia, founded HackNY with the help of Hilary Mason, the chief scientist at Bitly, in early 2010.
HackNY is funded by various supporters, including the entrepreneurship-focused Kauffman Foundation, venture capital firms like AOL Ventures, Union Square Ventures, and Google Ventures, among others. It connects students with tech startups for paid summer internships. Last year, HackNY sent 12 students to work at startups; this year, they have more than 30 students interning at startups around the city.
"Students didn't know what the term startup meant three years ago, now it's on everybody's radar," said NYU's Korth, who often advises students in evaluating post-graduation job offers. Until Korth and Wiggins came along, New York's engineering departments didn't have outward facing programs such as those at Stanford in California to help connect students with business opportunities, said Steven Blank, a professor at Stanford and UC-Berkeley.
The imprimatur of the city's premier academic institutions has made it more socially acceptable for students to pass up internships on Wall Street or with established Internet companies like Facebook.
"It's easier to tell your parents you're working for a startup when it's through a fellowship program that's going to pay you and provide housing," said Tal Safran, who graduated in May and interned last summer with Aviary, a New York startup that builds Web tools.
Still, even with HackNY's efforts, the New York tech community still has a way to go to supplant the finance industry as the biggest employer of technology graduates. About a third of Columbia's 2010 graduates in engineering, applied math and physics took jobs at financial services firms, compared to the 11.7% hired by computer software companies.
In a recent survey, entrepreneurs told the city's chief digital officer, Rachel Sterne, that engineering talent was their biggest need, citing competition from the West Coast and Wall Street.
Another impetus for New York's re-emergence as a tech center is Google. The company opened its New York office in 2000, mainly to house sales staff. Then, in 2003, Craig Nevill-Manning, a former Rutgers computer science professor, founded the company's first satellite engineering office in Manhattan. Google wanted to make sure that East Coast engineers could work for the company even if they didn't want to move to California.
With about 1,000 engineers, New York is now Google's second-biggest engineering office after its Mountain View, Calif., headquarters. Engineers at the office work on over 100 projects, including search, ads, Google maps and Google docs.
Google's investment in the office, located in Manhattan's fashionable Chelsea neighborhood, has drawn talented engineers from all over the world, and because Google tends to hire entrepreneurial employees, many of them have gone on to join early-stage startups or found their own companies in the city.
The proximity to Google has attracted enterprises such as Betaworks, a studio that both builds companies and invests externally, to Chelsea. "There's a good reason why we're here -- we want to be close to Google," said John Borthwick, founder and CEO of Betaworks, which is within walking distance of Google's New York office. The firm has raised about $50 million for its own products and 35 external companies.
Betaworks companies are focused on social media and real time analytics, Borthwick, 45, said. Among the firm's investments is TweetDeck, recently bought by Twitter for a rumored $50 million, Bitly, and SocialFlow, a company that analyzes real-time Twitter data to help companies time their tweets to have the most impact on consumers.
"Five years ago I sat down with one of the top VCs in the Valley and he said to me every single investment we do in the next five years will be within fifteen miles of the restaurant we're sitting at in Palo Alto," Borthwick recalls. "Five years later, he's wrong; 20 to 25% of his investments are now in New York."
NYC v. Silicon Valley
While New York's tech scene is on the rise, it is in the early stages of building a foundation that can survive another tech bubble or recession. People and companies have to fight harder for attention in a city that supports a variety of industries including media, fashion and finance.
"When you're not the town's business, you fight for resources and things that come easy in Silicon Valley," said Steve Blank, a Bronx, N.Y., native who has lived in the Valley for decades as an entrepreneur. Any lawyer in the Valley can prepare Series A financing documents, the contracts companies sign with investors for their first round of financing, Blank said. "That's not true in New York."
In tech, the product often precedes profit, and companies need time to evolve. It's a lesson that New York can learn from Silicon Valley, said Frank Speiser, CEO of SocialFlow. New York gets financing done at lightning speed, and returns are demanded just as quickly.
To succeed in the long run, said Speiser, New Yorkers need to learn a new skill: patience and reflection. "Think for a while, then go for it with that New York attitude," said Speiser. "Once you have the idea, there's no better place to be than in New York."
Write to Joseph Walker