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Posted at 12:03 PM ET, 09/21/2011

Out of the Valley and into the Alley


Storm clouds loom over the lower Manhattan skyline. (Mary Altaffer - AP)

Can New York’s Silicon Alley — or any other technology hub, for that matter — ever supplant Silicon Valley as the epicenter of the Internet world? Consider that some of the most exciting new start-ups over the past two years have been companies like Foursquare, Etsy, Tumblr, Gilt Groupe, Boxee and Kickstarter - all of which got their start in New York. At a time when the cost of launching a start-up has dropped to nearly nothing, New York’s young creative class has been starting new companies at an astonishing pace. And, in the process, they are transforming entire industries from media to food to fashion to the arts.

Compare this to the Web boom that occurred more than ten years ago. That was a time when the big New York City start-ups tended to be me-too media companies started by guys in their 30s and 40s, not by young men and women in their 20s and fresh out of school. Back then, the Wall Street money-men — not the Silicon Alley venture capitalists — ran the city, and were none too pleased to hand over their cash to twenty-something kids with a funny-sounding Web site. That, however, has changed, as the chaotic events leading to The Great Downgrade have finally opened the eyes of young grads to the fact that a career in tech might actually be preferable to a career on Wall Street. At the same time, smaller angel and venture capital investors have applied less pressure to start-ups to scale up and professionalize too quickly, giving young talent less reason to flee to the West Coast.

New York City has not been content to rest on its laurels, with even Mayor Bloomberg getting into the mix and calling for steps to make the city the technology capital of the U.S. and the world. In addition to supporting the creation of a Road Map for the Digital City, Bloomberg is investing the city’s money into making sure that the creative elite remains around — even if the market tanks. What’s interesting, of course, is that New York City has borrowed bits and pieces from the Silicon Valley model, while keeping what is distinctly New York in the mix. This is still, after all, The City That Never Sleeps.

When social media became the buzzword of the day and Web 2.0 took hold in the public imagination, it was exactly New York’s concentration of media professionals, advertisers, publishers and designers that made it a natural fit for the next evolution of the Web. When fashion brands began to embrace the Web, it also made sense that the city’s concentration of design talent in the garment district would get in on the action. The same story was repeated again and again, in every industry where New York had a competitive edge. Take the restaurant business, for example, where the city’s incredible array of food options, combined with the rise of location-based networks, eventually led to Google acquiring Zagat — great content on top of a great technology platform. West Coast meets East Coast. Instead of being something forced on the city by big money investors, the Web became something organically integrated into the daily rhythm of the city.

To what extent is the Silicon Alley model able to be replicated — not just across the nation — but also around the world? Silicon Valley is unquestionably still the role model around the world. It is the place where foreign dignitaries visit when they want to export "innovation" back to their homeland. Yet, the New York model might be more flexible for European cities trying to become innovative hubs — especially if those cities already have the type of urban density that makes something as simple as a “check-in” worthwhile. One thinks immediately of densely populated cities like Mumbai and Shanghai — where a Silicon Alley model may make more sense than a Silicon Valley model.

New York essentially built on top of a technology platform that Silicon Valley had already created. New York will never be about designing computers and silicon chips and mobile devices. Instead, it is about what you can do with all of this hardware when smart minds in crowded urban cafes and downtown lofts get to work. Attempting to construct a Silicon Valley from scratch may be a fool’s errand, but taking what a city does well and layering that on top of mobile and Internet technologies, while taking steps to attract and retain the creative class is ultimately a model that any city can attempt to replicate.

Dominic Basulto is based in New York City.

Read more on Innovations:

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By  |  12:03 PM ET, 09/21/2011

 
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