New York aims to get ahead of Silicon Valley

New York, the center of finance, fashion, art, advertising and media, now seeks to become the world's leader in technology.

Following the economic downturn in 2007-2008, the city is reinventing its economy and pitching itself as an engaging place to live with unlimited cultural amenities－key elements in attracting and retaining highly educated workers. There are now about 333,000 people employed in New York's tech sector, Forrester Research estimates.

Typical salaries in new, venture capital-backed and established technology companies range from $65,000 to $240,000, tech website Built-in-NYC reported. The median individual income in New York is $50,825, statistics compiled by the US Census Bureau show.

In the third quarter of 2019, New York's total venture capital funding－a measure of a region's economic dynamism－trailed only Silicon Valley-San Francisco, but led Los Angeles, Boston, San Diego and Seattle, PwC MoneyTree reported.

New York also seeks to nourish new companies. Futureworks NYC, part of the city's Industrial Action Plan, will make affordable manufacturing space available at the Brooklyn Army Terminal, formerly a port facility on the waterfront.

To dominate the technology sector, New York must take on California's Silicon Valley, the world's premier region for tech innovation.

Key to development

Two factors and one man were key to its development. After World War II, the region was largely agricultural and land was cheap. Two major universities－Stanford and the University of California at Berkeley－were nearby and provided much of the early brainpower.

Frederick Terman, a professor of engineering at Stanford, encouraged two of his students, William Hewlett and David Packard, to develop new technologies and their company, founded in 1939, became the region's spark. But Fairchild Semiconductor, launched in 1957, is sometimes referred to as the "big bang" of Silicon Valley because it spawned nearly 40 companies, including Intel.

Silicon Valley is home to major companies, including Apple, Google, Facebook, Cisco, Oracle, Netflix, Adobe, eBay and Intuit. Silicon Valley employs about 371,000 people, but the tech industry has spread throughout the San Francisco Bay Area where a further 385,000 are employed, the Computing Technology Industry Association reported.

This raises a basic question: Can New York, where there are no orchards ripe for development, where everything is expensive and the subway has myriad problems, compete?

The early indications weren't good. New York didn't have a strong engineering base. In the 1950s, IBM and Bell Labs called the region home, but neither produced a slew of startups. But 40 years later, Silicon Alley－the area centered on Manhattan's Flatiron district during the dotcom boomsoon attracted talent and venture capital. However, the dotcom bust brought on by excessive speculation in then-new internet technology temporarily stalled the city's development as a technology hub.

The next blow was the financial crisis of 2007-2008, generally considered the worst worldwide financial downturn since the Great Depression of the 1930s. Wall Street was hit hard and many lost their jobs. But then-mayor Michael Bloomberg had an idea: diversify the city's economy.

Cornell Tech is part of that diversification and a key factor in New York's challenge to Silicon Valley. Founded in 2012 and temporarily housed in Google's Manhattan building, the school has now moved into its permanent campus on Roosevelt Island, formerly known as Welfare Island because of its long-gone hospitals serving the poor.

The engineering school is a joint venture between Cornell University and the Israel Institute of Technology. It offers graduate study leading to a doctorate. It now enrolls about 300 students and plans to expand to 2,000 over the next 20 years.

Cities are central to innovation, acting as petri dishes where inventive engineers meet venture capitalists who back their startups and bring new products to market. There are now an estimated 7,000 to 9,000 startups in New York, advocacy group Tech: NYC said.

There's no reason to think future innovation will be limited to New York and Silicon Valley. Writing in the Harvard Business Review, professors Richard Florida and Ian Hathaway noted: "We're used to thinking of high-tech innovation and startups as generated and clustered predominantly in fertile US ecosystems, such as Silicon Valley, Seattle and New York.

"But with so many aspects of American economic ingenuity, high-tech startups have now truly gone global. The past decade or so has seen the dramatic growth of startup ecosystems around the world, from Shanghai and Beijing, to Mumbai and Bangalore, to London, Berlin, Stockholm, Toronto and Tel Aviv."

And they added: "A number of US cities continue to dominate the global landscape, including the San Francisco Bay Area, New York, Boston and Los Angeles, but the rest of the world is gaining ground rapidly."