Cities based on ideas are made of straw... and why Paul Graham is wrong about New York City

Paul Graham recently wrote a piece about cities.  He puts forth Cambridge as a city of ideas, New York as a city that is all about money (where people doing startups are second class citizens) and the Valley as a place for startups. 


I’m not about to start comparing the Valley to New York City.  That’s just silly, because the Valley has a multi-generational head start on creating tech startup companies.  However, given that, it does make me wonder why Cambridge and the Boston Area is so far behind the Valley, because Route 128 has been a tech center since the late 1950’s.  I mean, “Harvard and MIT are practically adjacent by West Coast standards, and they're surrounded by about 20 other colleges and universities,” as Paul puts it.  Perhaps he should be explaining why his City of Ideas gets less than a third of the venture capital investment that the Valley does.


I think the fact that Cambridge is a city of ideas is exactly why you could say it’s questionable how great a place it is to do a startup.  In an environment dominated by academia—where you lack time pressure, a sense of immediacy—you’ve probably got just as much of a chance of creating an interesting intellectual exercise in burning cash as you do building anything that resembles a real company.  I mean, have you ever tried collaborating with an academic institution if you’re a business?  Your startup would run out of cash before they figured out the right academic chair to lead the effort and which pool of research money to allocate for you.  It’s no accident that startups need to be spun out of these institutions to be successful.  Plus, seen any hugely successful companies come out of university incubators lately?  (And no, Zuckerberg’s dorm room does not qualify as an incubator.)

Also, think about it another way.  What are the last 10 or 20 really novel "ideas" in the startup world?  Things that required a leap of thought...   We can debate it and certainly I'm up for creating a list, but when I think of good ideas, I think of del.icio.us, Skype, Wikipedia, Twitter, Bug Labs, Slingbox, Google (b/c of the biz model)...   Hardly seems like Cambridge has a lock on the idea generation market in the startup world.


Ideas today are a commodity.  Anyone can have an idea, so being the Capital of Ideas is pretty much equivelent to building your city of out of straw.  If I were a co-founder of 3PigsTech.com, I’d think about building somewhere whose choice of building material was more formidable. 


Which brings me back to New York City.  By saying that “New York tells you, above all: you should make more money,” Paul Graham is basically admitting that he’s never been north of Central Park, on the Lower East Side, or out into the Boroughs.  I grew up as a finance major in NYC and I made the same mistake that Paul makes.  It wasn’t until I finished school and got about three years into my career that I soon realized that there was a lot more going on in NYC than just Wall Street. 


When I think of ideas, I think of creativity, not just scholarly research and publication in academic journals.  An idea has no value unless it’s either a) new or b) executed.  If execution is a business phenomenon, I can’t imagine a better place to execute than NYC (or the Valley, if you’re a tech startup), but in terms of new ideas being generated from creative people, I wouldn’t exactly hold the ivory towers of Ivy League schools up against the creative culture of NYC.  New York City is a mecca for design, fashion, dance, art, film, theater, international relations—it’s not difficult to imagine that this stew of creativity rubs off on other industries. 


Hedge funds, for example, are a great example of creativity leaking into another industry.  The most forward thinking, creative investors break out of old institutions to play markets in out of the box ways at hedge funds.


We even solve creative engineering problems here.  Peter Semmehack from Bug Labs, an open source hardware company pushing the limits of creativity in the consumer electronics space, has always said that he has found the best and most creative engineering talent here in NYC.  Need to explore a completely unfamiliar environment millions of miles away?  That was the challenge for the Mars Rover, and it’s no accident that much of it was built here, by HoneyBee Robotics. 


Paul also makes the point that someone creating a startup in NYC would feel like a second class citizen.  I have to be honest—I’ve felt that way several times, but mostly from people outside NYC.  Within the city, I’ve actually felt really supported.  Most of my 21 angel investors are not only in NYC, but they’re either NYC natives or have lived most of their lives here.  Among my large diverse group of friends (I grew up here, went to school here, never lived anywhere else, and know tons of people doing very different professions), I’ve received fantastic support.  No one ever asks me why I don’t just go into investment banking or trading. 


In fact, most of my friends aren’t even in finance at all.  Some of my closest friends are a magazine publisher, a lawyer, and a producer for televised mixed martial arts.  I play on a softball team with two PR folks, a clinical psychologist, a chocolate retailer, two IT guys, another lawyer, a teacher, a media buyer, and oh yeah, one guy in finance.  Most of the volunteers at the kayaking program I participate in don’t even have regular 9–5 jobs.  The other day, I was out on the dock with a guy that resells guitars and plays in a band, a former non-profit exec, a public health researcher, and another IT guy.   And these people don’t all live in big luxury apartment buildings in midtown.  They live with roommates in Astoria, in studios on the Lower East Side…  just scraping by but still loving every minute of it.  And we haven’t even mentioned all the actors and actresses.  Surely they’re not in it for the money, right?


So, the idea that NYC is just all about the money is just ridiculous…. just as ridiculous as this:


One sign of a city's potential as a technology center is the number of restaurants that still require jackets for men. According to Zagat's there are none in San Francisco, LA, Boston, or Seattle, 4 in DC, 6 in Chicago, 8 in London, 13 in New York, and 20 in Paris.”


How about we make the list “number of restaurants that don’t require jackets for men”?  I have a feeling NYC would lead that list, seeing as the total number of restaurants in NYC minus 13 is probably more than SF and Boston combined.  Is this really how Paul thinks his YCombinator startups should make decisions on where to build their business?  By restaurants with jacket requirements?


But rather than argue about whose city is better, which is similar to the arugument about what language to code in, go with what you know.  Generalizations will get you nowhere.  It would have made no sense for me to build Path 101 anywhere else but NYC, because my network is here.  I found a great technical co-founder, two amazing developers whose experience could not be any more well-suited to their tasks, and a slew of supportive angels.  That doesn’t mean all this stuff comes in a box if you move your startup here, but if you can say the same thing about your neck of the woods, be it Louisville, Miami, the Valley or Cambridge, stay put, keep your head down, and build like the dickens.  Your city is what you make of it and how you build your network, not what the pundits tell you it is.