My Testimony to the NYC City Council

A short time ago, I got invited to testify in front of the NYC Council. The hearing is supposed to:

"...focus on improving the city’s technology small business sector. The hearing will examine the state of a business sector that NY has traditionally lagged behind in, specifically the recently created NYC Seed program, which will provide up to $200,000 (per company) of investment into New York-based technology start-ups. The hearing will also examine what steps can be taken to better fund (i.e. venture capitalism) the growth of startup technological companies in order to make NYC more competitive with other cities when it comes to the technology sector."

Here's the testimony that I'll give today:

Charlie O'Donnell (

Co-founder & CEO of Path 101 (, Founder, nextNY (,  Blogger (, #71 on 2007 Silicon Alley Insider Influentials list, Adjunct Professor of Entrepreneurship - Fordham University, Instructor - ITAC FastTrac


First, I'd like to say thank you to the Council members who continue to have a strong interest in the NYC technology community.   Having a critical mass of influential people committed to maintaining and improving New York City as a place for innovation is half the battle.

Unfortunately for an organization as large as the New York City government, the other half of this battle is a ground war.  The ideas that will have the most impact on the local technology community are those that go house to house, school to school, wifi node to wifi node.  The stumbling blocks to improving our area's ability to promote innovation aren't simple--they're nounced. 

Take, for example, the NYC Seed program.  There has never ever been a lack of capital in New York City--for any kind of investment.  Many startups have been funded by people in the financial or real estate industries, when they're not funded by traditional venture capital firms.   No, money is not the issue, as I have written about before.  The issue is that there are not enough dedicated institutions who are economically incentivized to build community and business infrastructure here.  Owen Davis, at the end of the day, is one guy with $2 million who will get the chance to help 10 companies over the next year.  That's fantastic, but what if policy changes lead to the abandoning of this program.  Other than those 10 companies, which early stage statistics assume that at least half probably won't make it anyway, what will be the permanent impact of his work? 

If he had, let's say, a four year window, as most venture capital firms do, he'd have the time to build the necessarily relationships with all of the places where innovation comes from here in the city.  If he had a staff member or two, he'd be able to spend time not just investing, but working to create permanent channels to schools, businesses, professional groups, and technology centers--and he'd have the time horizon to accept longer term return on investment from building these relationships.  Institutional investors give their VCs a four year mandate to make investments across economic cycles--there's no reason why NYC Seed shouldn't have the same runway.  

At the end of the day, longer committments and more people on the ground are needed because innovation comes not from technology, but from people--and New York City technology has a people problem.  Local schools, with few exceptions, are not consistantly developing students focused on creating value through entrepreneurship and technological innovation.  You can build all the incubators you want--unless you're seeding students as early as high school or junior high with the idea that they could build the next Google here in New York, and giving them the learning tools to accomplish that, it's never going to happen.  

Here are two suggestions I'd make for New York City to make a bigger people impact:

First, I'd create the position of a technology community manager.  Large websites have community managers to make sure that they're aware what's going on in their communities, and that their communities are aware of all of the site's resources.  I'm as involved in the local community as any entrepreneur, and I still can't tell you the difference between what the NYC Council's mandate is related to technology and how that differs from the EDC, the Department of Small Business Services, how they relate to NYSTAR, etc.   A community manager would be a single point of contact whose mandate would be to familiarize themselves with all city services, local university programs, community groups, large businesses interested in working with the local tech community and other initiatives.  For example, nextNY is looking to run an event on business development best practices for startup companies.  We're looking for some space to run the event for between 50-100 people.  We have no budget.  I know there's probably some big company with a sizable conference room who'd love to have a bunch of startups come in and talk about business development one night.   I just don't know who that is and how to contact them.   A tech community manager could do that--and significantly help with these types of issues that involved local entrepreneurs try to solve on their own all the time in addition to their dayjobs.  

The second thing I would do would be to refocus on technology education in not only the public school system but also work with private schools and universities as well.  It needs to start early, too.  We can't have all our creative and talented youth thinking that their only opportunity for success in NYC is to work for a Fortune 500 company, because small business and entrepreneurship is what drives the growth in our economy.  How about a charter school built around information technology entrepreneurship--one that works with the best local computer science programs to provide scholarships to students trying to create their own businesses?   We need better answers to the question, "Where do world class developers come from in NYC?"   Right now, the school system isn't the answer to that question.

More than anything else, though, I think it's important that our local government--the individuals--lead by example and participate in the local technology community.  The local community is hyper connected through blogging, social networking sites, and a quirky but rapidly growing service called Twitter that ties people together one 160 character short form message at a time.  There are currently almost 2000 up and coming technology and digital media professionals on the nextNY listserv--are any of you on it?   Sure, it's kind of geeky in it's content, but you can set it to provide a daily digest.   If you're not on it, and can't spare the time to read the one daily digest e-mail of the group's activities, I'm not exactly sure how you're really going to be able to be supportive of the local tech community.  Communities are growing organically on these sites--like the 500+ people who have attached themselves to the Shake Shack Twitter account, mostly local tech folks, in order to navigate the long lines at our favorite local food establishment.   These communities are growing largely without the participation of local government leaders.  How many of you have a blog on your own websites that gets at least one posting a week, or a social networking profile that you yourself actually login to with similar frequency?   If you're not doing this, you're really not going to be in the flow of the needs of the local community.