This post was written by Ben Cole, a technologist and adventurer. 

After spending the last few years traveling the world, it’s become clear to me that every major city is an aspiring tech hub.

No matter where I go, the locals tell me the same thing: The government has recognized the importance of tech entrepreneurship, and they’re taking major steps to encourage it there. The obvious archetype for these places is Silicon Valley in California, but there’s a Silicon Something-or-Other just about everywhere I visit: Silicon Alley in New York, Silicon Roundabout in London, even Silicon Savannah in Kenya.

After months of trying to figure out where I should move next, the only obvious conclusion was that each place had its own pros and cons. In this post, I’ll look at each of the cities I considered and the facts that ultimately led me to my decision.

The Obvious Choice: Silicon Valley, California

With its rich history of tech entrepreneurship, Silicon Valley is the undisputed center of the tech world. Roughly defined as the stretch of California between San Francisco and San Jose, the Valley is home to some of the world’s most valuable tech companies, most of the top-notch venture capital firms, and of course, the Valley’s academic center, Stanford University. For decades, if you wanted to start a tech company, the Valley was the place to do it. There was no other reasonable option.

You might ask: With so much going for it, why would anyone go anywhere else? In my experience, the central factor that makes Silicon Valley a suboptimal option for some startups is the same aspect that makes it such a brilliant place for others. Silicon Valley is full of bright young people looking to build something cool, change the world, and make a billion dollars.These people tend to come from similar backgrounds: upper middle class families, Ivy League (or similarly prestigious) institutions, and most likely, one of the two coasts.

As a result, the Valley can be an echo chamber. That’s great if you’re building technology for technology’s sake (there’s nothing wrong with that), but if you want to create technology to be part of a larger industry like health, finance, or commerce, Silicon Valley may not be the place to do it. On a personal note, the Valley can also be a little suffocating. As much as I love technology, even I can’t live and breathe it 24 hours a day. The tech scene in Silicon Valley is so large and so (justifiably) self-important, that it can be all-consuming.

Still, the Valley remains the center of the technology world. In my judgment, for mainstream startups, there’s only one place to rival it:  New York City, the center of the rest of the world.

If Not Silicon Valley: Silicon Alley, New York

The term “Silicon Alley” dates to the mid-’90s and originally referred to the tract of Manhattan from the Flatiron District down Broadway to the TriBeCa neighborhood. (It’s since become a much more diffuse term as tech companies have popped up all over the city.)

Similar to Silicon Valley, New York has a huge number of smart, motivated, and passionate people. The major difference is that New Yorkers are wildly more diverse. While this may seem great for people with broader interests, it also creates its own set of problems. In my experience, the largest among these challenges is the shortage of technical talent in New York, especially at the senior level. The number of meetings I’ve had with local startups struggling to find a CTO/technical cofounder/senior developer has been staggering.

As a result, a key difference I’ve observed in New York is the prevalence of technical outsourcing. Many NY-based startups contract with dev shops (i.e. external software development firms) and design agencies to build their prototypes, which can be very costly. On the other hand, if you’re in a field like advertising, commerce, or fashion, you’ll find yourself in a much better position to get meetings with potential partners in New York than anywhere else. Just like its west coast counterpart, in New York, it’s all about the people.

So at the end of the day, which do you choose? More than anything, it depends on what you’re looking for, how your personality meshes with the different alternatives, and finally, on where you see yourself being happy. At the end of the day, both places have clear advantages and disadvantages; you just have to ask yourself what’s important for you. Only by understanding the key distinctions can you come to the best decision.

Photos: Flickr/laverrue/ Shht!/ David Armano

Hadley Harris is a general partner at ENIAC Ventures and Chief Business Development Officer at Thumb.

As a NYC based investor, it’s been pretty incredible to watch New York’s startup scene grow into a dynamic tech playground over the past few years. Even though Silicon Valley will continue to be the start up mecca for years to come, VCs, large tech companies and the technology press have recognized New York’s blossoming tech scene and quickly scrambled to get feet on the street. In fact, there has been so much action lately that the New York City Mayor’s Office created the Made in NY Map to showcase the growing tech community.

Based on investments alone, New York has seen a growth of 32 percent in VC deals from 2007 to 2011. New York’s tech scene has skyrocketed in the past 5 years, with tech related jobs increasing 28.7 percent since 2007. Tech publications have followed startups and investors in suit; VentureBeat opened its New York office in October and TechCrunch opened up NYC office hours last May as the startup scene continued to flourish.

As New York continues to carve out its place in the startup world, it’s interesting to take a look at how it has distinguished itself from Silicon Valley — its challenges and advantages, and how its companies differ from those of West Coast origin.

Funding is one area with significant differences. The ratio of investors to startups in New York’s ecosystem is relatively skewed, which brings about some limitations. While seed stage investment has grown over the last few years, there are still not enough mid-stage venture investors to fund NYC’s tech startups. From Q2 2011 to Q2 2012, the percentage of NY seed stage investments increased from 25 percent to 31 percent. In contrast, Series B investments shrunk from 25% to a mere 14%. New York startups grabbed $2.8 billion in funding last year, but this pales in comparison to the over 1,200 SV companies that raked in $12 billion.

As an active investor on both coasts, I’ve seen this imbalance play out in the valuations that startups garner from investors.  I’d estimate that the same company would get about a 25 percent higher valuation if it is based in the Bay Area as opposed to NYC. As the next wave of successful seed stage companies progress to raising series A and B rounds, look for more mid stage investment activity in NYC.  We’ve already seen investors such as Accel, First Round, NEA, Matrix and Bain Capital Ventures open offices here to address the city’s growing venture market.  As New York’s startup battlefield continues to grow, I expect to see even more investors and companies gravitate towards NYC.

Silicon Alley’s expansion is also rooted in certain characteristics particular to New York. As a long-established center of industries such as finance, fashion, advertising and media, New York has amassed a large pool of extremely talented people from those industries. While the Bay Area also has a high concentration of talent, New York’s broader talent mix has given those companies a particular edge and core philosophies. This is one of the main reasons why large West Coast tech companies such as Google, Twitter and Facebook have opened significant offices here — to take advantage of this talent pool.

It’s also the melding of these industries with technology that makes the NYC tech scene special.  Take fashion and commerce startups such as Gilt, Etsy, Warby Parker and Birchbox, or adtech companies such as TapAd, LocalResponse, OnSwipe andAppNexus. Fashion and advertising have long been booming in New York, but in the past few years they have branched into the tech space, creating several successful companies at those industry intersections. As startups arise in New York, many of those brilliant people are joining emerging companies and strengthening them with influence from these creative industries.

A third difference between companies sprouting out of New York and those from the Valley is in the focus on growth over engagement, especially in social startups. Silicon Valley-based companies are often more concerned with quickly scaling huge user bases rather than staying true to the company’s core values and building a real business. For example, in 2012, Bay Area social companies such as Socialcam, Zynga and Google with Google+ have touted huge user bases, but haven’t been able to back metrics like users or views up with anything that resembles strong engagement.

There is a trend amongst Silicon Valley companies of stopping at nothing to grow user numbers, which isn’t always best for the company. In New York however, we’ve watched companies such as Thumb and Tumblr rock the engagement charts. Thumb has amassed a loyal and engaged following, with users spending over 5 hours per month sharing and requesting opinions, while Tumblr users spend an average of 89 minutes on the service’s website each month. This number might be lower than Thumbs, but it is still significant considering that Thumb is second only to Facebook in terms of monthly user engagement per monthly average user.

Much of this success can be attributed to these companies staying laser-focused on their missions – focusing on engagement with an eye towards monetization. Even Silicon Valley-based investors are starting to take notice — recently, Andreessen Horowitz came out against so-called “bullshit metrics” such as page views, and emphasized the importance of user engagement instead. With companies in NYC leading this movement, it will be interesting to watch as Silicon Alley continues to rise in the ranks in 2013. As we move into the new year, I think it’s a safe bet that startups in Silicon Valley will take a cue from NYC and start to focus more on engagement and building a brand that resonates with its users, over strictly honing in on user numbers.

Hadley Harris, a Founding General Partner at ENIAC Ventures, has been actively working at the intersection of business and technology for more than 13 years. He is a noted expert in user acquisition, monetization and seed stage investing. In addition to serving as General Partner at ENIAC, Hadley is the Chief Business Development Officer at Thumb.

Photo: Devindra Hardawar/VentureBeat

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World leaders gathered in Manhattan today for the United Nations General Assembly. As part of his trip, British Prime Minister David Cameron made a surprise visit to another kind of General Assembly, this one with a “.ly” in its domain name.

The young founders at the New York headquarters of General Assembly, a global network of technology entrepreneurs, were blown away when Cameron arrived and peppered them with questions about their startups.

Seth Bannon, a graduate of tech accelerator Y Combinator told me he spoke at length with the British Prime Minister. ”He was keen to talk about the success of New York’s tech ecosystem and to glean lessons he could apply over the pond,” said Bannon, founder of a startup called Amicus.

“He was particularly interested in the role institutions like General Assembly can play in catalyzing such success,” Bannon said. London’s own startup scene is booming, particularly in a hipster area in the city’s East End known as “Silicon Roundabout.”

As much as he wanted to hear about our individual companies, he was even more interested to learn about the community at General Assembly that supports us,” said Keya Dannenbaum, who had a few minutes of the British politician’s time to pitch her startup, ElectNext.

Cameron’s visit further underscored New York’s role as a technology hub. In recent years, the city has earned the nickname “Silicon Alley.”

Jonathan Hefter, founder and chief executive of Neverware, also had the opportunity to present the world leader with his elevator pitch. ”It was a pleasure being able to pitch the Prime Minister of England,” said Hefter. “He was very interested in hearing about our companies and seeing how we work.”

Top image courtesy of General Assembly

Every week, a new story appears that predicts the death of Silicon Valley. As entrepreneurs opt to start companies in hip, urban sprawls like San Francisco and New York, the argument is made that the technology hub has has lost its edge as the center of the entrepreneurial economy. Just this weekend, Silicon Valley was panned in the New York Times and the Wall Street Journal.

The argument is flawed if you consider that San Francisco and Silicon Valley are inter-connected. They are like conjoined twins that share the same heart.

Even our local paper has broadened its definition. The San Jose Mercury News recently argued that when we talk about Silicon Valley, we mean San Francisco too, which is by some measures the startup capital of the world. As the Merc’s columnist, Chris O’Brien, put it: “This is recognition, perhaps overdue, that the kinds of entrepreneurial companies and industries once tightly clustered in the South Bay can now be found throughout the region.”

For companies like Twitter, it’s merely a practical choice to be in the city. To encourage tech startups to set up shop in the seedier mid-market neighborhood in San Francisco, tax breaks were offered by the city’s board of supervisors. For younger startups, it’s a hiring tactic. “Young and talented developers and designers expect you to be in San Francisco,” said Cullen Wilson, chief executive of Sponsorfied, a Y Combinator-backed startup which recently re-located from Mountain View.

Most successful entrepreneurs have one foot in Silicon Valley, where most of the venture capital firms remain, and another in the city. Google has a huge office in San Francisco and a headquarters in Mountain View. Google, as well as Facebook, LinkedIn and others, operate free shuttle buses so their younger employees can enjoy a vibrant social life in the city. The top incubators and accelerator programs like Y Combinator still operate in Silicon Valley, but many of the young graduates flock to San Francisco.

The point is that in the Bay Area, it doesn’t make much of a difference whether a startup is based in the city or the ‘burbs. Silicon Valley is a physical place, sure. It lies between two mountain ranges, Mount Diablo and the Santa Cruz Mountains, but it’s also a culture. And culturally speaking, San Francisco is Silicon Valley — albeit with a few art museums, nightclubs and achingly hip coffee shops thrown into the mix. It shares the one-track or ‘one-tech’ mind. Just as it is in Silicon Valley, life in San Francisco is a whirlwind of happy hours, hackathons, and networking events.

New York’s answer to Silicon Valley (“Silicon Alley”) may dominate in certain sectors like e-commerce and media. But joined at the hip with San Francisco, the Bay Area remains the top pick for entrepreneurs.

Silicon Valley has fortified and expanded, and it won’t go down without a fight.

Photo credit: Todd Lappin/Flickr

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Namely founder Matt Straz

Turnover has always been a problem at top advertising agencies. But these days the designers and developers needed to create rich media campaigns are also being lured away from Madison Avenue by the booming New York tech scene.

“Retaining top folks is always a problem for agencies,” says digital media agency veteran Matt Straz. “Battling for talent with tech startups and that has added a whole new dimension to the talent crunch.”

So Straz has founded a new company, Namely, which hopes to use cloud computing and data analysis to help advertising agencies retain their key employees.

Venturebeat has learned that Namely just raised a $1 million seed round from some of the biggest names in New York’s ad-tech scene: folks like Mike Lazerow from Buddy Media, Michael Barrett from AdMeld, Michael Kassan and Wenda Harris Millard from MediaLink, Simulmedia’s Dave Morgan and CIA founder Chris Ingram.

“At some agencies there can be 30 percent annual turnover on the top accounts,” said Straz. “We’re building a really robust database in the cloud so that the decision makers at these companies can get an informed take on who they should pay to keep and when it’s ok to let a competitor poach.”

Although he won’t name any names, Straz says that several of the largest advertising agencies have already signed on and imported their employee statistics, meaning Namely has a better chance to avoid the cold start problem of having a service making recommendations based on very little data.

Straz, who sold his previous startup Pictela to AOL, says that he decided to avoid raising from traditional venture capitalists and took four months going door to door with people from his own industry. “It took a lot longer, but it was a lot more satisfying. There are kind of two worlds in New York, the flashy consumer tech and then the big world of ad-tech behind it.”

He has also decided to headquarter Namely in Brooklyn. “That’s where the creative class tends to live,” Straz noted. He’ll be joining Charlie O’Donnell, who yesterday launched a new venture fund to focus on the rising tech scene in Brooklyn. “I just hired a developer and you know who I was competing with? Facebook. But this guy picked Namely because we’re based in Williamsburg, and that’s a neighbourhood he loves.”

On Thursday November 17th, 1,300 plus New York techies descended upon the Lexington Ave Armory to raise over $100,000 for HackNY, a nonprofit organization run out of Columbia and NYU that keeps young engineers off of the “street” (i.e. Wall Street) and in Silicon Alley, the burgeoning New York startup scene.

A combination fashion show and cocktail party, Raise Cache (get it?) showcased the hottest young things in New York tech, from venture capitalists and angels, to startup founders and tech journalists, strutting down the runway, modeling unique attire, much of which was supplied by fashion startups themselves. (Above, Artsicle co-founder Alexis Tryon.) Turntable FM and Dubset curated the music experience while booking NY Tech “celebrity” DJs including Fred Wilson of Union Square Ventures, Laren Leto of Texts from Last Night, and Dennis Crowley of Foursquare.

Skillshare, the startup democratizing education, helped to raise funds for the event (a little over $20,000) by allowing its teachers to teach and donate the profits from their classes to Raise Cache.

Rebecca Zhou, Kane Sarhan, and Ben Hindman organized the event, all mainstays in the rapidly growing NY Tech scene (Zhou is a 21-year-old computer science major at NYU and also a design advisor for TechStars).

All in all, Raise Cache raised just over $103,000 to date, an impressive feat that might not have been possible a year ago. This money will go to its next class of fellows, young engineers from around the country who will get placed with NY startups next summer for a paid internship and a highly valuable mentoring experience. At the event itself, due to poor acoustics and a bit of an awkward setup, there was some uncertainty as to what HackNY really did, and how it was associated (or not) with fashion…but at the end of the evening, the goal of $100,000 was still achieved.

Most importantly, the event was a testament to the growing NY Tech scene. It would not have been the same in Silicon Valley, where fashion startups are few and far between. NY Tech is distinctly different in that many of the startups evolve around already successful NY industries including fashion, commerce, finance, advertising, and media. And with Mayor Michael Bloomberg focusing on growing the sector by adding an engineering based institution and hiring Chief Digital Officer, it’s clear that events like Raise Cache will continue to influence the city and perhaps eventually the larger global engineering and technology community.

For now, its events like Raise Cache and the various hackathons around the city that continue to motivate a spirit of optimism and ambition in New York Tech. Even against the backdrop of bitter Occupy Wall Street protests, the spirit of New York Tech is continuing to shine, especially in focusing on innovation to solve some of the city’s and country’s economic problems. Raise Cache embodied the need for engineers to continue working on disruptive innovation as opposed to flocking to Wall Street, and if this event was a litmus test, then HackNY will continue to be successful.