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In tech, N.Y. wants to be king of the hill, top of the heap

During a panel discussion, civic and business leaders cheered the growth of New York's tech sector. Still, the metropolis has yet to give birth to a company on par with Google, Apple, or Facebook.

New York has Silicon Valley envy, but civic and business leaders say their city is becoming more attractive to the tech community. Greg Sandoval/CNET

NEW YORK--There are no tech companies from the Big Apple that compares with Apple.

New York has yet to produce anything on par with Google, Netflix, Intel, eBay, or Facebook. All those companies were either founded or are based in Silicon Valley. But civic and business leaders in New York want to change that. They say that recently, the nation's largest metropolis has become much more attractive to the tech community and more start-ups are here than ever.

At a panel discussion Tuesday in the city's Chelsea District that included venture capitalists, and representatives from the city as well as AT&T, there was much back patting for the progress already made in raising the city's tech profile. Participants also exchanged ideas about how New York can still improve. Sitting in the audience were Raymond Kelly, commissioner of the New York Police Department and Rep. Carolyn Maloney (D-New York).

The gathering was sponsored by the Center for an Urban Future and the Association for a Better New York (ABNY), which says that New York has recently surpassed Boston as the country's second largest center for tech start-ups.

Techies organized the New York protest against SOPA in January and it saw a massive turnout. The rally dwarfed a similar event in San Francisco. Greg Sandoval/CNET

But when reminded that New York is still not home to a marquee tech company, some on the panel seemed to get annoyed. Stuart Ellman, a venture capitalist, took up the city's defense and told the audience that had Facebook started today instead of 2004, there's a chance founder Mark Zuckerberg, who grew up in New York state, may have based the social network in the city (forget that Zuckerberg said in October: "If I were starting now, I would have stayed in Boston.")

The truth is New York is a long way from rivaling Silicon Valley as the country's technology capital. Judging from the panel discussion and what's been written, New York has some significant hurdles to overcome before making a serious challenge. The list includes:

  • Access to venture capital and talent pool: There's just more VC money in Silicon Valley and venture capitalists often prefer the companies they invest in to be close. Schools in Northern California, notably Stanford, are churning out more sought-after engineers than those near New York.
  • Real estate is more expensive. Not only does that mean higher costs for a start-up but for tech workers just out of college, the cost of living in New York can be a wallet buster. According to a story in The Wall Street Journal last month, the average Manhattan apartment now rents for $3,429 a month, an all-time high.
  • A lack of broadband access: According to a study by the ABNY and AT&T, most New York tech companies are located in midtown or lower Manhattan. Why not some of the outer boroughs? Well, in the case of Brooklyn, ABNY reported that some companies require backup sources to the Internet and Brooklyn simply can't deliver the extra bandwidth. The report gave New York's broadband infrastructure a B or B- and said that to become a world class tech hub, the city needed an A.
Raymond Kelly, commissioner of the New York Police Department, listened Tuesday to a panel discussion titled 'New Tech City.' Greg Sandoval/CNET

Still, Valley boosters would be foolish to underestimate New York. The rents are high partly because so many people want to live here. The city commands vast resources, and Michael Bloomberg, New York's mayor, is uniquely qualified to lead a technology initiative. It was a specialized computer terminal that helped Bloomberg, the nation's 11th richest man, build his financial-data and media empire before he became mayor in 2002.

New York is home to the fastest growing tech hub in the country, according to the ABNY study. The city has nearly 53,000 people working in the information technology sector, up 29 percent from five years ago.

The ABNY study also found that over the same period, nearly 500 technology companies were founded in New York.

Bloomberg is taking steps to making the city more affordable, according to Seth Pinsky, president of New York City's Economic Development Corporation. He noted that the policing and economic policies of the Bloomberg administration are helping to open up new and less expensive neighborhoods. Young people are venturing into areas that only a few years ago were plagued by crime but are safer now, Pinsky said.

Perhaps the city's grandest plan is to set up a tech university on Roosevelt Island, located in New York's East River. Bloomberg chose partners Cornell University and Technion-Israel Institute of Technology to build and operate the school, which will focus on attracting tech talent and fostering entrepreneurship.

Finally, in the competition between the two areas, New York is not without its triumphs. In January, New York flexed some of its tech muscle during the protest against the Stop Online Piracy Act. The city's tech community organized a 2,000-person street rally and generated nationwide press.

A similar protest against the antipiracy bill in San Francisco was able to draw only an estimated 200 people.