January 25, 2012 5:19 pm

Tech begins to grow in the Big Apple

Zach Sims and Ryan Bubinski are two New York City-based technology enthusiasts who are on a mission to teach people how to code. Last August, they launched Codecademy, a website that gives lessons in basic programming.

The start-up’s project, Code Year, promises to teach users to build their own apps and websites by the end of 2012. So far, nearly 350,000 people, including Michael Bloomberg, have signed up. With demand for engineers outpacing supply, the city’s mayor shares the vision of the founders of Codecademy – to create a technology-savvy world.

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The financial downturn highlighted the fragility of the banking sector as an important source of employment and tax revenues for New York. Now Mr Bloomberg and Andrew Cuomo, state governor, are pushing for a diversification into alternative industries.

Just as Stanford university has been the centre of gravity for Silicon Valley, and the Massachusetts Institute of Technology for Boston, Cornell university looks to provide New York with the education, infrastructure and technological ecosystem for the next generation of tech start-ups, which will also attract talent and business from elsewhere.

Cornell and Technion-Israel Institute of Technology won a joint bid to build an applied science and technology campus on city-donated land on Roosevelt Island, just east of Manhattan. The city will provide $100m of capital to assist with site infrastructure, construction and related costs for the 2m square foot campus, which is set to cost $2bn.

The New York City Economic Development Corporation claims the campus will generate more than $23bn in economic activity during the next 30 years and $1.4bn in tax revenue. It hopes nearly 600 spin-off companies will be formed over the period, creating 30,000 permanent jobs.

Tech clusters have already organically formed in Manhattan’s Flatiron district – dubbed Silicon Alley – and Brooklyn’s Dumbo, hosting start-ups and venture capitalists. Companies hope the campus will establish a pipeline of engineers, for whom there is a never-ending demand.

“Learning how to code is like learning how to read and write. It’s the language of the future,” said Jessica Lawrence, managing director of NY Tech Meetup, a network of almost 20,000 New York City-based technology professionals.

“The creation of the campus shows a commitment to technology as core to the economic engine in New York for the long term.”

According to city officials, high-tech employment in New York – home to companies such as Foursquare and Flikr – has shot up 30 per cent in the past five years, while private sector employment has decreased. New York recently surpassed Boston in the amount of venture capital invested in internet start-ups, second only to San Francisco.

“New York is ripe for rapid growth,” said Dan Huttenlocher, dean of computing and information science at Cornell. “The city has over the past decade been organically growing a tech sector . . . This is a natural time to fuel this growth to a new level. The campus can be a magnet for people with tech interests.”

Ray Valdes, analyst at Gartner, said the New York tech sector had reached a turning point. “New York has really accelerated over the last three years and successful entrepreneurs have moved to New York to participate in the ecosystem. In some cases people have moved from Silicon Valley,” he said.

“A threshold has been crossed. The volume of companies being created has been more pronounced over the last six to 12 months and we expect that to continue.”

Some have questioned whether New York can compete with the likes of Silicon Valley, particularly given that the campus will not take admissions until at least 2017. But others dismiss the notion of competition, saying each city offers something different.

Charlie Kim, head of Next Jump, a New York-founded company that handles loyalty programmes for groups such as Dell and Hilton Hotel, said he valued the city’s expertise in technology related to advertising, finance and retail.

“West coast engineers are the best for user interface and user experience,” he said. “You cannot find stronger talent than in Silicon Valley. When it comes to back-end architecture, the strongest existed in Boston. New York has the most business-minded engineers. The city is a real option for a start-up.”

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