Last night I attended a dinner hosted by the New York City Economic Development Corporation (aka NYCEDC) hosted by Deputy Mayor Robert Steel and Head of the Center for Economic Transformation Steven Strauss. In attendance were representative from virtually the entire New York venture capital community, as well as an equal number of prominent local entrepreneurs.
Steel and Strauss reviewed what NYCEDC was doing to support the entrepreneurial tech community, including incubators, seed capital, group meetings, and mentor programs. Then they opened up the tables to talk about 4 potential questions but the overarching question was: what’s the biggest problem the community faces and what can we do about it?
On their own, 4 of the 5 tables arrived at the same issue. This might come as a shock during the worst recession since the great depression but the big question was: what can we do to bring or convince more skilled engineering technical talent to choose a New York City startup over other opportunities around the country and the world?
While capital is an issue, and real estate can be difficult to find, the most rare and hardest thing to find is engineering talent. This is the biggest limiting factor for future growth of NYC companies.
I have seen companies rise on the backs of great technical talent alone; capital and marketing spin are no match to great engineering talent. We are getting to that point in time where we have gone through our technical employee unemployed reserves; it’s time to man the barricades and recruit talent that can power our companies success for the future. Talent begets talent, at the city, state and national level as well as at the company level. Immigrants bring other talented immigrants; great engineering students tell other great students to come as well.
I was asked by my table to present some thoughts on this issue. From my own VC perspective, I noted that our tech startup companies tend to start out with mostly engineers, perhaps 50 to 80% at first. And then, as the companies get bigger, than percentage drops to 10%, as the company naturally matures. Those more mature companies account for the majority of the 2000+ jobs our portfolio companies have created. So if you think about it, for every engineer we can recruit, that will create 10 new jobs ultimately. That might sound far fetched, but it’s something the Valley has known since its inception about engineers. NYC’s business DNA has known this about business in general but not about engineers and the impact on tech companies. Ultimately, engineers drive job creation, and that's why this issue is so critical from a policy perspective.
There are three key ways the groups came to attempting to solve this engineering shortage problem: 1/ create, build and grow new or existing engineering programs, 2/ recruit more engineering talent to NYC and 3/ open up immigration further along the lines of the Startup Visa program to allow entrepreneurs, investors and technical talent to more easily come to build startups in the country.
The first item, is admirable goal, and the city is taking steps in that direction, with the establishment an RFP by the NYCEDC to get proposals from a variety of engineering institutions. Even Stanford has thrown their hat into the ring. Kudos to Bloomberg for this effort as it’s well worth it for the long term, and a critical difficult step that would be not be taken by more short term focused politicians.
However, the second, recruiting talent, and third item, immigration, needs attention in the near term.
Indeed, on this second issue, HackNY and the Turing Fellowship Program have made great headway in starting that process to recruit engineers still in school to consider a summer internship at an NYC startup. Warren Lee, of Canaan Partners, and one of the founders of Turing, reported at the dinner that 30 companies recruited 30 engineers to the city for the summer. We need to support that program and programs like it and bring 3000 engineers to the city. (full disclosure: my partner, Brian Hirsch, has been involved with Turing as well.)
And the third item is how to get more talented immigrants to our country and our city. One NYC entrepreneur told me the story of how he outsources his technical work to a team of immigrants—in Vancouver— because they can’t get visas to the U.S.
New York City has been, and always will be the #1 business center of the world because it’s the center of so many vibrant knowledge industries ranging from finance to media to publishing to construction and healthcare, but more importantly in some ways it’s the vibrancy of our immigrant community that has grown our local economy by starting new business that eventually became world beaters. In the tech community, my estimate is that half of the early stage startups are immigrant founded, and probably half the staff initially are immigrants.
The recent proposed Startup Visa legislation (do click here and txt support!) is a step in the right direction. Mayor Bloomberg has always been vocal on this issue in support of the diversity of NYC and immigrant community. Now is a great time to raise the volume on that issue on the national level. NYC has the most to gain, and the most to lose from this federally controlled legislative initiative.
My understanding is that both Republicans and Democrats in the capital get that this issue must be addressed, as it's an economic jobs issue, not an immigration issue per se, so now might be a great time to press this Startup Visa initiative. It's worked well to recruit doctors to doctor starved rural areas of the country; as many as half the doctors in this country are now immigrants. A similar effort to recruit technical talent, as I mentioned above, would, I believe have a 10X impact on our economy in terms of jobs.
The real war in the 21st Century will be the war for talent, at all levels, beginning at the country level, then the state and city level and company level. For NYC’s sake, and the countries sake, and our portfolio’s sake, I hope that this discussion continues, and our community and country continues to act.