Silicon Alley 2.0 Emerges From Rubble of Internet Bust

Like crocodiles that survived the extinction of the dinosaurs, a collection of scrappy Internet firms is all that remains of New York City’s booming “Silicon Alley” of the late 1990s. But the companies that weathered the dot-com bust are growing steadily and contributing to the resurgence of a significant Web-based sector here, according to a panel of experts.Entrepreneurs, scholars, and venture capitalists gathered at Hearst Tower in Midtown yesterday to discuss the impact of what they now call Silicon Alley 2.0. One thing is certain: Over are the giddy days of the Internet boom, when a bunch of scruffy kids could get millions of dollars in funding without so much as writing a business plan. The city’s new Web entrepreneurs are older, experienced, and more focused on long-term profits.More important, so are the venture capital firms funding these start-ups. Internet companies would be hard-pressed these days to find early-stage VC funding that includes provisions for lavish office appointments.What remains the same this time around is that Silicon Alley still plays second fiddle to the West Coast. “New York hasn’t proven consistent success in forming and sustaining the technology companies that other places have,” the managing partner of Crossbar Capital, Charlie Federman, said at yesterday’s conference. “Could a YouTube have happened in New York?”Yesterday’s conference, sponsored by Brooklyn’s Polytechnic University and the Partnership for New York City, was an attempt to promote New York City and its pool of professional talent. It also aimed to dispel the notion that Web entrepreneurs here don’t think with the same creativity as those based in Silicon Valley.Another challenge for the emerging New York Internet sector is to distinguish itself in a city that so many high-profile industries call home. In Silicon Valley, office buildings emblazoned with the names of leading technology firms line the highways. “We’re in a fourth-floor loft in SoHo,” the chief executive of Upoc Networks, Steve Spencer, said. “I tell people to look for the big Levi’s store and go upstairs.”Panelists said it is generally easier to obtain start-up funding from firms outside New York, and the entrepreneurial culture here places less emphasis on creativity. “I doubt You Tube could have happened here. They would have charged $10 a month and never gotten an audience,” Mr. Spencer said.Some 200,000 people work in the Internet field in New York City. Silicon Alley — roughly defined as the West Side warehouseturned-office buildings between 34th Street and Battery Park City — doesn’t claim as many Webbased success stories as the West Coast. But technology firms here have evolved by offering serviceoriented Web architecture. Wall Street spent $80 billion on such Internet technology last year alone. “It’s not like we’re in the middle of North Dakota,” Mr. Spencer said.The chief executive of Nolej Studios, Alejandro Crawford, said that Web companies depending on modular growth — the ability to expand a business while maintaining a core of creativity and innovation — would dominate the next wave of Silicon Alley success. “Capital will follow,” he said.The senior vice president of mergers and acquisitions at Inter-Active Corp., Jason Rapp, said that large companies like Hearst, Viacom, and Time Warner are still finding their way on the Internet and looking to hire local technology professionals.New York City has also fostered innovations of its own. Mr. Rapp said that Seamless Web is an Internet-based food delivery service based here. “Where else do you have so many investment bankers working until midnight and ordering food?” he said.

Silicon Alley 2.0 Emerges From Rubble of Internet Bust

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