New York Gets Googled

Technology Staff Editor
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Step out of New York's 14th Street subway stop, turn up Eighth Avenue, and there, in the heart of Chelsea -- amid the traffic, delis, pizzerias, and restaurants -- is Google's largest software engineering center outside of Mountain View, Calif. Within the massive former headquarters of the New York Port Authority, Google software engineers and other tech professionals work in small teams on dozens of projects, including the search company's Bigtable storage system, Spreadsheets application, and Google Print Ads marketplace for newspaper advertising. Why is Google making the Big Apple its second home? Proximity to Madison Avenue and the media companies -- the four major TV networks, Time Warner, Viacom, News Corp., Hearst, New York Times Co., Bloomberg -- is only part of the answer. The New York metro area is emerging -- or re-emerging -- as one of the hottest technology centers in the world. Silicon Valley and Redmond, Wash., may spring to mind as the software havens of the United States, and new hubs like Bangalore, India, are flourishing overseas, but the New York area employs more technology people than any place in North America. The greater New York area employed 813,000 people in technology-related jobs in 2005, according to U.S. government labor statistics crunched by the New York Software Industry Association, compared with 283,000 in San Francisco and San Jose. New York has the infrastructure -- the telecom networks, office space, lawyers, and other professional services -- and local schools keep the talent pipeline full. Prestigious research facilities such as IBM's Watson Research Center to the north and Bell Labs to the west began employing computer scientists more than 45 years ago, and the area's universities -- the City University of New York, Columbia, New York University, Polytechnic, Princeton -- keep churning them out.
Room with a view: Google engineering directors Alan Warren, Marcus Mitchell, and Craig Nevill-Manning Photo by Sacha Lecca
Image Gallery:Googleplex East
Unlike Silicon Valley, where Stanford-bred entrepreneurs hatch new ideas in search of buyers or IPOs, New York's tech culture is rooted in the business-user community. Financial industry heavyweights such as American International Group, American Express, Citigroup, Goldman Sachs, JPMorgan Chase, Lehman Brothers, MetLife, Merrill Lynch, Morgan Stanley, Nasdaq, New York Life, and the New York Stock Exchange employ tens of thousands of IT pros here, while new-media companies such as DoubleClick provide fertile workplaces for building out Web 2.0. Among conventional tech vendors, Arrow Electronics, Avaya, CA, IBM, Information Builders, Lucent, and Verizon call the metro area home. "The New York thing is very simple," says Google engineering director Craig Nevill-Manning, who got the ball rolling four years ago when Google first opened an engineering center near Times Square. "There are a large number of incredibly skilled computer scientists in the area. That's why we're here." Google moved its offices to the Chelsea neighborhood about three months ago to make room for more people. When you count sales and marketing staff, the company now employs 500 people in New York, and it's hiring more as fast as it can. Google lists 19 software engineering openings in New York -- in decision support, mobility, Java, and mapping APIs, for example -- and 14 positions in operations and internal IT support. It's looking for a Web developer, interaction designers, and a usability lab coordinator, too. Company officials won't say how many IT people will ultimately work at Google New York, but, with more than 250,000 square feet of space in its new digs, there's room for many more (see story, "Googleplex East: Search And The City").
Google is trying to lure them with a work-lifestyle environment that combines the best of its perks-filled Mountain View headquarters with big-city surroundings. On a recent morning in Google New York's cafeteria, chefs prepared sautéed broccoli rabe, fish tacos, and tomato salsa, which, along with everything else within reach, including the sushi, are free to employees. An outdoor patio opens to a cityscape featuring the Empire State Building 20 blocks to the north.

Google As Good Omen
The New York technology establishment is welcoming Google with open arms. "They're very community minded," says Bruce Bernstein, president of the New York Software Industry Association. "I have only good things to say." No wonder -- Google's already buttering his bread. Google is a $25,000-a-year platinum sponsor of the NYSIA, which has about 500 member companies. When Google engineering director Alan Warren was a guest speaker at the association's monthly meeting last October, a standing-room-only crowd packed into the 250-seat auditorium to hear him talk about how Google operates. Google's perceived less as a threat in New York -- one that might hire away top talent from surrounding companies -- than as a catalyst of good things to come. "It's going to bring more jobs, more technical talent," says Jim Robinson IV, managing partner of New York-based venture capital firm RRE Ventures, who predicts that an ecosystem of new companies will spring up around Google. In the past, RRE has funneled 10% to 15% of its money into local startups, but Robinson expects 25% or more of its latest fund to stay in the area. "The opportunity set is that strong," he says of a wave of startups in areas such as social networking, content creation, and multimedia presentation.
How New York Rates
Tech Workforce B+ Immigration a plus; some skills shortages

Customer Access A+ New York's biggest strength

Financing B Shortage of angel and early-stage funds

Cost C- Rent, wages, taxes high

Entrepreneurs B Less experience than Silicon Valley

History Of Innovation B+ Tremendous university infrastructure; weak at commercialization

Data: New York Software Industry Association
Many of Google New York's tech people are products of this milieu. Engineering director Warren spent 10 years with IBM's Watson center. He also co-founded Juice Software, a New York-based enterprise software company sold to ProClarity, which itself was acquired last year by Microsoft. Metro geeks are anxious to mingle with Google. When Google New York last month sent out invitations to the first in a series of public speaking engagements, 800 people responded that they wanted to hear engineer Adam Bosworth speak on "Physics, Speed, and Imprecision: What Works and What Doesn't in Software, and Why." There was only room for 350, forcing Google to limit registration. Next time, it will be able to accommodate more, the company promises. Other big tech companies rent space in New York, too. IBM employs 2,500 at locations around the city and 20,000 in the tristate region; Microsoft has 700 sales and marketing folks at three Manhattan locations. What's different about Google is its decision to create an engineering center in the heart of midtown, serving as a magnet for young professionals who aren't ready to work out in the Connecticut, Long Island, Westchester, or New Jersey suburbs. "If you want extremely bright 20- and 30-somethings, completely immersed in new technologies, you need to put them in a dynamic and exciting environment," Robinson says. "I live in Westchester County, and while it is many wonderful things, it is not that." New York has its downsides, of course. Small tech companies complain of high real estate prices, both for office space and for employees looking to rent or buy. And since the terrorist attacks of Sept. 11, 2001, New York's financial companies -- the most prized tech customers -- have dispersed their operations more widely around the region. Neither customers nor tech talent are as concentrated as before. Meantime, Wall Street firms have an inflationary effect on IT salaries. "They will pay anything to get a top technical person," says Gerald Cohen, CEO of Information Builders, a developer of business intelligence software that employs 850 people, including 350 programmers, in offices over Penn Station. In lower Manhattan, entrepreneurs are hustling to become the next Google. At 55 Broad St., a dozen startups and small companies share 21,000 square feet of tech incubator space provided by the NYSIA. They include Extricom, an Israeli company whose Wi-Fi system is in beta testing; SystemsForge, which created a rapid-deployment methodology for Web site developers; and Visser Software Services, developer of software for data center and facilities management.

Another one of those companies is Motionbox, whose "personal video" Web site gives users video-editing capabilities not found on YouTube. Motionbox lets users slice and dice video -- say, a 60-minute soccer game -- so that only the highlights are shared with family and friends. The technology has business applications, too. Some NBC TV stations are using Motionbox to offer video over the Web. That NBC, based in New York, is using the local company's technology is no coincidence. Motionbox co-founder Douglas Warshaw began his career at ABC News, has worked as a television writer and producer, and is plugged into the local media scene. "It's terribly important that we be in New York because our target is these media companies," says Warshaw, a Manhattan native and Princeton graduate.
Riker returned to New York to start a new company after years in the Bay Area
It's why so many other tech vendors have landed here, too. "We are super close to the most demanding, sophisticated technology buyers in the world," says Bo Manning, CEO of e-mail management company Orchestria, which moved into its headquarters at 50th Street and Madison Avenue four years ago. Orchestria's customers include Bear Stearns, Citigroup, Goldman Sachs, Lehman Brothers, and Merrill Lynch. At Motionbox, Warshaw and the other co-founders -- CEO Chris O'Brien and chief architect Andrew Wason -- worked together previously at SoftCom, founded by O'Brien. SoftCom merged with Interactive Video Technologies, a provider of software for business Webcasting. O'Brien and Wason met early in their careers as programmers at Bell Communications Research, the former New Jersey research arm of the seven Bell companies. In other words, New York's tech entrepreneurs aren't the dot-com newbies of the 1990s. David Riker moved back to New York three years ago, after eight years in the Bay Area, where he led two tech startups, including eCoverage, which sold insurance over the Internet and was acquired by GMAC. Now, with first-round funding from RRE Ventures, Riker is weeks away from launching Storm Risk Solutions, which he describes as a "financial technology and business services" company. Its risk indexes, based on historical data, can be used by companies in a variety of industries to insure against weather-related financial losses. Storm Risk Solutions will offer its indexes as an online service, then give customers the ability to analyze risk scenarios and buy weather derivatives to offset the risk. A construction company, for example, might protect itself against too much rain on a highway project. A half-dozen programmers in Ukraine do most of Storm Risk Solutions' software development, but the company is based in lower Manhattan. Says Riker, "The access to clients and partners is unmatched."

Complaint Department
Later this year, the NYSIA plans to recast itself as the New York High-Tech Coalition and open membership to biotech, robotics, and telecom companies. That's one thing the New York tech scene is missing -- a place where all kinds of techies and power brokers can hang out together. About 60 NYSIA members last week gathered after work at JPMorgan Chase's Park Avenue headquarters for their monthly meeting. Attendees spent the first half hour in casual conversation, but the tone then turned ugly. It was time for the group's annual year-ahead predictions panel, and the prognosticators had bones to pick with some of the largest software companies that weren't there. "The CEO of Microsoft is an embarrassment in my opinion," huffed IT consultant Aron Trauring, arguing that Steve Ballmer has fallen out of touch with Microsoft's customers. Google doesn't escape the criticism. It has a "cultish" culture and collects too much user data, some complained. Others are envious. Google has been "so successful and gotten so big, it's going to be an almost impossible act to follow," said Erik Grimmelmann, chief technology officer of Send Word Now Communications and a veteran of AT&T and Bell Labs.
Incubate this: Wi-Fi developers at NYSIA's Broad Street lab
No one said this would be an easy crowd. It is, after all, New York, and you know what they say about New Yorkers. Which raises the question: To what extent might Google become a New York company? Or is it merely a Bay Area company with a New York address? Denis O'Leary, former CIO of Chase Manhattan Bank, a private investor, and a New Yorker, thinks you can take Google out of Silicon Valley, but you can't take Silicon Valley out of Google. "The biggest impact of Google having a New York presence is a likely rise in their employees' cholesterol levels," he quips in an e-mail exchange. "Sparks, Jordan's, Morton's, The Palm will impact them more than their physical presence will impact New York. Though something tells me they are not big steak eaters, so maybe it's Nobu instead." Welcome to New York, Google. It isn't Silicon Valley, but it can be pretty much anything you want it to be.
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View image gallery: Inside Google's New York Headquarters


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