Paul Graham, founder Y Combinator, kicked off the tech startup incubator's first official New York event with a half hour-long speech peppered with remarks about New York's inferiority to Silicon Valley. "It's a cultural problem that goes way back," explained the venture capitalist and founder of the Silicon Valley-based startup incubator. "New York cares too much about money. Palo Alto is home to nerdy idealists who want their product to be perfect. As long as finance continues to exist in NYC, it will drain too much talent from NYC's tech scene."
The audience of New York startup-types did not take kindly to Graham's remarks, but he's also not the first to make the claim that money muddles New York's vision as a tech hub. On the heels the buzz of coverage last year around New York maturing as a potential East Coast equivalent of Silicon Valley, plenty of bloggers have expressed doubts about Gotham's ability to creative rather than capitalist. New York is full of "people who know how to analyze and pick in assets, not people who know how to build companies," says Speaker Text founder Matt Mireles. However, New York's yeasayers have long said that the city's startup scene is in many ways an idealistic response to Wall Street culture. Venture capitalist Chris Dixon told Jenna Wortham at The New York Times last year that the financial crisis is showing would-be Wall Street workers another path, "We're helping save the next generation of college grads that would have gone over to Morgan Stanley," he said. Wortham's headline says it all: "New York Isn't Silicon Valley. That's Why We Like It."
Beyond the he-said-she-said defenses, it seems increasingly apparent that each coast will nurture different types of companies. Silicon Valley will always have its 40-year-long history as a tech hub and will remain a destination where companies can grow up (think Facebook) or ambitious idealists can learn from startup veterans (think Twitter). Meanwhile, the biggest startups to come out of New York tend to relate more to traditionally New York-centric industries like media and fashion. Tumblr, Etsy and Gilt Group are great examples. Furthermore, big finance companies like Goldman Sachs are not the gravy trains they used to be.