INSUBCONTINENT EXCLUSIVE:
New York City is a marvel of infrastructure planning and engineering
That infrastructure was built for the economy of the 20th century, a market that emphasized the manufacturing and trading of
goods.Infrastructure though has a very different meaning in the 21st century
The digital economy means we no longer measure the movement of products simply as tonnage on freight ships and trucks, but rather as bits
and bytes flowing from data centers to devices
The shipping container once revolutionized 20th century global trade, and now containerization is revolutionizing the way we think about
leader in startups compared to hotspots like the Bay Area, particularly in the sorts of enterprise and data infrastructure startups that
undergird the internet revolution.That situation is rapidly changing
Today, New York City has numerous unicorns targeting the enterprise, and a large number of up-and-coming winners like Datadog that are
commanding substantial market share
seeing the rise of a generation of hundreds of startups that are deeply technical and deeply committed to building the future of enterprise
infrastructure and applications.Today, TechCrunch presents a special report on the state of enterprise startups in New York City
My colleague Ron Miller and I interviewed dozens of people, and we boiled down their thoughts and insights into this series of articles
We purposely brought out focus away from the pure SaaS application world, and instead tried to go deeper into the infrastructure and
security startups that are increasingly powering and protecting our internet services.This article provides an overview of the changing exit
environment for startups in NYC, the rise of a set of mafias which are incubating startups, and the changing culture of customers and how
that is assisting NYC startups with their competition out west.We then have a series of profile pieces on early but burgeoning startups: DNS
provider NS1, time series database Timescale, bare metal cloud Packet, data privacy BigID, cloud monitoring Datadog, and a trio of security
startups: cybersecurity analytics Security Scorecard, graph-based security ops Uplevel Security, and decentralized authentication HYPR
Finally, we put together a gallery of enterprise startups we think are going to be making waves in the coming years.No need to search for
the exits anymoreOne of the on-going criticisms of the New York City startup ecosystem has been its lack of exits
the city has never measured up
environment in New York has started to look much better in recent years though, particularly in the enterprise space over the past year
Yext, which manages online reputation for brands, debuted on the NYSE last year and now sits at a $1.28 billion market cap
MongoDB went public late last year, and is just shy of a $2 billion valuation
Flatiron Health, which applies data analytics to cancer research, was acquired by Roche for $1.9 billion two months ago
Moat, an ad measurement company, was purchased by Oracle for $850 million last year.Those are some hefty exits over just a couple of months,
but the real depth of the NYC ecosystem can be witnessed in the startups right behind them that are becoming market leaders
Those companies include AppNexus, Datadog, UiPath, Dataminr, Sprinklr, InVision, Digital Ocean, Percolate, Namely, Compass, Infor, Zeta
Global, Greenhouse, WeWork and the list continues
than in the past is that the city is no longer relying on one company as the leading light that will prove the worth of the rest of the
As we interviewed investors and founders about what companies they thought were going to be the most notable in the years ahead, what was
illuminating was just how little overlap there existed between their answers
There is truly a cohort of strong startups coming of age in the city, and that gives the ecosystem much more vitality than it has ever seen
advantages has been the constant renewal of its startup talent
People join startups, learn the ropes from experienced founders, meet other talented employees, and eventually decide to spin out on their
own and build their startup dreams
Some companies have become so well known for this pattern that the networks they have formed are known as mafias
The PayPal mafia is perhaps the most famous example, but there are many other companies in the Valley that have become boot camps for the
next generation of founders.New York may be more notorious for its occasionally violent, often Italian mafias, but today the city is also
home to a growing network of startup mafias who are building companies and firms and powering the ecosystem.Take Voxel
The company, which was formed in New York City in 1999, built enterprise hosting solutions for customers around the world
despite its small size, it has created an entire generation of NYC enterprise startup founders
Voxel CEO and founder Raj Dutt ended up starting Grafana, an open source time series analytics platform
Voxel COO Zac Smith left to start Packet, and Voxel principal software architect Kris Beevers started NS1.Another stylized example is Gilt
Security Scorecard founders Sam Kassoumeh and Aleksandr Yampolskiy met at Gilt when they became the first two hires for the security team
and they eventually left to found Security Scorecard, which has raised more than $62 million in venture capital according to Crunchbase from
a long list of luminary Valley-based investors.The examples are endless
could be externalized as a startup
Liz Maida, the founder of Uplevel Security, learned her trade at internet traffic juggernaut Akamai, and has taken several of the product
lessons she learned there to heart
Timber.io founders Zach Sherman and Ben Johnson met at SeatGeek, where they realized that logging could be made significantly better
The networks each of these bought along helped in building their startups.Of course, all of these are anecdotes, and it is next to
impossible to systematically analyze these movements
Yet, these patterns of entrepreneurs and investors have become much more visible in the ecosystem
Startup talent is increasingly begetting startup talent, spinning out and circulating their knowledge.But beyond these clusters of
individuals lie the glue that is holding the ecosystem together: Jonathan Lehr and his team at Work-Bench and Ed Sim and Eliot Durbin at
All three of them made the bet years ago that New York City would become an epicenter of the enterprise infrastructure software industry
Lehr founded the New York Enterprise Tech Meetup, which hosts at Work-Bench a monthly gathering of hundreds of participants in the
enterprise space, from founders to customers.He has also built up a wide network of potential customers across industries to accelerate the
early sales of his startups
founders that information, saving them time on a sale that might not come to fruition.For Sim at Boldstart, the message is much the same
Now the fund has raised its third vehicle of $47 million, and plays a convening in engaging West Coast VCs
off when there is a sufficient density of talent, a strong desire to help one another, and an open ambition to compete
New York City has never lacked the latter, but it has been missing out on a dense network of helpful and experienced startup hands
the culture of Silicon Valley
She found that the East Coast was stodgy, hierarchical, and centralized around large corporate behemoths like DEC and EMC
In contrast, the West Coast was nimble, networked, and decentralized, with little social hierarchy.Silicon Valley was believed to be dead in
the early 1990s, outcompeted by Asian tigers like Singapore, Taiwan, and Korea in manufacturing the chips that gave the region its name
The Valley was saved in just the nick of time by the opening of the internet to commercial activity, and the culture of the West Coast would
prove perfectly attuned to the frenetic pace of innovation that followed
Valley innovation culture is now been exported around the world, and that is no less true walking around New York City startup neighborhoods
like the Flatiron and Union Square
The pure excitement of tech that can be found at San Francisco meetups is much more muted here
possible though because customers actually want to talk
Prior to starting the incubator and fund, he evaluated potential technology vendors at Morgan Stanley
Companies have vexing problems, and they are increasingly willing to experiment with startup technology if it has the potential to solve
those issues.The West Coast culture of flexible decision-making has entered the corporate world
CIOs used to have a vice grip on technology purchasing, but now leaders across the enterprise increasingly make their own independent
IT want is salespeople in front of them
He described the thinking of customers today looking at buying from startups
Datadog, which is now north of $100 million in annual recurring revenue, so competitive
Coast.While East Coast customers seem to have become more aggressive early-adopters, that view is not held universally
up acting as lighthouse customers for more conservative companies on the East Coast.Intense pain points can solve that hesitation
Ajay Kulkarni, the founder and CEO of time series database Timescale, noted that the company has customers in conservative industries
because the database solves a critical production challenge for those businesses, namely the real-time processing of internet of things data
He also noted that selling to the West Coast is not necessarily easier
Silicon Valley-based enterprise companies
now everyone is excited about
But ultimately, customers buy software because it solves their problems, and they know those problems intimately
Mixing the nimble culture of Silicon Valley with a customer focus has allowed New York to start competing far more aggressively in
enterprise infrastructure, and create a leading set of successful companies.The future is still waiting to be builtNew York has come a long
way, but it does still have challenges
Unlike venture capitalists on the West Coast, VCs in NYC often face significantly less competition for deals, and that means they can take
significantly longer to make a decision
In fact, for Sim at Boldstart, that has become a rallying cry
just how many sub-ecosystems exist
There are distinct Manhattan and Brooklyn startup communities that overlap far less than some might expect
While there are exceptions, the fintech, biotech, and adtech worlds also keep much to themselves
University ecosystems around Columbia, NYU, Cornell Tech, and Princeton also similarly stay in their own space
These fractures are not apparent at first glance, but few leaders in the community have been able to blur these demarcations.Ironically, New
York also has a lack of showmanship
To put it frankly, there is no Elon Musk or SpaceX that is a paragon of ambition and aspiration that drives the rest of the ecosystem to
(literally) shoot for the stars
also the opening for the enterprising individual who wants to make it big
