CTOs and COOs from the likes of Etsy, Charity Water and Knewton talked about the ins and outs of running a startup in New York City.
NYU’s Kimmel Rosenthal center was filled to capacity for Tech In Motion’s largest meetup in the city to date. It was no wonder: the agenda for the evening was a panel discussion with tech and management heads from some of New York’s more established startups. With Alex Cavoulacos, COO of The Muse as moderator, representatives from Etsy, GILT Groupe, ZocDoc, Knewton, LearnVest and Charity Water took to the stage to answer everything from how to get funding to why they started their companies in New York.
Cavoulacos began by asking what each panelist felt were the benefits and challenges of being based in the city. For Etsy’s Kellan Elliot-McCrea it was a no brainer – “We had to be based in Brooklyn because that’s where all our customers were.” Michael Bryzek of GILT said one of the city’s biggest advantages is that everyone wants to live here. He added that given the importance of user experience and design and New York’s intrinsic and formidable fashion industry, there was bound to be a merging of technology and fashion here. The diversity of skill sets and the workforce here is what sold Charity Water’s Brian Honohan.
When the panelists were asked their thoughts on having remote tech teams, Nick Ganju of ZocDoc said, “For startups, it’s better to have everyone meet in one room. Even if you know your friend who works from Denver, it isn’t worth the tradeoff in execution.” His thoughts were echoed by Bryzek and LearnVest’s Hrishi Dixit. LearnVest started in Argentina, but being in the finance business, it was only logical to move their operations to New York. “We saw that the remote team doesn’t work in the beginning, and once we moved here, we were working at 10 times the speed of the offshore team,” said Dixit.
On issues of scalability, David Liu from Knewton thought it best to have small teams working on well-defined projects. “We believe 5-7 people can change the world,” he said, “as long as there is a clear mission, – and we want to keep that small group feeling.” Honohan agreed. “You need to figure out your business challenge. A simpler version is easier to start with rather than the most scalable version; solving the scalability problem before you have an audience is a mistake,” he added.
The audience was all ears when the discussion moved to funding. Ganju’s advice was to work on the project full-time since “that will show investors you’re serious.” He said entrepreneurs should just go for it, since newbies need traction and a large user base to get attention. He also suggested doing something contrarian, something that is interesting and a little beyond the entrepreneur’s range. Bryzek had another approach. “It all works on relationships and track records,” he said. He picked 10 companies from an online site that provides information on funders and wrote to their CEOs. “It works because when these companies make money, they need to grow. And how do they grow? By spending that money. So you just have to find a company that really needs you,” he suggested. That also gives startups the chance to learn from companies that have had some success.
Given New York’s competitive and flourishing startup environment, an audience member asked how to hire, retain and fire employees. While some of the panelists preferred referral programs, others resorted to internships and campus recruitments. Liu said self-selection worked best for Knewton. “As long as your mission is clear, that’ll weed out about 90% of the applicants. Hire people like it’s the last time you’ll ever hire,” he said.
As far as retaining staff, the advice varied, from Honohan’s suggestion to listening to employees and empowering them to improve the processes to Dixit’s philosophy of helping employees attain their individual aspirations and milking the non-monetary benefits of being in a startup environment. As important as hiring the right people is, it’s equally important to know when to let people go. Like Liu said,” You have to hire fast and fire faster.” But Elliot-McCrea warned that pink slips should be based on good data. In Etsy, hires are rotated for six weeks before a decision is made on whether or not they will work out.
The last question of the night came from a member anxious about the competition and being beaten to an idea by another, especially if the other is a big corporation. Everyone threw out different iterations of the “execute better” mantra. Dixit said that since startups are fast and nimble, it’s easy to change directions, according to the current environment. Liu pointed out that as an individual, an entrepreneur had greater focus than a bigger company and Bryznek said that startups should try going where other companies couldn’t. He highlighted this by using Disney and Six Flags as examples of contrasting philosophies in amusement parks.
Elliot-McCrea’s advice for beginning a startup in New York, when I asked him, was to keep the rent low, make use of the networks, hackathons and other events in the city and use the city’s 12 million residents as an initial consumer base.
As Liu said, “It’s a great time to be in technology in New York.”