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New York is the hot spot for Big Tech

In the summer of 2013, Michael Bloomberg, then the mayor of New York, held a press conference to ...

Posted: Nov. 9, 2018 2:27 PM
Updated: Nov. 9, 2018 2:27 PM

In the summer of 2013, Michael Bloomberg, then the mayor of New York, held a press conference to announce that Spotify would open an office in the city and hire more than 100 engineers by the following year.

Bloomberg touted the announcement by Spotify, a music streaming service founded in Sweden, as validation of his efforts to "make New York City the first choice for tech companies to launch and grow."

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Five years later, New York may be on the cusp of two landmark tech industry announcements that would dwarf that Spotify news and cement the Big Apple as a big tech hub to rival Silicon Valley. Amazon (AMZN) and Google (GOOGL) are reportedly planning massive New York expansions with thousands of new employees.

Amazon is said to be planning to split its much-hyped second headquarters into two locations, with one rumored to be in the Long Island City neighborhood of Queens, New York. The company originally promised as many as 50,000 high-paying jobs for the project. Even if that number is halved, it could still mean tens of thousands of jobs in New York.

Google, meanwhile, is considering a large office space in Manhattan's West Village neighborhood, the Wall Street Journal reported late Wednesday. The move would potentially expand Google's already sizable presence in New York, with space for more than 8,500 additional employees, according to the Journal.

While Amazon and Google have so far declined to comment, longtime members of the New York tech scene were quick to hail this week's reports as proof of the city's ascendance with this sector.

"I have had a front row seat to watch the emergence of the NYC tech sector over the last thirty years," Fred Wilson, a prominent venture capitalist with New York-based Union Square Ventures, wrote in a blog post Thursday. "It started as a trickle, then a stream, then a river, and it's feeling more and more like an ocean."

Julie Samuels, executive director of Tech:NYC, a nonprofit network of tech leaders, told CNN Business that the news is a "vindication" for what she and others have long evangelized: "New York City is an international hub for technology."

This vindication comes after years of private and public efforts to boost New York's tech clout, including city investments in cybersecurity and a virtual reality lab as well as new tech campuses from Cornell and New York University. At the same time, homegrown outfits like Etsy, Yext and MongoDB have all gone public, Tumblr was acquired in a billion-dollar deal and WeWork now ranks as one of the most valuable startups in the world.

By 2016, New York City's tech sector had 128,600 jobs, setting a new record for the city, according to data released last year by the Office of the New York State Comptroller.

Even with that surge in activity, Amazon and Google could find it challenging to vie for tech talent given the sheer scale of hiring both be looking to do in the years to come. Samuels says there is certainly potential for a "short-term crunch" in the tech talent supply in New York.

But this needs to be weighed against New York's true strength for big tech. Unlike San Francisco, New York is a hub not just for the tech industry, but also for advertising, media and finance — areas that some of the largest tech companies are increasingly branching into.

"The next generation of technology tools that are going to be built are going to be built in partnership with existing industries, and that's going to require being where those industries are," Samuels says. "And New York is obviously where those industries are."

Case in point: Google. The company, which has spent billions on New York real estate this decade, including buying the Chelsea Market earlier this year, doesn't just go after engineers in the city. It also has recruited a large marketing staff and opened a production facility for YouTube to attract creatives.

For years, Google has been what Wilson calls the "anchor tenant" for the tech ecosystem in New York, luring tech talent to the city and serving as a potential pool from which other big and small tech companies in the region can recruit. Now, he writes in the blog post, New York may have not one, but "two large and well known anchor tenants."

When asked if this could one day help New York's tech scene to surpass Silicon Valley, Wilson sounded more circumspect. "I don't see [it] over taking," Wilson told CNN Business by email. "But NYC mattering more and more is what I see happening."

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