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Why Brooklyn is fast becoming the next Silicon Valley

Written by Ryan McChrystal on Monday, 01 June 2015. Posted in Communities, Analysis

Brooklyn is bursting at the seams with great tech companies. But how did the big apple’s bloodiest borough become its burgeoning borough?

Why Brooklyn is fast becoming the next Silicon Valley

Located in the east of one of the most bustling cities in the world, it is home to some of the most exciting names in tech. Since the turn of the century, it has undergone something of a regeneration and is now a trendy nerve centre, popular among young professionals and entrepreneurs. We could be talking about London’s Shoreditch, as we often are, but this month we’re taking a look at Brooklyn, the most populous of New York’s five boroughs, which is giving Silicon Valley a run for its money.

Since 2001, billions of dollars have been invested in Downtown Brooklyn, the Navy Yard and Dumbo, collectively known as the Brooklyn Tech Triangle. Over the years it has it has become a mecca for some of the world’s leading up-and-coming tech firms, including MakerBot, the 3D printer maker; Etsy, the online craft shopping site; and Kickstarter, the global crowdfunding platform. Brooklyn has the talent, a like-minded and supportive community and, being just a short subway ride to Manhattan’s Financial District, easy access to investors with deep pockets. 

This year, the triangle is estimated to contain around four million square foot of tech and creative businesses. The days of coming second place to Silicon Valley may, in the long run, be numbered if things continue on this trajectory.  

The big players may be the ones making headlines, but the army of small tech companies are the real lifeblood of the Brooklyn scene. Take WeDidIt, a company that helps non-profits to dramatically improve their fundraising efforts through data mining, set up by Su Sanni and Ben Lamson in 2011. It enables non-profits to take donations online and through a mobile app. 

Sanni, a Brooklyn native, choose to set up in Bushwick in the north of Brooklyn because of the growing vibe around technology companies and start-ups. “Bushwick is a place where a lot of creative professionals work and live and, just like Williamsburg and Dumbo, it has become a hub for tech,” says Sanni.

The general mentality in Brooklyn is consistent with its grittiness. “This is a tough place where tough people are born and bred; it’s a place where those with drive live and work,” he explains. “That same mentality has rubbed off on the tech start-up scene.” Silicon Valley has its hacker culture but in Brooklyn they take a different approach. “Here, it’s more about being creative and being a hustler; it’s about being hardworking and doing whatever it takes to get to the next stage.”

In many ways, this ethos carries with it the values of the American dream: the idea that by putting your shoulder to your wheel, prosperity can follow. A key part of that dream was a lack of barriers to success and, while New York may have high taxes, tax breaks are offered to many thriving tech companies.

Su Sanni, WeDidIt

Sanni has spent quite a bit of time observing the tech scene in San Francisco. Most recently, WeDidIt was part of 2014’s 500 Startups, an early-stage seed fund and accelerator program funded by PayPal and Google alumni. Sanni can say first-hand that while New York’s tech scene is currently a distant second to Silicon Valley in terms of maturity, it is still more than possible to build a successful, viable business in the Big Apple. “The more we have success stories like Etsy and MakerBot – which are raising a lot of money through prominent investors and hiring people – the closer we’ll be to closing the gap between New York and Silicon Valley.”

While New York is a centre of activity for new start-ups and young upstarts, a handful of tech companies have been around for an age and are still going strong. Grado Labs has been doing business in Brooklyn for almost a century, and just like Etsy and MakerBot, it complements the creative, hands-on approach of the borough. For the last 62 years, Grado has been making phonograph hi-fi cartridges for turntables and since the early 1990s it has been hand-making high-end headphones. 

Jonathan Grado, now 24, has grown up in and around the family business. The company was set up by his great uncle before being handed down to his father. “No one ever told me to get into this, then all of a sudden, I was just like, ‘I want to help the company’,” explains Grado. “And then I got really into it and fell in love with talking to the people online who use our headphones.”

The Grado family have stuck with Brooklyn for generations and has seen it change dramatically down the years. “When I was growing up, this was not a good area but luckily it’s turning around now.” 

The business situation in Brooklyn has also changed significantly. “We used to say we build our handmade headphones in America and then it became more city-centric and that’s gone even further; we now say we make headphones in Brooklyn,” says Grado. “Being here for so long, it’s no big deal to us but we’ve found some people go crazy for it. We are definitely proud of our borough though and the Brooklyn craze has definitely helped us; we don’t even have to advertise.”

As a place to live Brooklyn has evolved and is now much more attractive for young creatives, so naturally there’s been a migration of companies to the neighbourhood. They are wooed by the vast public parks with their beautiful scenery and the tourist attractions, not to mention Brooklyn’s major role in shaping various aspects of American culture. People who live and work in Brooklyn can enjoy great food, music and entertainment every single day.

Jonathan Grado, Grado Labs

The ever-shorter commute times and more affordable office space is what kicked off the growth in the community. However, as it grows in popularity, Brooklyn is also unfortunately becoming a little more expensive in recent years. “I went away to college in 2009 and when I came back, everything was ridiculously popular in Brooklyn,” says Grado. “That’s why we see a ton of communal working spaces here. And while being priced out kind of sucks, it’s forcing people to get resourceful and I don’t think things would be possible if they didn’t have to work as hard.” 

Co-working spaces are everywhere in Brooklyn. DUMBO Start-up Lab is one such space, mostly for early-stage tech companies. “Companies typically use their time here as a stepping stone,” says founder John Coghlan. “They’ll come here when they’re trying to raise seed capital or while applying for accelerator programmes.” 

Coghlan sees a lot of collaboration among members, which is to be expected in an environment where entrepreneurs can meet by a water cooler and discuss what they’re working on. “Entrepreneurs like having closer access to other people that are working in their field and the opportunities for interaction – whether it’s during work hours, in the coffee shops, in the neighbourhood or after work in the bars – are vast,” he says. 

The next decade is definitely looking good for the Brooklyn Tech Triangle. The borough is teeming with development sites and the number of tech companies is growing by the week. Where San Francisco is high-tech, Brooklyn is high-creative and the creative industries will continue to flourish in the US over the next ten years. Brooklyn is now recognised as a real tech hub, and with its grit and hustle, long may that continue.

 

Good things come in small packages

Parcel

After moving to New York fresh out of Harvard University, Jesse Kaplan found himself plagued by delivery nightmares. Every week day he would come home to a missed package slip and every weekend would spend hours in a post office queue trying to retrieve his deliveries. Enough was enough. He set about finding a solution for himself and countless New Yorkers, and Parcel was born. The company lets customers ship their packages to a rented mailing address and they are delivered as a time when they’re actually home and it’s all arranged though the quick and easy Parcel website.

A $1m fundraise later, CEO and founder Jesse Kaplan now operates a warehouse, a fleet of branded vehicles and a team of trusted drivers. What appeals to Kaplan – and so many other New York founders – about Brooklyn is that tech makes up a very small piece of the overall culture, with so many other industries for them to surround themselves with and learn from. “A lot of Manhattan startups are in the ad tech or fin tech spaces, given their proximity to huge ad agencies and financial firms,” he says. “Many of the better-known Brooklyn startups, like Etsy and Kickstarter, instead facilitate creative endeavours – and there’s certainly no shortage of Brooklyn-based artisans to empower here.”

Brooklyn offered the perfect mix of space, affordability, and convenience. Parcel moved there from Manhattan last September and hasn’t looked back. “I can’t imagine leaving New York,” says Kaplan. 

About the Author

Ryan McChrystal

Ryan McChrystal

In a previous life McChrystal wrote about asset management in the Middle East. A history and politics graduate from the north of Ireland, he now focuses his efforts a little closer to home. 

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