It’s a big moment for the New York startup community. Investors and entrepreneurs working in New York agree that Yahoo’s purchase of Tumblr marks a moment of maturation for the city’s startup ecosystem.
More than that, it legitimizes a career in tech and startups in a city known for finance.
“I think this is the maturation of the tech ecosystem in NYC,” said Founder Collective’s Micah Rosenbloom. “This exit will spawn more entrepreneurs and a new cohort of start ups. It’s part of the virtuous cycle of the tech sector. Also it’s great to have eBay, Google, and now Yahoo in the city. These companies hire and train more engineering talent, provide a legitimate alternative to the finance sector for engineers and represent future acquirers of NYC tech companies.”
GigaOM’s Om Malik suggested the same:
A Silicon Alley insider who wished to remain anonymous put it best when he described this deal as sign that finally in New York people who build things are getting rich versus people (Wall Street) who take things.
This doesn’t mean everyone on Wall Street will up and join a startup. But for younger workers, it means an awareness of another career path that offers at least the possibility serious wealth.
“I think anytime there is a sizable exit it reinforces the idea that the innovation economy is a viable place to make a career,” said Christina Wallace, New York Director of the Startup Institute, which trains prospective startup employees. “Whether it directly stems the flow of young talent to Wall Street is questionable, but it certainly drives home the message that there is more to New York than finance. So when their 2-year analyst gig is up, I think we’ll see more unhappy campers take the leap and make a transition instead of staying in a job they find unfulfilling.”
It may also impact the flow of talent from outside the city.
“At the margin, the next EE grad from Champaign-Urbana or Carnegie Mellon will more seriously consider NYC as an alternative to Silicon Valley as a place to find the next big thing,” said Matt Harris of Bain Capital Ventures.
It’s not just bankers whose perception of New York startups will be changed by the deal. According to Flybridge’s Matthew Witheiler, VC’s are sure to take notice, as well.
“One of the hurdles the NY tech scene had to overcome was proof that it can generate big exits for venture backed companies,” he told me. “NY has now seen three such exits in the past 11 months: the $700M acquisition of Buddy Media by Salesforce.com, the Recruit Co. acquisition of Indeed for a reported $1B and now the $1.1B Tumblr acquisition by Yahoo. With this new watermark, it’s getting harder to deny that NY can generate Silicon Valley type returns. Also noteworthy is the fact that all three acquisitions have been in different verticals, with Buddy Media in the marketing vertical, Indeed in the recruiting vertical and Tumblr in the consumer internet vertical.”
Not everyone agrees. PandoDaily’s Erin Griffith argues that the deal isn’t the giant standalone win the ecosystem was looking for. While it’s true that Tumblr may not be the kind of platform company that can almost single-handedly propel a tech scene forward, it’s significant nonetheless.
Mayor Bloomberg even came out to add his stamp of approval to the deal, appearing at a Yahoo press conference that announced, among other things, that the company’s New York team would be moving into the old New York Times building.
And it’s clear that it has the community excited. When it comes to building awareness within the city and ultimate attracting new talent, that matters as much as anything.
