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What Mayor Bloomberg’s Start-Up Overture Is Missing

New York Mayor Michael Bloomberg delivers the annual State of the City address at the Barclays Center on February 14, 2013 in the Brooklyn borough of New York City. Bloomberg cited positive statistics including a record 52 million visitors to the city and a record low 419 homicides in 2012 while calling for a ban on styrofoam in the city.
El Bloombito le gusta los start-upos. Photo: Mario Tama/Getty Images

Mayor Bloomberg is out and about today, touting his office’s new “We Are Made in NY” start-up outreach program, which helps fledgling tech companies navigate the challenges of opening up shop in New York City. The site is essentially a media campaign for the New York tech scene, accompanied by features like a job listings board and a consolidated list of start-up resources. The mayor went to BuzzFeed’s downtown headquarters to launch the program, and they spun his appearance into a listicle called “11 Reasons to Start a Company in New York City.”

Mayor Bloomberg is clearly aiming his overture at one particular kind of business: the small, new tech start-up, started in New York and with the vast majority of operations still located in the city. (To apply to the We Are Made in NY program, tech companies have to answer the question, “Does 75% of your technology development take place in New York City?“). There are lots of these companies — We Are Made in NY has a list of more than 900, including Rent the Runway, Etsy, and Kickstarter. But there are also big, established tech companies that don’t meet the 75 percent threshold, but have offices in New York and do major recruiting in the city. And Mayor Bloomberg should be making those companies feel at home, too.

Take Facebook, for instance. Facebook recently opened an engineering office in midtown, where it now has at least 100 people working on projects with their Californian colleagues. A hundred people is small compared to Facebook’s overall headcount, but it’s still a lot of jobs — it’s probably more people than are employed by all but a few of the 900 New York–based start-ups on the mayor’s list. And yet, because the vast majority of its development takes place in Menlo Park, Facebook isn’t captured by Bloomberg’s campaign. Neither is a company like Google, which has around 3,000 employees in the city, yet does much of its engineering in Mountain View.

Companies like Facebook and Google have different motives for wanting to be in New York than the ones suggested on BuzzFeed’s listicle. They don’t need access to venture capital, they have no reason to put their offices in “an incredibly historic building,” and they have no use for Cornell’s Roosevelt Island tech campus. The only reason they want to be here is what is called “talent arbitrage” — the name given to the idea that there are some very talented computer engineers, from Wall Street and other NYC-based industries, who won’t move to California but might take a job at a tech company’s New York office.

Talent arbitrage isn’t part of We Are Made in NY’s pitch to the start-up scene, but it’s a much more compelling reason for large tech firms to come to the city. Big companies typically aren’t incentivized to open satellite offices by PR campaigns; they’re incentivized when they want to reduce their tax burdens, when they want to open a new market, or when they can get something in a satellite location that they can’t get at home. Mayor Bloomberg isn’t proposing any new tax breaks for start-ups, but he could convince West Coast–based computing giants like Apple, Microsoft, or Genentech to expand their New York presence by pointing out the vast engineering talent that exists here and can’t be moved. That alone would create more New York jobs than convincing a hundred small start-ups to set up shop.

It’s possible, of course, that some of the now-tiny start-ups on Made in NY’s list will become huge, adding hundreds of employees in the city and becoming major presences in the tech sector. And it’s also possible that Mayor Bloomberg’s team has been working in less visible ways to entice the Googles and Facebooks of the world to bring more employees to New York. But leaving those major employers out of his tech industry love-fest might cost him in the long run. Perhaps Bloomberg’s campaign could have a size exemption for firms that have more than 500 employees in the city, regardless of where they do most of their engineering. Or maybe he could start a parallel “Come to NY” campaign for firms based in Silicon Valley that are looking to recruit engineers elsewhere.

Bloomberg’s provincial cheerleading plays well politically, but if the goal is expanding the number of tech-related jobs here, I’m not sure it’s enough. It’s all fine and good to entice the runts of the tech sector, but you can’t forget about the giants, either.

What Bloomberg’s Start-Up Overture Is Missing