Laid-off Wall Streeters find entrepreneurial spirit
A small-business incubator in New York steps up to rival collaborations in Boston and Silicon Valley.
Ann Hermes/The Christian Science monitor
The city is opening up a small-business incubator just a few subway stops from the financial district. This is where anyone who has a fledgling plan for a small business can apply to set up shop and get off the ground.
What makes the incubator attractive is its low rent – far lower than the cost of most office space in New York City. Also, with multiple endeavors under one roof, the workers can compare notes and feed off one another's energy.
A few perks come with the space, too. The Bill Gates-wannabes will have Bloomberg machines, which provide extensive business data. And the entrepreneurs can get an assist from interns – students from a university.
The city wants the incubator to scale up and up, with the ultimate goal of challenging America's leading entrepreneurial and incubator centers.
"Given the scale of New York and [its] economy, we are hitting below our weight compared to other centers like Boston and Silicon Valley," says Seth Pinsky, president of the city's Economic Development Corp., which is spearheading the effort. "We want to start to carry the weight that is appropriate given the size of the city and our economy."
To get there, the city is spending $15 million over five years. It will also draw on some $30 million in unused 9/11 federal money. Moreover, the city hopes to add some private capital, including $10 million in Angel Funds – money from affluent individuals who want an early equity interest in a promising new business.
"We estimate when this is all said and done, these [efforts] will create 25,000 jobs over 10 years," Mr. Pinsky says.
The city's unemployment rate in May, according to the New York State Department of Labor, was 9 percent – below the national average of 9.4 percent that month. New York City is somewhat better off, Pinsky says, because of its diverse economy and the growth of small companies in financial services. Some of that growth has apparently happened as people who lost jobs at large banks start their own businesses.
Interest in entrepreneurship emerged when some displaced Wall Streeters ended up at outplacement organizations such as Right Management in New York, says Leslie Hild, vice president for career management services. "We have sessions to ‘kick the tires' to see if the idea is interesting, and [participants have] the opportunity to speak to experts in entrepreneurship," she says.
Yet people who end up at outplacement firms tend to have higher incomes. New York's effort to energize entrepreneurial instincts, meanwhile, is geared to those making $20,000 to $70,000 a year. These are people on Wall Street who helped firms process trades or worked as administrative assistants.
Of course, New York isn't the only place trying to nurture entrepreneurs. According to the National Business Incubation Association (NBIA), there are close to 1,000 incubators in the United States. Some are attached to universities, some are part of a city's economic development plans, and some are geared to make money.
"The networks and experience are staggering compared to 10 or 20 years ago," says Dinah Adkins, president and CEO of NBIA. "Every year, we are getting ever-more-sophisticated entrepreneurs."
Clustering entrepreneurs is quite useful, says Tim Williamson, president of the Idea Village, a New Orleans business incubator. "It allows people to interact closely, bump into each other at the water cooler, [and it] forces conversation," he says.
The Idea Village is an example of how the clusters can grow. The organization has expanded its space from 3,000 square feet to 4,200 square feet. Included in the new digs: an intellectual-property law firm that hopes to assist the budding entrepreneurs and an "entrepreneurial concierge" whose job is to help build the sense of community.
For an incubator to be successful, it needs to bring in experienceed people to give advice and serve on a board of directors, Ms. Adkins says.
In New York, the person responsible for putting the incubator together is Bruce Niswander, a professor of technology entrepreneurship at Polytechnic Institute of New York University and director of the school's Entrepreneurship Initiatives. He has already set up 20 entrepreneurs in the space. Among them: some energy economists, a company developing wireless interfaces for trading of securities, and an online group for foodies and restaurants.
"Some are just [brand-new] start-ups. The rest are two years old or less," he says.
At the incubator, the companies sublease office space from NYU Poly at well below market rates. The companies can hire students from NYU Poly to work as interns – who will be on the payroll of the incubator, not the start-up. "It's one of the bigger benefits," Professor Niswander says. "The students get to work with real companies, and the companies get bright students."
One new tenant is People Data Solutions, which calls itself a "talent exchange" for people laid off from Wall Street. The concept, explains Robert Davidson, the CEO, is for companies to "sponsor" employees they have let go. Such sponsorships, along with other information about the workers, are entered into a database at the start-up. These workers can then opt to have their validated corporate data reviewed by prospective employers.
The incubator has enabled him to move his business from his home, which comes equipped with a 3-year-old. He's looking forward to being part of a community of entrepreneurs who are all trying to make their business plans work.
And he likes the potential for reasonable rent. "As a start-up, when we are not raising money," he says, "we're going into debt trying to figure how to do it."