Building an Emerging Sector Ecosystem
An analysis of NYC’s Urbantech evolution from its infancy to its current state
Since the 2008 financial crash, the renewal of the economy has been, in part, driven by the digitization of traditional sectors and the emergence of new ones. Everyone is trying to build and claim that they are the next ‘Silicon Valley’. The truth is that reactively trying to create an innovation ecosystem will never bear the expected fruits. Regions that have had success have been microscopically analyzed with ambitions of replication. While some have succeeded, the majority are still trying to find their way, trying to discover their own brand of tech.
Leverage your surroundings into an actionable vision
Similar questions were on my mind in late 2013 when understanding the NYC Cleantech sector. Instead of competing directly with entrepreneurial Cleantech hotbeds such as the Bay area, Boston, or Austin, could NYC create its own flavor? Could we leverage some of the other things happening in NYC ? What made NYC unique, and how could we position our sector to benefit from that?
Several points of significance happened in NYC in late 2013 and early 2014:
- NYC had the second fastest growing tech sector
- The Creative sector in Brooklyn was booming
- The City was continuing to invest in the city’s recovery from superstorm Sandy, and
- The end of the Bloomberg era and the beginning of the de Blasio era marked by overarching transformative initiatives such as LinkNYC and the Applied Sciences’ roll out of Cornell Tech, NYU’s Center for Urban Science and Progress, and Columbia’s Data Science Institute
A private sector driven and self-sustaining tech ecosystem was starting to take shape, the creative sector was beginning to blend with other sectors, and the public sector was strongly committed to make NYC smarter, more sustainable, and resilient. This unique convergence of trends became a major factor in developing the NYC urbantech ecosystem.
This paper shares my personal reflections and approach on building an emerging sector ecosystem including the visioning, strategy, hurdles, achievements, and lessons learned during its various phases over the last three years.
Create the tailored strategy
What was going to happen once we launched the Urban Future Lab? How could the NYCEDC support the growth of the sector? What were the barriers facing startups that wanted to scale in NYC?
A successful strategic plan would need to balance progression with familiarity. The objective was to plan how the NYC sector should look like in 5 years by analyzing:
What resources currently existed within the ecosystem — accelerators, incubators, co-working spaces, companies, academia, prototyping and testing capabilities, government resources, think tanks, etc.
The maturity of the sector; a niche but growing cleantech sector with an emphasis on energy efficiency and buildings, the sector felt like it was still trying to figure out its way. This was, of course, considering where other NYC sectors were: fashion is a mature market competing with rival global fashion cities, media and telecom is a mature market in the midst of digitization and consolidation, finance recovered from its 2008 woes, real estate was adapting to the sharing economy boom, and the bio-sciences continues to be one of the fastest growing sectors.
How other cities were competing in Cleantech. According to the Cleantech Group, NYC did not fare well in innovation and investment index but did remarkably well in energy and climate policy. While rankings are not meant to be taken literally, it was nonetheless telling that NYC had several obstacles that needed to be overcome to create a leading cleantech ecosystem: how sizable was the private and NGO sectors? Are there any prominent players in the space? What is the nature of the collaboration among the public, private, and academic sector?
Inputs into developing a strategy
Cleantech and Energy — Since the release of PlaNYC in 2007, NYC has had a growing city-policy support of the sector to reduce emissions and rethink our built infrastructure. Superstorm Sandy brought the reality that NYC’s infrastructure requires significant change and innovation to make the city more resilient to future extreme weather. The investment focus on the built environment and resiliency has been reflected in the type of companies that have emerged during that time period.
Digitization — Link.nyc, cheaper sensors, the growth of the tech sector, and the proliferation of big data has been vital to the emergence of the concept of smart cities in NYC. Developing high-speed connectivity that is accessible to all city residents and visitors will unleash a plethora of innovative insights and technologies that will make a city more aware and, consequently, more adaptable and sustainable.
Open Data — The Bloomberg administration’s Open data initiative, growing tech talent, and emerging Big Data & GIS platforms built the foundation of the Civictech movement. Civictech, technological solutions to improve public services, has had advocates in NYC such as Microsoft, Civic Hall, BetaNYC, and CartoDB, and successful city administration-sponsored competitions such as Big Apps.
Applied Sciences — The lack of STEM talent in the NYC economy has been apparent since GE, IBM, Bell Labs, and other scientific institutions in NYC dominated the world stage at the turn of the 20th century. With the advent of the Bay area as the 21st century leader in technology and innovation, it was important for NYC to think about its role in the 21st century innovation economy.
Leveraging the urban science talent emerging from these institutions (Cornell Tech, New York University’s Center for Urban Science and Progress, and Columbia’s Data Science Institute) is another reason for the rapid growth of the smart cities sector in NYC since 2013.
North Brooklyn Renewal — One influential element that is less discussed is the impact of the creative sector in the NYC innovation sector. The early 2000’s brought a new economic life into north Brooklyn, escalating into a global center for alternative ideas and ideals, design, and DIY culture. Together with the growing Manhattan tech scene came a unique blend of companies: Etsy, Kickstarter, MakerBot, and WeWork that brought elements of DIY, Crowdfunding, Advanced Manufacturing, and Sharing Economy respectively, providing and attracting talent that is setting the tone for the New York brand of tech for decades to come.
Public-Private partnerships — Without the local government support for technology and innovation during the second half of the Bloomberg years and in the de Blasio years, it can be argued that NYC wouldn’t be where it is today. In comparison to tech hotbeds such as the Bay area and Austin, ecosystems that are primarily funded by the private sector, NYC’s public sector has had a history of developing and supporting initiatives to catalyze the growth of different sectors. The sheer size of NYC allows its local government to have a group that thinks about this exact question: how to develop an emerging sector.
The answer, as detailed below, lies in the mixture of private sector needs, public sector priorities, and the ability to secure funding. Working alongside private sector partners and affiliated city agencies has been pivotal at understanding how to grow the industry and how to convey sustainability and other policy goals into actionable private-sector results.
The NYC Urbantech sector strategic plan
Calling it the Urbantech sector — According to Urban.us, Urbantech can be interpreted as:
“The space defined by core city needs from water and waste to transport and safety. For most of us, these are the things we don’t notice unless they stop working. But these are also the things that require new approaches as cities confront the triple threat of climate change, increased populations and constrained budgets”.
Moreover, from my perspective, it can also be interpreted as the convergence of Cleantech, Civictech, and IoT in the context of urban environments:
- Cleantech — Improving Cities through Sustainability, Resiliency, and Efficiency
- Civictech — Improving Cities through Transparency and Equity
- Smart Cities — Improving Cities through Connectivity and Livability
Supporting company formation and growth — In building an ecosystem, it is important to look at every step of the market growth curve to understand where gaps exist. Once the gaps have been identified, the easiest thing to do when looking for solutions is to see what other more-established sectors have done.
By looking at the NYC Tech sector, one of the early support mechanisms were co-working spaces and incubators. Providing a physical space for like-minded entrepreneurs can foster a community, provide affordable office rents for tenants, and deliver a cross-pollination of each company’s networks. As needs are identified, different support layers can be added from a programmatic (e.g. pitches, office hours with mentors and experts, workshops, introductions, demo days), operational (e.g. accounting, media and marketing, prototyping and testing, legal), and financial (e.g. rent and prototyping subsidies, working capital loans, equity funding) end.
In 2013, the entrepreneurial Cleantech and Energy sector was concentrated mainly within ACRE, an micro-incubator for the sector, that resided within NYU’s Varick Street incubator. The idea was to create a dedicated space that would serve as the center for the sector’s entrepreneurial community in NYC. The Urban Future Lab was the result: bringing the ACRE incubator across the East River to Downtown Brooklyn to a new home offering a dedicated space featuring a demonstration and exhibition space. A dedicated space would allow to create a defining brand and strategy. One unforeseen outcome from creating the Urban Future Lab was the interest we received from international delegations and companies seeking to build their US presence and potentially establish their US headquarters in NYC. The interest mainly came from Europe (Denmark and the Netherlands in particular) and UFL has become a great resource to understand the local, state, and federal policy landscape surrounding the sector.
As tenant companies began to outgrow the space, the increasingly expensive NYC real estate and inflexible terms became daunting to current growing companies. While WeWork certainly aims to fill that gap by providing flexible terms to startups and other organizations, it can be seen as lacking the sector-specific community and resource support that many young companies seek and benefit from. Furthermore, it was important to continue clustering our sector by building a cohesive community and providing resourceful benefits that would allow companies to grow and innovate in NYC.
In February 2016, we announced Urbantech NYC, an overarching brand to support the urbantech sector by providing curated resources for this emerging sector. The focal point of the announcement was the two new Hub spaces at Grand Central Tech and New Lab which are launching this summer. The overall strategy was to build upon the Urban Future Lab by amplifying our original intentions of growing a strong community, and providing needed resources that allow sector companies to succeed in NYC. With flexible private and co-working spaces, advanced prototyping and testing equipment, and sector-focused programming (New Lab = Hardware-focus, GCT = Software-focus), our vision for the hubs is to build a network of Urbantech communities that connect with each other; This is the essence of Urbantech NYC: A unified ecosystem that supports and has the participation of the entire community including the private sector, startups, academia/NGOs, and the public sector. Centralized coordination will:
- Enhance branding and marketing efforts
- Build connections with regional, national, and international cleantech and smart cities incubators and networks, and
- Bring a sense of transparency to interested sector companies and associations who desire to increase their involvement in NYC’s urbantech ecosystem.
Providing resources to entrepreneurs is certainly a key element to growing an economic ecosystem, but in order to build a resilient pipeline of growth, a proper innovation support system needs to also be put in place. What is an innovation support system?
It’s bringing all the ingredients together that help spark ideas, investigating those ideas further through research, developing commercialization mechanisms to bring those ideas to fruition, and building a talent pipeline. A robust academia ecosystem, multidisciplinary talent, and ways for the public, private and academic sectors to interact effectively are key ingredients in order for that to happen.
For the urbantech sector, there is a need to understand what the challenges are in a city’s urban systems, and develop and commercialize solutions using research from universities and think tanks, talent and ideas from the private sector, and the spirit of the startup community. In NYC, NYC MediaLab is such an example for the media sector. With a generous grant received from the Regional Economic Development Council, we are currently developing a similar approach for the urbantech sector: developing challenges and research projects that undertake the various problems faced by city agencies and urban systems. The other desired outcome of this Smart Cities Innovation Center is the networking and relationship-building aspect that strengthens the intractability of the various parties in an ecosystem.
In order to successfully translate a working prototype into a future city solution, opportunities to test and pilot the solution are critical. One approach is to create a map of challenges within NYC’s urban systems and build a platform to pilot solutions in those targeted areas. Neighborhood Innovation Labs, a joint effort between the NYCEDC, Mayor’s Office of Technology and Innovation, and NYU’s Center for Urban Science and Progress, would help determine the most effective solutions to issues faced by communities and city agencies by allowing universities, private sector organizations and startups pilot their solutions on NYC’s infrastructure at a neighborhood level. There is a tremendous need to build a simplified system to pilot technologies to bring innovative and potentially scalable solutions to NYC, give opportunities to small technology and solution companies to work with the city of NYC, and engage the community at a neighborhood level to understand and bring solutions to improve the livability of their communities. Beginning with five neighborhoods, one in each borough, the idea is that different neighborhoods represent different facades of a city (zoning, geographical, infrastructure, demographic, history, etc); each neighborhood will give a glimpse into understanding NYC. Over time, the idea would be to expand to other neighborhoods, slowly building a real-time view into how NYC functions and evolves, and further removing barriers to adopting new technologies.
Execute your plan at the right time, with the right stakeholders, in the right sequence. Grow organically. Adapt with momentum.
Since I began looking at the NYC Cleantech and Smart Cities sector in 2013, an exciting amount of change has happened that has enabled the NYC sector to grow and evolve into its own flavor.
It goes without saying that its imminent success can be attributed to a collected effort involving the private sector, startup community, academia, non-profits and the public sector. While there are countless models that despict how to create an innovation ecosystem, there are several instances where I realized that we were effective in our own way, and the following are a few realizations and lessons learned:
Be the enabler — find how best to optimize the industry; learn all the pain points and discover solutions. Make introductions, facilitate workshops, and understand relationships that need to be made; Being the best kept secret is more effective than always striving for the spotlight.
Grow Organically and Cohesively — Don’t assume you have all the answers right off the bat; developing economic initiatives organically allows those responsible to more effectively understand their market, to dissect the evolution of sector products and solutions, and to better realize the sector potential and its purpose. Cohesiveness in the development of an ecosystem is necessary to its success, as with any other creative process, by building upon successful endeavors and adjusting to current needs.
Don’t wait & take risks — It is my belief that great ideas will eventually happen, whether you execute first on it or someone else. In order to remain competitive, it is important to take calculated risks and test out ideas in front of potential partners, collaborators, or investors. While not all ideas will ultimately be successful, being experimental allows you to learn as you go along and begin to understand how best to adapt your idea to actual needs and move away from your assumed idealistic theories. Moreover, it allows you to see things and opportunities you wouldn't have realized otherwise. Several current initiatives that stemmed from pilot projects include the Danish Cleantech Hub, a startup and knowledge exchange with Denmark, to developing a piloting test-bed in Lower Manhattan.
Lower Manhattan Smart Neighborhood Pilot — The infancy of the project began through a conversation with the CTO from the Downtown Alliance on the idea of putting sensors in lower Manhattan’s BigBelly trashcans and other infrastructure managed by the Downtown Alliance. These trashcans had solar power access and were deployed in over 180 locations throughout Lower Manhattan. Under this pretext, NYCEDC and the Downtown Alliance entered NIST’s Global City Teams Challenge (GCTC) which led to us partnering with NYU CUSP who had the expertise to bring this concept to reality. At the time, NYU CUSP was building a quantified community in Hudson yards from the ground up, and we were interested in building such a community in an existing neighborhood, in addition to allowing innovative technologies to be piloted. Our involvement with GCTC and NYU CUSP served as a precursor and led to the development of the forthcoming Neighborhood Innovation Labs.
Establish structure — As the sector expand, it is important as an economic development stakeholder to coordinate efforts between different players in the sector. Urbantech NYC is the idea behind that: giving an external portal to the NYC sector that offers a holistic community outlook with a transparent and coordinated structure that’s easy to grasp and engage in. As the community continues to grow, so will the coordination efforts.
Build the right team chemistry — Team dynamics are a crucial element to building successful initiatives and being able to navigate all the activity when things begin to pick up. Structured vs. Risk taker, Detail-oriented vs. Big Picture, Execution vs. Creative. All are important and all are needed.
Establish an alliance of trusted supporters and advisers — Finding ways to fund and realize new initiatives requires a good understanding of and network with key city agencies, state institutions, and other catalyzers to help raise funds, gain support, and market effectively.
Develop public-private partnerships and collaborations — Building a successful ecosystem requires the participation of all parties: academia, NGOs, government, private sector, and startups. Academia and NGOs bring the ideological angle, government the equity angle, private sector the realistic angle, and startups the energy angle. While certain established ecosystems such as the Bay Area and Boston have a strong private sector support, some emerging ecosystems such as NYC have found growth success using this model while San Diego and Austin have built strong ecosystems using significant private sector influence.
Gauge momentum, position, and evolution of sector to minimize redundancy, optimize solutions, and leverage influence:
- Momentum — How are your and your stakeholders’ efforts impacting the city, and how are they perceived by others looking in? What’s the momentum economically and socially? In the urbantech sector, as urbanization continues, so does the increased importance of cities influencing society. After all, “Where clever people congregate, innovation results.”
- Compare to other ecosystems — Positioning can be interpreted by understanding impact of new innovation and technology policy, growth of private sector stakeholders, and the movement of the industry as a whole. Many reports exist comparing innovation, sustainability, livability, and other factors among cities across the world
- Evolution of public policy and sector — Federal policy can have a transformative impact on local economic development. While not entirely comprehensive, it was great to see the Obama administration releasing a report on their support for the growth of the urbantech sectors across the US.
As a sector grows and evolves, it becomes more complex and comprehensive, allowing sub-sectors to prosper into their own sector. This reemphasizes the importance of growing a sector organically to evolve with the natural growth of these sub-sectors.
Develop a plan and reassess — given our assessment of NYC’s position in the sector, is our role still needed? where else can we be helpful? The strategy behind Urbantech NYC was to lay down a groundbreaking initiative, reiterate yet expand, branch out into other transformative initiatives, apply structure and coordination, and create effective marketing and branding efforts (e.g. Press Releases, Ribbon-Cutting events, Stakeholder events, etc.).
Maintain a realistic expectation — Don’t over-commit; be realistic. You might think this is the greatest thing in the world but as someone delves into a subject, their world becomes smaller and smaller, and their actual perception more distant from reality.
Be patient — If the idea/concept is well thought-out and the need is strong, funding will find its way — don’t wait for funding; work in parallel to bring it to light.
A three-year transformation
Of course, these are my mere observations of the last few years working on an emerging sector in NYC; it is, by no means, comprehensive. The sheer complexity of the inputs that feed into building and growing a sector is profound. Having a coordinated yet experimental, an organic yet thoughtful strategy has proven quite fruitful, so far, in creating NYC’s Urbantech Sector. Some milestones that have personally indicated this include:
- The Urban Future Lab reached a milestone when Agrilyst, an agtech business intelligence platform and one of the tenants at its ACRE incubator, won TechCrunch Disrupt SF.
- Our upcoming hubs spaces at Grand Central Tech and New Lab have an impressive group of partnering institutions including Cornell Tech, Microsoft, ARUP, Autodesk, and Carnegie Mellon alongside city colleges and other local partners. This caliber of partners would have been much more difficult to obtain in our sector even a few years ago.
- The Neighborhood Innovation Labs initiative, a partnership between NYCEDC, NYU CUSP, and the Mayor’s Office of Technology and Innovation, was announced last September in an official White House press release.
- The Regional Economic Development Council awarded NYCEDC a grant to establish a smart city innovation center, a sector-dedicated prototyping and commercialization center. This award showcased the state-level recognition and support of the efforts, growth, and future of the sector in NYC.
- The opening of the IBM’s Watson Center in the East Village, the formation of Alphabet’s Sidewalk Labs, the proliferation of sector-focused entrepreneurial resources (Civic Hall, UrbanX, Techstars IoT, etc.), and next year’s Smart Cities NYC conference conveys the important message that the private sector is investing in and committed to NYC being the center of Urbantech.
Further reading
- Why Today’s New York Tech Scene Looks Nothing Like You’d Expect
- Lessons from Finland on building an innovation ecosystem
- Boosting Tech Innovation Ecosystems in Cities
- Is Big Data the next urban revolution?
- A systems perspective on processes involved in deploying innovation ecosystems
- A 1975 Report from NASA on Urban Technology development
- Innovation to strengthen growth and address global and social challenges
- Exploring the ecosystem of innovation using the Austin Technology Incubator model
- Can design advance science, and can science advance design?
