Earlier this week, Bloomberg reported that software company Yext is hiring 500 people over the next five years to work in a shiny new building in the Meatpacking District in Manhattan. As well as being significant news in its own right – that’s a big hiring spree – Bloomberg pointed out that this is not the first tech company to move into New York.
The original plan for the building, which covers 142,500 square feet and costs around $1 million a month in rent, was that it would be occupied by health insurer Aetna. That plan was dropped when health company CVS initiated a takeover of Aetna, and now Yext is moving in at the end of this year.
Yext is a software firm which helps companies keep their information up to date on websites like Facebook and Yelp, Bloomberg says. That’s pretty vital work for most companies these days, and it’s clearly making Yext good money if it can afford to hire 500 people and pay a cool million a month in rent in the centre of New York.
But, you might be asking, don’t high-growth tech companies typically do that in Silicon Valley? Isn’t Silicon Valley supposed to be the centre of the technology universe? If you’re not in California, some might say, you’re irrelevant.
This is, of course, an exaggeration. There are innovative tech companies all over the world and everyone knows it. But there is also a huge gravitational pull from the Valley. It’s so strong that it’s created a huge property price spike in the area and even its own cultural phenomenon – the ‘tech bro’.
True York
Of course, New York is no slouch. According to commercial real estate company CBRE, it’s the second largest tech hub in the US behind San Francisco, with 254,270 tech workers. And it is one of the world’s premier business and banking centres, too.
But it’s not always been an obvious option. The Yext chief executive said in an interview that when the company started, back in 2006, people thought he was crazy for doing so in New York.
“Everyone in 2006 told us that we were crazy to try to start a tech company in New York,” he said. “New York tech would not exist in its current form without Google’s decision to open an office here in the early 2000s — that’s what legitimized New York as a tech hub.”
And Google has maintained its commitment to the city. Late last year, it said that it will be updating its presence there and is investing over $1 billion in capital improvements to establish a new campus, Google Hudson Square.
Tech companies in the community
Something else that Google mentioned in its blog post announcing its investment in New York is that as a big company, it has a responsibility towards the communities it is in.
“That means supporting the infrastructure and services that make our neighborhoods unique places to work, live and play. Since 2011, Google has contributed more than $150 million in grants and employee-matched giving to New York nonprofit institutions,” the blog post reads.
It’s significant that the company should mention this because, on the whole, local and national governments are very pleased when tech companies come to town. They bring investment and generally a young, well-paid workforce.
Amazon’s HQ2 was the peak example of the type of competition that derives from these benefits. Local governments and their officials clamour for investment from the big tech companies – as well as the practical effects, it’s obviously quite something to be able to say that Amazon is headquartered in your city.
And Amazon was obviously relying on that when it opened up competition for its second headquarters. But a backlash started, with some arguing that tech companies do not bring as much investment and true support for the communities as they say they do. Some also suggested that the new wealth displaces existing residents.
Others argued – particularly in the case of New York – that if city officials were willing to hand out tax breaks for the company (the usual way of enticing companies in), then they should be able to pay for better infrastructure, including the city’s ailing public transport system.
What’s obvious is that regardless of the arguments on either side, being a tech worker puts you in high demand: both from companies that want you, and cities that want the companies. Software really is eating the world.
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