A technical co-founder? In New York fuggedaboutit!

By Adam L. Penenberg , written on October 29, 2012

From The News Desk

Not long ago, I pitched a multimedia product I had conceived to a well-heeled New York-based entrepreneur who was an investor in several startups. I got about 30 seconds into my spiel before he interrupted. He started telling me about my product, my business, my industry even before he had the slightest idea what I was talking about.

After several minutes, he said,  “Adam. You know what you really need? This thing called a viral loop. Know what that is?”

“Pardon me,” I replied, “but I’ve always wanted to say this. I wrote the book on viral loop.”

More than discovering a fan in the unlikeliest of places, for me this moment crystalized that old saying by screenwriter William Goldman in his classic book, "Adventures in the Screen Trade" -- “Nobody knows anything.” He was talking about Hollywood film producers and studios and their inability to forecast which movies would be hits and which would flop. But the same goes for venture capitalists and entrepreneurs.

The guy passed on the idea but I cheered myself with the knowledge that investors had once passed on Intuit, Compaq, and Lotus, and had turned down Google, Cisco, FedEx, and Paypal. Meet with a dozen potential investors and you’ll likely hear 12 different opinions on what you should do. Often they just parrot the latest conventional wisdom, and one of the most popular pearls of wisdom you’ll hear is that an entrepreneur needs a technical cofounder.

Yet some well-known New York startups are bucking that trend. Take, for instance, Pinterest, Fab, and Quirky, three fast-growing companies that have raised vast amounts of venture capital (Pinterest, $100 million; Fab, $150 million; Quirky, $97 million) and are valued north of $100 million.

The one thing they have in common? None has a technical cofounder. Not a single one.

Maybe New York startups are different from those in Silicon Valley. Most don’t have roots in technology as much as they sprout from media and social, and that makes sense, given the people who live here. Silicon Valley has Google and Facebook. We have The New York Times, Time Inc., and News Corp. DoubleClick, Buddy Media, and HuffingtonPost all had massive exits — two ad companies and a new media content empire — and they were hatched in New York. If you’re a top engineer, however, where are you going to live? A large percentage of New York's professional class work in media or publishing -- the soft sciences, if you will. Silicon Valley specializes in geekified hardware and software products. Many New York startups wouldn’t know R&D from a UFO.

Then there’s the physical make up of New York City. One observation you hear about FourSquare, long the poster child for New York-based startups, is that it might never have gotten off the ground if it had started elsewhere. New York, a walking city, is ideal for check-ins, unlike the Bay Area or, say, Los Angeles, both of which are predominately car cultures. Now, Dennis Crowley did have a technical co-founder for FourSquare, but not while coalescing ideas for Dodgeball, the company that put him on the map as a serious entrepreneur. He wrote on Quora:

Pre-dodgeball I went thru 3-4 years thinking I was going to meet some magical engineer who would build all the stuff I was thinking about. But I never met that person, so I taught myself ASP and MS Access (yikes! eventually PHP an MySQL) out of a book and got to work just hacking stuff together. I'm still a really shitty programmer… but I know enough to hack a prototype together (which is what you need to get other people / investors on board).
Pinterest is perhaps the most copied site on the Web today. As my colleague, Erin Griffith, put it: "If imitation is the sincerest form of flattery the founders of Pinterest must be laughing their asses off."  The company started as Tote, a mobile app designed to turn every cell phone into its own retail clothing store. It showed promise from the beginning, winning the audience choice award at NYU Stern’s Berkeley Center for Entrepreneurship and Innovation 10th Annual Business Plan Competition. But investors turned their noses up at Ben Silbermann and Evan Sharp, largely because they were not technical cofounders. Nevertheless they persevered and now “pinning” has become part of our lexicon.

Neither of Fab’s co-founders are hardcore coders. Bradford Shelhammer, a former Design Within Reach salesman with great taste — No, really! His home has been profiled in The New York Times — and Jason Goldberg, a serial entrepreneur expert at viral marketing, launched Fabulis, a gay social network in 2010. Ten months later they met with their investors to tell them it wasn’t working and, with $1.2 million still in the bank planned to pivot. A few months after they raised $8 million in a Series A, and a month after they hit 1 million members Andreessen Horowitz led a Series B for $40 million, based on a valuation of $200 million. Now they are on the way to becoming a global brand, and they’ve done it largely by outsourcing their coding to Eastern Europe.

Quirky, on the other hand, is the brainchild of Ben Kauffman, who as a teenager started Mophie. Kauffman brings product design to the masses by having more than 260,000 community members crowdsource inventions, which are tinkered with and improved in Quirky’s Chelsea offices then sold at, Bed, Bath & Beyond, and Target. As for Kauffman, a college dropout who’s the quintessential ideas guy -- he talks with the speed and diction of a game show host -- he’s built two successful companies as sole founder, and he’s barely 25. And he did it without a technical cofounder.

There are many influences at play here. Part of it is New York coming into its own as a startup center. It will never rival Silicon Valley, of course, but it is gravitating toward the kinds of companies it does well, many of which spring from the kinds of business that thrive here — media, entertainment, fashion, and finance. Many begin by following the Lean Startup methodology. Get a product out there to users as quickly as possible, and see if there's a business in it.

It doesn't take a team of top-level engineers to accomplish this; it often just requires someone with a good idea, persistence, and access to enough capital to get a prototype coded and out the door. And since there are precious few engineers here, it's also sheer pragmatism to bypass naming a technical cofounder.

You might say it makes good business sense.

[Image courtesy mac filko]