The center of tech is shifting from Silicon Valley to "application towns" like New York and LA

By Erin Griffith , written on May 16, 2013

From The News Desk

There weren't many entrepreneurs in New York City in 2006 when Chris Dixon was building software for a hedge fund. Interested in startup culture, he decided to leave the stability of a day job for the uncertainties of being an entrepreneur, and started his own company. This was long before "Tweet Tweet Boom Boom," the 2010 New York magazine cover story announcing the arrival of New York's tech scene. By all accounts, Dixon should have picked up and moved to Silicon Valley to built SiteAdvisor, his security company, but he chose to stay in New York.

He decided to start it here, he recalled at PandoMonthly NYC tonight, because he simply likes the city better. It wasn't a conscious decision not to move to the Valley, but he didn't encounter the typical drawbacks that companies face outside of Silicon Valley. The most common complaint is there's no access to talent or capital, but he didn't encounter that problem at SiteAdvisor nor at his second company, big data machine learning company Hunch, which he launched with Flickr co-founder, Caterina Fake.

"It's not easier to recruit engineers and raise money (in Silicon Valley)," Dixon said. The biggest benefit of being in the Valley is that, when adding employees number 50 to 100, it's easy to find a person who has the exact specific experience you're seeking. "You can just pull them off the shelf and slot them in" to the role," he added.

His allegiance to New York is now slightly more nuanced with his new job. Last fall he joined Andreessen Horowitz as a partner. The firm requires its partners to be in the Valley, so he had to move. He joked that he was hoping his recent deal for New York-based Shapeways, a $30 million Series C, which is a greater financial contribution than all of his angel investing combined, would make up for his leaving.

That doesn't mean Andreessen Horowitz isn't a staunch believer in New York's teeming tech scene. It's simply a reflection of the firm's worldview that venture capital is collaborative by nature.

"Everything you do is by definition a little crazy," Dixon said.

If he'd struck his recent deal for drone company Airware from New York, his partners in Silicon Valley might not have gotten on board. But because Dixon was able to sit down with Marc Andreessen and toss around ideas, the deal for a company that makes operating systems for flying robots didn't seem so far out.

Andreessen Horowitz has an inherent bias towards companies based in the Valley, but Dixon sees a shift to New York and LA. "New York is an application town as opposed to being an infrastructure town," he said. "Just like you see a shift from the Valley to San Francisco, you see a shift to New York and LA as well. That is a big trend and will play in favor of New York, LA and other 'application cities.'"

(Disclosure: In addition to being a personal investor in PandoDaily, Dixon is a partner at Andreessen Horowitz, whose partners Marc Andreessen and Jeff Jordan are also personal investors.)

[Illustration by Hallie Bateman]