Techstars NYC is at an inflection point
After playing musical chairs with its managing directors, and watching as Techstars Boulder claims the program's biggest success stories, Techstars NYC finds itself at an inflection point.
So far, the New York chapter, launched in 2011, has had a mixed record. The Techstars network boasts programs in Austin, Boulder, Boston, Chicago, Seattle, and London. But even though New York City is the second-largest tech hub in the country, the Techstars program here has not found the success of Techstars' other cities.
Part of the reason is managerial instability. In 2012, Managing Director David Tisch left and Eugene Chung, formerly of NEA Partners, took over. But Chung was abruptly let go three weeks before the program's demo day. No official reason was given for Chung's ouster, beyond Techstars CEO David Cohen's statement that Chung "wasn't a fit and we decided to go in another direction."
In a recent email, managing director Nicole Glaros admitted to the program's issues, writing, "Even at Techstars, we have really struggled, especially this last year, to really capture the potential of the community." (Glaros oversaw the transition from Tisch to Chung.)
Accord to Cohen, the "other direction" he wants Techstars NYC to go is one that takes them back to their roots: a renewed focus on product demos over flashy sales pitches, and more community-building.
It also involves the hiring of a new managing director. Earlier this month, Techstars appointed Alex Iskold, founder and former CEO of GetGlue, to run its New York program. Iskold founded GetGlue, which he recently sold to i.TV. For all my criticisms of accelerators, I think Iskold brings the right approach to the role. He echoes Cohen's desire to build more community around the program, and to focus on product over pitch. It doesn't hurt that he's a founder himself, and is very technical and product-focused. Regardless of whether you can call GetGlue's ultimate outcome a success, it was the clear leader of the wave of second screen apps, an area Twitter is making a big push into.
Iskold's new direction for the program has the potential to pay off, considering Techstars NYC has had a mixed record to date. The portfolio has had a few modest breakout hits, like Contently, Onswipe and CrowdTwist. It also has its fair share of startups that flamed out early (ToVieFor, MobIntent and SmallKnot) and plenty of "cockroach startups" that refuse to die (Red Rover, founded in 2008, is still in business but has yet to launch it seems; Shelby.tv went dark for 18 months and re-emerged last week with a new app). Still, Cohen places New York in the "upper third" of its cities in terms of IRR.
After following up with the companies, I found that three of NYC's classes show a decent mix, with just a few failures and the rest trucking along. But one class -- the one that that graduated in the second half of 2011 -- has not fared well. To whit:
- Spontaneously failed.
- Urtak failed.
- MobIntent failed.
- Coursekit pivoted to Lore and sold to Noodle.
- Piictu sold to betaworks and was shut down.
- Dispatch sold to Meetup and was shut down.
- Sidetour sold to Groupon for an undisclosed deal value.
- Wantworthy abruptly shut down its site and pulled its app, Fresh, from the app store.
Here are the survivors:
- ChatID has raised $3 million and accumulated customers including Newegg, Acer and HP, CEO Dan Herman says.
- Ordr.in has five employees, and 20,000 restaurants available on its API.
- Ambassador moved to Michigan, now has 10 employees and has grown its revenue 300 percent year-over-year.
Contently might be the most successful company to graduate from all four of NYC's Techstars classes. The company has 24 employees. Its platform has 27,000 writers and counts 40 Fortune 500 brands among its clients, including American Express, Anheuser-Busch, and PepsiCo. Clients pay between $3,000 to $25,000 a month for access to Contently's platform. Contently impressed New York Times media columnist David Carr, who last week called Contently "a hot little company."
That's class two. The first Techstars NYC class, on the other hand, remains mostly intact, with one shut-down, one sale, and a whole lot of pivots.
- ToVieFor, whose drama was chronicled in a Bloomberg reality TV show about Techstars, failed.
- Thinknear sold to Telenav for $22.5 million and the product remains alive with the founders still involved in the company. Cohen notes that this deal has minted a return for the class.
- Red Rover is still alive.
- Migration Box is now Shuttlecloud and is still alive.
- Wiji changed its name to Immersive Labs and then IMRSV; the company moved to LA and two of its three co-founders left, but it's still alive.
- Homefield pivoted to Shelby.tv, shut down for 18 months and recently launched a completely revamped version of its product.
- SocratEd changed its name to Veri and pivoted to Memoir, a memories app which recently launched.
- Friendslist pivoted to Timehop and its mobile app is now growing by 100,000 users a month, with one third of its users opening the app every day.
- Nestio, which has five employees, pivoted from a consumer-facing app to a property management tool for landlords.
Why is the first class still around and the second one basically disappeared? One founder put it to me this way: Techstars had a lot to prove in that first year. That pressure created a culture of determination, which the founders took to heart. Many of the companies have contorted themselves beyond recognition with pivots and shifts in strategy, but they refuse to give up. The second class didn't seem to have that.
Meanwhile, the third class, which graduated in 2012, has been trucking along, aside from three failures.
- Smallknot turned down venture money and basically called it quits (the site remains alive).
- ConditionOne ditched its business model, laid off staffers in May and hasn't launched its product yet.
- Rewind.me has suspended operations, its CEO told me.
- The rest -- Moveline, Classtivity, Pickie, Poptip, Karma, Marquee, Lua, Bondsy, 10Sheet (now Bench), and Wander (now Days) are all still in business.
Which brings us to Techstars NYC class number five.
Applications are open. Techstars expects 1,000 companies will apply for ten spots in the program. Iskold is also recruiting founders to apply, because he wants to set a high bar for getting in, he says. He's looking for a few companies doing something "really out there and futuristic."
Iskold's goal is to make Techstars NYC into more of a community hub, even for people who aren't in the program. He announced open office hours and calls for anyone in the New York tech community to get advice and input on their ideas.
"We can't just be focused on churning out classes," he says.
Cohen said this community aspect is a big part of Techstars' roots. "We obviously can't invest in every single company, but we can try to be helpful to them," he says. "In Boulder, where we're based, thats very much the ethos."
Beyond that, Techstars New York will engage its four classes of alumni. Iskold plans to do eight alumni events this year, where past Techstars participants can build connections with the current classes. That includes the alums whose companies have failed. They were chosen to join Techstars because of who they are, not because of their ideas. Iskold wants these serial entrepreneurs to stay involved with Techstars, and maybe even start their next companies in the program. He's even tried to recruit some to apply for the upcoming cycle.
"I believe there is a science to it," Iskold says, "and serial entrepreneurs are best positioned to create billion-dollar companies. If you're starting companies over and over, it's more likely that one will become a billion dollar company."
"I want to completely yank out the bogus numbers, the up-selling and the trying to pretend," he says. "The 'show' [air quotes] shouldn't be there."