amNY special report: New York City's 10 hottest tech startups
Howard Lerman, Yext's co-founder, shows exactly what he thinks of his old-school rival Yellow Pages. (Deidre Schoo)
Gotham, startup your engines.
The city’s tech scene appears poised to come out of the shadows after years of fighting for the limelight enjoyed by New York’s core industries such as finance, media, advertising and fashion.
“I will go out on a limb and say that NYC right now is the most innovative place on the planet. If I had to bet I would bet the next black swan [startup] will come from there,” said Rafe Furst, a Silicon Valley-bred entrepreneur.
The companies featured here are amNewYork’s picks for the top 10 tech startups, compiled with the help of ChubbyBrain, an information services firm.
Venture raised in ’09: $43 million
This fashion retail Web site sells designer goods at sample-sale prices.
“It’s a fundamentally different way of selling merchandise that has a lot advantages for brands and consumers,” said co-founder Kevin Ryan.
Gilt’s members have to be invited, adding to an air of exclusivity to the site, where deals are deep, such as a pair of Testoni shoes at $500 instead of $2,000. Also innovative: The site schedules its sales — everyday at noon new ones begin for 36 hours.
Why they’re in New York: Gilt counts 400,000 New Yorkers among its membership of 2 million. Ryan was on the ground floor of the ad firm DoubleClick when Google paid $3.1 billion for it in 2005. He’s among the city’s most successful entrepreneurs.
“New York is the only place you want to set this company up because the brands are here,” Ryan said.
Measure of success: The company went from $25 million in revenue in 2008 to $170 million last year. Ryan predicted $500 million in 2010. With that kind of growth the company has gone from eight employees to 380, and it is making a big push into Tokyo.
Venture raised in ’09: $1.35 million
Creators of the pioneering social-network startup Dodgeball are back with another venture named for a schoolyard game.
Foursquare members are plugged into a network of users who share their whereabouts and interests in a given city.
“It’s a fantastic tool for exploring really dense areas like New York,” said co-founder Dennis Crowley.
Members can access tips and reviews from other members, and GPS technology allows them to explore their immediate surroundings. There’s even a game element as people earn points, badges and titles. For instance, members who frequent an establishment the most become the “mayor” of that locale.
Why they’re in New York: Crowley said one of the city’s top draws is its economic diversity, as opposed to the cliquish Silicon Valley, where everyone is in the business of startups.
“There’s a lot more mixing of people in different industries in New York and it just breeds a different kind of person,” he said.
Measure of success: Foursquare’s growth has been “absurd,” Crowley said. The company launched in March and is up to 275,000 members. Membership rose almost 70 percent last month. “The next Twitter,” is one common phrase hurled at the company.
Venture raised in ’09: $4.4 million
“We make awesome easy,” said co-founder Stevie Clifton.
Animoto does this with its automated video generating platform, in which users, pros and amateurs, upload their content — music, images — and then press create video.
“Beautiful productions at the click of a button,” Clifton said.
Why they’re in New York: “I'm not sure Animoto could have started anywhere else,” Clifton said. The company’s founders either lived here or wanted to live here, he said.
Measure of success: The company is going strong and breached the million-user mark late last year, and now it has 1.2 million registered users. Sixty to 70 percent of its revenue comes from pro accounts that cost $250 a month. For less-serious editors, the site offers basic services free.
Venture raised in ’09: $2 million
This startup wants to be your “smart friend,” the one you go to for advice when you’re in the market for a car, stereo, computer or whatever.
Users can turn to Hunch.com for that kind of support whether pondering what religion best suits them or what tea to drink. The site can make 100,000 recommendations across 5,000 topic areas, according to co-founder Chris Dixon.
It works by leading users through a list of questions, and then generating a recommendation based on their responses. The number of questions it answers grows as users contribute to the site.
“It’s a system that gets smarter as more people use it and contribute to it,” Dixon said.
Why they’re in New York: “Besides New York City being the greatest city in the world, several Hunch co-founders were already here or were interested in living here,” Dixon said. “Add to that an incredible talent pool and a vibrant and growing tech scene, and you've got a great combination for startup success."
Measure of success: It topped more than 1.2 million users before it reached six months old, and is compiling a useful database on consumer behavior.
Venture raised in ’09: $5 million
Co-founder Fabrice Grinda is blunt about how inspiration struck him — or didn’t.
“I didn’t have brilliant ideas so I decided to steal other people’s brilliant ideas and take them to places around the world where they weren’t done before,” he said.
That’s how he came up with OLX, an online classified site akin to Craigslist.
Why they’re in New York: Grinda said there’s an argument to be made that the company should be closer to Silicon Valley, but hey … he loves New York.
Measure of success: Grinda would be happy with being the No. 2 such site in the U.S., while it’s No. 1 in the rest of the world, 90 countries and 40 languages.
Venture raised in ’09: $25 million
Yext bills itself as the next Yellow Pages, but it’s more like the Yellow Pages on speed dial. Yext partners with small businesses to advertise them across the Web and charges the companies only for business it directs their way — what co-founder Howard Lerman called “pay per action.”
Businesses such as auto repair shops or hair salons pay Yext for relevant phone calls based on whether potential customers say keywords such as “oil change” or “highlights.” Customers call on a monitored Yext-enabled number listed in the ad.
Why they’re in New York: A Big Apple base gives Yext access to the advertising capital of the world. There’s also a certain pride in trying to make it here. “People said we were crazy for trying to build a tech company in New York,” Lerman said.
Measure of success: Yext is a $20 million a year revenue company right now, with eyes for more.
Venture raised in ’09: $5 million
AppNexus is a platform for advertisers to use Internet ad exchanges, which are basically markets for eyeballs on the Web.
Advertisers bid against each other in real time for the ability to direct a message at a single Web surfer. The trades take 50 milliseconds to complete.
“The Wall Street version of the Internet is going to explode, where people can buy and sell ads like stocks,” said Michael Rubenstein, AppNexus’ president.
Why they’re in New York: “New York is most known commercially for Wall Street and Madison Avenue. If you thought of a company that merges the two, advertising and trading, where better to start that company?” Rubenstein said.
Measure of success: AppNexus is investing in its infrastructure to handle a surge in trading. It handles up to a billion such trades a day and expects that to grow twentyfold.
Venture raised in ’09: $6.25 million
This startup says it’s the first “cost per lead” marketplace in the world, meaning advertisers pay it only when potential customers sign up through ads that Pontiflex helps place online.
It’s part of the growing accountability in advertising movement at the city’s core.
“We allow advertisers to run ads on the Internet where they only have to pay when people sign up as opposed to click on it,” said co-founder Zephrin Lasker.
Why they’re in New York: Aside from a base in Dumbo with easy access to Madison Avenue, Lasker said the city can act like a boot camp for startups. It forces you to step up your game.
Measure of success: Pontiflex has deals with about 800 publishers and almost 150 advertisers, and expects to triple its revenue, which it would not disclose, this year.
Venture raised in ’09: $28.25 million
This green Internet tech startup partners with cities, including Chicago, Los Angeles and Houston, to track how much residents recycle.
“I was looking for something socially responsible to dedicate my professional skills to,” co-founder Ron Gonen said of the company that has grown into a global entity.
The company equips recycle bins and garbage trucks with RFD chips to monitor waste, and it calculates the ecological savings. Residents can track their recycling efforts online, and they are rewarded with up to $400 a year in points that can be redeemed for goods through business partners, such as Whole Foods, CVS and a number of local businesses.
RecycleBank earns 50 percent of the savings cities accrue.
Why they’re in New York: The company has offices worldwide, but is based here. That’s because Gonen started the company as an MBA student at Columbia, which was also a seed investor in the startup.
Measure of success: The company had deals with 10 cities in 2008, and now partners with 50 cities around the world, reaching 600,000 households with 1.5 million more coming online shortly. Gonen was optimistic RecycleBank would add New York City to the list this year.
Venture raised in ’09: $2 million
Sharing links to content from your favorite Web sites can be cumbersome when there’s a long string of words, backslashes and coding. Bit.ly solves that URL mess by shortening the links.
The service can be used by regular Joe Web-surfer who wants concise links for Twitter posts, or it can be used by media pros who want to gauge how their content is circulating online, and if they’ve gone viral.
“By creating bit.ly links, users are able to view real-time traffic to their content, and track statistics and trends,” said Andrew Cohen, general manager at bit.ly.
Why they’re in New York: Cohen had a simple reason for what sets the city apart: New Yorkers.
Measure of success: “It's become one of the largest sharing platforms on the real time Web,” Cohen said. It’s gone from 11 million clicks a month in July 2008 to 2.4 billion last month. The company is working on a number of revenue generating possibilities, including an ad-driven video-sharing site, bitly.tv, that features the Web’s top viewed content.
The companies here are amNewYork’s top 10 picks for city-based startups — in no particular order — based on the amount of money they raised in 2009 and the volume of social media activity the startups generated last year. The data was crunched by ChubbyBrain.