September 26th, 2008
Wall Street's Pain = Tech's Gain
The Dow is down just 28 points, to 10,993, as this gets typed at midday Friday. Maybe everyone who wanted to head to the exits already has. In meantime, the dysfunction on Wall Street should redound to New York’s advantage — in technology.
The reason: Wall Street has always been able to pay higher prices for the best information technology talent in the city. Until now.
Now, with Lehman Brothers gone, Merrill Lynch falling into the hands of Bank of America and both Washington Mutual and Bear Stearns winding up in the tent of J.P. Morgan, there are thousands of tech folks out on the street looking for jobs, as Amanda Fung reported in Crain’s New York Business.
Here are her sobering numbers: Wall Street laid off 22,000 workers in the first half of the year. Thousands more are coming now.
And in the last seven months — get this — only 1,100 tech jobs were added, bringing the overall total in the city to 42,700.
Where are they going to go?
A lot will spell their new employer this way: s-t-a-r-t-u-p.
Which augurs well for the continuing emergence of Silicon Alley as a counterweight to Silicon Valley. Now, Fred Wilson, who is kind of the John Doerr of the Big Apple, doesn’t like the term Silicon Alley, as he noted in his Web 2.0 Expo presentation last week on the New York Internet Industry.
But the well-known principal at Union Square Ventures has been keeping track of the rise of the venture capital business in the nation’s financial capital for more than a decade. In 1995, he notes, New York startups got 30 seed and early stage fundings. San Francisco startups got 230. Nearly 8 times the number.
This year, the New York count is 116. The San Francisco count: 360. Only three times as much.
Now, we’ll see if all the brains who figured out the algorithms that carried out the enormously complex mortgage-backed securities business, the credit default swaps and the collateralized debt obligations can find better more useful ways to employ their intellect and talents in New York City.
And whether New York’s venture capitalists back them.
Now, some of you may be saying: Heaven help us. But these guys and gals aren’t the ones who dreamed up a system where the security that someone was buying was cut off from the actual collateral underlying it.
They just built systems that carried out the dreams (and now nightmares) of the financial minds who thought them up in the first place.
PHOTO SOURCE: Buck Ennis, Crain’s New York Business
Tom Steinert-Threlkeld is editor-in-chief of Securities Industry News, as well as a long-time media, technology and business journalist. See his full profile and disclosure of his industry affiliations.
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| 09/26/08
