The Federal Aviation Administration finally laid down the legal groundwork for the operation of small drones in February, but as the governmental body showed this week, those laws don’t mean you can just fly unpiloted craft wherever you like. The FAA has proposed its biggest fine ever — $1.9 million — to be levied against aerial photography company SkyPan International for illegal drone flights in the busy airspace above New York and Chicago.
The FAA says that SkyPan conducted 65 unauthorized drone flights over urban areas between March 21st, 2012 and December 15th, 2014. The drones involved allegedly lacked a two-way radio, transponder, altitude-reporting equipment, airworthiness certificates and effective registration, while SkyPan itself failed to get a valid Certificate of Waiver or Authorization for the flights. The FAA says that of the 65 flights, 43 of those flights reportedly took place in New York’s tightly restricted Class B airspace, and took off without receiving air traffic control clearance to do so.
The FAA criticized irresponsible drone use in August, noting that pilots had already reported more than 650 close calls with small uncrewed craft in the first eight months of 2015 alone — more than double the 238 reports it filed in 2014. But SkyPan has defended its record, telling the National Journal that it has been conducting aerial photography in urban areas for 27 years “in full compliance with published FAA regulations,” and that it was “fully insured and proud of its impeccable record of protecting the public’s safety, security and privacy.” The company now has 30 days to respond to the FAA.
In a statement released on its website, FAA administrator Michael Huerta said that “flying unmanned aircraft in violation of the Federal Aviation Regulations is illegal and can be dangerous.” Huerta noted that the US has “the safest airspace in the world,” but said that “everyone who uses it must understand and observe our comprehensive set of rules and regulations.”
But SkyPan could argue those rules are far from comprehensive. Congress set a date of September 30th for the FAA to pull together blanket rules that would legalize the use of small drones, but after putting out proposed regulations in February, the aviation administration missed the deadline. It said that it may need until 2017 — or even later — to reach a consensus of opinion. Until then, the FAA has approved more than a thousand individual flights, but the US is still without federal regulations, frustrating both hobbyist drone operators and companies such as Amazon who plan to use drones to deliver items to customers.
On Road Trip 2015, CNET takes a look at the tech scene in the Big Apple, and how it has quietly emerged from the ashes of the failed “Silicon Alley.”
The office space of TechStars NYC, which fosters startups and connects them with investors and potential customers, was, well, what you’d expect one of the key tech hubs in the city to look like: a brightly lit area with rows of tables populated with people typing away on MacBook Air computers. Motivational signs like “Move fast and break things” (a well-known Facebook mantra) decorate the walls. Occasionally, someone in a hurry zips through the room.
Even so, it was eerily calm on a Tuesday.
It’s just a few weeks before the next class of startups begins a 13-week tenure at TechStars, founded in 2006 in Boulder, Colorado, before expanding to eight other cities including the Big Apple. Once boot camp begins, a countdown clock — currently off on this August afternoon — signals the start of a race with a dozen companies working to build up their businesses for a final pitch to investors and customers. So is that when the volume pumps up?
“It’s still pretty quiet,” Alex Iskold, managing director of TechStars NYC, conceded. “But it’s intense.”
The New York tech scene has followed a similar path as it’s evolved over the years — starting off quietly but growing to the point where investors, corporations and city officials now take it seriously. While New York isn’t the birthplace of a household tech name like Google or Facebook, the city boasts a vibrant startup scene, with eager entrepreneurs able to tap into the expertise gleaned from other key industries in the city and ready to gamble on being the next big thing in tech.
“New York is the craziest city in the world,” Iskold said. “This matches our DNA perfectly. We are the city of risk takers, of a million choices and cutthroat competition.”
New York now boasts its own notable tech row. Etsy, an e-commerce site that sells handmade items, went public in April and is valued at just over $2 billion. Yahoo acquired micro-blogging site Tumblr for $1 billion in 2013, and is rumored to be interested in its Manhattan neighbor Foursquare, the location-based services provider. Fashion retail site Gilt Groupe raised $50 million earlier this year and may eventually go public. In December, WeWork raised $355 million in a deal that valued the workspace provider at nearly $5 billion.
New York, unlike California’s Bay Area and Silicon Valley, also boasts a more diverse array of industries and communities to draw talent from. That’s why you don’t always hear about tech; with such a whirling circus of activity around media, fashion, finance and other fields, it’s easy for anything to fly under the radar.
“Talking to some of my friends who have dinner parties in Silicon Valley, there’s all of the obsession about this fund raising and that fund raising,” Gilt CEO Michelle Peluso said. “The nice thing about New York is it’s a very broad city. ”
Still, New York is a distant second to San Francisco when it comes to tech. It lacks the blockbuster tech companies that have yielded wealthy founders willing to go out and create the next hot startup. There also isn’t a supply of engineering talent like there is in the Valley.
And if you’re a startup looking for more substantial funding, you still need to go west. While the amount of venture capital funding in the New York metropolitan area nearly doubled to $2.34 billion in the second quarter, it trailed well behind the $9.1 billion in funding invested in Silicon Valley, according to PricewaterhouseCoopers.
Still, New York isn’t going to let the Bay Area have all the fun. Nor should it.
San Francisco “can’t have a monopoly on innovation or we’re all in trouble,” Peluso said with a chuckle.
A diverse scene
The theater was packed, with some enthusiastic attendees equipped with inflatable noisemakers. But this wasn’t a Broadway show or film premiere. It was the monthly gathering of the NY Tech Meetup group, which has seen its membership grow threefold over the last four years to more than 45,000 members.
A crowd of nearly a thousand tech enthusiasts, programmers, city officials, businesses and potential investors gathered to watch 10 startups run through live demonstrations of their projects as audience members alternated between hooting and hollering and asking insightful questions. The presenters aren’t all looking to build the next billion-dollar business; Seth Carnes considers his photo-and-text app, Poetics, a work of art. In his spare time, mapmaker Jeff Ferzoco built a digital map chronicling the New York hotspots for the lesbian, gay, bisexual and transgender community going back to 1859.
“You’re seeing a diversity of demonstrators and different types of products,” said Jessica Lawrence, executive director of the group.
On a Tuesday night in early July, one demonstration in particular left the audience impressed. Yaopeng Zhou and his team from Smart Vision Labs showed off a device that used a smartphone’s camera and processor to conduct an eye exam. Smart Vision’s product, which Zhou said is already shipping, could allow people in undeveloped nations to quickly get their vision checked.
Unlike Silicon Valley, which has been a wellspring for every sort of idea in tech, New York startups tend to get their inspirations from the surrounding industries, whether it’s fashion, media or health care.
Zhou got the idea for while working at GE Healthcare in New Jersey, and met his co-founder, Marc Albanese, while he attended New York University’s business school. Smart Vision is a New York native.
Access to different industries, from a recruitment and potential customer standpoint, is also an advantage New York holds, some successful entrepreneurs say.
“It’s pretty special, because in New York you pull from different disciplines,” said Ayah Bdeir, the CEO of do-it-yourself hardware maker LittleBits, at the opening of the company’s pop-up store in Manhattan late last month. “You have skills that come from finance, from fashion, from food, so they’re not only tech people but they come into the tech scene and I think that brings in a fresh perspective to the work that we do.”
It also helps keep the tech world grounded.
“In New York, no matter what you do, there’s always someone who doesn’t care,” said Charles Bonello, co-founder and managing director of Grand Central Tech, which fosters startups with a mission of building up the local tech scene.
Money, talent still out west
In Silicon Valley, there are a number of serial entrepreneurs who struck it rich and went on to foster more startups. Think the “PayPal Mafia,” the group of former PayPal employees who went on to found or fund other big-name companies, including Tesla Motors, YouTube, LinkedIn and Facebook.
New York lacks that legacy infrastructure. While there’s an increased willingness by local funds to invest in startups at the early stage — Union Square Ventures is a major player here — companies looking to develop further find they need to get serious funding elsewhere. Smart Vision, for instance, got funding from TechStars’ Colorado office and won a $1 million award from Verizon, but Zhou said he still has to fly out west to meet with venture capitalists.
“You can’t emulate Silicon Valley,” said Jeffrey Carr, a business professor at NYU. “There’s such a unique combination of things: (Stanford) University, entrepreneurs and the rock-star status they hold out there and the money.”
It’s also tougher to find the right engineering talent in New York. It’s easy to sell programmers on the potential upside to heading to San Francisco, where billion-dollar startups seemingly spring up on a regular basis. It’s a tougher sell for New York.
“That’s probably the biggest challenge that a tech company in New York faces is really recruiting from that talent pool in San Francisco, because it’s so far away, and because it is a very different lifestyle here,” said Peter Vidani, creative director at Tumblr.
“What are we selling them? Rude people, cheap pizza and bad weather?” Iskold added.
New York is working on creating a base of technical talent. The city launched Digital.nyc last year, which serves as a hub for the local startup scene. Cornell University is spending $2 billion to build a tech-focused facility on Roosevelt Island. Coding school General Assembly is also trying to reinforce the ranks of technically savvy workers in the city.
Silicon Alley redux?
Back in the mid ’90s, a nascent tech scene in New York rallied around the term Silicon Alley. But when the tech bubble burst in 1999, taking down many of the heavy hitters in the real Silicon Valley, Silicon Alley also collapsed.
It just wasn’t the right time for New York.
“The city itself wasn’t particularly well-suited,” Peluso said, recalling how office buildings lacked basic infrastructure like wiring for high-speed Internet access, and how landlords would ask for a 10-year lease commitment. “A 10-year commitment? I don’t even know where I’m going to say I’m at 10 days from now.”
There also wasn’t a strong venture capital presence. “Silicon Alley was a loose collection with not a lot of interesting things,” Iskold said, laughing.
The name is also a bit of a misnomer at this point. Silicon Alley started off in the Flatiron District near the historic Flatiron Building on Fifth Avenue and 23rd Street. But today’s tech companies are spread all over the New York area, with pockets in Manhattan and Brooklyn.
So is this Silicon Alley, version 2.0?
“We shouldn’t be calling it Silicon Alley,” Iskold said about the New York tech scene. “It sounds off to me — I don’t even know what that means honestly.”
For New Yorkers, however, the sight of increasing numbers of tech offices has become ever more common.
While Silicon Valley grabs attention as the center of the tech universe and birthplace for some of the biggest startups, the most recent growth data shows that the NYC tech boom is living up to its own Silicon Alley hype.
A confluence of forces is behind the rising tide of the city’s tech. A voyage inside the workings of New York City’s startup scene reveals tech players and funding drawn to the region’s bedrock industries of finance and fashion, and media, marketing and commerce.
New York has also been the beneficiary of city and state policies favoring business incentives to attract tech in the wake of the financial crisis and jobs exodus. Mayor Bill de Blasio has continued in the footsteps of former mayor Michael Bloomberg, making tech central to the scene.
“Technology is driving innovation across New York City’s industries – from fashion to finance to manufacturing, making it more necessary than ever for the City’s digital community to have a central platform,” Mayor Bill de Blasio said at the October launch of Digital.NYC, the city’s hub of tech services intended to make the digital economy accessible to all New Yorkers.
Like San Francisco’s tax credits to Twitter and others, New York City has also extended tax breaks to attract tech. Buzzfeed in December was granted a $4 million tax credit for its new 194,000 square foot headquarters to encourage it to stay amid concerns it may go elsewhere. That came after Etsy scored a new 200,000 square foot Brooklyn digs and a $5 million tax break. It’s a trend that’s playing out repeatedly across New York City.
Another factor weighing in New York’s favor: tech job growth is exceeding Silicon Valley’s. Since 2008, technology employment in New York has grown roughly 40 percent, with financial and legal services coming in below pre-recession numbers. While the growth in New York has been slightly faster than Silicon Valley — 8.4 percent versus 5.2 percent as of June, according to commercial real estate giant Jones Lang LaSalle — the size of Silicon Valley’s workforce still remains significantly larger than New York’s, at 213,000 compared with 90,000.
The biggest single indicator that NYC tech is rocketing, however, is its venture capital deal flow. Venture capital has taken a huge leap in NYC, signaling a wave of new opportunities particular to the Empire State.
Venture capital investments jumped 138 percent to $1.7 billion in the New York Metro region in the third quarter compared with a year ago, according to PricewaterhouseCoopers and the National Venture Capital Association. For the same period, Silicon Valley venture capital grew 20 percent to $4.4 billion.
Investments in the metropolitan area companies are coming for good reason. Media and entertainment, retail and consumer products are all regional strengths, attracting new businesses centered on tech.
Digital Media Boom
New York has long owned the title of media capital of the world. That is now extending deeper into the digital arena. Investments in media and entertainment shot up more than threefold to $1.8 billion across all regions, and much of that came to the big city.
Brooklyn-based Vice Media scored a $500 million investment during the period, highlighting the edgy publisher’s expansion and New York’s growing digital media presence. New York City-based Buzzfeed attracted $50 million in the period as well. In the current quarter, the city’s Vox Media has nabbed $46.5 million. Meanwhile, content distribution platform Outbrain is expected to go public early this year at a $1 billion valuation.
Online Retail Ride
New York, of course, is a worldwide center for commerce, especially for fashion, art and investments. It’s therefore no surprise that the city’s become a hotbed for online retail upstarts. Investments in retail shot up sixfold to $233 million last quarter for all regions, including New York City, as startups emerge to shake up businesses in previously insular industries void of innovation.
Flash sales sites became all the rage in the recession but have since struggled to gain footing as continued product availability remains a growing concern in up markets. NYC-based Fabtook in $336 million in venture capital over several years and flamed out, selling in November for a reported $15 million.
It remains to be seen whether rival Gilt Groupe, which has taken in $236 million in funding, will prosper amid IPO speculation. The company’s trailblazer status and deep roots in the fashion industry have enabled it to maintain a following and continue to get good merchandise. Another beacon is Artsy, which received $18.5 million this year for its efforts to connect more people to the cutting edge art flowing in and out of New York’s galleries.
Product to the People
NYC is also a hub for startups that are evolving in core commerce areas. Consumer products and services shot up nearly fivefold to $453 million in the quarter for all regions, with investments going to New York startups.
The new generation of retail startups is mixing content marketing and product curation. Think companies like Thrillist Media Group, which blends content with commerce aimed at men. The startup category includes New York-based Birchbox, which offers subscription boxes of beauty samples as well as relevant content and tips. It attracted $60 million in 2014.
Consumer financial services are an area of slow and steady growth, with startups like Betterment, which closed $32 million in 2014 to open up the wealth management industry to the 99 percent. Then there’s OnDeck, whose late-2014 IPO is riding the online lending wave started by Lending Club and Prosper.
Does all this mean New York City is on its way to having its own stable of so-called tech unicorns? This trajectory is likely to continue. That’s because retail, media, finance and fashion are all industries native to New York.
So with the economic factors and the existing talent pool, tech companies that are innovating in those industries will continue to gravitate here. Additionally, the lowered barriers of entry mean that we might see more tech companies migrating to the Big Apple with the goal of being closer to the media, fashion and financial giants that they are selling to or disrupting.
The Twitter accounts of the New York Post and United Press International (UPI) have been hacked with fake tweets on economic and military news.
In one post, the Pope was quoted on UPI’s Twitter feed as saying that “World War III has begun”.
Meanwhile, the New York Post’s account said that hostilities had broken out between the United States and China.
It is the latest hack of a high-profile social media account, four days after US military command was compromised.
UPI, which is based in Washington, confirmed in a statement that both its Twitter account and news website had been hacked.
Six fake headlines were posted on its Twitter account and a breaking news banner was added to a fake story about the Federal Reserve on its homepage, the statement added.
A tweet on the New York Post’s account said the USS George Washington, an aircraft carrier, was “engaged in active combat” against Chinese warships in the South China Sea.
A Pentagon official said the tweet about hostilities with China was “not true”, AFP reports. The tweets have all since been deleted.
The New York Post says it is investigating the hack.
It comes just days after US President Barack Obama unveiled proposals to strengthen cyber security laws after a spate of attacks on high-profile US targets, including the Pentagon Twitter feed and Sony Pictures.
The Twitter account of the US military command was suspended last Monday following an attack by hackers claiming to support Islamic State.
In November hackers also released reams of confidential data stolen from Sony Pictures, and in recent years cyber criminals have attacked other US companies such as Home Depot and Target.
A number of media organisations, including AFP and the BBC, have also been subjected to cyber attacks over the past two years.