We hear a lot about the importance of entrepreneurship to our economy these days. So I went to visit a firm whose business is to identify, nurture and promote entrepreneurs working on their first start-ups.
I didn't have to go to Silicon Valley to do it. I went to the heart of Manhattan, 43rd Street and Broadway.
On the eighth floor of a skyscraper in Times Square I found two-dozen intense young people working on start-up companies under the watchful eye of the Entrepreneurs Roundtable Accelerator. This partnership, founded by Jonathan Axelrod (himself an entrepreneur) and two fellow veterans of the New York tech community, invests in, guides and grows young companies.
Every six months, ERA accepts a class of 10 start-ups that have not yet secured their first institutional investments. Most are running on sweat, fumes and goodwill money from friends and relatives. ERA selects the 10 from more than 500 applicants, most from the New York-New Jersey area -- which tells you something about how many ambitious entrepreneurs there are around here.
ERA chooses start-ups in sectors that are heavily concentrated in the New York area. That means advertising, media, publishing, sports, fashion, entertainment, and finance. Axelrod and his two partners, Charlie Kemper and Murat Aktihanoglu, assess the candidates according to three broad criteria: quality of the founders, strength of the target market and, finally, the business itself. The last criterion is the least important, since the direction of the business changes substantially as the firms grow. That's why they're start-ups.
You can cut the energy and the intensity at the ERA offices with a knife, and cross-fertilization across start-ups is essential. ERA invests $25,000 in each company. The culmination of the acceleration period comes four months later at Demo Day, when the entrepreneurs present their products and promises to the sharp eyes of prospective investors.
Members of the first class had their Demo Day last fall. Taken as a whole, they roughly doubled the number of employees working for them over the course of the four months; nine of the 10 have raised six-figure investments since then, with most raising more than $500,000 (the amount considered a full seed investment round at this stage).
What do these start-ups look like? Nik Bonaddio is the founder of NumberFire, which uses quantitative modeling to bring new insights and analysis to the world of sports. Thirty-four million people play fantasy football; NumberFire's mathematical model can beat ESPN's NFL predictions 70 percent of the time. That gets folks' attention and means there's something marketable -- maybe to the sports leagues, maybe to fantasy leagues, maybe to fans, maybe to Las Vegas oddsmakers. NumberFire landed a healthy initial investment and it's off and running.
Jay Shek and Jeremy Clemenson started a company called Centzy. U.S. consumers spend $540 billion a year on everyday services like haircuts, oil changes, manicures and yoga classes. But 80 percent of businesses that supply such services do not post prices and hours online. Centzy generates that hard-to-find information for consumers. The technology to gather the cost and availability of services within five blocks of wherever you are at any given moment is very, very sophisticated. And what better place to offer such a service than in the densest, most vertical city in the country?
Welcome to the future and the world of enterprise, ingenuity, persistence, smarts, risk-taking -- and luck -- all wrapped up in one. Start-ups are the vital seed corn of the new economy: nimble, innovative, creatures of the digital age, and fueled by brainpower, hard work and venture capital. This is a road only the toughest and brightest choose, and start-ups that succeed on a serious scale are rarer still. For those involved, it's about survival of the fittest and luckiest. For the rest of us, it's about powering economic growth for the country as a whole.
Peter Goldmark, a former budget director of New York State and former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund.