How to Leverage the East Coast Startup Ecosystem

Tejpaul Bhatia, Startup Lead NY @ Google Cloud; Brandon Greer, Corporate Development @ HubSpot; Rob Pegoraro, Journalist @ Yahoo Tech

Ascent Conference 2019

Rob Pegoraro [00:00:04] So I like this panel a lot, I’m an East Coast guy, I was born and raised in the great state of New Jersey, got to D.C. as fast as I could. Any Nats fans here? Well, there’s one here. So so let’s talk about this, um. What makes the East Coast distinctive, besides the fact we have arguments over bagels, pizza in the quiet car and Amtrak, what is. What makes us not like the left coast?

Tejpaul Bhatia [00:00:32] Well, to start, the three of us are here, so that makes it very different. I will quickly introduce myself Tej from Google Part Team called Google Cloud for startups. Interestingly, my title has changed from startup to ecosystem manager. So very applicable for this panel. Was the question, why is ours better or different?

Rob Pegoraro [00:00:54] Different.

Tejpaul Bhatia [00:00:56] Different yeah.

Rob Pegoraro [00:00:56] The value.

Tejpaul Bhatia [00:00:57] So my team has eight ecosystem managers around the world, we’re a relatively new team, two years old, New York, Boston, L.A., San Francisco, London. Tel Aviv, Singapore and Bangalore, and those eight were chosen for a very specific reason, but each of the ecosystem managers is there because of our roots in each market. So I’m a lifelong New Yorker, born and raised. What makes us different, what makes all the ecosystems different usually comes down to three things. One is talent, people starting the companies capital investment coming in and customers. And I think I’ll speak specifically for New York, but we can talk about the East Coast up and down. We have all of that in 14 square mile radius. So in terms of density and convenience for my role in Google and as a founder before, it’s just super easy to get connected with everyone very quickly in this ecosystem.

Brandon Greer [00:01:57] Everyone, so my name is Brandon Greer, I run the HubSpot Ventures, which sits within the corporate development function of HubSpot Boston based marketing, sales and customer service software company. Um, so my entire career has been on the East Coast and it’s been interesting to see started out at Open Venture Partners, which is a fund based in Boston, and sort of did the whole analyst associate thing where the goal was to source deals and sort of find either diamond in the rough or bright shining diamonds a lot those were out and stuff. But the key for us was looking for opportunities that weren’t sort of like right smack in front of you. What struck me about the East Coast ecosystem was, um, there were there are a lot of legacy companies that were built here. Uh, there’s, uh, you know, obviously a next wave for most legacy companies here, next gen that, next gen this. And you’re starting to see a lot of those pop up everywhere. And a lot of those exist here. Um, know second to that, there’s an incredible sort of educational density. Right, in Boston. I think just like per capita, like super high numbers of institutions and places where you can you can sort of catch talent that makes it sort of super interesting as well from a founder perspective. But, um, those are sort of the two things that sort of I would call out. So the legacy sort of next gen theme we’re seeing. And then, of course, like the density of talent.

Rob Pegoraro [00:03:20] So we talked about what we do well, what are our weak spots like I know in D.C. there’s always this talk about funding and there just isn’t all that VC money sloshing around the D.C. area like there is in the Bay Area or the other Bay Area, as I sometimes put it.

Brandon Greer [00:03:36] Yeah, so from from our site, so so HubSpot at this point has dozens of thousands of customers and we are reaching a sizable scale, what we’ve begun to see is there are a lot of companies that aren’t properly integrated with different systems of records, whether it’s like your ERP or your CRM, all that. Sometimes I think having the proximity to some of the larger players out in the San Francisco Bay Area has been to the benefit of some startups because they have, you know, startup leaders out there meeting with you, developer advocates every which way to help folks build integrations. But I think leveraging those systems of records, even if they exist outside of, you know, sort of our four walls here in New York or Boston, wherever you might be, that’s a really important way to sort of reach scale. So so getting embedded in some of those those worlds, too, I think is a weakness today, but doesn’t necessarily need to be, um, and it’s a it’s a way to, of course, get get adoption beyond just your core market.

Tejpaul Bhatia [00:04:33] Yeah, so, uh, first and foremost, one thing I think we do terribly is whether this is true right now out of our control, but the Bay Area is not very good either. L.A. is phenomenal. Another thing that we do poorly, I think, is we don’t play to our strengths and I’ll speak specifically for New York, but I think it’s an East Coast thing. There’s a lot of this comparison to the Bay Area, East Coast versus West Coast or, you know, people saying, like, you really should move out there. If you’re starting a company, you got to be there. A lot of this is bullshit, a lot of this is telling you what you should do coming from someone who doesn’t even know what you do, right. So I think if you choose for whatever reason to build your company here or anywhere, there’s a reason you chose that because you’re from here, your family is here or it’s what’s right for your business or where you can attract the most talent. And I think up and down the East Coast, so we can talk about Boston, New York, Jersey, D.C., but also all the way down the Carolinas and Florida and Miami. There’s a lot of strength in those markets where I think people can tap into those markets, tap into those ecosystems, tap into the corporates that are in those markets, the government itself, the universities, accelerator’s coworking spaces and whatever the key industries are in those markets and really create an advantage for themselves, which just simply moving to the West Coast is not going to give you that advantage.

Rob Pegoraro [00:06:01] So we’re in Manhattan. We have to talk real estate. There are so many incubators, accelerators, coworking spaces. How is that helping us, given that real estate is one of the huge pain points of the Bay Area in particular?

Tejpaul Bhatia [00:06:18] You know, I can give a personal example, I was a founder for ten years, three companies, all three companies, investor backed. I think out of those ten years I only paid rent for two of those years and one was after an acquisition. So it wasn’t really me. It was a acquirer that was paying for it. And the reasoning is, I don’t it’s not that there’s a surplus of space, but because there’s so many opportunities, whether it’s VC firms or incubators or coworking spaces or corporate, you can actually find a great deal for a set period of time in New York if you look for it. And if you don’t, you can always grab a coworking desk, which is actually, in my opinion, pretty affordable for a desk.

Brandon Greer [00:07:07] Yeah, I mean, they’re obviously like, you know, intense talent wars happening, you know, for for for tech talent. And, you know, one of the themes that at least my company has sort of adopted is just leaning into remote work. Right. And so, obviously, you know, it’s sort of a, you know, work where you are mentality. And obviously they’re sort of making the shift to. But what I’ve noticed also was a lot of the companies we’re investing in will have sort of a distributed workforce, sort of half sort of here or wherever you’re based, and then sort of the other half all throughout. So, you know, there are a lot of folks are recruiting in Atlanta, staying in Atlanta and using that sort of as a as a hub at this point. And once there’s sort of a rhythm, you’ll start to see sort of micro communities form around your company in different areas. Right. So, like, you know, we’ve got sort of a small population in Denver, a small population in Atlanta. They meet up, whether it’s at a Starbucks or whatever. So there’s sort of community being built, but it’s not at the level of headquarters and all that. But, you know, it’s it’s a theme worth adopting, particularly when you you can’t necessarily provide the the salary, the benefit, the package that, you know, one of the larger players can so.

Rob Pegoraro [00:08:15] I think he used the phrase university density before, and it’s true in Boston. I hear Harvard and MIT are OK schools. All right. All right. You know, New York’s got a handful, D.C. We have my alma mater, Georgetown. But of course, part of our HQ to bid for Amazon was we’ll build a million square foot campus for Virginia Tech just outside the national landing area, a name no one to use for that neighborhood before. Um. Are we sufficiently taking advantage of that because it seems a lot of these you know, you have bright engineering graduates coming out of these universities and schools. Are they all staying around here or are they getting poached by companies elsewhere?

Tejpaul Bhatia [00:08:56] So, um. I would say New York is now taking advantage of it now, an engineering grad coming out of NYU or Columbia or Hunter or any of these schools, they have a lot of options and they’re getting paid a lot of money. They’re thinking about other things as well. Cost of living is not easy out in the Bay Area is not easy out here. But what you see, and I can speak specifically from Google’s standpoint issue, too, is another story. But that’s an example of large tech firms building here. And the story about Google 20 years ago when the first person in New York said, I’m going to build a campus in New York, the founders of Google thought was ridiculous. You’re never going to find the engineering talent you need in New York. Obviously not true, 20 years later, you may have read Google is expanding its footprint here significantly, and the hundred percent reason is for the talent. The talent is here. We can create an opportunity for them and have jobs that are competitive to keep them here in New York. One thing I would add, though, is that what would the big tech firms, what that shows about them expanding here is that also creates a lot more opportunity for engineers and college students and entrepreneurs to start companies here. The first argument everyone’s going to make, well, how do I compete with Google and that salary or how do I compete with Facebook? And the salary was a founder. You have to anyway. If you can’t convince someone to come work for a company with the limited resources, you’re going to have a challenge as a founder anyway. So, yes, the cost of engineering is going to go up a little bit. But now every founder starting a company, whether that company fails or they pivot or they move on, knows they have an opportunity at a significantly important tech job in New York that’s not at a bank, you know, that will continue their career. They can bounce around.

Rob Pegoraro [00:10:46] Banks are all saying their tech companies to the right. The banks are saying they’re tech companies to. Sure. Uh, that didn’t seem to be like sure. That’s right.

Tejpaul Bhatia [00:10:57] Right.

Brandon Greer [00:10:59] So there’s also like a lot of like accelerators and incubators popping up on campuses, right. And so that’s a really interesting pocket of people to to leverage to. So one thing we would see at Cornell, where there’s a pretty thriving tech community, both here in Manhattan but also in Ithaca, is, you know, folks would partner outside of the university. So whether other students at different schools or, um, you know, founders who had had fundraising experience, things that, you know, you just wouldn’t have an undergrad or even your grad program, supplementing those skill sets is something that you can probably bring to the table. So if you raise capital before you sort of have an operations background, want to lend it to folks who are who are sort of new at the game of building a startup, that’s also a huge opportunity. Right. So I think it’s a it’s a way to sort of leverage the scale of an accelerator that someone like, you know, NYU or Cornell could bring, but also kind of add, add and whatever your expertize might be to sort of build together. But but that’s that’s sort of what what I’ve seen so far in general. Like I mean, you know, what becomes an investable company is a company that has managed to keep its costs under control in relation to the revenue it’s generating. Right. And so one of the key ways of doing that is obviously the sort of costs you incur for talent. So getting creative, particularly at the early stage, you know, when you are really on a budget is one of the core ways to become optimally investable. And that’s something that doesn’t always strike people at the outset.

Rob Pegoraro [00:12:21] You use the word compete, which immediately made me think about Norn can be Claus’s another person on the East Coast with strong opinions about technology. Senator Elizabeth Warren has come out for her saying, let’s ban these things, let’s hold them non-enforceable as they are in California. How much of an impediment are they really? To someone who’s got a job they maybe don’t love, but they like to do a startup, but they signed the non compete, so they either need to move or work in some other field. Is that a real problem here? It’s above my pay grade. And I don’t know. Uh, uh, I’m not I’m not asking for any endorsements of any candidates here.

Tejpaul Bhatia [00:12:56] I’m not a lawyer, although I lawyered a lot for my startups, which I regret. Uh, pay your lawyers. It’s OK that they they earn it. Um, I would say if you’re working at a company, just be careful. You know, don’t be stupid. Don’t be working on your idea at the company on their computers. Read the contracts that you’ve signed up with. That said, most companies. Have departments where you can go and say, hey, I’m working on this and they’ll clear it. Google definitely does, we can do that for a whole bunch of things. If it is competitive, they’ll tell you. If it’s not, they’ll carve it out for you. But I also think if you’re just careful of not doing it on company time, company resources, you should be OK.

Brandon Greer [00:13:45] Just curious, just the room, so how many folks are founders in the room? Good for you. Make most people in the room, so I don’t know if you’re safe from that, but yeah, I mean, the other thing I think and I don’t know if this is in your question, but one of the the key things that he thought or thinks about is sort of the exit story. I mean, you know, you might set out to become the next public company, but obviously thinking about the landscape of places you might consider exiting to or working with, partnering with, there are now like tools. There are some some folks actually in the back, a company called Crossbeam, that helps you better understand the overlap you might have with potential customers that can help you understand like marketing, could help you understand sort of partnership opportunities and begin to force rank how you work with partners. And that’s an important thing to do because you have sort of a finite number of calories you can dedicate to your partnerships. And you’ve got a small team and you’re the partnerships person, even as a CEO or whatever. Knowing how to smartly go about partnerships is a really good way to do it. There are now technologies out there to help you do that. But back to sort of the exit point, we don’t corp dev. So Corp Dev obviously encompasses ventures, which is my world, but it rolls all the way up to strategic M&A and, you know, full buyouts. Right. And so having a sense of the companies to which you could exit or for which you might be a super strategic acquire, sometimes it’s not always for the technology. Sometimes it’s for you or for your team and their expertize they built, whether it’s in the world of graphic design, tooling or reporting, whatever it might be. Um, you know, just getting a sense of of that landscape is super helpful, too. In the earlier you do that, the better you can sort of position an angle, which is which is sort of a unique thing you can do with the density of legacy companies out here that are also looking to kind of reinvent their wheel a bit to kind of hedge against the next next wave of whatever. Right. So you have companies like the eyes of the world that are building these, you know, sort of old school product information management solutions. And then, you know, they have to think pretty actively about sort of what’s next. Right. So if you’re what’s next, make that clear. And I think that’s something that we can we can do a lot better. Yeah.

Tejpaul Bhatia [00:15:51] So, Brendan, I’m glad you asked how many founders are in the room. I believe the title of this panel is leveraging the startup ecosystem. Um. I think it’s an extremely important thing for our founders to do to get whatever advantage you can to be as resourceful as you possibly can. You don’t want to because you want to focus on your business. But I’ll give you some insight on what that means from a corporate and from when I was a founder. When we look at a city and we decide if it’s one of those cities we’re going to go to, we look at five types of partners that we think founders can utilize. I’m going to add a sixth, which is the corporate Google and other big companies, including banks and and whatever the industry is there. But it’s the venture capital firms, the accelerators, the coworking spaces, the universities and founder communities. And we look at the penetration of those five in each market. And we’re doing it from a corporate standpoint because we’re trying to go to where the founders aggregate. But as a founder, if you can leverage your university or the university in your market, the coworking space that you choose, other accelerators, investors, there’s a lot of things you can do in terms of getting talent and capital and customers, like I mentioned. But there’s also a lot of serendipity that forms in those communities. And it’s really important as a founder to have that there’s no guarantee it’s going to give you a significant advantage. But another thing that you were asking about what we’re not doing right on the East Coast is the ability of that serendipity. Again, specifically talking about Manhattan. You’re not in a car. You’re walking around. Look up every now and then, don’t you? Don’t put the phone down. It’s OK. I first of all, I recommend it look up. It’s amazing. There’s a sky and there’s architecture, but literally just pay attention. Like, look at the faces you see there, people you’re going to see around say hello. And you never know. Like it’s going to sound like a cliche story, but a number of times one of my stories is about to fail. And someone looked at me and they’re like, you look like garbage. Why? And all my stories about the bill, what do you need? We’re running out of money. Sorry, I can’t help you. And then I get a call two days later. So weird. I was at dinner with this person and they said, they’re an investor, you should talk to them. And boom, that’s the next round of funding.

Rob Pegoraro [00:18:02] So at this point, I want to leverage the curiosity ecosystem in the room, by which you mean if some of you have questions, somebody somewhere has a mic or they’ll take one of ours. All right.

Audience 1 [00:18:22] Hello, my name is Cameron Williams, I’m the CEO, founder and CEO of a company called Ever WOAK. We do logistics automation. I’m just curious from a Google perspective, what does Google actually do for startups specifically? And, you know, what types of things can we leverage from a startup perspective because our entire platform is on GCP right now.

Tejpaul Bhatia [00:18:43] Awesome. Um, so that wasn’t a plant, but I will, uh, uh uh uh, first question. Are you paying me paying cash? So let’s talk after so the first thing we do, so I’ll give you, I guess my team is called Google Cloud for startups. We’re intentionally placed, we’re not in sales and we’re not an investment. We can connect you with both sides of our company. But again, we’re called ecosystem managers because you’re going to give us as ambassadors for Google out into the community, but advocates for founders inside Google. And the way we do that on our program is first through credits. So the first hundred thousand dollars a cloud bill can be covered by us again, not investment. Is credits only helpful if you’re on GCP, which you are second is training. So making sure you and your team have all the tools and resources your business needs to be successful. And third is community. Obviously here in New York we do a ton of stuff. But I mentioned those eight ecosystem managers. I’m the only one that’s pretty hyper focused on one market, but they’re global. Regional. We joke that my coverage area is 14 square miles, but my counterpart in Singapore is 14 countries. But we give you access to a global community of investors and founders and gigglers that can help you. And it’s unprecedented access inside Google for a startup to have a human connection inside Google. It’s not that Google doesn’t want to provide that connection. It’s not that they don’t want to help startups, but the scale that a company like Google works at, there’s maybe 50 companies in the world that spend enough money with Google to get that kind of attention. So it’s a big signal for Google to be doubling down on startups and on New York.

Man in the background [00:20:32] Get to the back here in a second.

Audience 2 [00:20:35] Hi, uh, my name is Ivan from generated photos, um, you talk about what you can give to the community and I would like to ask what you want from the community and what are your results? Uh, both of you, uh, your team skew results. What are you hoping to get from from us?

Brandon Greer [00:20:57] Yeah, so, you know, you’re talking to people who both work at your relatively sizable companies, obviously not nearly the same size, but at this point, both building out ecosystems, HubSpot is relatively new to what Google is not. And part of building an ecosystem is having a diversity of providers. Right, so that you know what we can’t fill or what we can’t do for our customer. Someone else can. And so that’s why we have hundreds of APIs that you can build on top of and create these integrations with your product. And that’s something that you really should lean into. Right. So before I even started in Corp Dev, I was building out the ecosystem of integration partners. And so, you know, you can actually see if you build a super elegant integration to Salesforce or into HubSpot to Google and you’re the only provider that does what you say you do and you sort of get good marketing around and create more community around the use case. It can be a really meaningful source of revenue for your business. Right. And it’s almost free distribution. Right, because you’re listed in a marketplace of a large provider. You know, let’s say you play in a very niche space and you target, you know, a specialized industry or something like that. It’s a good way to sort of get that scale and visibility. And I think, you know, any any large provider would benefit from that, too, because on our side, you know, the sort of peek behind the curtain is that selfishly for a large company, the reason why they want a lot of integrations is because it creates a stickier customer experience. Right. So if you become a system of record, you know, has a lot of data and I’m Salesforce or I’m HubSpot and I’ve got you wove it into six or seven different applications all pinned to my company, you know, your churn risk is materially lower, as you might expect. And so that’s actually the that’s the rationale behind Eco-Systems, is that ecosystems actually allow folks to fill to fill gaps that aren’t on the road maps of the other companies. And if you fill those gaps, you become a part of that journey. It’s not to say that you’ll always be a predicate or derivative play of the company, but it does mean that you actually can ride that wave with them, which is which is a really nice thing, you know, sort of the early stage of a business life cycle. So it’s a really like a good way to sort of get in there and get in there early. There are a lot of companies that are, you know, at that sort of, you know, beginning to be that sort of unicorn stage. And they’re building those ecosystems out. If you can get in there when when the marketplace is just beginning to form there, there are a lot of million IRR channel stories that come out of that. Um, so just something to keep in mind.

Tejpaul Bhatia [00:23:21] Yeah, it’s a very good question when a big company is saying, hey, I’m here to help. Well, what do you want from me? So those three things I mentioned, the credits, the training and the community, a lot of times founders will say, what’s the condition? And there is no condition. There’s no contract use. It don’t it doesn’t matter. Right. It’s only valuable if you’re building actually on Google. But let’s be honest. Why would a company like Google do this? Right. What’s what’s the motivation? And. Well, let me let me take I’ll give you my personal motivation, which is it makes me feel good. Selfishly, I love it. This is this is amazing for me. I was a founder for a long time. I like helping founders. I’m glad I’m not in a sales role that I can be helpful to everyone. And where that aligns with Google is Google Cloud is the biggest bet that Google has taken since Google. And I don’t know if you’re following the cloud market and it’s growing extremely fast. The market’s growing extremely fast. Google cloud is growing extremely fast and a lot of the focus is up at the Fortune. Five hundred. And that’s right. That’s where the trillions of dollars are happening. But then one of the future enterprises are the startups now. And Google has a history of playing this long game, usually with open source, with technology and developers. But we know that if you work with us and you have a good experience with us, whether you’re built on Google or not, you’re going to be hopefully successful in this startup or the next one of the one after that. And we want you to have that good experience. And if you’re doing well, that means we’re doing well if we’re working together. So it is a very nice, symbiotic relationship. And I do feel it is about the ecosystem and seeing how those ecosystems evolve and how we can actually show a tangible result because of us being part of that ecosystem.

Audience 3 [00:25:22] Um, thank you for sharing, our view is very helpful. Um, so as entrepreneur, we when we talk to the investor, we also began asking a question about, uh, how about if Google will do this? You know, if the big giant will start to enter the playground you are in, what’s your advantage? And you guys are in the ecosystem. You are helping the startups, but also to accompany your views are very innovative. Company inside must be like incubator labs. You are doing the same thing. How do you balance that out? And the question a second question is, we are a startup. We try to reach YouTube for a particular API calls because we will launch our new version and we need 10 million calls per day. But we couldn’t receive those feedback. Basically, we have to jeopardize our functionality for next version, how those things can be resolved. Sounds good. I just want guys your attention. Thank you.

Brandon Greer [00:26:29] Number one. Yeah, I mean, so, um, you know, frankly, there’s never been more of, like, an existential threat to start ups when you think about just like the the large players out there, which is why you see little political campaigns being formed around the idea of breaking that up. Right. And it makes sense. The the thing there is, um, that will always exist. Right. Like, we did not know that Amazon was going to buy Whole Foods like like those are those are outcomes that you kind of can’t quite predict. Right. And so those are those are sort of God mode, existential threats that I wouldn’t predicate your business on, just that I wouldn’t be in that mindset. I think in general, knowing the the landscape of large players is the super smart thing to do and knowing how you would work with them, think about their gaps, think about what they’re doing wrong. Think about segments that they’re actively not targeting. Right. All these companies, big and small, have sales teams that target certain segments and look with the ones that they’re not. Right. And so what’s the what’s the rubric that your your investor and I know this is dipping a little bit into sort of investment criteria, but that’s also also my world. Right. And so, you know, we we literally have this rubric and there are seven criteria, maybe, maybe 10. It’s market opportunity, its value proposition. It’s competitive differentiation. It’s economic momentum, it’s exit landscape. And these are all things that on each of those vectors, you’re going to want to have a clear answer on how you compete. Right. Because any company only exists in three markets. It’s a product market, a talent market and a capital market. Right. And so, you know, on the product market side, how are you doing? How does your product compete on a talent market side? Why you why your team and on the capital market side? You know, for me as an investor, as a potential sort of partner for you, um, what’s my endgame here where this is headed? So I think getting in that mentality of sort of the viability of the business, even even in the presence of a large incumbent, is the way to think about it.

Tejpaul Bhatia [00:28:23] Yeah, I would say, you know, you started the question with, well, a VC will say to me, you know, take the VC OUT first hand. What’s your answer? Right. Clearly, if you started this company. There’s something wrong or right about you, and we can debate which one it is that you believe, that’s not an issue, right? Otherwise, you wouldn’t start this because why wouldn’t it? Sure, they can stop. Go back, get a job like that. You don’t think that way. So if a vote is asking you that, have a good answer. I can give you some talking points if you want one of your advantages, speed, passion. There’s a ton of studies done about the large corporates doing everything, and there’s a lot of startups and unicorns that have taken one sliver of it and made a space for themselves. So looking at those gaps, so I wouldn’t let that. Bother you or deter you if you’re getting to a point where it’s a real concern, then you’re doing something very right.

Rob Pegoraro [00:29:25] And with that, we’re out of time. We’ll see you all out on the street, the subway, hopefully not on ninety five to all the startups in the room. Good luck.