First of all let me say that New York is my home. I was born and raised here, and like the millions of others who call the city home, I was overwhelmed by the terrorist attacks of Sept. 11. Words cannot begin to express the sorrow that we all felt for our neighbors, friends and colleagues at that time.
Nevertheless, New York has always been known for its resiliency, and while in the immediate period after the attack there was confusion about what to do and how to do it, there was total clarity in regard to the response of New Yorkers. Known worldwide for their tenacity, New Yorkers banded together to help repair the city and very quickly began to talk about coming back even stronger than before.
Almost immediately there was a collective effort to get businesses back in operation as quickly as possible. This was accomplished through the help of many organizations led particularly by the New York City Partnership, which serves as the voice of the city’s business community on legislation, regulation and public issues. The partnership helped gather important resources, such as free space, reduced rents, financial support, service organization support and alternative resources provided by other companies in the city.
Many businesses were destroyed in this tragedy-and some of them, particularly those in retail and on ground-floor levels or in buildings that are no longer standing-have not re-emerged. But, for the most part, businesses were back to normal in a relatively short period of time.
The problem the city now faces, however, is driven more by the factors we are facing nationwide as we go through one of the toughest economic environments I have experienced in my 30-plus years in the venture capital business. While Sept. 11 caused dislocation, its effect was to exacerbate the impact of the decline that the financial service and media industries-two mainstays of the city’s economy-were already experiencing. In addition, the tourism industry was decimated and is now crawling back in the face of a nationwide economic slump.
An example of these setbacks to the city is the new media industry, which was in a dramatic upswing in the late 90s. The tough economic conditions of recent years had begun to affect that industry prior to Sept. 11. Many of those businesses (and to a large extent that industry followed the decline of the dot-com industry nationwide) suffered significant decreases in employment and in the number of businesses operating in related areas.
A measure of this perhaps is the fact that Silicon Alley was on the way to being almost as well known as Silicon Valley. Our Alley was a downtown industry and business segment that had modest beginnings but grew to a total employment of more than 138,000 in its heyday in 2000. The employment level in the Alley today is less than a quarter of what it was at that time. What this has meant is that a lot of software, Internet and technology gurus who were attracted to the city during that period are now looking for jobs or seeking to re-ignite their entrepreneurial spirit by starting new businesses.
The residual impact of the decline of dot-coms and of the economy in general is that there are a lot of very talented people in and around New York City who were previously not attracted to this area. Today, however, they have now found a way of life in New York that is attractive and have found a stimulating environment. They are forming and re-forming new associations that are creating new companies. In some respects it could be said that Sept. 11 has acted as a catalyst for re-energizing New York.
In addition, the decline in the economy has, for the first time in many years, made available attractive office space and rental housing at prices that make New York a far more desirable environment to do business.
Perhaps the most positive impact from Sept. 11 has been the collective response from our mayor, governor, federal government officials and the U.S. Congress to do whatever they can to support the city. Together with leading businesses in the city and with the New York City Partnership, we have enjoyed a new sense of energy and resiliency that has not been evident here for many years. New York has become a place to do business!
If you add this element to the enormous access to capital, transportation facilities, a highly skilled work force and myriad service organizations available within a stone’s throw, New York City is a particularly attractive place for businesses to get started and thrive. There are many new government programs to give grants, tax abatements and loans to jump start growth and expansion. For example, small downtown businesses affected by the attacks of Sept. 11 can apply for grants or interim financing in amounts of $25,000 to $250,000 from the New York City Investment FundFinancial Recovery Fund.
An interesting barometer of this energy, in spite of the decline in the dot-com world, is that the New York New Media Association (a division of the Software and Information Industry Association) now has more members than it did a year or two ago. The New York eCommerce Association, a new group that acts as a catalyst in bringing together e-businesses with sponsors, customers, and ideas, reports a 30% increase in membership and an equal increase in attendance at events. Also, the New York Capital Roundtable, a monthly forum of leaders in the middle-market mergers and buyout community, is boasting record attendance of up to 250 at its monthly meetings.
You can feel it in the air; you can feel it in the level of excitement. There is an underlying fervency that may not always appear on the surface but is clearly showing itself in many ways in today’s difficult environment. It is showing itself in the particular efforts to carve a premier position for New York City as a center of excellence for leading-edge health care and research. This is an especially promising area for growth because New York is blessed with a tremendous supply of the country’s top hospitals and learning centers. Once independent operations in competition with each other, these organizations are joining forces to add a powerful dimension to New York’s economy.
There is considerable activity underway, like the proposal by Sen. Hilary Clinton (D-N.Y.) to help make New York City the biotechnology center of the country. And it is showing itself specifically in the World Trade Center site, where more than a half-dozen plans are being considered to rebuild immediately what was destroyed, and to do so in a way that is broader in scope and in many respects better than ever before. We’re looking forward to creating a 24-hour community, built on a commercial core and balanced with residential, educational and cultural facilities. This will become the place to live and work in New York City.
Alan Patricof is vice chairman of Apax Partners Inc. (formerly Patricof & Co. Ventures Inc.), an international private equity firm with operations in nine countries and more than $11 billion under management. He founded Patricof & Co. in 1969. Patricof sits on the boards of Johnny Rockets, CoreComm, NTL Corp., and Boston Properties, Beth Israel Hospital and is a trustee for Columbia University Graduate School of Business.