'The Real Question Is How Silicon Valley Is Going to Compete With Us'

So many U.S. cities now pin their economic hopes and dreams on building a burgeoning technology sector and becoming a mini-Silicon Valley, with an abundance of jobs and well-educated residents. Even New York City, whose residents and leaders rarely admit to any feelings of inferiority, is no different. It wants those hot tech start-ups for itself.

And in the last decade, New York has succeeded in cultivating, attracting, and boosting its local tech talent. Just ask the founders of Tumblr, Etsy, BuzzFeed, or Warby Parker—all companies headquartered in New York. Tech and information companies, including media properties, now make up the second largest sector in the city's economy, surpassed only by finance, according to a new study produced for the Bloomberg Administration. Since 2007, those types of jobs grew by 11 percent, or approximately 26,000 positions.

National Journal recently sat down with Robert Steel, New York's deputy mayor for economic development, to talk about New York's tech push and why the city is different--maybe even better--than its California rival. Edited excerpts follow.

You worked for Goldman Sachs for years as a banker. Did you ever think you would see a day when the tech sector would become New York City's second-largest driver of jobs, trailing only finance?

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Finance is still an important part of the New York City economy and industry. It's an important jobs contributor and even more important in terms of tax revenue, so it's still important to focus on. What you see is that technology isn't just an industry. It's a skill that's spreading through all industries. New York City needs to have start-up companies that are begun here like Tumblr or Etsy, but we also want the very large established companies to come here, whether that is Yahoo or Google. All industries, whether it's advertising, communications, publishing, or retail, are being changed by technology. They're not tech companies, but every industry needs the skills of knowing how to use data and manage it accordingly.

How can New York compete with Silicon Valley, which outranks New York with the amount of venture capital funding it has and with its built-in advantages, such as its close ties to universities like Stanford?

I think the real question is how Silicon Valley is going to compete with us. What you're seeing with technology is that as it moves from being hardware-driven, it's all about how you use the technology. I would argue quite strongly that NYC has much better skills because the industries in which it's going to be used--advertising, communications, publishing, retail, fashion—these are here. So, I don't know how Silicon Valley will be able to keep up, as the focus of how technology is applied moves to New York. If you look at the companies that are being successful here, they are basically application-based. I don't think the software that enabled entertainment is going to be birthed in Silicon Valley. I like New York's odds in those competitions.

What can other cities learn from New York's multiyear quest to build a tech sector?

Every city has to figure out its game plan. Our job—and Mayor [Michael] Bloomberg led us with this—is to look at the cards in our hand and decide how we can best play them. So we have transportation. We have the water. How can we play our hand? I think the mayor's vision—to say that we are going to double the number of Ph.D.'s and engineers in applied sciences in the next decade—is putting a thumb on the scale to change something. Other cities have to figure out what is in their portfolio.

Often, when I hear city officials talk about building a tech sector, there is little discussion about how to plug less-skilled workers into those types of jobs. What's your plan?

The two most important trends in my lifetime affecting economic development would be globalization and the advent of technology changing things. Both of those have the byproduct of potentially exacerbating income inequality. I think it's a tricky issue, but my best single plan is about a comprehensive program with education and training connected to jobs that we think will be there.

We've already done it—if you look at the IBM collaboration with P-Tech [a public school in Brooklyn]. They have intense mentoring and coaching between the kids and IBM, and they guarantee that every kid gets a first-round interview job with IBM. It's in process and happening right now with about 600 kids. It's not going to be one thing, but we have examples of things that are working, and it's getting on it at an early age.

What do you want the New York tech sector to look like a decade from now?

I think this will be unhelpful to you, and you won't like this answer, but I think our job is to create the environment where things naturally happen. We want to be a city where people want to be. We're not going to decide: "This guy wins, this guy loses." It's not for us. Instead, it's Brooklyn Bridge Park. It's the public safety. It's us making sure the cobblestone streets look great. The No. 1 successful aspect for economic development is quality of life, and the quality of life is education, clean water, and clean air. All of those things—that's the constellation.