After a year or two in Tel Aviv, with a product, a few customers, and an R&D team, you’ve decided it’s time to open a US office. You’ll need to hire a salesperson or a marketing lead, or maybe even relocate yourself, as the CEO.
Either way, one of your first dilemmas is: where in the US? The two most common alternatives are New York or San Francisco (or more accurately, The Bay Area / Silicon Valley).
In this post we’ll present our subjective opinion: New York. We don’t pretend to share the outcome of some robust scientific research; we’re biased as the majority of our team is based in NYC, and there’s no one right answer that fits all startups anyway. Every company (and every CEO) has a different set of circumstances, constraints, and preferences.
And still, here’s why we think the answer is NYC, by a long shot.
- Time difference. 7 hours between Israel and NYC, 10 hours between Israel and the Bay Area. Theoretically, only a three hour difference… not a big deal, right? In reality though, these three hours are game changers. A 10-hour time difference from Israel = 0 overlapping work hours between the Israeli and the US offices. When folks arrive at the San Francisco office at 9am, it’s 7pm in Tel Aviv and we’re already home. If you still want to hold work meetings, it means that one side is always going to be very unhappy: either waking up super early or working late. It might not sound so bad at the beginning, but talk to your employees’ families after a few months of regular video calls at 8pm (or later). No fun! On the other hand, in New York you easily get three hours of overlap… a significant portion of your day. And it’s easier to ask people to “stretch” the overlap every once in a while, when the usual three hours are not enough.
- Flight time. Similar argument: San Francisco is really. far. from. Israel. As an Israeli CEO of a startup that does business with the US, you already know it’s a pain to fly once a month from Tel Aviv to NYC. To get to the Bay Area, add about eight more hours if flying through NYC (six hour flight + 1-2 hours connection time), or four hours if you prefer the nightmare also known as a “direct flight.” As the CEO, you might just deal with it, but your employees (especially the American ones) are going to be less than delighted.
- Customers! One of the main reasons for opening a US office to begin with is to be closer to the market, to your customers, and potential customers. Getting that precious face-to-face time is invaluable. New York is undoubtedly the US’s commercial and financial center, and is the leading city for industries like retail and e-commerce, fashion, finance, and media/communications/advertising. It’s hard to explain the joy of walking to a meeting with Macy’s or Warby Parker, or throwing a customer event at your office with The New York Times, NBC, The Wall Street Journal, and AOL (actual experiences we’ve had in New York). San Francisco and the Bay Area boast an impressive concentration of technology companies – so if that’s the your target market, Silicon Valley might be a better fit. But for pretty much any other industry, the answer is New York.
- Hiring. This is a somewhat controversial argument. The Valley is home to a ton of startups and tech companies, and as a result, a ton of talent in marketing, sales, business development, product, and any other function you’ll be hiring for. There’s no doubt that from a sheer numbers perspective, there are way more potential tech hires in the valley compared to New York. Having said that… competition over talent in the Bay Area is absolutely brutal. If you think hiring engineers in Tel Aviv is tough, hiring sales people in the Valley is ridiculous. As a small, unknown Israeli startup, with an OK office and mediocre perks, you’ll need to pay infuriating salaries and deal with insanely high attrition. It’s a bit less intense in New York: recruiting is far from easy, but competition is less fierce, and it’s easier to build a mini-brand and to stand out (see our article How an Israeli startup grew its NYC office from 3 to 40 employees in a year).
For further reading:
- Amit Karp (always a good read)
- Bloomberg in a recent article about NYC’s Israeli startup scene
- A different take on this subject by UpWest Labs
As I mentioned, this is a highly subjective (and emotional!) topic. We’d love to hear your thoughts.