Upstart Start-Ups

The start-up businesses in New York's Silicon Alley have never been comfortable about getting down to numbers--revenue, site traffic, profits, even the coordinates of the ''Alley'' itself (south of 41st? 14th and up? Any address with a decent view of the Flatiron?). No wonder--the usual comparisons with the giants of Silicon Valley are humbling, to say the least. Intel, 3Com, Cisco, Netscape, and Sun alone make 15 times annually what all New York's new media companies generate in 18 months.

On its own terms, however, the city's new media biz is beginning to add up. According to the sweeping ''2nd Annual New Media Survey,'' released last month

by Coopers & Lybrand and the New York New Media Association, local new media revenues are now $2.8 billion a year, while employment has jumped by 105 per cent (to 56,000 full-time, part-time, and freelance jobs) since the end of 1995, making new media a larger employer in New York City than publishing, TV, or film and video production.

Hidden in that data is a surprising truth: the Alley businesses fueling that growth are getting smaller and riskier. Outfits with revenues under $1 million now make up a stunning 83 per cent of the industry, compared with 63 per cent in late 1995. Without a network of seed capital, these Alley entrepreneurs break even because they absolutely have to. For most of them, getting rich by going public is about as likely as paying for shareware or buying a copier. In New York, survival alone is a form of credibility. As much as new media dislikes numbers, we've chosen 10 of the city's biggest success stories, relatively speaking--the front-runners of an evolution in process.

Jaime Levy

Age: 31

CEO, Electronic Hollywood

As the city's most in-demand hired hand, Levy developed an enhanced music disk for aural revolutionary Billy Idol, designed the seminal Web zine Word, and brought a dark edge to avatar-based chat with The Malice Palace. But beginning October 1, Jaime Levy finally went to work for Jaime Levy. Funded by a private investor, Levy's new company--a still-fetal ''entertainment network'' called Electronic Hollywood--wisely splits its duties between the fun stuff (animation, multiuser environments) and paying the rent (services like custom search engines and site design). In many ways, Levy, a West Coast native, is the success story of the Alley. After struggling to find work with a ''really expensive'' multimedia degree from NYU's Interactive Telecommunications Program, she's now got venture capitalists and agents publicly offering her money just to play. It's the inspiration--not the industry--that keeps her tied to Manhattan's sandbox. ''In L.A. we'd be limited to film, in San Francisco to technology,'' Levy says. ''[But] in New York, we've the got the perfect combination of content providers--there are just so many bands, artists, and filmmakers...but we can also get clients.''

Tom Watson, Jason Chervoks

Ages: 35, 33

Editors, @NY

For many in the new media industry, news breaks at odd times--most specifically Friday afternoon, when the sprawling @NY newsletter drops into the ''in'' box. Delivered to 7000 clients free of charge, Watson and Chervokas's dispatch includes interviews, briefs, analysis, and even catty cocktail chatter. How do they make money? By slyly blending spam into their missives in the form of simple text ads and sponsorships. After two years, the goateed Columbia grads have landed major outlets for their work, including a weekly Digital Nation column on the New York Times site and a syndicated spot in the New York Post. They're even considering franchising the newsletter to other cities--but unlike many a start-up, Chervokas is wary of reaching too far. ''You can very quickly replicate costs without replicating profits,'' he says. ''We started this out of our pockets...like a mom and pop stationery store. We didn't put in so much money, but we put in a lot of sweat equity.''

Scott Heiferman

Age: 25

CEO, i-traffic

The online advertising industry is all about placement, and Heiferman has made a booming business out of stepping into Web surfers' way. A University of Iowa graduate, he came to New York two years ago to work at Sony Electronics, where he was put in charge of the company's first advertising site on AOL. To grab people's attention, Heiferman tracked down the engineering geeks who programmed AOL's Welcome screen and sent them a stash of Walkmans to basically stick Sony up there. Suddenly, the Sony area had monster traffic, and Heiferman had a business model. i-traffic's 40 staffers don't design banner ads--they find places for them. They function like a traditional ad agency's media-buying department, but they consider themselves a ''strategic linking agency.'' The effectiveness of their campaigns has attracted an impressive client list--Disney, CNN/SI, BellSouth, CDNow--and nearly every other interactive ad agency in New York is following their lead. The strategy is to get brand names in front of as many eyeballs as possible, not to build lifeless advertising Web sites. ''If you think about Pepsi, they have these vending machines, they're in all the bodegas,'' says Heiferman. ''People don't go to the Pepsi factory to buy Pepsi.''

Uzi Fisher

Age: 20

producer, Pseudo Online Network

Fisher, in his own summation, ''is all balls'' and all over the map. As the producer of online entertainment company Pseudo's techno-rave Netcast Freq.net.com, Fisher is planning an all-out assault on film, fashion, and music--simultaneously. He had been in discussion with Soho designers Liquid Sky to manufacture his own clothing line--Coolmax uniforms that he calls ''the e-suit made for the internautical journey''--but the deal fell through. Instead, he'll use the designs in his upcoming mockumentary about a secret society of ravers that eventually ends up online at--where else?--Pseudo. The project isn't just product placement. In charge of creating some six new rave music shows at Pseudo with Matt E. Silver (who produced the Prodigy, Orb, and the Chemical Brothers), Fisher wants to create a kind of digital Masons for club kids, to evolve in tandem with the production of the film. ''I want to build this whole culture,'' he says. ''We will design it to be upgradable.''

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