Dumbo, Brooklyn: A Neighborhood Transformed By Its Vibrant Tech Industry

This is a repost from NYU student Jessica Summer's blog. Jessica is a graduate student at New York University's Business and Economic Reporting program. Read the original post here.

On a weekday morning, the usual hustle of the city seems like a land far away in Dumbo, Brooklyn. While walking through the silent streets and passing by locally-designed clothing stores, hand-crafted art shops, vegan eateries, and empty playgrounds, the only noise seems to come from the train overhead, rattling across the Manhattan Bridge. Despite its serene façade, Dumbo is brimming with innovation, stemming from its thriving technology startup industry.

The technology industry in Dumbo has expanded considerably and changed the neighborhood over the past ten years, as more companies are choosing the area as the ideal place to launch a lucrative business, due to the fact that the tight-knit tech community allows for networking and collaborating with like-minded innovators. However, Dumbo’s creative culture is nothing new, as the tech industry emanated from the community of artists that had set up shop in Dumbo, more than 20 years ago.

With this rapid expansion, the cheap rent that used to be notorious in Dumbo is long gone, as property rentals have skyrocketed. Furthermore, with so many startups slinking there way into Dumbo, problems are occurring, such as a lack of space for newcomers and companies competing for the same talent to fill similar jobs.

Matthew Burnett and Tanya Menendez, the founders of Maker’s Row, an online platform that connects American designers with American factories, launched their company a mere few weeks ago in the NYU-Poly incubator in Dumbo, which gave the two a place to turn their idea into a viable business.

“I’ve been here in Brooklyn for over six years. I love the community,” Burnett said.

Both Burnett and Menendez appreciate that so many creators of startups live and work in Dumbo, and that they have the chance to socialize with those in the same industry. “If there is so much networking happening in this core area, it’s easier to find resources,” said Samir Ajmera, manager of the NYU-Poly incubator, which opened in December 2011.

The two hope to eventually keep their business in Dumbo upon moving out of the incubator. “It’s just nice not to be in the city. It’s not as hectic. I can walk outside and actually take a break and clear my head,” Menendez said.

Dumbo initially became a favored place to launch a business because of its inexpensive rent prices. “When you’re starting a company, money is scarce, so usually entrepreneurial companies establish themselves in off-the-beaten path neighborhoods and Dumbo basically was that about ten years ago,” said Gavin Fraser, Founder and CEO of Small Planet, a company he started in 2009 in Dumbo, specializing in the development and design of mobile applications.

In 2007, Andrew Zarick, CEO and Co-Founder of Digital Dumbo, a platform that helps connect those in digital communities, first started working in Dumbo for a digital agency and observed the neighborhood as it began to transform. “We started noticing this movement of digital to the neighborhood. You would be in coffee shops or bars, and hear people talking about similar work to what we were all working on,” Zarick said.

In January 2009, Zarick organized an initiative, Digital Dumbo Drinks, at reBar, known to all those in the industry as a place to gather and exchange ideas. “It was largely just to get like-minded people from the neighborhood in the same room,” Zarick said.

The many digital startups that have established in Dumbo have sparked innovation and a vibrant energy throughout the area. “When I was your age in New York, there was nothing going on in Dumbo. This neighborhood has gone through a radical transformation over the course of the last ten to fifteen years,” said Fraser, whose company has expanded from a one-man operation to a flourishing team of 25 over the past three years.

The animated, yet more relaxed working environment in Dumbo appeals to many working in the tech industry. “The neighborhood provides a more casual atmosphere, contrasted with Manhattan’s more buttoned-down culture. Dumbo has very distinct borders, which provides a small town or campus-like feeling that people here appreciate,” said Chris Martin, the Director of Community Development for the DUMBO Improvement District.

The DUMBO Improvement District instituted free neighborhood wifi on the streets in April 2011 in order to promote collaboration among the tech industry. “In bringing free internet access to our street life, we are encouraging people to step out of their offices, their residencies and engage with one another and the neighborhood in new and different ways,” Martin said.

Zarick believes that the theory detailed in The Rise of The Creative Class by Richard Florida, best describes why Dumbo has become such a huge technology hub. “He [Richard Florida] basically said the conditions that lead to bohemian culture are the same conditions that lead to high-tech innovation. That makes a lot of sense because Dumbo historically, is an industrial neighborhood and all the buildings here are open-office environments,” Zarick said.

According to Zarick, artists used to work in the area in the 1980’s because the rent was so affordable. “There is a low barrier to entry for people with ideas to move in, set up their businesses and do it in a cost-efficient way, and we see culture as the underlying driver of that,” Zarick said.

Part of Dumbo’s allure is that the neighborhood has been at the center of creative and experimental work for decades. “Dumbo appeals to these companies because there are a lot of like-minded, creative and tech-savvy people in a small area, which fosters great collaboration and even competition. Dumbo has always been known as an important neighborhood in Brooklyn culturally. With the added exposure from the tech industry, the artistic culture here grows too,” Martin said.

For these reasons, many of the companies in the NYU-Poly incubator, like Maker’s Row, hope to stay in Dumbo and be a part of the creative community, but over the past few years, real estate prices have drastically increased. “It’s too expensive now and everything in Dumbo is taken. It’s impossible to get space here now,” Ajmera said.

Zarick also finds that space seems to be an immense problem working against the expansion of the tech industry in Dumbo. “We need more space and hopefully more will come on to the market, especially as some of the bigger companies outgrow Dumbo,” said Zarick, who predicts that Williamsburg and Bushwick may become new centers for tech companies to relocate.

Another fundamental problem with so many tech startups all trying to thrive in Dumbo is that most of the companies are searching for those with the same expertise and aptitude. “It’s a highly competitive market for talented programmers. That has always been the case, but it’s especially true here in Dumbo because people want to work here now and there are a lot of companies competing for the same talent,” Fraser said.

Zarick agrees that finding the top talent is becoming difficult. “It is always a struggle to find high-tech talent, especially engineers. It’s a huge issue in New York. Everybody is always vying for the best talent they can get,” Zarick said.

Despite these problems, many new businesses are still trying to establish in the neighborhood and the tech industry in Dumbo is expected to grow. New York City Mayor Michael Bloomberg openly supports entrepreneurship and with the Economic Development Corporation, has helped to set up numerous incubators around New York City, to house startups. As of March of this year, there have been ten city-sponsored incubators established, which have assisted over 550 businesses and provided more than 900 jobs.

The Brooklyn Tech Triangle, consisting of a partnership between the Brooklyn Navy Yard, the Downtown Brooklyn Partnership and the Dumbo Improvement District, conducted a study with Urbanomics, and found that the creative and tech industries have had a huge economic impact on Brooklyn, with total economic output amounting to $3.1 billion as of this year.

There are now 523 firms within the industry and 48% of them believe that their employment will double in the next three years. In fact, since 2000, the Downtown Brooklyn area (including Dumbo and the Brooklyn Navy Yard) has created over 9,000 jobs and over 500 new businesses.

The Brooklyn Tech Triangle is working on several proposals that would help to accommodate more startups in Brooklyn, mainly in Dumbo, as well as to supply even more jobs to the tech industry. “There is a lot of initiative to get as much tech in here,” Ajmera said.

Despite plans to further expand and allow newcomers in, those already working in Dumbo, hope that their companies will be able to stay. “Dumbo just feels more like a real community. You see familiar faces. I really like that,” Menendez said. “I don’t think there would be any better place for us,” Burnett added.