Crains New York - May 28, 2012 - (Page 3)

Wanted: techies Google, Cornell deal underscores city’s shortage of engineers BY MATTHEW FLAMM New York’s tech community had two reactions to Google’s pledge last week to temporarily house the fledgling graduate school CornellNYC Tech. One was simple amazement that the company could spare 58,000 square feet at its local headquarters in Chelsea. The other was sheer gratitude—of the sort rarely expressed in the most competitive city in the world. Yes, the search-engine colossus will get first crack at hiring these muchneeded engineering students. But for once, what’s good for Google is good for everyone else. That’s how desperate New York is for tech talent. The lack of engineers and developers in the city’s tech sector is a daily fact of life, hampering the growth of startups while forcing larger companies to overspend on talent. While hardly limited to New York, the shortage is nonetheless a sign of the industry’s rapid growth—and of how unprepared the nation is to meet the demand. CornellNYC Tech and NYUPoly’s coming tech campus in Brooklyn provide a local glimmer of hope. But they have yet to enroll their first students.In the meantime, tech companies will continue to cough up bigger salaries,poach from rivals and push for immigration reforms to fill their engineering gaps. Brokers battle for share Real estate titans under threat as new players vie for lead BY THERESA AGOVINO Real estate brokerages constantly seek to cut the best, most creative deals for their clients. These days, though, many firms here are funneling their time and energy into transactions with themselves at the center. In the past five weeks, two growing brokerages have lured one toplevel executive each from a longtime leader in the industry, Cushman & Wakefield Inc. Those defections come in the wake of two brokerages—including one of Canada’s largest—setting up shop here. And bond-trading powerhouse BGC Partners Inc. is horning in, snapping up two big-name firms in the past eight months and vowing to make waves in the industry by marrying Wall Street finance with real estate dealmaking. The result of all this is that suddenly the market is looking significantly more competitive. That’s because,at a time when so few deals are being done around the nation, brokerages are flocking to where the most activity is. “Firms want to be here because it is the most profitable market in the country,”said Steven Littman,managing partner at executive search See BATTLE on Page 7 Google’s new relationship with Cornell underscores the search giant’s position as a feeder of engineering talent for the rest of the city’s tech businesses. With technologists making up roughly half of the nearly 3,000 employees in its New York headquarters, the company has played a big role in drawing top-tier talent to the city. And occasionally, hot startups can lure those developers away. Most of the approximately 40Google alumni at the social-media service Foursquare, for instance, are technologists, according to a person close to the company. “In the tech community, Google is Harvard,” noted one Silicon Alley entrepreneur who has a few exGooglers on his payroll. The search for whiz kids leads companies, much like sports teams, to elite university programs, like those at Columbia and Carnegie Mellon. “One superstar is worth 10 average, decent engineers,” said Dave Otten, chief executive of LongTail Video, a 5-year-old video technology provider with 30 em- ployees and 10 openings for techies. “We’ll pay a lot for that person.” Demand for top talent has pushed up costs. Executives say engineers with just a few years’ experience are pulling down well over $100,000, and junior people start out at $75,000—a $20,000 bump over what they were getting a few years ago.Those salaries are still below what Wall Street pays engineers, but startups offer a more exciting culture. Companies say it’s an investSee WANTED on Page 17 TAXINOMICS: A FARE HIKE, YES. A FAIR HIKE? MAYBE NOT THE BLOOMBERG ADMINISTRATION in July is expected to approve a 20% taxi fare increase sought by cabbies. That would drive up the tab for an average three-mile ride from $12 to $14.40. It also would mean the first pay raise for drivers since 2006—when a gallon of gas cost around $2.75—yet many hacks fear their gains would be offset if the city also allowed taxi fleet operators to hike the amount they can charge drivers who rent their cabs. Those rates are now capped at $666 for weekly leases and $105 for daily daytime-shift rentals. Bhairavi Desai, executive director of the New York Taxi Workers Alliance, said fleet operators have increased their revenues in recent years through other means, like advertising and credit-card fees. Some surprisingly big numbers are at stake. Each day, about 13,240 cabs roam Gotham’s streets, carrying around 600,000 passengers across the city. About 60% of the cabs are owned and operated by fleets; the rest by owners who drive their cabs part-time. Here’s how the dollars flow. —JEREMY SMERD newscom GOOGLE’S DEAL with Cornell (unveiled last week by Google CEO Larry Page and Mayor Michael Bloomberg) could give other local tech shops a shot at top talent, too. DRIVERS Cabbies make about $165 per 12-hour shift, plus tips, fleet operators say. The Taxi and Limousine Commission says it’s more like $130 after costs. Operators say drivers would make a little more than $200, plus tips, after a fare increase. Drivers note that sales taxes they pay on operator leases cut their incomes by 3% to 4%. ADS Fleet operators get about $100 a month per cab for rooftop advertising. Taxi TV provides additional revenue. CREDIT CARDS The 45% of rides paid with plastic account for more than half of all revenue because the trips and tips tend to be bigger. Operators charge drivers up to 5% for each swipe, passing 3.5% to the card company and keeping most of the rest. Mobile payment technology from Square could let drivers bypass the operators’ fee. MTA SURCHARGE Cabbies collect 50 cents per ride and pass it to operators, who send it to the Metropolitan Transportation Authority—but only once per quarter. Meantime, operators earn interest on the millions they collect. The NY Taxi Workers Alliance estimates the float nets operators $40,000 a year for every 150 cabs. MEDALLIONS Taxi medallions have (pardon the pun) fared better as an investment than the Dow Jones industrial average. In the past 30 years, the Dow is up 1,100% while corporate medallions are up 1,900%, to about $1 million, not including financing, insurance and broker fees. May 28, 2012 | Crain’s New York Business | 3 buck ennis

Table of Contents for the Digital Edition of Crains New York - May 28, 2012

Crains New York - May 28, 2012
Contents
Kids’ Lines Behave Badly for Retail Industry
City’s Scarcest Resource These Days? Engineers
Taxi! Follow That Cab’s Fare Increase
Nasdaq Attack the Facebook Fallout in the Markets
Bronx Retail Strip Goes From Famously Bad to Bustling
It’s the Return of the Automat
The Insider
Real Estate Deals
Opinion
For the Record
The Week on the Web
Classifieds
Taking Urban Farming to a New Level
Anne Fisher: Manufacturing Jobs Make a Comeback
Hot Jobs
Movers & Shakers: Russian Banker Shares His u.s.plans
Gael Greene: Fighting the Crowd at Primola
The Week Ahead

Crains New York - May 28, 2012