Where next for WAYN? New York versus the Valley
We’re excited to announce that WAYN is expanding across the pond by setting up an office there for the first time!
Most of our fellow compatriots who have already done the same have pretty much all opted for Silicon Valley or San Fran as their natural first choice for expanding into the US, which for them makes sense, given that most of the tech start-ups and world’s leading firms are based there, including Facebook, Twitter, Google and more. However, for us, it was a question of what makes sense the most for our business, and New York came out on top.
Didn’t Facebook move from New York to the Valley?
For those of you who have seen the new cult movie “The Social Network”, a fantastically well-written screenplay of the Facebook story according to Zuckerberg’s co-founding partner, you will have duly noted that Zuckerberg made the move from New York to the Valley, egged on by the rebel founder of Napster himself Sean Parker, played by Justin Timberlake (I could think of worse people to play me if they were to ever make a film about us!). Following the move, Zuckerberg quickly raised $500K for 7% stake and the rest shall we say, is history. Up until that point, Facebook was a boot-strapped start-up based in New York, funded by a few thousand dollars provided by Zuckerberg’s ex-partner (and friend), so the question is, would Facebook be where it is today had it not moved to the Valley? Who knows? It no doubt helped and for most start-ups, the biggest pull-factor in moving is raising money from one of the myriad of Venture Capital firms and Super Angels who are based there.
WAYN was one of the lucky few who managed to break this mould and raise $11m Series A funding from a UK-based venture capital firm back in 2006, for less than 25% stake. This helped us to expand the business, which by that point had already set up a near-shore operation in Poland as well as a head office in London, and had become profitable pretty much from day one. WAYN was around before Facebook had even been invented, and we have often pondered what may have happened had we been a lot more like Zuckerberg in our thinking and had a Sean Parker to help guide us, as back then, we didn’t even think about raising money or moving to San Francisco to help scale the business. Instead, we grew from less than 50,000 members to over 1 million members within in 6 months back in 2005 whilst still holding down full time jobs. Our first focus back then was – how do we grow profitably, which inevitably meant stifling growth, as the only way we could make enough money to survive (without raising money) was to charge a subscription for people to interact. Had we had the foresight that Zuckerberg was given at the time, we would have no doubt done some things differently, but as entrepreneurs working on our first start-up venture, we did what we thought was right at the time, and are proud with what we have achieved thus far – even if we are not quite as successful as Facebook is today
So why have we chosen New York over the Valley when the likes of Zuckerberg, in the earlier stages of Facebook’s growth, moved from there to the west side? For us, there were a number of key factors…
Firstly, WAYN already has established offices in both London and Poland and the commuting distance between the two means that we can be in both offices quite regularly, with a number of flight connections at low cost. I try to spend 1 week of every 4-6 weeks in Poland and find that having this presence in both offices to be an important ingredient for both moral and communication. It has also made a massive difference to the culture of WAYN, with both the UK and Polish offices feeling like an extended family, which was recently played out to great effect, when we brought the entire team from the UK over to Barlinek, a small town close to a lake in Poland.
Thus, in order for us to remain both in close commuting distance, as well as time zone differences, New York has the advantage over San Francisco. If we were moving the entire company to the Valley, it may be different, but we have no intention of closing our offices down in Poland or the UK, given that Poland represents the well-oiled engine of the business and London the international commercial hub.
Despite being a tech business with social media ingrained into our fabric, we are also a travel and digital media based business, and when you look at the concentration of media and travel companies in New York compared to San Francisco, New York wins hands down. WAYN relies on advertising to earn a living and the agencies across Manhattan, represent the world’s highest concentration of media spend – even compared to London. In addition, 48 of the top Fortune 500 companies are based in New York, which is more than any other US city. In addition, the majority of the world’s leading media firms have their headquarters based in New York, including Rupert Murdoch’s News Corp, which bought the fledgling MySpace in 2005, Time Warner, Hearst Corporation, NBC, Viacom and more, with many of the other leading media companies such as Disney and Discovery, having offices based there.
Many of the world’s leading travel companies or ad agencies are also based here, including leading travel brands such as Condé Nast Publications, although most of the leading online travel agencies themselves are more spread out. Still, Priceline are based in Connecticut and have presence in New York, as do Travelocity and Tripadvisor are only down the road in Boston. In addition, the aspirational, higher-end lifestyle and leisure market has a good base in New York, which is aligned or our VIP premium focus also, not to mention the fact that the next generation of start-ups including Foursquare are based here. As a result, we feel that, on balance, New York has the best fit in terms of industry focus for us, compared to the Valley or any other US hub.
Many start-ups see being based in the Valley as a huge advantage in many cases because of its high concentration of local talent in the tech sector, with a much higher abundance of experienced developers and product people to choose from. However, this also means that you have to compete aggressively to attract and retain them, and given we have both a cost advantage and have benefitted from attracting highly skilled developers in Poland already, we would rather focus our efforts on how to attract and retain good engineers from this part of the world than in the US.
Who we are more interested in hiring however, are the best advertising gurus and well-connected media folk, which we understand New York to have in abundance. In addition, we have recently hired a new Chief Operating Officer, who is not only a New Yorker, and now based in his hometown, but he is helping us to improve the product and we are in the process of seconding our main product person from the London office to New York.
If raising money was our prime focus, the Valley would probably be the best place for us to be also, but right now, we are not focused on fund raising, as we have instead, managed to make WAYN a profitable business and would rather not dilute our equity and equity lose control if we can help it. We want to be able to control our own destinies and if we can sustain our profitable growth going forward and invest in our growth from those profits, being close to the valley for fundraising becomes less important for us. That doesn’t rule out investment opportunities though and the Valley is still only 3 hours away from New York on a plane. Plus, you have many leading venture capital firms based on the east coast as well as strategic companies who could be potential investors also.
East is where it’s AT
Finally, we know of some cool start-ups and close friends from the industry who are planting their own seeds in New York, so we are happy to be in and amongst this new wave of the Brit invasion. We’re really excited by the move and hope to plant some strong roots particularly given that WAYN has a large base of users that are US based – even more so than the UK in terms of traffic. For our US users and those travelling to the States from overseas, we hope that us having a local presence will allow us to attract more localised deals and partnerships to bring more value to our users when they are over there. Wish us luck, as the office is opening next month, and I will be there for the first week, to help set things up.
See you on the other side of the pond… it’s a long swim!