Brooklyn Gathering Holds Promise of NExT Big Thing

NEW YORK ( TheStreet) -- Charlie O'Donnell, a thickly built kayaking addict, was working at angel investor Union Square Ventures in 2006 when he took a subway ride with his boss, the Internet visionary Fred Wilson, to Fort Greene, Brooklyn, to visit four guys building a Web site called Etsy out of their apartment.

Union Square got into Etsy early, and stands to win big if and when the popular DIY marketplace, which now employs some 400 people, goes public or is acquired by a larger retailer. For his part, O'Donnell, a Brooklyn native, now 33, gained some life-changing insights into the start-up company movement gaining speed in his own hometown.

"That was a real eye-opener -- that something very big was going on in my backyard," said O'Donnell, who went on to form Brooklyn Bridge Ventures in January 2012, his one-man v.c. firm that has so far raised $6.5 million and invested in 10 start-up companies, half based in Brooklyn, the other half in Manhattan.

"Brooklyn has been the home to a lot of creative folks for a while," O'Donnell said earlier this week while riding the N-train to pick up his car on 5th Avenue, in Brooklyn that is.

"What's happening now is that some of these creative folks are realizing their skills and talents can be used in a business that is scalable, and really that's part of a general movement towards individual entrepreneurship. As those businesses have grown, more and more people are involved in a greater entrepreneurship community," he said.

And like many a movement that comes of age, that community now has its own yearly gathering.

For a second day, the Brooklyn neighborhood of Williamsburg, the nexus of the New York's DIY movement, will be hosting its second " NExT Conference," a gathering of start-up companies, inventors, technologists and various business professionals punctuated by a free expo held in nearby McCarren Park, featuring many more start-up companies. The conference, which is taking place for a second day on Friday at the Brooklyn Brewery and the fastidiously hip Wythe Hotel, is an outgrowth of the Northside Festival, a larger confab of more than 100 live music, film and arts events that runs through Sunday.

The festival and the NExT conference is the brainchild of Scott and Daniel Stedman, founders of the Northside Media Group, which also publishes the Brooklyn arts-focused L Magazine. The idea for the NExT conference emerged three years ago when Stedman said he came to realize that while well-known bands such as TV on the Radio, MGMT, Yeasayer and The National live in Brooklyn, a slew of start-up companies were emerging out of what Stedman likes to call the "creative community."

One early example was Kickstarter, a company originally created to help bands source money and financing from their biggest fans. Kickstarter started among a group of friends living in the Brooklyn neighborhood of Vinegar Hill, a curiously lovely small stretch of streets along the East River just north of Dumbo. Kickstarter later moved to the Lower East Side, obtained financing from Union Square Ventures in 2010, and recently purchased a former pencil factory in Greenpoint to build a new and expanded headquarters.

Rather than mimicking Austin's South by Southwest festival, Stedman said it was essential that technology be a component of the NExT Conference rather than its focus.

"Austin did it successfully years ago, so you can't just tag something to just round it out, it actually has to represent that community," he said. "For us, the 'ah-ha moment' came when we noticed that Brooklyn isn't just a technology community, it's that the freelancer has become the entrepreneur, that there's this new entrepreneurship community and it's coming out of Brooklyn's wider creative community."

The NExT Conference reflects a contemporary Brooklyn, or better said, a slice of north Brooklyn that has evolved from a spillover neighborhood for young people priced out of the East Village in the 1980s and 1990s to something of a cultural reference point, for good and bad.

Brooklyn's burgeoning collection of eclectic restaurants, homemade retail and gourmet coffee shops hasn't been universally embraced. Upscale retail has replaced Mom-and-Pop bodegas as bistros have supplanted neighborhood eateries. Real estate values have spiked, reflecting the borough's changing breed of businesses which in turn threatens to transform Brooklyn's north and easterly neighborhoods into extensions of Tribeca, clean and soulless.

The product craze -- single-gear bicycles, designer pizzas, handmade furniture -- has opened certain segments of north Brooklyn culture to easy ridicule but it hasn't dampened the borough's particular entrepreneurial spirit.

"Brooklyn has really catalyzed the movement around DIY and technology," said David Gilboa, one of the co-founders of the popular eyeglass maker Warby Parker, which was started three years ago in Philadelphia but moved to Manhattan to access a wider scope of talent.

"As the world has moved to more mass-produced goods, there's become a desire from a lot of people to express their creativity through making products themselves, and also a demand from consumers to own unique handmade goods," Gilboa said.

That drive has helped create food-service specialists such as Plated, Sweet Roots and the chef-for-hire service, KitchenSurfing, another Union Square Ventures investment, as well as the 3D printing company MakerBot. Other Brooklyn-based companies have aimed to try to make the world a slightly better place -- the health care procurement provider Sheerpa, and Tough Mudder, the Brooklyn-based fun-loving experience-focused physical adventure event organizer that has grown into a $130 million business in three years from the humble beginnings of a $20,000 loan.

"Brooklyn is the antidote to Manhattan, it doesn't have people walking around in suits, taking themselves a little bit too seriously," said Guy Livingstone, a former London-based corporate lawyer, who started Tough Mudder with his childhood friend, Will Dean, a Harvard Business School graduate. "There are a lot of people looking for the antidote to all of that, and that's Brooklyn, and it's also what our company offers as well. We're very glad to be here."

Tough Mudder employs about 140 people in Brooklyn's Dumbo neighborhood, and operates offices in London and Munich with Melbourne on the way, Livingstone said.

Of course, Brooklyn's start-up scene would probably look a lot like Austin or Portland, Ore., if it wasn't adjacent to Manhattan, a point O'Donnell, himself something of a start-up, often mentions while adding that he takes as many meetings in Brooklyn as he does in Manhattan. (Queens, not so much.)

Austin's South By Southwest is a great musical event, O'Donnell said, but unlike Brooklyn it doesn't have Manhattan nearby from which to attract venture funding, legal expertise and other services essential to building a start-up.

"You need entrepreneurs, but you also need angel investors and random hedge fund guys who think start-ups are cool,'' said O'Donnell, who plans to tap out his fund between $8 million to $10 million, and take lead positions in 30 to 35 start-up companies. "To build that community, you need both ends of that equation, the talent and the money.''

O'Donnell said both can be found in Brooklyn. Maybe even this weekend.

Written by Leon Lazaroff in New York

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