06.03.2011 – People to Watch in Silcon Alley – Slideshow Profiles – CRAIN’S NEW YORK BUSINESS

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05.29.2011 – Martha Stewart Posts (Tasteful) ‘For Sale’ Sign – Week On the Web – CRAIN’S NEW YORK BUSINESS

Martha Stewart posts (tasteful) ‘For sale’ sign

Media and home decor franchise explores options, while Albany decides on a property tax limit and hedge funder David Einhorn invests in the Mets.

By Benjamin J. Spencer
May 29, 2011 5:59 a.m

Bloomberg News

Even DIY craft maven Martha Stewart knows when she needs help. On Wednesday, her limping Martha Stewart Living Omnimedia announced that it had hired Blackstone Advisory Partners to evaluate its options, including a possible sale of the company.

The news sent MSLO shares soaring nearly 30%—to all of $5 each. The value of Ms. Stewart’s famed franchise, nearly $2 billion back in early 2005, was a mere $250 million after the day’s trading.

It’s been a hard few years for the media and home decor franchise. Magazine ad dollars dried up; a merchandising deal with Kmart wasn’t renewed. In January, NBC dropped Ms. Stewart’s morning television show and its related spinoffs, relegating them to Hallmark Channel oblivion. The company’s CEO position has been vacant since 2008; Lisa Gersh, a founder of Oxygen Media, is slated to assume the post June 6.

The company’s announcement came just as 69-year-old Ms. Stewart, who has had the job title of chief editorial officer the past few years, is set to rejoin its board of directors, ending a five-year banishment due to her 2004 federal conviction for obstruction of justice.

TAX-SQUEEZED SUBURBANITES, REJOICE: Gov. Andrew Cuomo and state leaders agreed to impose a 2% limit on annual property tax increases statewide. The guv says property taxes soared 5.5% per year between 1999 and 2009, and the new cap aims to combat economic decline. Still, the state teachers union said limiting tax increases would devastate low-income schools outside of New York City. Legislators seem set to vote on the cap next month. …

HEDGE FUNDER DAVID EINHORN BET $200 MILLION ON THE METS, buying a minority stake in the financially strapped team. Whether that’s enough to buy a championship, or even downplay owner Fred Wilpon’s recent tongue-lashing, remains to be seen. …

THE HUFFINGTON POST IS NOT OFF THE HOOK, YET. A federal judge declined to throw out a lawsuit claiming the media company’s founders, Arianna Huffington and Kenneth Lerer, stole the idea for the online news site from a duo of Democratic political consultants—a charge AOL Huffington Post Media Group said is “pure fantasy.” …

THE FEDS ARRESTED GERARD DENAULT, the lead manager on the controversial CityTime project, and charged him with receiving $5.6 million in kickbacks from a technology subcontractor. Mr. Denault, who oversaw the rollout of the computerized timekeeping system for more than 100,000 municipal workers, could not be reached for comment. His employer, Virginia-based SAIC, has not been charged with wrongdoing. …

TWO MASSIVE, LONG-VACANT BROOKLYN PROPERTIES WERE FINALLY CLEARED for redevelopment. A judge rejected a community group’s lawsuit and green-lighted a $2 billion redo for the former Domino Sugar factory in Williamsburg. The city is now free to rezone the 11-acre site for a mixed-use residential project. And in Sunset Park, a 1.1 million-acre warehouse shut since 2000 gets its own shot at redemption: The city’s Economic Development Corp. tapped Salmar Properties to redevelop the charmingly named Federal Building #2 for light industrial use.

05.15.2011 – Week on the Web – Hedge Funder Found Guilty – CRAIN’S NEW YORK BUSINESS

Hedge funder found guilty

A jury finds Raj Rajaratnam guilty, while the city debates the cause of an alleged Census undercount and Goldman Sachs takes some heat.

By Benjamin J. Spencer
May 15, 2011 5:59 a.m.
Raj Rajaratnam Galleon

Bloomberg News
A jury last week found Raj Rajaratnam guilty of all 14 counts of conspiracy and securities fraud.

The federal government netted its biggest hedge fund fish yet when a jury found Raj Rajaratnam guilty of all 14 counts of conspiracy and securities fraud. Jurors deliberated the insider-trading case for weeks, after listening to damning testimony from Wall Street bigs such as Goldman Sachs Group Inc. Chief Lloyd Blankfein and former McKinsey & Co. director Anil Kumar. In the end, the government’s unusual wiretaps likely sealed Mr. Rajaratnam’s fate, as jurors repeatedly listened to more than 40 tapes of the defendant milking various industry players for inside information.

The Sri Lanka-born hedge fund executive faces as much as 25 years in prison; sentencing is set for July 29. Mr. Rajaratnam, 53, plans to appeal the verdict and will wear an electronic monitor during his house arrest in the interim.

At the peak of his career, the Galleon Group founder managed more than $7 billion and was revered on Wall Street. In his defense, his lawyers tried to convince jurors that Mr. Rajaratnam was simply well-researched and only moved on information that was publicly available. Prosecutors, however, painted the hedge funder as the very definition of an inside trader.

Undercount debate

A Census official said a “processing issue” was one of many possible causes for a population undercount in the city—not that Tony Farthing, the bureau’s regional director, would confirm said undercount. He spoke at a City Council hearing in response to a Brooklyn councilman’s incredulity over Census-reported apartment vacancies in Bay Ridge. The city, which has yet to officially challenge the 2010 census count, hopes to reclaim 80,000 residents it says were missing from the rolls and thereby boost federal funding by $2.4 billion over the next 10 years.

A tough week for Goldman Sachs

Not only did Goldman get the heads-up that the Commodity Futures Trading Commission might soon charge it with civil fraud relating to its clearing services for a broker-dealer, it also admitted to receiving more subpoenas concerning its ill-fated mortgage product Abacus 2007-AC1. That piece of work has already attracted global scrutiny.

AIG starts selling

Uncle Sam wants to unload a thin slice of its 92% stake in American International Group Inc., offering 200 million shares in a sale that commenced last week. The government’s breakeven point is $28.72. Just 1.6 billion shares to go.

Met names board chairman

Daniel Brodsky was named chairman of the Metropolitan Museum of Art’s board. The developer admits he’s no expert when it comes to art, yet he was a driving force behind Lincoln Center’s recent renovations, and he’s a trustee of not only the Met but also the New York City Ballet and New York University. In his spare time, he manages 6,200 apartments in 68 Manhattan buildings.

Battery Park City residents relieved

Many Battery Park City residents are breathing sighs of relief after their managing agency agreed to cap the neighborhood’s total ground-lease rents at $525 million over the next 30 years. The agreement prevents projected hikes that could have cost the community $279 million more than that. A product of the 1980s, ground leases require tenants to pay a rental fee on the underlying city-owned land, in addition to apartment fees.

A version of this article appeared in the May 16, 2011 print issue of Crain’s New York Business.

04.28.2011 – Refinancings Plummeted in Minority Areas – CRAIN’S NEW YORK BUSINESS

Refinancings plummeted in minority areas

Approvals for refinanced mortgages fell by 14% in New York City neighborhoods with sizeable minority populations while soaring 110% in predominantly white areas at height of recession.

By Benjamin J. Spencer
April 28, 2011 1:57 p.m
The number of mortgage refinancings approved by lenders in New York City’s neighborhoods with sizeable minority populations “plummeted” from 2008 to 2009, the last year for which figures are available, according to report released Thursday by the Neighborhood Economic Development Advocacy Project, a fair housing nonprofit. The drop occurred even as refinancings in predominately white neighborhoods soared.

The figures are drawn from a national report covering seven large urban areas, in which NEDAP partnered with six other urban justice organizations. The groups examined the most current federal Home Mortgage Disclosure Act data, focusing on conventional mortgage refinancings.

Combining the New York City figures with demographic data, the group found that lenders decreased the number of loans made in neighborhoods “of color” by 14%, while loans approved to applicants in predominately white neighborhoods soared by 110%.

“In New York, we’re seeing a step in exactly the wrong direction,” said Sarah Ludwig, a co-director of NEDAP. She said the disparity points to the existence of a “dual credit market that corresponds to the racial composition of neighborhoods.”

In a separate statement, she added that “Fair access to credit is absolutely critical to New York City’s communities of color, which have decidedly borne the brunt of the foreclosure crisis—on top of decades of persistent lending discrimination.”

Caitlyn Brazill of New York University’s Furman Center for Real Estate and Urban Policy said that the rate of housing depreciation could be a factor in lower bank approvals. She pointed to an October 2010 report by the Furman Center focusing on individual borrowers rather than geographic data.

“We did look at home price depreciation across New York City,” Ms. Brazill said, “and there have been greater rates of depreciation in predominately minority areas.”

The NEDAP report also found that loan applications from particularly African-American and Hispanic communities fell even further—by 27%—than approvals from 2008 to 2009, the depths of the recession. During the same period, applications originating from majority white neighborhoods went the other direction, soaring 78%.

Ms. Ludwig said this suggested that banks had not reached out enough to those hardest hit by the subprime mortgage crisis. “There definitely doesn’t seem to be a lot of marketing to these communities,” she said.

The New York Bankers Association did not have an immediate reply.

CLARIFICATION: The report found that approvals for refinanced mortgages fell 14% in New York City neighborhoods with sizeable minority populations. NEDAP partnered with six other organizations nationwide to produce the report, of which New York City numbers were one part, and NEDAP Co-director Sarah Ludwig said banks are not doing enough marketing in minority neighborhoods. These facts were unclear in an earlier version of this article.

04.15.2011 – What Tech Bubble? VC Funding Holds – CRAIN’S NEW YORK BUSINESS

What tech bubble? VC funding holds

Nearly 70 companies in the New York area received more than $580 million in funding, according to a Friday report; funding was down 3% from year-ago quarter.

By Benjamin J. Spencer
April 15, 2011 3:49 p.m.

Despite rumblings of a tech bubble, New York area funding for tech startups held fairly steady in the first quarter.

Some 69 companies in the New York area received more than $580 million in funding, according to a Friday report from PricewaterhouseCoopers and the National Venture Capital Association. Funding slipped 3% from the first quarter of 2010 but was up 6% over the fourth quarter. The number of deals was down 21% over the first quarter of 2010 and down 22% over the fourth quarter.

“Despite recent hype about both funding gaps and bubbles within the venture capital industry, the first quarter demonstrates an investment pace that is reasonable, rational and relevant to the long-term nature of our business,” said Mark Heesen, president of the National Venture Capital Association, in a statement. “What we are not seeing this quarter is just as critical as what we are seeing.”

In New York, startups in software and IT dominated funding in the first quarter, accounting for $198 million, or 34%, of venture capital dollars, according to the report. The life sciences sector, which includes companies specializing in biotechnology and medical devices and equipment, accounted for 33% of funding, or $190 million. Media and entertainment startups received nearly $129 million in funding in the first quarter; recipients there included Beyond Oblivion, a cloud-based music service that snagged a whopping $77 million in the first quarter—the most of any New York-based company—and question-and-answer website Stack Overflow, which received $12.3 million in funding.

David Silverman, managing partner for PwC’s New York emerging-company practice, said the average deal was high this quarter, reflecting a growing business savvy in New York’s Internet and tech sectors. He said business owners who may have developed two or three other successful tech companies since the 1990s are now bringing their experience to the field.

“What we saw 10 to 15 years ago in San Jose, we’re seeing now in New York City,” said Mr. Silverman.

The New York area still trailed California’s Silicon Valley and New England in tech investments during the first quarter, according to the PwC report. In Silicon Valley, 212 companies received $2.5 billion in first-quarter funding; in New England, 90 firms received $639.3 million.

But the Big Apple is gaining traction. According to a separate analysis from CB Insights, New York state received more venture capital dollars in the first quarter than Massachusetts, which due to its Boston tech scene has long been No. 2. New York brought in $379 million in venture capital in the first quarter, according to CB Insights, compared with $227.6 million for Massachusetts. CB Insights’ report includes five sectors: software, Internet, mobile and telecommunications, computer hardware and electronics.

“There’s a lot of optimism surrounding New York right now,” said CB Insights Co-founder Anand Sanwal. He noted that the city’s seed-stage startup accelerators, which help prepare young companies for evaluation by venture capital firms, are helping.

“They churn out some really interesting companies and entrepreneurs,” he said. “There’s a lot of momentum. The ecosystem just kind of feeds on itself.”

04.01.2011 – Transportation App Roadify Wins BigApps Contest – CRAIN’S NEW YORK BUSINESS

Transportation app Roadify wins BigApps contest

The company, which makes a transportation app for mobile smartphones, received a $10,000 prize, which was presented by Mayor Bloomberg at an awards ceremony

By Benjamin J. Spencer
April 1, 2011 3:29 p.m.

After judging ended and the dust settled Thursday night in Chelsea at the NYC BigApps 2.0 awards ceremony, one company emerged the “appiest” of them all: Roadify.com, a parking, traffic and public transportation real-time information application for mobile smartphones.

Mayor Michael Bloomberg presented the awards personally at the ceremony, held in the IAC building. Mr. Bloomberg announced during the ceremony that BMW had agreed to double all cash prizes for the winners.

The city’s Economic Development Corp. and the NYC Dept. of Information Technology and Telecommunications, who co-sponsored the contest along with BMW, handed Roadify a $10,000 prize, which, according to the company’s head of marketing and design Dylan Goelz, will go “100% into the product,” including readying the app for Google-based Android phones to augment their existing iPhone and text-message-based service.

“We were floored last night,” said a still out-of-breath Mr. Goelz. “We had literally no idea when we were called up on stage that we had won.”

Mr. Goelz, along with founder Nick Nyhan and software developer Ethan Arutunian, created the original app in November 2009 as a text-based Park Slope, Brooklyn parking finder. All the user had to do was text “Get” to the number provided, and a user who had just vacated a parking spot would text back the location of the spot.

Roadify quickly expanded to include crowd-sourcing social updates from on-the-spot commuters as well as real-time city traffic and transit data from the Metropolitan Transportation Authority and the NYCDOT—including buses and subway lines all over the five boroughs.

“We wanted to make an app for New Yorkers, and New Yorkers are inherently commuters,” said Mr. Goelz. “It’s a massive part of their life.” Roadify’s “mash-up” of real-time data and social updates allowed commuters to find anything from “crowd-sourced alerts and updates from other commuters about delays, to whether there’s a mariachi band on the third car.”

“The data is great,” he said, “but it’s the social element that will make commuting a bit more enjoyable.”

Simon Buckingham, chief executive of Appitalism, an NYC-based apps marketplace, said developers like Roadify have just started to realize the full potential of this “mash-up” of technologies. Roadify is “typical of the type of apps that are winning awards,” Mr. Buckingham said. “Utilizing the on-board capabilities of the smartphone, the GPS and mapping built-in—that is really a great service in my opinion,” he said.

Savvy advertisers have jumped on the app bandwagon, he said, because while “mobile advertising is only a billion dollar out of a $700 billion advertising industry,” sponsors like BMW know their core audience too well to let the growth opportunity of apps slip by.

“[BMW] understands something very fundamental,” said Mr. Buckingham. “The most engaged app consumer is the 25- to 35-year-old male or female with a graduate degree. The simple reality of it is that they’re realizing that this is an attractive audience. Their target market is there, and they’re trying to get ahead of the curve and exploit the intimacy and the location information of smartphones.”

The BigApps competition, only in its second year (hence the ‘2.0′), challenges programmers to develop mobile software applications that encourage users to access a wealth of publicly available city data. Though contestants had more than 350 city data sets to work from in 2010, provided on the NYC DataMine site—essentially double what they had in 2009—developer submissions dropped from 81 to 58.

“The Bloomberg administration has been working on [making city government more open] for nine years,” said Nicholas Sbordone, a spokesman for NYC DoiTT, which built and maintains the DataMine site. “This is the public’s data, and we want to keep on making it accessible for as many people as possible.”

An EDC spokeswoman said that transparency was only one goal of the contest, though. “The real goal is to support New York City’s tech sector,” she said.

The spokeswoman noted that last year’s BigApps winner, MyCityWay, had so far received millions in venture capital. The MyCityWay money included an initial $600,000 investment from the NYC Entrepreneurial Fund, which is managed by FirstMark Capital.

Mr. Goelz said that as a privately funded company, Roadify is “in the process of seeking capital now.”

In the meantime, he said, Roadify is “absolutely looking forward to working with the MTA” to coordinate a better overall rider experience. He said the app could help the transit bureau find out “everything from customer service to understanding where the most and least satisfied riders are. It makes it clearer for them and clearer for their customers.”

03.26.2011 – 2011 40 Under 40: Aaron Shapiro, HUGE Inc. – CRAIN’S NEW YORK BUSINESS

2011 40 Under 40:

Aaron Shapiro, 39

HUGE, Chief executive

Aaron Shapiro

Aaron Shapiro’s work life is not simply paperless; it’s downright nomadic. The chief executive of HUGE, a digital marketing and design agency, doesn’t even have an office in the firm’s Brooklyn headquarters.

“I just have my laptop. That’s all I need, right?” he said from the company’s expansive Web design floor.

Mr. Shapiro’s overriding management directive: “Make something you love.”

His approach wins major clients. HUGE redesigned websites for CNN and Reuters and spearheaded the Web design of Pepsi’s novel Refresh campaign, which reallocated $20 million in funds intended for Super Bowl advertising to fund community initiatives.

Mr. Shapiro sold HUGE for close to $40 million to The Interpublic Group of Cos., a global network of marketing agencies, in 2008. The corporate backing allowed the married father of two to raise $10 million for a major international expansion, which started last year.

Adding to the string of achievements, Online Media, Marketing and Advertising magazine dubbed HUGE the social media agency of 2010. And Advertising Age recently named Mr. Shapiro’s firm to its A-List of hot agencies to watch, for the second straight year.

“Aaron’s incredibly driven and very, very relentless,” said Philippe Krakowsky, head of talent and strategy at Interpublic. “He’s always projecting himself to the next place.”

Indeed. HUGE had nine employees when Mr. Shapiro joined in 2005 as a business and strategy partner. By the time he became CEO last year, the firm boasted 300 employees and had offices in London and Brazil. Profits jumped by 50% in each of the past three years, topping $60 million in 2010. HUGE e-commerce platforms such as Target.com and JetBlue.com help generate some $12 billion in revenue for clients worldwide.

Next up: regional offices in Shanghai and Tokyo.

By Benjamin J. Spencer