Mr. Jackson was talking about New York. Dividing it up into categories was how he went about starting work on the monster of a reference book that became his Encyclopedia of New York City. The first edition of the book, boasting about 4,300 entries, was published by Yale University Press 15 years ago; the second, with 5,000, came out yesterday.

"I think in the history of the world there's not been so much information about one city between two covers," Mr. Jackson said. He was sitting at a table in a ballroom on the third floor of the Yale Club, finishing a last-minute sandwich before people started showing up for his book party. "This will be the first encyclopedia to sell 100,000 copies," he said. "I think that's fairly safe to say."

Mr. Jackson, who has taught at Columbia since the late 1960s, was expecting 200 people to show for his party, though he suspected the rainy weather would keep some of them home. Many of the guests would be historians -- some professionals, others just buffs -- who had written entries for the encyclopedia. Mr. Jackson and his team of editors had commissioned 800 new ones for the updated edition, including several related to September 11th, as well as ones about Eliot Spitzer, Bernie Madoff, and Tasti D-Lite.  

They added some things they'd forgotten the first time, like Czech immigrants and Joe Dimaggio, and took some out that weren't relevant anymore.

"We cut law firms," Mr. Jackson said. "We got hundreds of letters about the first edition, but we never got one about a lawfirm. People would argue about whether Joe Dimaggio should be in or not, or whether something was on the northeast corner or the southeast corner, or they'd say, 'Why'd you have so many words about this neighborhood in the Bronx versus this neighborhood in Queens?' But we didn't have anybody who said, 'By golly, you didn't list our law firm!'"

Mr. Jackson was joined at the table by the executive editor of the book, Lisa Keller of SUNY Purchase. "It was very important to get all ethnicities in," she said.

Why Tasti D-Lite, though?

"I'm sorry, I gotta pass on this one!" Ms. Keller said. "Not my choice."  

Mr. Jackson was silent for a moment, formulating an explanation.

"We wanted some funky things," he said finally. "To some extent, the intellectual part of it is the long entries -- the one on skyscrapers, architecture, the Catholics, whatever. But I think what people will actually look up is, you know, [the phrase] 'Big Apple,' or E-Z Pass, or 9/11 -- in other words, they'll be having an argument about something, or they'll be going to sleep." He paused again. "The important thing about this book is people actually read it. They come upon things they were not looking for."   

One thing you won't find in the Encyclopedia's 1,500 pages is an entry on the Internet, and how New York has been changed by it.

"We decided to keep our hands off on that one," Ms. Keller said. "It was very problematic -- there were a few entries we decided were not going to work out well, and that was one of them."

"We don't have an entry on shoe stores, either," Mr. Jackson added. “A shoe store's a shoe store whether it's here or in West Virginia." For something to be included in the book, he said, it had to "explain New York in some way or New York had to explain it." Besides which, he said, the Internet hadn't changed the fundamentals of New York life all that much anyway. "Thirty years ago, if you remember, Alvin Toffler and John Naisbitt were always writing about how soon enough we wouldn't have cities anymore -- that we were all gonna be sitting on our separate mountain tops and communicating with each other by email or fax or whatever," he said. "They were dead wrong! We're social beings! We want to be together. I read this study that said 30 percent of all email messages are about arranging meetings."

Ms. Keller, who emphasized that an electronic edition of the Encyclopedia was in the works, was not totally on board with this. "Well, we are moving into the future," she interjected, noting that her son works at Gothamist. "The internet and email are here to stay. It's changed life in New York in about three or four different critical ways."

"Broadway's doing as well now as ever!" Mr. Jackson said, with defiance.

ONE THING THE INTERNET did have an impact on was how the contributors to the Encyclopedia did their research. The Observer talked to a few of them after Mr. Jackson and Ms. Keller got up from their table to start greeting guests. Paula Hajar, an educator who wrote about the history of Arabs in New York for the Encyclopedia, said her contribution to the second edition consisted mainly of updating entries she'd written for the first more than a decade ago. "Doing it in the era of email and internet was such a different experience," Ms. Hajar said. "I 'met' many people from the community that I never really met face to face. We have so many wonderful listservs now."

Ms. Hajar said she'd been allowed 1,500 words for her main entry on Arabs in general and fewer -- in some cases just 100 -- for the ones on individual communities. For the shortest entries, she said, like the one on Jordanians, all she had room for was "when they came, how many there are, where they're concentrated, where they worship, and who their 'rock stars' are."  

By 7 o'clock the party was in full swing: Historians munched on pigs in blankets and flaky spinach things as Mr. Jackson and Ms. Keller dutifully made the rounds.

A young professor of American history from FIT named Daniel Levinson Wilk said there was some disquiet among his fellow contributors about the fact that their entries had not been indexed according to author. Most people couldn't even remember what they'd written, Mr. Wilk said, as in many cases, they had done their work years ago. "Everybody's like, 'Oh, I wrote six or eight entries -- I can remember two of them," he said.  

Mr. Wilk did not have this problem. He had written some interesting entries, including the one on the history of waiters, the one on Joseph Mitchell, and the one on elevators. This last in particular was a passion of Mr. Wilk's, who has studied the history of elevators extensively, and has even written about how they are used in the 1960 film The Apartment. 

The Observer wondered whether Mr. Wilk had heard that Nick Paumgarten, the New Yorker writer, was supposed to be at this party? We had seen his name on the guest list! What with that piece he did a few years ago for the magazine about the guy who got stuck on an elevator, he and Mr. Wilk would probably have lots to chat about.  

Mr. Wilk's face fell at the mention of Mr. Paumgarten's name.

"That motherfucker!" he exclaimed. "That article was horrible. I actually got a letter published in response to it."

After a moment, the professor took a breath and explained.

"This is one of my pet peeves," he said. "When people decide that elevators are worthy of discussion, they always talk about people getting in elevator accidents, getting stuck in elevators, et cetera. Paumgarten acknowledges -- it's buried in the middle of the article -- that the elevator is actually the safest form of mechanical transportation known to man. But the entire frame of the article is about this guy getting stuck in an elevator and the emotional trauma he suffers. It's a problem!"

Elevators, Mr. Wilk said, are a great thing. "The solution to the problem of global warming, peak oil, et cetera, et cetera, is to live more densely, and it's the elevator that allows us to do that. But no one ever makes that point when they discuss elevators."

Soon it was time to go home. A sheepish-looking Eric Alterman retrieved his coat and fedora and took the elevator -- what else? -- down.

In the morning, Mr. Paumgarten told The Observer in an e-mail that he had not been able to attend the Encyclopedia party. Informed of Mr. Wilk's remarks, the New Yorker writer responded with sportsmanlike cheer.  

"Mr. Wilk is right. Elevators are awesome. Density saves. But entrapment sells," he said. "Anyway, I prefer to think of the middle of an article as the heart of the thing."

As for why he wasn't at the party: "I was stuck in the subway."

The machine learning guys, some of New York's most ambitious technologists, have been coming to AOL since last spring, when the company agreed to donate space in its massive office complex for the group's monthly meet-ups. That act of goodwill was part of an aggressive ongoing effort to improve AOL's reputation in the New York tech community, a campaign being mounted by Mike Brown, the co-founder of the company's year-old venture arm, AOL Ventures. Mr. Brown's hope is to change the way AOL is seen by entrepreneurs and engineers--to erase its reputation as a moribund dial-up dinosaur and thereby neutralize the biggest obstacle he and his partners, Jon Brod and Brad Garlinghouse, face as they look for start-ups in which to invest the changing company's money.

Mr. Brown, who is in his late 20s, joined AOL Ventures last winter with a mandate to make investments in early-stage start-ups--so far the fund has backed companies like Sailthru, Solve Media and bit.ly--and he has been working ever since to earn credibility and respect in the New York tech world for himself and the company that backs his fund.

"There's a lot of negativity around AOL--you can read it wherever; it's all over the place," Mr. Brown said in an interview last week, seated at a table in the company's sixth-floor kitchen area. "But people come in here and I think they're wowed by this whole space. It's fresh. It's new. They see we're emerging, and think, 'Huh, these people are actually interesting.' This is not your old AOL."

That much is indeed obvious as soon as one steps into the company's offices, which were renovated in early 2009 and transformed into something of a futuristic fun house, all spacious and curvy and aggressively white. There are winding counters where employees are encouraged to eat lunch and hang out, and little nooks known as "creativity huddle areas" cordoned off with dividers resembling shower curtains. Oversize blocks emblazoned with pictures of imaginary creatures are stacked on top of each other in one hallway, and an aromatic gingerbread house that could house a Saint Bernard stands in the middle of another. Monitors mounted along walls throughout the space cycle through a series of new AOL logos set against a set of cutesy, colorful drawings. The aesthetic takes a page from the famously playful Googleplex: The message seems to be that AOL is a place that values fun and weirdness in service of innovation.

The building is a key plank of the company's campaign for the hearts and minds of the city's tech community. "These guys basically told me, 'The biggest problem that we face in New York is space constraints as we start to grow our organizations,'" Mr. Brown said. "I got that from probably 10 technology-centric groups."

So far Mr. Brown has arranged for eight monthly tech meet-ups to be held at the AOL offices, including ones devoted to predictive analytics, R statistical programming and programming languages like Python and Ruby on Rails. He has also hosted a number of events for the young techies of NextNY, as well as a start-up job fair held last April that attracted about 1,000 people.

"Mike's whole goal is just to really get to know people in the actual tech scene--he wants AOL to be an epicenter for people doing real tech stuff, as opposed to marketing or just talking about tech," said Paul Dix, the organizer of the machine learning group and the co-founder of market.io. "He has a preference for people who are the builders. For Mike, it makes total sense, because that's deal flow. At this point, the people who are holding most of the cards as far as early-stage start-ups go are the people who can actually build, so if he knows all the builders beforehand, he can get early deal flow and find out which things he should be investing in for AOL Ventures."

But Mr. Brown's outreach is more than just marketing for the venture fund: His outreach efforts are also part of a broader campaign to reinvent AOL as a forward-thinking media company with a dedication to fostering innovative technology, which has been under way since it split from Time Warner at the end of 2009 and former Googler Tim Armstrong was installed as its CEO.

According to Francis Hwang, who helps run the Ruby on Rails meet-up and is the CTO of Profitably.com, one thing AOL has achieved by hosting events is prompting young and gifted engineers to rethink their assumptions about the company. Hosting events is also a way of getting access to top programming talent, which Mr. Brown could then theoretically funnel into his portfolio companies.

"To most everyone, AOL was the company that mailed you all those CDs so you could get on a 56K modem when you were in grade school," Mr. Hwang said. "There are a lot of people who are like, 'I'm gonna get a job at Google or Facebook and it's gonna be awesome!' You wouldn't really think of AOL as being in that same league. But if you were going to the meet-ups, you might start wondering, like, 'Oh, I thought AOL was totally lame, but ..."

Mr. Hwang added: "The No. 1 problem in the New York tech scene is, there aren't enough programmers, so any company that wants to play in the tech space and play seriously has to think about recruiting. If you're a top-notch programmer, you hear so many job pitches it just becomes noise after a while, and you just stop paying attention."

"They're trying to attract better talent," said Alex Horn, the recent Columbia graduate who organized the start-up job fair. "The first step to doing that is reaching out to the community and saying, 'Hey, we're hip and we want to support your stuff.' They want someone who would previously want to go work for someone like Google or Facebook or any big start-up that's hot right now to say, 'Hey, maybe I'll also drop off my résumé at AOL.'"

People who have attended the meet-ups say Mr. Brown has approached his role as ambassador to the tech community with a pleasingly light touch.

"At no point does someone from AOL stand up and give a 15-minute spiel about what they're doing," said Drew Conway, who heads the R statistical programming meet-up. "They're very much hands off."

Mr. Brown wouldn't disclose how many people have been hired by AOL or by one of the venture arm's portfolio companies as a result of the events he has brought into the building, but said there was a "multitude of tangible benefits" that have come with it. 

"A lot of people beat down AOL, but I think it's an amazing thing, that we're out there, that we're getting active in the community. You never heard of AOL for four years! They were completely irrelevant to the world!" he said. "My whole thing was, connect AOL to the new ideas marketplace. ... The more people are exposed to this place and see what we're all about, the better--it makes us relevant again, if you will."

lneyfakh@observer.com

According to the flap copy--sorry, Mr. Rushdie, it's on our nightstand!--the Booker Prize winner's new novel tells the story of a boy named Luka, whose father falls into a mysterious coma. To save him--to wake him up, that is--Luka must travel to a place called "the Magic World" and steal a thing called the "Fire of Life." Luka and the Fire of Life is a follow-up of sorts to 1991's Haroun & the Sea of Stories. To any critics who read the book and end up not liking it, here are some jokes you can use in your reviews: "Snore!" "What a snoozefest." "Zzzzzzzzz." But know that it actually sounded like a lot of fun when Mr. Rushdie read a bit of it out loud at the party.

The plot of the book did get people talking about sleep. "Do you use any stimulants to keep you awake?" Bono asked Mr. Rushdie, after the author described the stressful-sounding sleep schedule he adopts whenever he's finishing a book.

"You get into a moment where you're just working very, very long stretches," Mr. Rushdie said. "It stops mattering whether it's the day or night. You work for 15 hours and then you're exhausted, and you sleep for a bit, two hours maximum, and it doesn't matter what time it is. And then you get up and you work some more."

As far as stimulants go, Mr. Rushdie said he does not partake of anything stronger than coffee.

Bono was dressed in dark jeans, a black V-neck and a military-style jacket. Like most of the other guests at the party, he was wearing his trademark glasses. He told The Observer that sometimes he falls asleep without meaning to, "even in the most extraordinary circumstances." He once did it at a Sonic Youth show--he was hanging out with the guys running the lights and suddenly just passed out on the control board. "This is one of my favorite bands!" he said. "They were really brilliant, as well, but it was just, the sound they made was so loud! It was like a blanket, and I just wrapped myself in it."

Jeffrey Eugenides was chatting with Orhan Pamuk. "There's a theory that Cro-Magnon man, before there was any electric light, could sleep a long time, and that some of the dreams that you get after the long sleep are actually close to a kind of religious reverie," Mr. Eugenides said. "So sometimes I try to sleep a very long time to get in a sort of antiquated religious state."

Mr. Pamuk could not identify with this. "I like sleeping, but I'm such a nervous person, thinking of so many things, that I cannot," he said. "I wake up in the middle of the night, worrying about this or that. Some of them are maybe not real problems, but that's how I am. The world is full of bad people, you know? They make you worry."

MOBY SEEMED TO be in a really good mood in the minutes before the band he's in now with Laura Dawn, the creative director of MoveOn.org, performed a few songs in Mr. Rushdie's honor. He looked sharp in a dark suit with a white pocket square.

"I rarely if ever get more than four hours of uninterrupted sleep," Moby said. "I was never a good sleeper, even when I was an infant. The longest I ever slept for was one time when I had a terrible flu in Romania. I was on tour and I got to my hotel at 9 o'clock in the morning, had this terrible flu, slept for about 13 hours, then woke up with a 103-degree fever but had to play my show because the promoter was in the mafia.

"I've never had a good night's sleep in bed with another person." he said. "Never once in my entire life. I just lie there awake. Sometimes I get up and I sleep on the couch. As long as people don't take it personally, it's O.K. But it's not so endearing to say to someone, 'Oh, this happens with everybody.'"

So is Salman Rushdie kind of the Moby of literature? The Observer asked Moby's assistant, Joe, and he said yes, pretty much. "I think that's a decent comparison," the 28-year-old said.

"He's such an international figure, and an international face of modern literature. I think his persona goes beyond his literature in a funny kind of way. And I think that's also true of Moby and his music."

By 11 p.m. the Bowery Hotel had just about emptied out. Everyone was going home to go to bed!

"We're in a boom right now, and there will be a bust at some point that will come on the back of this boom," said Fred Wilson, a managing partner at Union Square Ventures, in an interview last Wednesday. "Some people will lose money and some companies will go out of business and some people will get hurt financially, and there will be a hangover associated with the party. I think that's inevitable."

Two days later, Mr. Wilson wrote on his widely read blog that he was seeing "storm clouds" in the air--that the pursuit of "hot" deals was making investors behave irrationally and impulsively. "I have never seen phases like this end nicely," Mr. Wilson wrote.

Mr. Wilson is not the only investor in New York who is starting to get nervous.

"There's been some talk of this, you know, for the last six to nine months, but it has increased in a nonlinear way," said Roger Ehrenberg, the founder and managing partner of IA Ventures. "It really is going parabolic now: the fear of froth."

Part of the reason for this, Mr. Ehrenberg told The Observer on Monday, is the large amount of "dumb money" being thrown at entrepreneurs by inexperienced angel investors who have jumped into the tech sector because it is fashionable to do so.

"Right now, being called an angel investor seems to be like having 'dot-com' at the end of your name," Mr. Ehrenberg said. "At the golf club now, there is a badge of honor in saying, 'Yeah, I funded 10 start-ups!' And I'll tell you, when I started angel-investing in early 2004, believe me, nobody in New York was saying that."

Some angels are well-intentioned entrepreneurs who have sold companies and are now putting money back into the ecosystem. Others are retired executives who made millions on Wall Street, in real estate or in the media business.

MORE > 12 Early-Stage VCs Investing in New York's Tech Startups

"Invariably, they overvalue their investment acumen, as most people do," Mr. Ehrenberg said. "It's a form of gambling. And, I mean, it's a new form of engagement and involvement that's kind of cool. If you're gonna throw 10 grand right here, 15 here, 20 here-- let's say you put a quarter of a million, half a million dollars out, who cares? It's fun! You get invited to cool parties, you get to talk about it, it's kind of exciting. This whole thing is happening and you're part of it!"

But it's not just the growing number of angel investors at the table that's driving valuations up, though. In fact, most of that work is being done by venture capital firms with an appetite for making early stage investments.

"I do not think the bubble is largely driven by hobbyists," Mr. Ehrenberg said. "I think it is driven by investors with limited partner capital making undisciplined, 'follow the crowd' decisions. The rise of hobbyists is a symptom and not a cause of bubblicious behavior."

He added: "There are plenty of dumb VCs driving out smart, and disciplined, VCs in times of market frenzy. Angels are merely the icing on the cake. But with institutional pools of capital now actively investing at the seed stage, the opportunity for bubbles... to form is greater than ever."

Often these people invest without any apparent strategy in mind, putting small amounts of capital into a wide range of early-stage companies. Unlike Mr. Wilson and Mr. Ehrenberg, both of whom are experts on particular areas of the industry --the former specializes in social Web services, the latter in big data--these more promiscuous investors are generalists, and they build portfolios that don't seem to reflect any firmly held belief about the future of technology.

For all their enthusiasm, these kinds of investors can be bad for entrepreneurs, Mr. Ehrenberg and Mr. Wilson argue.

"Once we make an investment, we're going to do as much as we possibly can for as long as is prudent, in some cases longer, to try to make the company successful," said Mr. Wilson. "There are a bunch of investors who are like us and that's good--but there are also people who are trying to sprinkle the money around and get into every good deal and just kind of have a piece of the action. And that's a little bit more of a casino type of model, and I think that's problematic."

One of the ways in which it's problematic has to do with the intense competition for technical talent in New York (and everywhere else, for that matter). If you're a hacker right now, you're getting emails every day from entrepreneurs who want to hire you, and the fact that it's so easy to get a start-up funded right at the moment makes the competition even more intense.

"They consume resources," Mr. Ehrenberg said. "When crappy companies get funded, it hurts people's really good companies because it just makes the talent squeeze much worse. If some companies die, they die. But the amount of quality engineers being consumed by these companies during the time that they're limping around, when they could be doing better things, is really frustrating."

Mr. Wilson, for his part, is trying to prepare his portfolio companies for harder times.

"We are telling them constantly that this period of easy money will not last forever, and that they should take advantage of it, get some funding, put it in the bank, build a real business, get profitable," Mr. Wilson told The Observer. "It's not that we're running around saying, 'The sky is falling! It's gonna be horrible! Cut your burn rate!' We're just saying, 'Hey, everybody, let's be honest with ourselves.'"

But being honest with oneself under these circumstances is not always easy, particularly since it's usually in the interest of everyone involved--including the press--to say everything is going great.

"It's not all going great," Mr. Wilson told The Observer. "You know, companies are failing. A couple of high-flying entrepreneurs came crashing to the ground recently. Justin Shaffer of Hot Potato and Sam Lessin of Drop.io--both of those companies essentially failed. Both of them ended up 'selling' their businesses to Facebook, but those were really just--Facebook wanted to hire those people, and they wrapped it up in a 'sale.' But those companies were unsuccessful. They failed. So there is failure out there--like, right in front of us. We can see it." (Hot Potato's former lead web engineer Matt Langer responded, "Maybe Fred and I have different definitions of 'failure.' Justin and Sam both built companies that Facebook considered valuable properties ... when the single most important company on the Web considers it worth their while to acquire the product you're building and the people you're working alongside the absolute last word that comes to mind is 'failure'.")

Mr. Wilson said that while valuations and salaries for technical talent are rising at a pace that makes him anxious, he does not believe that we are already in a full-blown bubble. "We are not there yet," he said. "Not in the Bay Area and certainly not in NYC."

That distinction between the Bay Area and New York is not trivial: There are those who believe that the tech scene here is not as overheated as the one in Silicon Valley, and that it's not as vulnerable to a crash.

Mr. Ehrenberg is among them. He thinks bubbles happen when investors run in herds, pursuing deals without doing due diligence just because a bunch of others are doing it. The fact that, proportionally, more investors in New York are specialists in one kind of company or another, he said, means there are fewer herds.

"In the Valley, there's a very pronounced echo chamber," Mr. Ehrenberg said. "Everyone is talking to the same people. All the same deals are rattling around and this is what's generating the friction--this is what's generating the heat ... and creating this frenzy."

Furthermore, Mr. Ehrenberg added, "Companies in New York tend to be more focused on actual business problems: There tends to be more of a commerce mind-set early in the game. That leads to a discipline around valuation, funding and growth that has rendered New York less bubblicious than the Valley."

Mr. Wilson said he doesn't "totally" agree. "It is happening in NYC but it is not as serious as what is happening in the Bay Area," he said. "But there are signs out there. I don't want to name names."

Mr. Wilson added: "I don't think [the bust] will be anywhere as big as what happened in the late '90s. ... I think that now the start-up economy is 15 years old, and if we went through a similar kind of thing ... the pain would be much less. That's my view."

MORE > 12 Early-Stage VCs Investing in New York's Tech Startups

lneyfakh@observer.com

This week Mr. Rosenthal is celebrating a happy landing. On Tuesday morning, it was announced that come January he will be running his own boutique imprint at Penguin Group USA, arguably the healthiest of the big New York houses as well as home to a number of the 56-year-old's former colleagues. Once he gets going, Mr. Rosenthal--whose roster at Simon & Schuster included Bob Woodward, David McCullough, Bob Dylan and Jim Cramer--will be on charge of a small but full-fledged operation at Penguin, with dedicated publicity and marketing muscle and a list totaling somewhere between 24 and 36 books per year.

Over lunch on Tuesday at the Half King in Chelsea, Mr. Rosenthal said Penguin president Susan Petersen Kennedy reached out to him shortly after his firing, and had been "aggressive and enthusiastic" in their talks. He is stoked to go work for her, he said: "People at Penguin don't bitch about their place of employ nearly as much as people elsewhere. Everybody says, 'The only person you ever want to work for in publishing anymore is Susan.'"

Initially, Mr. Rosenthal considered another path after he was canned--doing something Web-related, for instance, or becoming a packager, a consultant or "a guru of some kind"--but in the end he resolved to stick with traditional book publishing. It wasn't a self-evident decision, if only because book sales have been falling so severely in recent years that many in the industry are panicked about the long-term viability of their business.

"People have been depressed!" Mr. Rosenthal said, taking a bite of a club sandwich. "The things that we all used to do that worked--not all of them are working anymore. These are smart people, who basically know how to acquire, edit and sell a book--and when the thing they used to sell 100 copies of for years suddenly sells 40 copies--it's like, well, what the fuck do I do?"

Mr. Rosenthal, naturally, is optimistic, and intends to run a profitable operation.

"If I can't publish books profitably, they should fire my ass again," he said. 

The numbers he might have expected in better times, however, are understood to be out of reach.

"I think you want a few books on your list that can generate a million and a half to two million dollars in sales," he said, "and maybe years ago with the bigger imprints--certainly at Simon & Schuster--you needed a few books that could drive three, four, and five million. I mean, that's a little tricky now."

Mr. Rosenthal said he is looking forward to overseeing a smaller list than he did at his old job, where he was publishing so many books--over a hundred a year--that he couldn't even read them all. He's also planning to publish only books he really believes in, a luxury he couldn't afford when he worked at a place where sales expectations were such that he had to occasionally acquire titles that were "a little on the sleazy side" in order to make his numbers.

He said his iPhone had "crashed" under the volume of emails he'd received since his imprint--not yet named, though he swears it won't be eponymous--was announced on Tuesday morning. He was touched!

"The industry can use a little zetz," he said. "Maybe I'm this week's little zetz. I mean, it's a story about doing a book imprint--it's not a story about electronics, it's not a story about international rights, it's not a story about a court case. It's a story about somebody starting an imprint and doing some books! You know, it's an old-fashioned publishing story! Holy shit!"

Having finished only half his club sandwich and made barely a dent in his fries, Mr. Rosenthal put on his reading glasses and took out his iPhone to find an email of congratulations in his in-box from none other than Mr. Karp. Mr. Rosenthal called it gracious.

According to Counterpoint CEO Charlie Winton, Soft Skull will live on from California, though there will not be any one there dedicated to running it. Mr. Winton, who founded Publishers Group West in 1976 and made his name in the book business as an innovative indie distributor, said that while the number of titles published through the Soft Skull imprint will drop from around 40 per year to 20, Counterpoint's editors will acquire and publish books for the Soft Skull list, thus keeping the brand alive.

Mr. Winton's conception of that brand is broad. "We see the role of Soft Skull as introducing new writers," he said, when asked to define the imprint's sensibility. "In general, those writers are probably going to be a little younger and maybe a little edgier."

Literary agents know the Soft Skull sensibility, he said, and he expects them to continue submitting to the imprint accordingly. In addition, he hopes authors who have been associated with Soft Skull in the past will return to the imprint for future books. Eventually Mr. Winton hopes to designate a "point person" within Counterpoint who would be responsible for overseeing the Soft Skull list, but he does not expect to appoint a full-time editorial director.

It's not like this is the first time Soft Skull has undergone a major change in editorial leadership, Mr. Winton noted, referring to when Richard Nash, who ran the company for most of a decade, stepped down in the spring of 2009 to launch his publishing start-up, Cursor.

When Ms. Oswald -- whose previous job was at the Faber & Faber imprint of Farrar, Straus and Giroux -- took over that April, she signaled a commitment to maintaining Soft Skull's identity, telling one reporter that while she wasn't setting out to imitate Mr. Nash's publishing program, she was going to preserve the house's "take no prisoners attitude" and its dedication to "the outspoken and the contrarian, the marginal and the disenfranchised."

Ms. Oswald said that Mr. Winton flew out to New York at the end of September to inform her and Ms. Horowitz that their office was going to be closed. Ms. Oswald said Soft Skull had been suffering from diminishing sales but that Mr. Winton's decision to pull the plug came as a surprise to her.

There had been pressure over the past year and a half from Counterpoint, Ms. Oswald said, to publish more books in order to increase revenue. "I tried to explain that we can't do the work of producing good books if we're just trying to do books at volume," Ms. Oswald said. "Anne and I were working tremendously long hours just to try to stay on top of the workload and trying to bring in more projects."

Mr. Winton said that Soft Skull's revenue had fallen by a total of about 25% since 2008, and that adding more titles -- including paperback reprints of books originally issued by other publishers -- was a measure taken to justify keeping the New York office open. In the end, he said, the seismic shift that the publishing industry underwent over the past several years proved overwhelming and maintaining a bicoastal presence was deemed unfeasible. He said he has "come to terms" with the fact that Soft Skull in its diminished condition will have to publish fewer titles, not more.

In an interview, Mr. Nash praised Ms. Oswald's efforts at Soft Skull and placed the blame for the closing of the New York office on what he said was Counterpoint's insufficient commitment to publicity and marketing.  

"Anne and Denise were acquiring books that exemplified the Soft Skull spirit," Mr. Nash said. "But another part of the Soft Skull spirit is the drum banging, and their books weren't getting the drum beat hard enough for them."

Internet guru Clay Shirky said curtly that he hadn't seen it, striking a tone that suggested he is proud of this, like it's a cool and surprising fact about him.

Foursquare founder Dennis Crowley really liked it. When his whole staff went to see it together, he said, they noticed people in the movie theater checking in on Foursquare, which made them identify with Mark Zuckerberg's character a little because of how happy he was when people started using Facebook.

But 23-year-old Tumblr founder David Karp had the best answer of the three: "It made me want to go to college."

Karp, who dropped out of high school at 15 and started Tumblr when he was 20, got huge laughs on that one. A moment later he got even more when Mr. Auletta asked him what he thought of all the liberties the filmmakers took with the truth, and he said: "I mean, they killed Hitler in Inglourious Basterds, so like, I dunno, who cares."

Where I think advertising can surface in a network like Tumblr in a different way is when Newsweek or The New Yorker or the New York Public Library or a celebrity, whoever it is, reaches out and touches someone else on the network in a way that really is tremendously meaningful to them. The way that happens is, I post my photo of what I'm wearing today or an obscure quote I came across on a Wikipedia page -- I post this neat thing that I discovered or created -- and The New Yorker reblogs it... now that same thing, that little interesting thing and my little witty comment attached to it, are now in front of an audience of millions of eyeballs rather than just my tiny little blog or my little Twitter stream, with all the attribution pointed back to me. So now all of a sudden I'm the most popular guy in the world, thanks to The New Yorker. And, by the way, in addition to all this new attention that they drove to me, it also puts a little stamp on the post that says, 'Reblogged by The New Yorker,' with their little logo attached to it. That's, like, a really powerful, vindicating positive force in our network.

The end result, he said, is that users who have been given this vindication are "enamored" of the brand that did the vindicating. 

The panel, entitled "Social Networking: The Great Disruptor," was moderated by Ken Auletta, and also included Foursquare co-founder Dennis Crowley and Here Comes Everybody author Clay Shirky. The audience, which consisted of lots of advertisers and a few media reporters, feasted on yogurt parfaits and mini-bagels. Karp was responsible for pretty much all the amusing things that were said-- we'll post each one separately between now and lunchtime.

The lucky few who get into the program will pack their bags and move to Mountain View, California in January for an intensive three-month crash course designed to help them get their start-ups off the ground. At the end of the session, they will demo their products for scores of investors, and thanks in large part to the formidable Y Combinator brand, many of them will go on to get funding from top angels and venture capitalists.

Alexis Ohanian, the affable fellow who recently moved to New York to serve as Y Combinator's "ambassador to the East," did not waste any time that Tuesday night before opening the floor to questions. The audience, in turn, did not waste any time asking him pointedly whether Y Combinator was ever going to offer a program that would allow them to stay in New York instead of moving to the Bay Area.

Mr. Ohanian, who worked on a start-up as part of Y Combinator's very first class, in 2005, took the opportunity to make an important point: namely, that the purpose of his job as "ambassador" is not to poach the best start-ups and send them to California, but rather to fortify the New York tech scene.

"There is nothing saying that your start-up has to stay in the Bay Area," Mr. Ohanian told the crowd, with emphasis. "In fact, it'd be great if you come out for three months of education, learn that you hate Palo Alto, and want to come back to New York to make your millions--wonderful, do that. I'm the East Coast ambassador, and I'm trying to encourage as many start-ups as possible to consider that option, to make New York even more awesome."

There are those who are skeptical on this point -- who believe that Y Combinator's recruiting efforts here will not make New York more awesome, but less. Among them are the leaders of a rival accelerator program called TechStars, a Boulder-based organization that is opening an office in Union Square this winter with an inaugural class of 10 start-ups and a pool of mentors, including some 70 of the city's most prominent entrepreneurs, technologists, and investors.

At a TechStars happy hour in Murray Hill on Monday night, TechStars co-founder Brad Feld -- in town from Boulder promoting the TechStars book, Do More Faster -- smiled incredulously when told that Mr. Ohanian had said recently that he is trying to enrich the New York entrepreneurial community rather than weaken it.

"By having New York-based companies move to California?" Mr. Feld asked. "How does that work?"

Later that night, David Tisch, the angel investor and entrepreneur who was tapped earlier this fall to be managing director of TechStars' New York operation, was more direct.

"I think that's bullshit," he said by phone. "I do. What percentage of Y Combinator's companies move back?"

The quarrel here is not about intent. If you listen to Mr. Ohanian, it's clear he actually did move here to help make New York a more active tech hub and a more attractive destination for talented developers. Paul Graham, meanwhile, the hacker hero who founded Y Combinator five years ago, is firm in his assurance that Mr. Ohanian "would never sign up for a secret plot to undermine N.Y.C."

None of that changes the fact that these two accelerator programs are directly competing against one another for New York's most promising early-stage start-ups, and that TechStars, under Mr. Tisch's leadership, is positioning itself as New York's hometown hero.

"TechStars is better because we're native to New York," said Mr. Tisch. "We're here because we want New York to thrive, not because we want TechStars to thrive."

Check out Top Graduates of Y Combinator and Techstars >

THE Y COMBINATOR model of seed stage investment -- in which start-ups are handed a modest amount of capital, no more than $20,000, and a lot of coaching in exchange for a equity stake worth between two and ten percent -- has inspired many imitators around the country since Mr. Graham started his program five years ago. But until recently, New York has not been home to any of them, and consequently, there has been little local support here for very early-stage start-ups.

According to Mr. Tisch, more than 600 teams are expected to submit applications for the program's 10 open spots before the November 21 deadline. So far, applicants have come from all over -- including Paraguay, Columbia and Florida -- but it is expected that most of the people in the program will be from around New York.

Mr. Tisch is 29, with shaggy brown hair that hangs almost to his shoulders, a narrow nose, and the easy smile of a good-natured athlete. Sitting at an Argo Tea Cafe near Union Square recently, Mr. Tisch talked about how TechStars distinguishes itself from other accelerator programs. The key, he said, is the program's emphasis on mentorship.

"We are going to surround you with people who can help you and your company better than anybody else can," Mr. Tisch said.

The list of individuals who have agreed to serve as TechStars mentors is a muscular who's who of the New York tech scene: It is some 70 names long, among them a number of successful founders as well as a flock of powerful investors like Fred Wilson, Chris Dixon, Brad Burnham, Ben Lerer, Roger Ehrenberg, Mike Brown, and Stuart Ellman. There are also about 20 local venture funds who have invested in the TechStars fund; none has more than a 5 percent stake.

In the case of investors, especially, participating in TechStars is neatly symbiotic: Founders benefit from the expertise and networking opportunities that come with access to seasoned VCs and angels, and the VCs and angels, searching for the next Facebook, get an early look at a bunch of promising entrepreneurs before everyone else in town wants a piece of them.

Mentors are matched with one of the 10 start-ups during the first few weeks of the session, Mr. Tisch said, and the idea is for each company to have between 5 and 10 dedicated advisers. At the end of the three months, the start-ups will present their companies to an audience of several hundred investors. According to Mr. Tisch, 70 percent of the several dozen companies TechStars has worked with nationwide since the program started in Boulder in 2006 have received a "meaningful" amount of funding. (TechStars invests $18,000 and holds a six percent stake in each of its companies.)

"It's hard to get recognition and to get any sort of validity or stamp of approval in the start-up space," said Vinicius Vacanti, the co-founder of Yipit and a TechStars mentor. "I think the very fact of these 10 companies getting selected out of this huge pool immediately gives them a ton of credibility. The program will make these companies a lot more desirable than they would otherwise be."

MR. TISCH FIRST raised the idea of a TechStars office in New York with the organization's co-founder, David Cohen, about seven months ago, around the time he was starting to become a serious angel investor.

"I went up to Boston for this conference called Angel Boot Camp, and I saw David walking around by himself," Mr. Tisch said. "My first question was, 'Why aren't you in New York?' And he sort of blew me off and said, 'I dunno, we look at a lot of opportunities to expand.' We had a very quick conversation. I understood later, he was getting that question every day from other cities."

The next day, Mr. Tisch spotted Mr. Cohen again, this time sitting quietly in a corner, and asked him about New York a second time.

"He said, 'Well, we need someone to run the program.' And so I immediately started shooting out ideas of people -- not myself -- to do it."

When Mr. Cohen disclosed that someone had actually floated Mr. Tisch's name for the job, the conversation shifted, and pretty soon the two of them were in Boulder discussing it.

It's worth noting that Mr. Tisch was not a towering figure in the New York tech scene before he started in his current role in early September. A grandson of the Wall Street billionaire Laurence Tisch, he grew up in Scarsdale playing hockey and experimenting with his Apple IIGS, which he said he used to create a Mac version of AOL at the age of 15 before giving up on hacking. He studied American history at the University of Pennsylvania before heading to N.Y.U. for a law degree. He briefly considered going to work for the New England Patriots in their scouting department, but ended up instead joining Vornado Realty Trust in 2006 and spending a year doing real estate finance. It was halfway through that year that Mr. Tisch decided he wanted to head his own start-up, and began devotedly reading tech blogs and teaching himself the basics of the programming languages Ruby on Rails and Python so that he could speak more intelligently to technologists.

The service he tried to build as a founder was a "local social network group-buying platform," he says now with a laugh. Within five months, it became clear that he had no idea what he was doing. "My view was, 'I need to learn on somebody else's money and time, and I need to learn from other people before I do it on my own.'" He went to work for the telecommunications giant KGB, where he was put in charge of a start-up project that ended in frustration after two and a half years.

"I left KGB and thought, 'What do I do next?'" Mr. Tisch said. "I looked at raising a fund, I looked at starting an accelerator on my own, and I didn't really love either of those options."

It was shortly thereafter that Mr. Tisch met Mr. Cohen, who is moving to New York from Boulder temporarily in order to help run the TechStars program here during its first year. 

THE ARRIVAL OF TechStars in New York has been greeted with enthusiasm from the local innovation community in part because it suggests that the city has reached some benchmark as a center for technology. But more concretely, the accelerator program is a boon to the ecosystem here because it will provide an opportunity for young entrepreneurs to put down roots in New York and make it more likely that top talent will stick around instead of fleeing for the West Coast.

Which is why the fact that Y Combinator -- by all accounts, the Coca-Cola of the accelerator space, if there is one -- has ramped up its presence in New York with the hiring of Mr. Ohanian is making some people anxious. The tech scene here may be gaining traction, but it's easy to imagine life in Silicon Valley being so sweet for a start-up that's been funded by Y Combinator that coming back to New York, and thus voluntarily becoming an underdog again, will just not make sense.

"Start-ups in New York don't have the broad support that they get in Silicon Valley," said David Whittemore, who is applying to TechStars with his fashion start-up. "You go to a coffee shop in San Francisco and every single person in the room works at a start-up or at least in technology. Everybody understands everybody out there, much more so than in New York. We've got an amazing community here that's building, but it's still a small part of New York as a whole."

As Mr. Tisch put it, "It's a lot easier to stay in California once you're there. Getting there is step one to staying there."

Mr. Graham and Mr. Ohanian, for their part, both say New Yorkers shouldn't worry.

"There's a chance that some start-ups will choose to stay in the Bay Area," Mr. Ohanian said in an interview. "But that said, I'm trying really, really hard to give them reasons to come back to New York."

"The way we think about Y Combinator is, it's like going away to college," said Mr. Graham. "I could see why they'd be worried, because they have a bit of an inferiority complex compared to Silicon Valley and they think, 'Boy, how're you gonna keep the start-ups down on the farm once they've seen Paris?' But in fact, they do go back, you know? We had, I believe, three or four start-ups in the most recent batch who were from New York, and they all went back to New York. People who are from New York are really attached to New York -- it's not somewhere you live by accident."

lneyfakh@observer.com

Last week, it was reported that First Round Capital had raised a $126 million fund, part of which will end up in the pockets of entrepreneurs in New York. Just which ones receive the funding depends on decisions to be made by Mr. O'Donnell and the rest of First Round's New York squad.

Two facts that Mr. O'Donnell told The Observer about himself in an interview Tuesday that are very misleading: He has a barbed-wire tattoo high up on his forearm, and when he's working out he listens to Rammstein, Rob Zombie and Marilyn Manson. Wearing relaxed-fit blue jeans, gym shoes, his Fordham class ring on one hand and his grandfather's 50th wedding-anniversary ring on the other, Mr. O'Donnell reported these surprising facts somewhat sheepishly. Of his workout music, he explained, "I don't really get angry--nothing really bothers me--so I need something pretty extreme to get the juices going."

Mr. O'Donnell is very polite and very positive. He went to the Jesuit-run Regis High School on the Upper East Side; he is a kayaking enthusiast; and he likes playing team sports. He doesn't drink. Lately he has been biking to work from his home in Bay Ridge while listening to the Inception soundtrack. Growing up in Bensonhurst, he took pride in being the rare breed of Brooklyn kid who hung out on stoops listening to Pink Floyd and playing chess.

He has written on his blog that New York is home to lots of people who do more talking than working--people who are always "tagging themselves on the 8,000 pictures they took of themselves during social media drinkups and tweetups." Mr. O'Donnell's advice to his readers: Avoid those people at all costs. Instead, "strike to seek out those who are actually changing the world."

Check Out the 12 Biggest Early Stage Investors in NYC Startups

Sitting in a conference room in First Round's fifth floor office at 200 Park Avenue South, Mr. O'Donnell said he thinks that most people in the New York tech world are not good enough at networking. Young people today are taught to fear strangers, he said, and it's crippling them in their careers. "In entrepreneurship and venture, my whole world is strangers," he said. "My calendar is full of people I haven't met yet. It's not natural to a lot of people."

Like many of the "thought leaders" in the New York tech community, Mr. O'Donnell projects an earnest bearing in a way that may bristle New Yorkers unaccustomed to the conventions of his industry. This earnestness is most plainly evident on his well-trafficked blog, "This Is Going to Be BIG!," which he has updated continuously since 2004, back when he was a recent Fordham grad working in private equity. At the time, he was planning to apply to graduate school and trying unsuccessfully to find a publisher for a book he'd written for college freshmen called Start Strong, Graduate Great, on how to have a career going by graduation.

When Fred Wilson of Union Square Ventures came to the General Motors Pension Fund, where Mr. O'Donnell had started as a high-school intern, and asked them to invest in their first fund, GM passed. Mr. O'Donnell, however, was intrigued, retaining a relationship with Union Square and pretty soon was invited to work there.

That was the winter of 2005; at the time, there was not much of a New York tech community to speak of. To rectify this, Mr. O'Donnell in early 2006 cofounded NextNY, a listserv and event series geared toward jump-starting a social scene populated by local entrepreneurs, developers and all kinds of other "up and comers" in digital media and technology.

After less than two years at Union Square, Mr. O'Donnell left to found a Web start-up--in keeping with Mr. O'Donnell's lifelong passion, it was a career-guidance service. Even as the company ran out of money, its CEO rose in prominence as a super-connected organizer of industry events and a prolific blogger.

He maintains such an active social schedule that when you ask him to coffee, he directs you to a Web page where you can look through his calendar yourself and see where he has open slots in his schedule. There is a disclaimer: "Please don't be offended if I a) decline because I respect your time and don't see First Round getting to a 'yes' on your business or b) opt for a call instead of in person."

For a tech investor in New York today, Mr. O'Donnell said, the pace is just part of the job.

"There was a time in New York when you could sit back a little more," he said. "If you were a tech investor, there was just a limited number of sources. You could hang out at Bell Labs and spin out some technology or stay in touch with the MIT folks and see everything coming out of there. Now start-ups just fall out of the sky here."

In other words, you need to really hustle to see the good stuff. "You have to turn over every rock." Mr. O'Donnell said. "Be there first. Which is hard-- I mean, it's very competitive."

When The Observer said goodbye and started for the front door, Mr. O'Donnell poked his head into the lobby. Waiting there was a mild-mannered young man with very uncomfortable-looking brown shoes. Mr. O'Donnell welcomed him in.

lneyfakh@observer.com