I think SF is very similar to NYC in the sense that it offers the cultural variety young people want. SF has better weather (except for this damn fog) but for the most part New York has an even bigger cultural draw than SF. The problem is that the universities it has, namely Columbia and NYU, are not in the same league as MIT, Stanford, or Berkeley for engineering, despite being very good schools. Secondly, and more importantly, NYC just doesn't have the same techy density, but it sounds like it's getting there and this could be the sort of initiative to put it over the top.

Not to mention startups compete with jobs on Wall Street for top devs. Though I guess it'd be like starting something here in SV and competing for talent with Facebook/Google.

The advantage that NYC has is it has vastly more top shelf design talent.

I wonder why modern day robber baron titans of industry don't found universities anymore. Maybe Bloomberg can invest in a Carnegie of his own?

While I too would like to see Mr Bloomberg give some of his (hard-earned) billions away to a good cause, it's too hard to establish a great university over night. He's going the route of inviting top existing research universities to establish a satellite campus of sorts. This is a much smarter approach for attracting talented students and researchers.

This is a wild guess, but perhaps the first new well-funded university of high prestige will be something spun out from the Khan Academy's efforts. It wouldn't be a university in the traditional sense, it may not even have much of a physical campus. But given how much he's supported Khan's efforts, perhaps that could be one of Gates' legacies. A GKU, perhaps?