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Is Boston the New Silicon Valley? My Discussion with Boston Startups

This article originally appeared on The Next Great Generation

Earlier this month, Facebook founder and CEO Mark Zuckerberg made a surprising statement at a Stanford University forum.

“If I were starting now,’’ he said, “I would do it very differently, but I knew nothing back then. Honestly, if I were starting now I would have just stayed in Boston.’’

Even more interesting was Zuckerberg’s less-than-positive comments about Silicon Valley, the long-reigning mecca for technology startup companies.

“There’s a culture out here where people don’t commit to doing things, I feel like a lot of companies built outside of Silicon Valley seem to be focused on a longer-term,” he explains. “You don’t have to move out here to do this.”

In addition to Boston, many cities have prided themselves as Silicon Valley alternatives – notably New York City, Boulder, Seattle, Dallas and Los Angeles.

So does Zuckerberg’s Beantown endorsement signal a shift in prowess from Silicon Valley to Boston? It’s an interesting question that I pitched to local Boston startups.

“Cities are like different flavors,” says Andrew Sudbury, one of the founders of Abine, a Boston startup that provides Internet privacy solutions for consumers who want to control their personal privacy.

“New York City has a lot of advertising-related startups, San Francisco has consumer facing and Boston generally has security and data companies. We’re a blend — security and consumer facing in Boston,” says Sudbury.

Ditto, agrees Marek Olszewski, “chief scientist” at venture-backed big data startup Locu that was founded out of MIT to improve local search applications with big databases.

“It really depends on who you are,” says Olszewski. “New York City has a bit of a bigger community that can benefit from the variety of services and activities in the city, say, for instance with Fashion Week there’s ways local startups could get involved and benefit.”

Indeed, New York City is often toted as the East Coast rival to Silicon Valley, especially with Mayor Bloomberg’s unabashed initiative to overtake the Valley as the new tech startup capital of the world.

Notably, New York City has made a name for itself in the realm of social media with companies like foursquareTumblr and Etsy all founded in the Big Apple.

So what does Boston have to offer from its east coast counterparts?

“With TripAdvisor and Kayak in the area, Boston is great for transportation startups,” says Joost Ouwerkerk, co-founder and product chief at Hopper, a venture-backedstartup originally from Montreal. Ouwerkerk’s company is also planning to open its office space for events and other engineers who want to experiment with some of Hopper’s technology.

“In particular the Boston community is close-knit, it’s easy to find and collaborate with others,” says Ouwerkerk.

This also makes Boston ideal for another factor: finding employees.

“Obviously the great schools around here, MIT and Harvard University among others, makes Boston a great place for gathering talent,” says Locu’s Olszewski.

Ouwerkerk agrees. “Competition for talent acquisition in the Valley is cut-throat,” he says. “There, we would be competing over engineers with Google and Facebook, and we just can’t compete with them.”

Zuckerberg seems to endorse this as well after taking a recruiting trip to MIT and Harvard University shortly after his visit to Stanford.

In addition to some of the nation’s coveted sources of new talent, Boston also boasts a number of factors that contribute to its startup-friendly environment.

This includes Boston’s startup incubators like TechStars Boston and MassChallenge and programs like DartBoston Family Dinner that help link entrepreneurs with angel investors. It also doesn’t hurt to have a skew of startup-friendly coworking spaces like Oficio, Cambridge Coworking Center, and the Bocoup Loft.

Designed to accelerate the growth of local startups, incubators provide resources such as office space, mentorship and even getting rid of your student loan debt in the case of the recently announced Gen Y Capital Partners (not based in Boston).

However, despite Boston’s many draws, a number of tech startups founded and initially funded in Boston have moved on to create their hubs elsewhere. The list includes companies likeDropBoxGreenGoose and WePay.

Despite Boston’s extensive angel investing and venture capitalist networks, one of the primary draws elsewhere is money. During the second quarter of 2011 alone, Bay Area venture fundingexceeded $3 billion.

While the allure of west coast investor networks is tempting, HubSpot’s Manager of People Operations Brian Rogers raises an important point. The Cambridge-based inbound marketing software company recently raised $32 million in a funding round with west coast investors including Google VenturesSequoia Partners, and Salesforce.com.

“It’s not impossible to get west coast money out here on the east coast,” says Rogers.

Do you work for a Boston-based tech startup? How does Boston compare? If not, how does your city compare as a Silicon Valley alternative?

Image Credits: Andrew Feinberg & TechCocktail

    • http://www.greenhornconnect.com Jason Evanish

      Hiroki,

      Great article. Boston certainly deserves to be in the top startup hub conversation. I think what it suffers from is a lack of identity; like a meta version of startup, we’re not sure who we are and we try to say we’re the best for everything. What we’d be better suited doing is recognizing our strengths and double down on them.

      I do want to correct you on the incubators…there’s a number of misconceptions in your list:
      “This includes Boston’s slew of startup incubators, including TechStars Boston, MassChallenge,Y Combinator, Cambridge Co-working Center, Gen Y Capital Partners and the DartBoston Family Dinner.”

      TechStars Boston and MassChallenge provide space and mentorship for 3months. TechStars gives you $6,000 per founder (up to 3) for 6% of your company and a convertible note for another $100,000 (for additional future equity). MassChallenge takes no equity, but only a handful of winners (approximately 10-20) out of their 120 or so entrants receive prize money (again for no equity).

      Y Combinator is no longer in Boston. They left 3+ years ago. It is only in the Valley, but Alexis Ohanian of Reddit is their chief scout on the East Coast for them, so he is based in NYC but occassionally comes to Boston.

      The Cambridge Coworking Center (C3) is just that, coworking space. For $250 a month, you get a desk and access to the CIC (Cambridge Innovation Center) amenities including food, conference rooms, etc. There’s no specific mentorship or investment.

      DartBoston Family Dinners happen every other month or so and bring together about 5-10 mentors/angel investors to have dinner with 15-25 young entrepreneurs working on interesting startups. It’s one of the best events in Boston if you get the chance to go (you have to apply…they have limited seats) but is definitely not an incubator.

      I haven’t heard of Gen Y Capital Partners, but they sound like an investment firm focused on young people, which is sorely needed (as you allude to at the end).  One of Boston’s greatest weaknesses is the lack of a developed angel community.

      Thanks,
      Jason

      • http://twitter.com/hnmurakami Hiroki Murakami

        @jasonevanish:disqus  Thanks for the correction Jason. I originally wrote this article a while back so I actually don’t remember my sources of info for this story. Thanks though I will be sure to update this article with your corrections. 

        Gen Y Capital Partners was just recently announced, apparently their scheme is to forgive student loan debt. There’s a link to the story on TC here: http://j.mp/vrumr8.