Observations on the Boston Entrepreneur Ecosystem: A Year in the Boston Startup Scene by Jeff Seibert

 

As such, I was more than happy to accept when Jason asked me to reflect on this past year and specifically some of the differences I've noticed between here and Silicon Valley. For some it's a touchy subject - hundreds of thousands of words have been penned on "what makes Silicon Valley special?" and "is it possible to replicate?" and, most aggressively, "can [insert locale here] ever compare?" Not only is this not of interest to me, it's unproductive. Every community is impacted by so many different variables, most of them entirely outside their or anyone's control, that it leads to over-simplified analysis and hypotheticals.

 

That said, there are some very real differences between Boston and Silicon Valley that deserve to be surfaced. These don't make one place better than the other, just different. And to succeed anywhere, I think it's pretty important to understand the ecosystem you're in.

 

In no particular order, these are:

 

 

One of the first things that struck me when I arrived here was the vast variety of companies being started and worked on in Boston and New England as a whole. Yes, there are lots of biotech firms - I was expecting that - yes, there are lots of software/consumer internet/mobile companies - I was expecting those too - but that was just the tip of the iceberg. There are companies with a human element and with a physical product element getting amounts of publicity and recognition in the startup scene here that would be unheard of in Silicon Valley. Take Second Glass, for example, which has grown its business almost entirely through events, or Sproxil, which is cleverly attacking real-world medical problems in developing countries, or Zyrra.

 

This range of ideas and their popularity amongst the local press and competitions reveals a healthy community unimpeded by the thick walls of the bubble that continually surrounds Silicon Valley. There are very real benefits to living outside of a tech utopia, where everyone and their mothers use online services that 99.999% of the world has never heard of. The variety provides benefits ranging all the way from more ideas and teams that spread across disciplines to simply more interesting networking-event small talk. This variety should be cherished and promoted - the worst thing the local community could do would be to shower too much attention and press on one industry, particularly whatever the hot new space of the month is.

 

 

Boston and Silicon Valley are both fortunate enough to lay claim to countless entrepreneurship events on a weekly and daily basis. There are many places in the world (Madrid, New Zealand, Baltimore, to name a few) where this is simply not the case, and where more are desperately needed to strengthen the community: we should feel lucky, as I would argue that is not a problem that Boston has today.

 

Quite the opposite, in fact. The hidden curse of bountiful events is destroyed productivity. Events are fun; you meet people, grab drinks, perhaps even learn something. Then, three hours later, you realize you've really made very little progress on your company.

 

Silicon Valley has it a bit easier here. There are so many dozens of events every night that it is unquestionably clear one cannot attend every one or even some meaningful percentage of them. The tendency, then, is to be very choosy - going to events with defined agendas and defined purposes in mind, whether the goal is to make a specific contact or pick up a specific skill. In such an environment, events without clear goals rarely survive, as their attendance soon dwindles to nothing.

 

Here, however, it's not yet clear which events I would consider to be must-attend and which could be discarded with little loss. The net result is that I've attended events far more frequently than I ever did out West (though in fairness, I've been trying to meet people and get involved in the community, so it's also been more of a priority for me). 

 

I would urge our local event organizers here to think carefully before putting something on. Most people I've talked to are interested in either a strong speaker who is prepared to discuss a very specific, actionable topic, or a networking event targeted at bringing together a (small) very specific demographic of people. General "startup" events are useless - often having too many people to meet everyone and too varied a crowd to know who you are meeting. Fewer events, of the right type, may actually be better for the community and lead to more productivity time as a result.

 

 

While attending all these events over the last 12 months, I've noticed one major difference in the overall demographics of the ecosystem here, versus in Silicon Valley: the omnipresence of (social-media) marketers. In the Valley, events are dominated by engineers: programming events are dominated by engineers, networking events are dominated by engineers, and marketing events are dominated by engineers (who are desperately trying to pick up some marketing skills). In fact, I struggled for over a year to find and hire a marketing person for my startup, and we were paying market rates. Here the problem appears to be precisely the opposite, and I wasn't expecting this given the number of strong engineering programs in the area. Perhaps the number of liberal arts schools simply overwhelms.

 

It would be unproductive (and a lie) to call this a problem, as there is unquestionably a need for this talent, but I will renew my call for more targeted events.

 

 

One of the most frequent comparisons made between Boston and Silicon Valley has to do with the fundraising climate and one of the most common complaints I've heard over the past year is how difficult it is to raise money here. Truthfully, this tires me - it is simply not something worth worrying about. Great entrepreneurs with great companies will raise money here, as many have, and many will continue to do. Crappy companies will fail to raise money, they will implode sooner, and their people will move on to hopefully better companies. It's a win-win all around. Without naming names, I would argue that many of the companies that have moved from here to the Valley during the past year in order to find capital quite clearly fall into the latter category, and that we should be sadder about losing the talent than losing the companies.

 

Underlying these complaints, I believe, is a bigger problem - the current obsession (in Silicon Valley too) with raising capital at a very early stage, with the mistaken impression that fundraising signals success, even to the slightest degree. Successful businesses do two things: change people's lives for the better and, hopefully, make money in the long run. Raising capital is often seen as a means to more rapidly accomplish the first with little realization how vastly more difficult it makes the latter. And companies that ultimately fail to make money will ultimately have to stop changing people's lives, but I guess it was great while it lasted? This obsession has been fueled out West by the glut of PayPal-, Google-, and increasingly Facebook-mafia that have the personal capital to make small investments in dozens or hundreds of companies. The decried lack of angels here can be almost entirely blamed on these peoples' absence. But with super-angel investment models built to survive sub-1% home-run rates, I am expecting a radical fallout of young Valley startups in the next 18 months that fail to raise follow-on rounds and fail to be acquired. Was that really the success they sought?

 

 

Investors generally come in two flavors, each flavor demands a very specific fundraising strategy, and the relative percentage of each flavor does, without question, vary between the East and West coasts. The first is emotional investors, who tend to be driven more by the excitement of the business idea, the potential promise of the company, or how strong their affinity is with the problem being worked on. The second is quantitative investors, who tend to be more swayed by strong numbers reflecting traction, engagement, or revenue run rates. Emotional investors can be pitched early, as long as you have a crisp idea, painful problem your solving, plan for execution, and probably some mockups. The product or service does not have to be launched, and probably should not be launched, since the second it's real, it's no longer imaginary, so there is nothing left to get excited about. Quantitative investors must be pitched late: the product or service should be launched, should have customers that demonstrate strong engagement, and should have traction or revenue graphs headed up and to the right. If you don't have numbers to prove these things, you're not going to make much headway.

 

Note that neither type of investor responds well to companies that have just launched. There is no longer anything unknown to get emotionally excited about and there is not yet enough data to make things numerically interesting. But I have seen way too many Boston startups attempt to raise money at precisely this stage during the last year. No wonder they are complaining.

 

Taking this one step further, there are unquestionably more quantitative investors in greater Boston than emotional ones (things are more balanced, if not reversed, out West), so I would urge everyone here whining about angels to shut up, put their heads down, build great businesses, and reemerge with the data to prove it. You'll know it's time to raise to money when you have so many investors calling you, you can no longer get any work done.

 

Imagine where Boston would be on the map if the community as a whole worked with this attitude?