Scott Kirsner's take on east coast startups - part II

Scott has another thoughtful post on why we don't have more successful consumer internet companies in Boston.

(side note: I've told Scott in the past that we should re-define the conversation and expand the topic to the Northeast, ie NYC & Boston.)

Anyway, Scott has 5 reasons why the east coast isn't producing more, bigger, better consumer internet companies.

"1. Our big companies locally don't seem to spawn enough start-ups.
2. Boston doesn't yet have a truly vibrant blogosphere that can help bring attention to new products/companies
3. Investors here can have blinders on when it comes to consumer-focused technologies, or anything that seems wacky at first (let's start a Web site that provides free hosting for videos, and has no business model, and let's call it YouTube)
4. Graduating students (or drop-outs like Facebook founder Mark Zuckerberg) sometimes don't feel like there's enough of a vibrant community here that will support their ideas/start-ups
5. We don't have any big consumer device or consumer Internet companies locally."

I think they are all good points. I could expand, agree and differ a bit on each point.

But instead I'd like to comment on point #3.

I was at a dinner last night with an east coast VC from a top tier firm. We talked about Scott's post. His view was that Boston simply doesn't have consumer internet marketing talent. My VC friend believes Boston does tech/networking/telecom and should stick to that. "That's what we do". I've heard this view shared by others in Boston as well. Yes, I agree that Boston produces great tech firms. But I don't agree with the "lack of marketing talent" thesis. It's a bit of a cop-out. And it's breeds more of the same.

I actually think east coast VCs should look inwards. All of us. When I moved back to Boston in mid-2001, the internet 1.0 world was crashing everywhere. And dark days were only getting worse. It's easy to forget now, but it was uglier than ugly. And for several years. I'm not sure that todays super smart 22-25 year old entrepreneurs remember those days (and I'm glad!). And at that time, east coast VCs particularly those in Boston, didn't want to invest in consumer internet companies. Period. The word dot-bomb was a nasty word. Even proven successful internet 1.0 entrepreneurs that generated significant returns weren't funded.

That was the fork in the road. When the crash hit, Silicon Valley kept investing in the consumer web while east coast VCs cleaned up their portfolio's and double downed in infrastructure or didn't make investments at all. Local entrepreneurs that wanted to build a consumer company either morphed their ideas into tech infrastructure or they moved to the west coast. Of course there were exceptions.

East coast investors weren't the only ones that avoided consumer internet companies. Great boston consumer entrepreneurs re-invented themselves as infrastructure people. The press stopped covering consumer internet entrepreneurs and startups. Industry magazines stopped the local coverage. The Boston Globe still doesn't really cover the local tech scene except for Scott's contributions (and I'm so glad he's back).

This combination over the years created a culture.

Fortunately it's changing. It just took the Northeast longer to get their mojo and convictions back in this space

And it's happening. Look at the energy at WebInno, TechCocktail, O'Reilly Ignite, nextNY, OpenCoffee, Boston Post Mortem, etc etc. Great firms locally are taking big chances and going for it. We have made a bunch of cutting edge investments in the northeast and elsewhere. So have other Boston firms like my friends at GC, Polaris, Highland, Matrix, Battery and others. It's exciting.

I think next year or the year after will be an important test. A bunch of east & west coast early stage Web 2.0 companies won't make it. That's just the deal with early stage companies. Will that  scare off east coast entrepreneurs, VCs and the press. Will we determine that we have arrived at dot.bomb 2.0 or we will we invest through it and continue and try to find the very best teams building kick ass companies?

Comments

[Shawn Broderick]

Great historical context, Bijan.

[Matt]

Great post and a hot topic among those in the the space down here in NYC. To speak to items 1 and 4 from a New York perspective, the nature of many people that come have come here is typically not to build a startup.

Many come here and start out in the historically established industries of finance, media, and advertising. The passion for wanting to do a startup can be strong but making the full-time jump without an established, ongoing network of startup inclined people and capital (one that will ride out so called "bombs") will make it tough. High rent / cost of living doesn't help.

For startups here today, there's that added skepticism from people that went through those "dark days" and have since settled at the established company down the block.

At the last NY Tech Meetup, a show of hands revealed that there are a high percentage fellow full-time startup people in town today. Some have always been there, others it's their first time. Ongoing coverage and support is the only way the east coast can be a destination for people to start AND grow startups...

[Jeff D]

Bijan,

I also find it hard to believe that a city with so many top notch schools somehow produced a dearth of marketing talent. The talent is here, it just needs to be given the proper incentive to come work for startups (and needs to have an avenue to find those positions.)

I'm involved with a pre-start up that will almost certain get funded by one of the Boston firms you listed above and we'll be building a consumer software product. Hopefully we can help turn this tide.

P.S. I tend to sense a certain belief in West Coast VCs that their closeness to Silicon Valley gives them some sort of innate superiority to VCs in other areas. But that could just be faulty perception on my part.

[Don Jones]

There's no denying that different regions of the country have certain industries that they are best at: San Diego is Wireless and Biotech, North Carolina is Medical Devices.

There is also nothing that says that a region can't become more prominent in a certain industry if venture capital firms begin to focus on and fund those types of start ups.

If anything, it may be a competitive advantage for a VC firm to focus on a neglected industry in its region - it won't have as much competition for deals from other VC firms.

[Search Engine Optimisation UK]

You have really added nice historical context.