Boston is known for its’ rabble rousers (see: Boston Tea Party).
Its’ scrappy bands of status-quo disruptors (see: Boston Red Sox Dirt Dogs).
It is a city known for its’ upstarts (see: “San Francisco and New York use tomatoes in their seafood stew, so we’re going to use cream and it’s going to be delicious.”)
But there’s a new group of pugnacious upstarts disrupting the status quo in Boston and beyond: tech entrepreneurs.
“Boston is today a city of startup believers, and the buzz that emanates from its collective refound optimism is permeating the entire ecosystem. That feeling might be difficult to quantify, or codify, but it is apparent in every discussion with stakeholders in the city’s tech community,” wrote Pando’s Hamish McKenzie.
Boston’s new Innovation District
The Massachusetts Miracle
Boston’s startup roots go all the way back to the founding of Massachusetts Institute of Technology (MIT) in 1861 and the rapid education expansion that helped make Boston the “Athens of America.”
We also have MIT to thank for the very tool that made tech startups possible – the computer. In 1928, MIT professor Vannevar Bush engineered the first manually mechanically operated analog computer capable of solving differential equations with up to 18 independent variables. In 1951, other MIT researchers built the first computer that operated in real time. They named it “The Whirlwind I,” and it was used by the U.S. Navy during the Cold War.
Proving that where technology goes, money soon follows, Boston is also home to the nation’s first venture capital firm, American Research and Development, which was founded in 1946 by Harvard Business School professor Georges Doriot.
However, it was the establishment of the Route 128 tech corridor was the real game changer for Boston’s tech scene. The “Magic Semicircle” was built around Boston after World War II, providing the transportation infrastructure to support the coming economic growth. Tech companies including Digital Equipment Corporation, Wang Laboratories, Data General, Prime Computer, and many others spread along Route 128 throughout the mid 1970s, helping Boston become the epicenter of the minicomputer revolution. By the 1980s, the area was often compared to Silicon Valley, and the positive effects of this growth on the Massachusetts economy was dubbed the “Massachusetts Miracle.”
But the “miracle” was short-lived as PC’s soon overtook minicomputers – but Boston tech companies decided to sit this particular innovation out. In a three year period, minicomputer manufacturers lost over 40,000 jobs, and the state ended the 1980s having lost its position as the most prominent high tech region in the U.S.
East Coast vs. West Coast
More recently, Boston is known as a city where great tech entrepreneurs get their start only to take their companies and go West to Silicon Valley. Facebook’s Mark Zuckerberg and Dropbox’s Drew Houston are the most high-profile departures, but other companies include TaskRabbit, Locu, Ginger.io, and WePay, not to mention tech accelerator Y Combinator. (To be fair, Facebook did open an engineering office in November in Cambridge’s Kendall Square, the heart of the area’s growing tech community and the same neighborhood where other West Coast giants Amazon and Twitter have recently opened offices.)
Nevertheless, Boston does appear to have a bit of an inferiority complex. Recent news stories include titles such as “What’s Really Wrong with Boston Tech?” (author Dan Primack blames the media) and “What Boston Needs to Jumpstart More Startups” (author Barb Darrow blames the transit system. And lack of mentoring. And bad marketing.) Even the city’s Internet service proved to be a ripe punching bag for a former mayoral candidate (“Boston’s Startup Disconnect.”)
Adding fuel to the fire, a Startup Genome report released late last year assessing cities according to output, funding, performance, and mindset, ranked Boston at No. 6 on the list of the world’s best regions for startups, behind not only Silicon Valley, LA, Seattle, and New York, but also Tel Aviv.
Everyone Loves a Good Comeback Story
But the same factors that helped propel Boston’s startup growth in the 1970s and 1980s are still in place: world-class research universities, a highly educated population, and a high concentration of venture capital.
Today, there are 74 universities and colleges in the area, 250,000 students, and 8 research universities pumping $7 billion into the economy and spending $1.5 billion yearly on research and development.
Greater Boston is the second leading center for venture capital investment nationwide, attracting $3.1 billion in funding in 2012, trailing only the Bay Area, according to the National Venture Capital Association and PricewaterhouseCooper.
All these startups and venture capitalists need space, which Boston has been creating in spades. Former Mayor Thomas M. Menino’s Innovation District initiative is transforming 1,000 acres of the South Boston waterfront into an urban environment that fosters innovation, collaboration, and entrepreneurship. So far, the city says it has added more than 5,000 jobs at 200 companies. The newest gemstone of the plan is the newly opened District Hall – the venue for the Boston leg of the Challenge Cup international pitch competition.
Coworking spaces, incubators, and accelerators abound in both Boston and its’ suburbs, including the four-year-old mega-accelerator MassChallenge, Techstars, Dogpatch Labs, Greentown Labs in Somerville. And for all those students graduating from MIT and Harvard’s Innovation Lab, there’s the Cambridge Innovation Center, a seven floor startup hub housing nearly 450 startups and offices for two major venture capital firms, Charles River Ventures and Highland Partners.
The makeup of the startups in these incubators and accelerators also reflect the fact that Boston tech is wiser today than it was in the 1980s. Instead of relying on computers and hardware, Boston’s new tech Renaissance is driven by software, telecommunications, medical technology, and financial services.
“Boston appears undifferentiated only because it is not the leader in consumer internet, therefore not top of mind in the popular press. There are many clusters here with multi-hundred million dollar or billion dollar exits or hundreds of millions of revenue both in software (adtech, travel, health IT, database, enterprise, search, commerce, storage, games) and beyond (robotics, materials, life sciences). Boston will continue to birth big companies that may never have taken root in the Valley,” Techstars Boston investor Reed Sturtevant said in the Startup Genome report.
Even defector Mark Zuckerberg has come around to the Boston tech revival narrative, telling an audience in 2011 that if he had to do it all over again, he would have stayed in Boston. “If I were starting now I would do things very differently. I didn’t know anything. In Silicon Valley, you get this feeling that you have to be out here. But it’s not the only place to be. If I were starting now, I would have stayed in Boston. [Silicon Valley] is a little short-term focused and that bothers me.”
I would bet that Zuckerberg finds San Francisco cioppino less satisfying than Boston chowder.