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Friday, May 8, 2009
How I See It
Mass. needs a startup culture comeback
MHT's Efrain Viscarolasaga: How social networking is changing business
MHT's Doug Banks: 10 Women to Watch in tech
Flash Slideshow: Mass High Tech All-Stars Thought Leadership Roundtable
Four years ago, I sat in the Waltham office of a prominent venture capital firm that focuses on high tech and listened to a partner’s dire forecast for Massachusetts: “I don’t know about the future of this region. We have a net outflow of students from the top universities, the big companies that anchored the tech sector are gone, and the cost of living is too high for young people.”
That sentiment had been around for a while, but it was the first time I had heard it articulated so succinctly. Since then, there’s been a chorus echoing the same point, and it has come from all corners of the innovation economy. For example, last September I met a partner at another top VC firm, this one focused on medical devices. Of the half dozen or so boards on which he sits, none are in Massachusetts. “I wish I had some local investments,” he said, “but there’s nothing innovative happening around here.”
And just a few weeks ago an investment banker who focuses on biotech told me, “A few years ago the biotech sector felt so exciting, but now the buzz is gone. It feels like the air’s gone out of the balloon.”
What is going on? With some of the world’s top universities, natural beauty and great culture, Massachusetts is in an enviable position. Yet, while the commonwealth still spawns many outstanding startups, it is clear we are losing ground relative to other states. And as innovation declines, more of the top graduates from local universities believe they must leave Boston in order to advance their careers. It is a slow, downward spiral.
Some say the problem is the cost of living. It’s true that many states, like North Carolina, can boast of lower costs. But California, the favored destination of New England refugees, has more expensive real estate and higher taxes. And as an executive search consultant, I can attest that once people move to California, it is hard to get them to come back East. Others blame it on the state government, which is widely considered to be unfriendly to business. But that doesn’t explain it, either. Again, look at California.
The real culprit is something far more complex and intangible: a decline in the region’s startup culture. “Culture” is a squishy concept, but the decline is characterized by less risk-taking by entrepreneurs and investors. As the willingness to take risk has declined, there are fewer startups, fewer successes and talent leaves the region. Among the young graduates who leave each year are many future entrepreneurs who will be starting companies elsewhere. It is easy to see how this has become a vicious circle.
California’s startup culture is in a different kind of cycle, where its success exerts gravity like a black hole, sucking in the country’s best talent. The sad truth is, many of our most promising graduates think California is the place to be, and that Massachusetts is a stodgy place whose time is past.
How does Massachusetts regain its edge? Unfortunately, there’s no simple prescription or quick fix. Culture doesn’t change overnight, nor does it respond to government programs.
Regaining Massachusetts’ rightful place will take years, and will only be achieved through the accumulated efforts of entrepreneurs and investors as they invent new technologies and choose to invest their sweat and capital here in Massachusetts. Like generations of New Englanders before us, success will come through brains and guts.
Editor’s note: For more on the state of technology in Massachusetts, see the Inside Report
Mike Travis is a principal with Travis and Co., an executive search firm in Newton. He serves on the program committee of the WPI Venture Forum and is active in the New England entrepreneurial economy. He can be reached at mtravis@travisandco.com.
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