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Enough Already.

May 29, 2009

In September 2007 I posted (see it here) a suggestion that the locals stop whining about how bad the startup economy in Boston is relative to Silicon Valley.

This inferiority complex continues to be fueled by all the whining whirling around -  about which company has moved to CA or shutdown, and which VC firm has shut down or moved or not invested in months. Phooey! These are such non-events in the grand scheme of things, we should all just be green-conscious and stop wasting any more bits on advancing the neurosis.

Consider the following facts in contemplation of a technology 12-step program for Boston:

  1. Silicon Valley dominates venture capital dollars for enterprise software, networking equipment, consumer Internet and semiconductors – and has done so for quite a while and is unlikely to change anytime soon.
  2. Thus, there are more enterprise software, networking equipment, consumer Internet and semiconductor companies started and funded in Silicon Valley.
  3. So, the clusters of the most important companies in enterprise software, networking equipment, consumer Internet and semiconductors are found in Silicon Valley.
  4. And, these important companies routinely buy Boston-based startups in enterprise software, networking equipment, consumer Internet and semiconductors sectors – to help them enter new or adjacent sectors, creating value for our employees and investors,
  5. Then, engineers and marketing executives in the Silicon Valley companies routinely leave to cultivate new ideas in enterprise software, networking equipment, consumer Internet and semiconductors – as do their counterparts in Boston.
  6. See step #1.

So what? We’ve become an outsourced R&D center for Microsoft, Oracle, Cisco, Google, Intel, et al, in enterprise software, networking equipment, consumer Internet and semiconductors. You can complain that VCs don’t go for the long ball enough and sell too quickly. Or that there aren’t enough strong product and customer marketing executives in Boston. Or that entrepreneurs just aren’t creating and VCs are just not funding the “big ideas” in these sectors. And you would be entirely correct. So what?

Enterprise software, networking equipment, consumer Internet and semiconductor sectors have reached a level of maturity with consolidation of vendors and market share. Will the leaders of these sectors be toppled at some point; sure – no empire lasts forever. But there needs to be some inflection point in order for this to take place. There are certainly some candidates for the sea change – virtualization and the cloud, true mobile broadband and others. In the mean time, we should expect to continue to see big tech companies – based in the Valley – buy little companies – to fill tactical and strategic needs. Particularly in a recession economy where R&D spending on anything that isn’t revenue positive or critically strategic is  nil. And since still we’re one of the top spots for investing in these sectors, no big surprise that we get our fair share of M&A.

This doesn’t mean Boston is second rate; it means we’re not  tops in these sectors. Who cares. Rather than bitch and whine, I prefer to acknowledge the situation (part of our 12 step program) and look for investment opportunities that either leverage this structure or focus on spaces whose leadership is up for grabs and where we Bostonians have comparative advantage – like robotics, MEMs, analog, video, med-tech, green-tech, and others.

How do we keep the great brains (from MIT and elsewhere) in Boston? As VCs, we need to fund them early and often. We need to find and cultivate talented marketing people in addition to great engineers. (easier said than done) And we need to be bold.

Great companies are bold; take advantage of the opportunities in front of them, build teams that exude optimism and commitment and don’t stop moving forward regardless of the obstacles before them. Silicon Valley doesn’t own the patent on boldness. Let’s stop acting like they do. It’s enough already.

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