East Coast Silicon Valley
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” – R. Buckminster Fuller
A few months ago I was talking to executives in charge of innovation at a large U.S. bank. “Our biggest problem is that we look at all this new technology being developed by startups, but integrating it with our, frankly, archaic systems is incredibly complex and costly.”
So, I replied, perhaps naively, “Why don’t you just build a NEW bank from scratch? Infrastructure designed with all the new technology and none of the limitations of the old. It’ll take a fair amount of money, time, and resources, but it will be a lot less painful than continuously fighting arcane systems. And at the same time, it would be an incredibly exciting project, rallying your troops around a huge goal and positioning your bank as a clear visionary leader.”
I’m not sure if that will actually ever happen—I mean, what do I know about building a bank? But the idea in itself was intriguing. Reinvent yourself, rather than improve yourself. Rally troops.
It might be time for the Boston region to think the same way, and truly REINVENT itself in the global startup economy. We’re lacking a sense of identity. And our ecosystem is too fragmented, lacks meaningful collaboration, and is fraught with artificial barriers like non-competes. You know it’s bad when the Harvard Business Review tells you “unless you are launching your venture in… life sciences you may want to consider relocating.” Hey, how about instead we try to make Boston like one of those places we “may want to consider relocating” to?
Flying insects are attracted to light. People are attracted to urban centers. Beings are attracted by high concentrations of “something,” in this case — opportunities. The Boston area has one of the highest concentrations of researchers and top academic institutions in the world — including MIT and Harvard. So why the brain drain? Why do software startup founders choose to head West?
I’ve been prompted to write this post after the MIT Engine announcement — one of a couple of great things that has happened for “startup junkies” in Boston lately, along with GE’s move into town. I truly believe MIT’s Engine is a game changer, similar to the model, albeit at a smaller scale, that built Silicon Valley — a “best in the world” concentration of researchers, venture capital, amazing entrepreneurs, and, hopefully, maverick leaders at its helm.
Leaders in the vein of Fred Terman, the “Father of Silicon Valley,” who spearheaded the creation of Stanford’s Research Park, and who encouraged Stanford faculty and alumni to start companies rather than pursue careers in academia. Terman’s efforts were prompted by a simple reason: it troubled him that his best graduates had to go to the East Coast to find employment. Ironic, isn’t it, that we now have the opposite problem?
So what does Boston represent for startups? How can we pull together the resources we have, such as the amazing academic research, and the corporate innovation groups and corporate patent troves, to give a sense of the huge-scale concentration that can attract and keep the brightest minds creating our nation’s future companies? And what can Boston be BEST at and known for, other than life sciences? What is our startup and innovation identity?
Silicon Valley does a great job at scaling companies and at building mobile and Internet (including social) startups. New York has created a reputation around fintech and media — and now even digital healthcare, topping the 2016 charts for venture investing in that sector. Montreal is busy positioning itself as the “Silicon Valley of Artificial Intelligence.” If you haven’t paid attention, take a look at Element AI, the A.I. startup incubator with a huge vision that Yoshua Bengio (one of the “fathers” of deep learning) just launched there, with investments from the likes of Microsoft. Did you know the @Montreal_AI and @Quebec_AI Twitter accounts have around half a million followers each?
What do we want Boston to be, other than the “Silicon Valley of Life Sciences”? What do we reinvent ourselves around? We won’t be able to replicate California’s weather, or Sand Hill Road (well, we could have Snow Hill Road…). But there are lots of other things we CAN do. And same as Stanford solved their brain drain, Boston and Massachusetts can solve it now as well, and more than reverse the trend.
Here’s my Top 10 “wish list,” in no particular order:
1. Spearhead real research collaboration between local universities, and between universities and corporations, combining resources as a region and enabling Boston to position itself as the world’s TOP research and innovation center for robotics, virtual reality, retail tech… you name it. Create identities. And furiously market them to the world.
2. Build a Software Research Park, including housing options — maybe far-fetched, but we did find land and money for the proposed Olympic Games venues, didn’t we? Randomly, how about Widett Circle? NYC is doing something very similar with the Roosevelt Island redevelopment, aiming to make it their “Nucleus of Silicon Alley.” A Park could create a real sense of concentration, and this is an investment, not an expense — did you know Silicon Valley’s per-capita GDP is the third highest among all world regions?
3. Work with corporations to unlock their large and largely unused patent troves and facilitate access for startups, which is ultimately a win-win if patents are monetized. Perhaps GE Research could be the trailblazer here?
4. Increase city and state funding for supporting the startup infrastructure. How come an organization like MassChallenge, which has done an incredible job putting Massachusetts on the international “startup map,” only has $1 million to award to its yearly cohort of Boston companies, whereas Buffalo, NY, can afford $5 million in awards — and increasing to $6 million next year — through its 43North competition? At least nice to see that half of this year’s Buffalo winners were from Boston…
5. Terminate non-compete agreements. Enough has been written on this topic, but the fact is they restrict innovation. We’d never see a company like Viv Labs start in Massachusetts, whose founders left Apple to build a better Siri. The lack of non-competes not only creates an unfair advantage for California in attracting new talent, but the constant risk of losing employees forces Silicon Valley companies to think, run, and innovate faster than companies elsewhere.
6. Significantly expand entrepreneur-in-residence programs at colleges, allowing foreign-born students who start companies to stay in the country. Babson and UMass are great pioneers in this area, but we need to increase these efforts on a much larger scale. The eventual adoption of the White House’s International Entrepreneur Rule will help, but we need a concerted local effort. The Research Park mentioned above could also provide temporary research employment for foreign alumni starting companies.
7. Revisit our startup tax incentive programs and make them better than what other states are offering. For example, the Start-up NY program offers companies the opportunity to operate tax-free for 10 years on or near eligible university or college campuses in New York State. No business, corporate, sales, state, or local taxes, and no franchise fees. And no income tax for the company or its employees. Ten years of savings. What can WE offer that is even better?
8. Use Boston’s relative proximity to Europe and to Canada’s main innovation centers (Toronto/Waterloo and Montreal) to create much deeper links with their academic, research, and innovation ecosystems. This should eventually attract some of their best startups to Boston to scale up and benefit from the much larger U.S. market and broader access to capital. A good example of what’s possible comes again from NYC: the Jacobs Technion-Cornell Institute.
9. Make a concerted effort to attract fresh capital from large foreign funds, particularly China/Asia and the Middle East. Enabling more foreign-born college alumni to stay in the country to start companies (see above) would be an additional incentive for foreign funds to invest locally. Initiatives can go hand-in-hand, and build on each other.
10. Re-think Massachusetts education at all levels, in the context of an “automated future” where many current jobs will be lost and the best career opportunities will be in STEM fields — see the White House predictions for just the transportation sector. We must lead the young generations to embrace technology subjects early on, with equal encouragement for girls and boys. This is a long-term project, but it needs to start NOW. Artificial intelligence is already taking over the world.
Sky Is The Limit
Finally, let’s hope that innovation initiatives in our region will be led by “the sky is the limit” maverick leaders, who can not only convince employees, college faculty, and alumni to start new companies, but who have the visionary and brazen style needed to inspire and massively attract talent from other U.S. regions and abroad. Remember flying insects — the brighter the light, the more they come. So let’s turn on the brightest lights.