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Boston vs. the Valley: Does Geography Matter?

I chose to live in Boston, the city didn’t choose me. That is, I wasn’t born here, I have no family ties here, but instead my wife and I moved here out of love for the location, though not for the weather. 

So I can’t figure out why so many people want to declare this place dead, at least in the technology sense. The latest is Sarah Lacy, journalist of many titles and the woman who drew the ire of “tweeters” at South by Southwest.

The interesting part of this debate is why geography matters at all. Don’t most Web 2.0 companies exist on the premise that geography doesn’t matter? That you can continue to stay in touch with someone on the other side of the world as easily as you can with someone down the street? Sarah's point is that starting a business is difficult and it's better to be surrounded by peolple going through the same experience. If it's easier to start something in the Valley, why not do it?

The Boston Globe's Scott Kirsner has been tackling this question for quite a while, including his very interesting article examining why Facebook went west when it should, by all rights, be a Cambridge-based company. 

Facebook went west because East Coast VCs wanted to see an income model and at the time Mark Zuckerberg couldn’t show them one. West Coast VCs were willing to take the chance based only on the energy and the possibilities. 

A former client of mine who moved to the Valley in order to take over a consumer-oriented company once commented that Boston is great for the intellectual companies, those that will sell to the government or other enterprises. The brainpower at MIT, Harvard, BU, Brandeis (had to throw my alma mater in that list) and other Boston-area schools makes this a hotbed of intellectual talent. 

However, The Hub lacks the energy of the Valley and for those consumer-focused brands that feed on that energy, the Valley is the only place to be. 

Who is right? Today it looks like those in the Valley are brilliant. But when I was a kid Wang, Digital Equipment Corp. and Polaroid were at the top of the heap. Today the Wang Towers house a number of small companies, DEC’s offices belong to HP and Polaroid’s Waltham headquarters is about to become condos. 

Two years ago everyone talked about Friendster. A year ago it was all about Second Life. Today they’re the butt of jokes. Even Peter Shankman joked the other day that MySpace is being dropped "faster than third-period French."

I don’t believe Boston is dead, I believe it’s just in the shadows for a while. These things run in cycles and right now consumer-facing technologies are hot, so the money flows there. Then again, it also takes a lot more money to get a consumer brand off the grounds. Eventually VCs will swing back toward the more conservative investments and Boston will thrive again. 

Perhaps the tech economy will truly become global and the geography won’t matter much, but the fact is, innovation will continue.

 

Tags: Boston, facebook, innovation, sarah lacy, VC investment, venture capital

Posted by Chuck Tanowitz on April 29, 2008 at 10:31 PM