пятница, 2 марта 2012 г.

It's not costs, but cool that attracts young entrepreneurs. How can Boston compete?

o hard feelings, Boston, but Tim Chae and Michael Maghsoudi aredropping out of Babson College, packing up Chae's Mazda hatchback,and taking their start-up to Silicon Valley this month. Jeffrey Lu,26, and Conan Jen, 25, are leaving too, to take part in anaccelerator program for new ventures based in Mountain View, Calif.,a stone's throw from Google's headquarters.

None of them have anything especially negative to say about thetech scene here, having participated in conferences, dinners,mentoring sessions, and business plan competitions designed to spurstart-up activity. "I always wanted to experience the Silicon Valleytech lifestyle," says Chae, who grew up in Sacramento. Lu, who methis cofounder while attending school in Andover, says, "I love theEast Coast, but we want to be in the best place to grow thecompany." They are developing The Daily Aisle, a wedding planningsite.

Boston likes to see itself as a hive of innovation, and a fertileplace for entrepreneurs with big ideas. But when it comes to young,first-time founders working on websites, mobile applications, anddevices designed for consumers, the magnetic pull of Silicon Valleyand New York City is strong. Despite Boston's heritage of buildingsophisticated hardware and software for business and government, thecity seems to be grappling with a coolness deficit when it comes toretaining twentysomethings and newly-minted college grads, whointuitively grasp - and sometimes create - the next big thing.Think Mark Zuckerberg and Facebook.

At Babson, to look at just one entrepreneurially oriented school,the percentage of graduating seniors who stay in New England hasdropped from 77 percent in 2000 to 61 percent last year. (Babsonofficials note, however, that the school attracted more studentsfrom outside the region during that period.)

"There is definitely a feeling in the Bay Area that you'rehanging out where all the cool kids are," says James Reinhart, whomoved his 14-person company, ThredUp, from Cambridge to SanFrancisco last year. (ThredUp facilitates trades of children'sclothing, books, and toys among parents.) The Bay Area techcommunity, Reinhart adds, seems to orbit around high-profile chiefexecutives from companies like Twitter, Facebook, and Apple. "Bostondoesn't have the star power or the glitterati," he says.

And while Boston may claim a wider range of innovation industries- like biotech and alternative energy, for instance - its pin-striped rival to the south, New York, is also using an awesomenessadvantage to lure an increasing number of Internet start-ups andyoung entrepreneurs, many of whom take the Bolt Bus down and don'tcome back.

David Frankel, a Boston-based investor who spends a day a week inNew York, and frequently travels to Silicon Valley, says simply,"There's no question that the perception is that we're not as cool."

So what constitutes coolness to techies not generally known forbeing the hippest of the hip? Accessible investors willing to take arisk on wild ideas. Hangouts that attract entrepreneurs andinvestors, and encourage serendipitous meetings. An endlesssuccession of office-warming and product launch parties with openbars. Companies that make stuff that your friends from collegeactually use or have heard of. Chief executives with bigpersonalities, and experienced entrepreneurs willing to mentor up-and-comers. Designers and programmers to turn ideas into actualproducts. Quality coffee and cheap burritos.

What doesn't seem to matter are many of the issues that electedleaders and economic development officials spend endless energyfocusing on, like corporate tax rates, the cost of housing, ortraffic.

"The focus is 100 percent on the immediate goal, like launching aproduct or raising money," says Rich Aberman, cofounder of onlinepayment start-up Wepay, which left Boston for Silicon Valley in2009, and later raised money from founders of PayPal and YouTube."You don't even think about those other factors."

Inaki Berenguer, an alumnus of MIT's Sloan School of Management,moved his photo-sharing company, Pixable, from Cambridge toManhattan, where he has raised more than $6 million from investors.He says he never worried that costs in New York might be 20 to 30percent higher. "That shouldn't be a concern if you are starting astart-up that is going to create millions in value, or at least thatis what you think," he says.

Speaking from a mobile phone while stuck in traffic on Highway101 in Silicon Valley, ThredUp founder Reinhart says, "You just wantto be around other smart people, the arts, good dining, and decentpublic transportation." He adds, "For entrepreneurs, especially veryearly in developing a company, it's a binary thing: Will this be abetter place to build my company? Corporate tax rates don't reallyenter into the equation."

Much more important is the opportunity to rub shoulders withpeople building companies, and to be part of a buzzy milieu thathelps spread the word about firms launching new products. LeahBusque says that over the course of 10 days in San Francisco lastmonth, she met founders and executives from companies like Zappos,the online shoe store; online auction pioneer eBay; and photo-sharing site Flickr.

Busque moved her company, TaskRabbit, from Cambridge last year;it connects consumers with a network of people who will run errandsand take care of small jobs.

"For me, the serendipitous moments to talk with other amazingentrepreneurs and influencers in the consumer Internet space hasbeen the coolest factor, by far," she says.

Boston can claim at least a few companies that can plausibly becalled cool. Harmonix Music Systems developed the video gamesGuitar Hero and Rock Band, and has a new hit called Dance Central.TripAdvisor runs the Web's most-visited collection of travel sites.IRobot makes robots that clean gutters, and Bose makes headphonesthat blot out the sound of obnoxious officemates.

There are signs that the culture in Boston is changing, becomingmore urban, youth-focused, open, and supportive. "I came back toBoston from working in Silicon Valley in 2007, and the city haspicked up a lot of momentum since then," says Jennifer Lum, aveteran of two mobile advertising companies who started aninvestment firm, Apricot Capital, last year.

Lum threw a giant dance party for denizens of the tech communitylast year, which she dubbed "Playtime," and she plans to repeat itsoon. Voltage Coffee & Art, a Kendall Square cafe that opened latelast year, has become a popular meeting place among techies, and aVenture Cafe plans to open a few blocks away, with an explicit focuson becoming a watering hole that attracts entrepreneurs andinvestors with regular networking events.

The MassChallenge, a nonprofit that claims to be the world'srichest start-up competition, launched last year with $1 million inprizes, as did Angel Bootcamp, an effort to get more wealthyindividuals involved with backing new businesses. Venture capitalfirms like Atlas Venture and Highland Capital Partners are returningto the city from suburban office parks. (The founders of Facebookhad to take a pricey cab ride to Waltham investment firm BatteryVentures, which ultimately passed on the deal.) Initiatives likeTwelve by Twelve and Founder Mentors have cropped up to connectnewbie entrepreneurs with those who have done it before.

"Now, we have more people starting companies, more mentorship,and more events," says Rob Go, a veteran of eBay who cofounded theCambridge venture capital firm NextView Ventures last year. "I thinkAct Two is that some of these guys need to be successful. You needmonster companies."

Big firms that generate lots of wealth for founders, Go says, actlike anchor tenants in a mall - they attract entrepreneurs andtalented employees. "I don't think people go to San Franciscobecause of the great parties," he says. "I think they go becausethey want to be inspired."

So how can Boston progress further down the road to awesome? I'dsuggest three steps. First, college students need to come intocontact with cool companies located here before they graduate; thatcould involve internships, speakers coming to campus, or companieshosting student visits. Second, we need more programs likeMassChallenge, Dogpatch Labs, and TechStars Boston (and YCombinator, which sadly decamped from Cambridge in 2009) thatprovide postcollegiate entrepreneurs a petri dish in which theircompanies can grow.

Third, investors need to be willing to fund first-timeentrepreneurs who aren't just building products to sell to Fortune500 companies, and help them build great teams. If the money isn'there, they won't stick around.

Of course, the final and most important step toward being coolmay be the hardest one for data-driven Bostonians: to stop analyzinghow you could be cooler.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him onTwitter @ScottKirsner.

YOUR `AWESOME' IDEAS

How do you think Boston could be made a more attractive place forentrepreneurs? Share your suggestions at www.boston.com/business.

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