Paul Graham on Why Boston Should Worry About Its Future as a Tech Hub—Says Region Focuses On Ideas, Not Startups

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and investors are conservative is the same reason Chicago ones are. It’s not Yankee prudence. It’s just that they’re less confident.

That was certainly the case with us during Viaweb [a Graham-founded software company that was acquired by Yahoo in 1998 for approximately $49 million in stock]. We had no idea how anything to do with startups worked. I was so naive that I independently invented the concept of a price to earnings ratio. I remember thinking that for a startup it might be as high as 10.

The one advantage a Boston startup would have is the universities. If someone started a big startup in Boston, they could catch the local graduates before they thought of leaving. But how many grow to that size?

X: Do you see a difference in students or young entrepreneurs between the two areas as well, and if so, what?

PG: There is a big difference in students. Stanford students are all thinking about startups. MIT students mostly think of getting jobs at Microsoft or Google.

There’s not so much difference among entrepreneurs, because they, by definition, have already crossed the line into thinking a lot about startups. But founders in the Valley are probably more confident.

X: Finally, if you were to be a psychotherapist for the Boston investment/entrepreneurial community, what advice would you give: try to be more like Silicon Valley, or focus on your strengths and being the best you can be? Or what?

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PG: I’d say, first of all, it’s a good sign that people who care about Boston’s future as a tech hub are worried. At least they’re not in denial.

But how many people really need to care about Boston’s future as a tech hub? I suppose the City Fathers should be worried about it. But the average person can solve the problem by moving.

For people who do decide they have to care, I think this idea of focusing on “individual strengths” is a dangerous road to follow. There aren’t really a lot of individual strengths in the startup business. The only solution is to swallow your pride, admit you’re losing, and then figure out why.

I don’t understand why people don’t spend more time trying to understand precisely why Silicon Valley has won so far. That’s the real question. I spend a lot of time thinking about that. My best guess so far is that the elaborate theories about cultural differences are wrong. I think it’s a combination of the weather and historical accidents, specifically Shockley Semiconductor. And probably also the fact that the Valley didn’t already have something else that was the big thing in town, the way LA has movies and NY has finance and Boston has ideas.

The first two imply a lot of hope for Boston. You can’t change the weather, but you can improve quality of life, which is a superset of it. And historical accidents can be arranged. Boston was only one timid VC away from being the home of Facebook. It’s the third one that might be the hardest to beat—that Boston already has something they care about more than startups.

X: I ask this because there seems to be this constant comparison to and envy of Silicon Valley here. And, for instance, you wouldn’t tell your new child to try and be more like someone else—you would try to focus him on being happy and fulfilling his potential. Maybe the two areas are so different in so many ways it is pointless to compare…

PG: There are cases where I’d tell him to be like someone else. If he wanted to learn how to ride a bike, I’d tell him to watch how other kids did it, not that he should cultivate his unique potential as a pedestrian.

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