Boston VCs Grok Social Media—So Can We Please Not Tell That Facebook Story Anymore?

5/12/09Follow @bbuderi

The X Factor, which debuted last week without yet having a name, is a mostly weekly column featuring conversations with local innovators, entrepreneurs, and investors.

It’s a legendary story of doom here in Boston (folks around here kind of like gloomy stories)—how the local VCs passed on this idea called Facebook, the kids from Harvard moved west, and…the friggin’ Valley beat us again. It’s safe to say this story is trotted out dozens of times each year to show how Boston VCs don’t take risks, don’t do early stage, don’t understand consumer Internet businesses. In short, it’s the poster child for how New England missed the social media revolution.

But let me say here and now that this hackneyed story is passé, as old and behind the times as analog dialup.

I’ve felt this way for some time, but it was driven home to me during the recent Twitter craze. For one thing, although Twitter is based in San Francisco, its first venture investors were from the East Coast—and Bijan Sabet, a general partner at Boston-based Spark Capital, is nicely perched on its board.

But the presence of Boston-based VCs on the social Internet and new media scene hardly ends with Twitter. Depending on how you define the field, you can find Boston VCs behind a host of such investments, both in East Coast firms like Eons and Hunch (General Catalyst), and in West Coast companies such as social news site Digg (Highland led the Series C round last fall) or Metacafe (also Highland), and even Facebook (Greylock Partners, albeit out of its San Mateo office with partner David Sze, who also invested in Digg and LinkedIn). And that’s a quickly culled, very short list.

Mike Hirshland and Bijan SabetAmong local firms, Spark, Polaris Venture Partners, and (to a slightly lesser extent) General Catalyst Partners, which has just brought in Facebook co-founder Chris Hughes as entrepreneur-in-residence, are leading the way in social media. I profiled Hughes in his new role at GC in last week’s debut column. So this week I am going to look at Spark and Polaris (I promise Web/media investments are not the focus of this column—I just want to get us beyond this Facebook meme once and for all). Between them, the two have amassed an array of new media investments that run from tweeting to blogging to Internet TV. (See my still-incomplete lists at the end of this article.)

The two most prominent social media investments by these firms are Twitter, in Spark’s case, and, for Polaris, Automattic (the company behind WordPress, the leading blogging platform). So I sought out the partners who made these investments—Sabet and Polaris general partner Mike Hirshland—for their take on my premise that it’s time to put the Boston-Facebook story behind us. I also asked them how their social media/consumer Internet deals came about, where they think Boston stands now in this arena, and whether New England could ever hope to compete with California in grooming social media companies (there is some reason for optimism on this front—read on).

Here’s my report.

Both Sabet and Hirshland agree that the center of gravity for social media companies is clearly on the West Coast—no surprise there—and tell how it takes a concentrated effort on … Next Page »

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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  • Luca

    That would be Fred Wilson of Union Square Ventures, not Fred Williams of Union Square Bank.

  • http://www.xconomy.com/author/bbuderi/ Robert Buderi

    Very sorry–fixed, thanks

  • http://www.dailygrommet.com/ Jules Pieri

    I am happy for any progress on advancing the Boston locus for social media and consumer internet enterprises. The list in the article is a good start but it’s still relatively anemic, considering that half of it is more social media infracture, and not consumer facing. At the end of the day, we are all consumers (politicians, policy makers, investors, employees, and entrepreneurs) and the best way to grab mindshare for social media innovation is to create meaningful consumer facing businesses. To build the kind of experiences to which people become deeply attached.

    Although it is not social media-based, Zipcar is one of our best local consumer internet examples. I like CarbonRally too, as a very young example of local social media-fueled innovating company too. Care.com and RunMyErr come to mind as well. We have to broaden our definition of social media to include the innovative use of those behaviors, tools, and technologies. Not just the creation of platforms and infrastructure/analytics around social media.

    Anyway we need more, more, more in Boston, and much of the onus and opportunity lies within the investor community–to get out of its comfort zone. So few investors have really done consumer and social media in their careers. It’s understandably hard for them to trust even deeply experienced teams in these areas…it’s such a scary black box to investors. Success in consumer facing-enterprises can’t be driven entirely with dials and levers–it takes insight and confidence too. Social media does, however, offer amazing customer engagement and acquisition tools to make consumer businesses profitably scale in very new ways. That’s the real opportunity in social media.

  • Jules Pieri

    Oops…typed too fast. Meant to type RunMyErrand.com I erred.