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might be a more conservative culture than the Valley. But the turning point, says McCance, was the shift away from the minicomputer, which had been dominated by New England firms like DEC, Data General, Prime, Apollo, and Stratus, to the PC. “When the technology moved to the personal computer, we overstayed the mark as a region,” he says.
“The thought leadership in tech companies, as the minicomputer sun set and the personal computer rose, moved to the West Coast.” That, he says, created a kind of virtuous cycle that exists to this day. “When new companies formed, they were formed out of new thought leaders.”
McCance says “there was no compelling reason (like proximity to semiconductor companies) for the consumer e-commerce companies to all be in Silicon Valley, other than thought leadership. But that was enough to have Google, Yahoo, CNET, Facebook, MySpace, YouTube, LinkedIn, Amazon, etc. all locate on the left coast. Many founders, like Mark Zuckerberg, were even in Boston at Harvard when they started their company, but located in the Valley because of the virtuous circle. Boston has virtually no important entrants in arguably the most important information technology segment of the last 20 years, in spite of the preeminent universities of Harvard and M.I.T.”
(An aside on the matter of Facebook. It is widely reported in New England that East Coast VCs passed on this deal and therefore lost us the chance for it to be located here. McCance seemed to dispel at least part of that story. His firm, of course, did make a small investment in a later round of Facebook. But Mark Zuckerberg was not going to stay in New England anyway, he says. “In my opinion, he could not, he would not, start his company here, because he needed to be in the heart of the action.” And the same remains largely true today, he says. A young entrepreneur comparing the climate in New England to that of the Valley will still find the energy and action greater out there.)
The good news is that the situation can change, McCance says. “All of those things [that caused the shift] are correctable. All of those things are not fatal by any means.” For starters, he says, places like MIT and Harvard, which are proven engines of startups, aren’t going away. “At the margin, there are small things that can be done to make the climate more attractive for startups. An example is to change the non-compete laws that are much more restrictive and enforceable in MA than in CA. ‘Hot’ engineers don’t want to worry about ending up in lawsuits and court if they leave one company to start or join a new company.”
As far as other, bigger factors go: “I’m no expert here. However, it seems to me Boston needs to gain the thought leadership role amongst entrepreneurs in important future sectors of economic growth. We have done it well in biotechnology, although Silicon Valley is still arguably number one with Boston a close second. Possible future segments will include cleantech and alternative energy. There always is luck involved. The key is some ‘winner circle’ companies need to be built and stay independent (not acquired) in these new segments for the world to see the new thought leadership. If you look at the Globe Technology top 25 market capitalization list, published every week on Tuesday, it is really an unimpressive list except for EMC. None of the other companies would be in Silicon Valley’s top list.
“Most entrepreneurs want to be independent, that is why they are entrepreneurs,” continues McCance. “The large amounts of private equity, now available for later stage and secondary investments, may permit the next generation of Boston companies to stay independent. A revived IPO market, of course, would also help.
“It will take time to change, but Boston must have its Google.”
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