Spark Capital’s Todd Dagres on NY vs. Boston, What’s Beyond Social Media, and Why Tech Investing Is Better Than Making Movies

7/13/11Follow @bbuderi

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the same collaborative demeanor here. I think people here are a bit too insular: this is mine, don’t look, stay away.” Meanwhile, in New York, according to Dagres, the prevailing attitude is: “I got to collaborate and see what others are doing and improve my profile.”

Dagres calls efforts like the Boston Innovation District, created to attract startups, a start. Says he, “That’s nice, but when you consider what’s going on elsewhere, it’s a drop in the bucket, really. It’s not really creating that community effect that you have in New York. We need the community to flower and blossom, and then if it does we have the best, most creative minds in the world here.”

How Working in Hollywood Helped Spark, and Why Tech Investing is Better than Making Movies—In the early 2000s, after leaving Battery Ventures, Dagres became a movie and TV producer and spent time in Hollywood. So did general partner Alex Finkelstein, who created and sold several TV shows before joining Spark. Dagres says the Hollywood stint gave him a great appreciation for the ecosystem around the entertainment business and how the various stakeholders—producers, writers, audience, and so on—fit into a successful concept. That appreciation has helped Spark in its investments, he says, many of which also fall into the media and entertainment categories. “You got to have a sense for the ecosystems, everything from the initial creation to the ultimate monetization. You have to understand that cycle and the ecosystem around that cycle,” he says.

Moreover, he says, the tech business—specifically Internet-based business—is far better than Hollywood. With Web companies, he says, “you’ve got entrepreneurs, creators, and customers. That’s the way it should be.” Hollywood has all those, but in the middle of them come agents, studios, lawyers, and distributors. “The middle of that is basically anti-entrepreneurial,” says Dagres. “That’s what wrong with the entertainment business. It’s not what’s wrong with the tech business, which is why I like the tech business.”

A Message to the State of Massachusetts: Forget Movies, Think Video Games—”If you look at Massachusetts, we are giving hundreds of millions of dollars a year so that Hollywood will come in here and produce movies. Half of the movies are basically ‘why Boston is a shithole,’” Dagres says. “If you saw The Departed, did that make you want to come to Boston?” he asks. Or The Town?

But even if the movies were all positive about Boston, Dagres says, “We’re misspending that money.” It makes no sense, he says, “to bring Hollywood here to shoot a movie for 10 weeks and then leave. They’re gone, and the money’s going. Instead of spending hundreds of millions on that, why not spend the hundreds of millions to foster the development of companies here that will employ thousands and generate hundreds of millions in tax revenue?”

So where should the money be spent instead? “I’ve been pushing for years to give the same incentives that we give Hollywood to come here to shoot movies to the video game industry. The difference is if you start a videogame company, people stay here and work. They live here, they pay taxes.” And software constantly requires updates, unlike movies. “You’re never done with software. With a film you’re done.”

So did Massachusetts blow it by not matching the perks Rhode Island gave Curt Schilling to take his video game company, 38 Studios, from the Bay State to Providence? (Here are some details.) “No, because I think he wanted too much. He had a company that was unproven that was asking for a lot. He was an outlier. For every Curt Schilling company, there’s 10 that are worthy of receiving support, because they’re not asking for much, they’re just looking to have a competitive advantage and a little bit of a break.”

What’s Beyond Social Media—After his initial pronouncement that he couldn’t tell me which areas he believes are poised to take off, Dagres did talk about his investment philosophy and gave … 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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