Massachusetts Technology Industry Needs a New Deal, Not a New Brand

2/27/09Follow @wroush

If Silicon Valley didn’t exist, Boston would have to invent it in order to have someplace to feel inferior to.

That’s the thought that occurred to me when I read an article in the Boston Globe last week about the Information Technology Collaborative. This new posse of industry, government, and academic leaders met in Cambridge recently to discuss the best ways to publicize the information technology sector in Massachusetts. The idea is to recapture some of the luster that Route 128 used to enjoy as the East Coast’s answer to Silicon Valley. The group tossed around new brand names for the state, such as “The Innovation Hub,” but rather than settling on any single message, it decided to commission a $150,000 study to demonstrate how the infotech sector contributes to the Massachusetts economy.

Here at Xconomy, we haven’t gotten directly involved in these kinds of discussions and studies. Nor have we given them much ink. It’s not because we don’t care—on the contrary, our mission is all about chronicling the innovation ecosystems in and around our home cities (which also include San Diego and Seattle). Rather, it’s because we’re usually too busy writing about actual innovators at actual companies—both the successes they’ve achieved and the challenges they face.

Boston’s problem is not a lack of tech entrepreneurship. (If you don’t believe me, check out the 1,700 stories we’ve published on our Boston site alone since our founding 20 months ago.) Indeed, there’s so much amazing innovation going on in Massachusetts already that it seems superfluous to worry about better marketing slogans or how much mental real estate Boston occupies relative to Silicon Valley. It would be far better for economic growth in the state if public-private initiatives like the Information Technology Collaborative focused on a few substantive policy reforms targeting the all-too-numerous obstacles to prosperity for local businesses, technology professionals, and entrepreneurs.

Don’t get me wrong: it’s important to show the outside world, especially businesses considering locating in Massachusetts, that the state has an innovation-friendly government. But elected officials are already doing a pretty good job of that—witness Governor Deval Patrick’s recent tour of the Cambridge Innovation Center and his West Coast trade mission, and Boston Mayor Tom Menino’s creation this week of Boston World Partnerships, a group that hopes to use online social-networking tools to play up the value of doing business in Boston.

So instead of commissioning more studies and devising advertising campaigns to help people “discover” Massachusetts, let’s take a closer look at local problems we could fix and local success stories that could be emulated or amplified. I’m not a policy expert, and other observers could probably come up with a more trenchant or realistic list. But here are just five of the ideas officials could choose from:

1. Clone MIT inventions like the Deshpande Center at other universities in Massachusetts. We probably didn’t need one more report to tell us this, but MIT’s impact on the global economy, via companies founded by its alumni, is gigantic, amounting to some $2 trillion a year, according to a Kauffman Foundation study released last week. The report attributed much of MIT’s success at churning out successful graduates to a well-developed “entrepreneurial ecosystem” in which the institute, the local technology and venture-capital communities, and students themselves all assume key roles.

Kauffman vice president Lesa Mitchell told me the foundation supported the study mainly because it needed to put more data behind its campaign to nurture similar ecosystems at other schools. The foundation just gave the University of Kansas a major grant to set up an organization modeled on the Deshpande Center for Technological Innovation, which matches MIT innovators with business mentors and provides seed funding to get ideas from the lab bench to the prototype stage.

But we need more Deshpande Centers right here. Schools like Babson College, Northeastern, Boston University, and the University of Massachusetts have plenty of innovative faculty and students who could benefit from equal access to experienced mentors and the venture community. Unfortunately, not every school has a wealthy and public-spirited alumnus like Desh Deshpande, who founded Sycamore Networks, willing to pony up the cash needed for an array of seed grants. This is where the state should step in—either with direct grants to schools, or by funneling money through the state’s ample array of quasi-public technology advocacy agencies, like the Massachusetts Technology Leadership Council, the Massachusetts Technology Transfer Center, the Massachusetts Technology Collaborative, and the Massachusetts Technology Development Corporation.

2. Upgrade Boston’s transportation infrastructure to make commuting easier. One obvious project—and an expensive one, though it’s exactly the kind of infrastructure investment that the Obama Administration says it wants to make to put people back to work—would be to add a second set of train tracks to the MBTA’s Fitchburg-South Acton line. Because there’s only a single track west of Acton, there aren’t enough trains to get professionals who live in Boston out to their employers’ offices along the I-495 corridor in the morning, or to bring them home in the evening. If you live in Boston and you work at IBM’s new facilities in Westford and Littleton, for example, the earliest you can get to the office is after 9:42 a.m., when the first outbound train arrives at Littleton/I-495. That’s a business-unfriendly transportation policy if I ever heard of one. The fact is, so many people make the “reverse commute” from the city to the suburbs today that it’s no longer reverse.

And while we’re at it, how about getting serious about fixing the 103-year-old Longfellow Bridge, which, as anyone can see, is a rusting hulk? The Department of Conservation and Recreation recently removed lane restrictions that were in place during a six-month, $12.5 million emergency repair project, but those measures were merely palliative. The disruption to business in both Boston and Cambridge if … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • amir

    I read the Globe article mentioned in the second paragraph and my heart sank to my feet when I read the final comment about “The one and only real asset we still have here is the Yankee brain.” In the small world I occupy here in Massachusetts, I have to tell you that I don’t see many Yankees anywhere in any part of high technology. Maybe the desire to rely on this demographic is what’s holding the state back.

  • http://www.HILForum.com Steven Wardell

    Boston’s future brand is more likely to be as the world capital of healthcare innovation and healthcare IT than just generalized IT.

    Boston has the world’s leading innovators in hospitals, clinics, academic medicine, healthcare consulting, healthcare, and e-health companies, all in one cluster, most within a 40 min drive of each other.

    As healthcare takes up an ever-greater part of the national and world economy, the country and the world are going to increasingly turn to Boston for answers to improve healthcare outcomes and make it more cost effective.

  • http://www.genotrope.com Tom Summit

    Seems like a waste of good money and a concrete example of why we have lost the edge in the first place. Things need to be done not studied.
    I’m no expert, but I don’t think giving something a name creates a brand. Creating something of value is required and then the name will stick, as was the case with “the technology highway”.

    My un-solicited two cents, is to give that money to people like Bill Warner, and let him use it to champion constructive and value creating programs such as he has done with the MassTLC Innovation 2008 unConference and will also be doing with TechStars Boston. From what I have witnessed, he has more passion and energy to revitalize “theHub of Innovation” than any committee.

    BTW I agree with Amir’s comment about the “Yankee” moniker. I understand the sentiment as it pertains to ingenuity, but the downsides are cliquishness and shying from the limelight, both negatives for this initiative.

  • http://www.alexascordato.com Alexa

    Great insights, Wade. For all the talk that’s out there, I see very little in terms of practical tactics being executed.

    As someone who was raised in New York and is familiar with the Bay area, I can definitely say that Boston is lacking on two fronts: the hussle-factor and enabled youth.

    The hussle-factor: New York is the city that never sleeps for a reason. Businesses know how to hussle. Everyone from the corner hot dog vendor to the artisan in the village to the I-bankers on Wall Street understand this concept of being open for business 24/7. I feel no sense of urgency or accomodation here in Boston when it comes to businesses or industries really trying to serve the needs of its constituents. We’re talking about things like Starbucks closing at 9 PM within blocks of BU’s main campus (hello? college students need caffeine) and the T stopping service by 12:30 (the fact that I plan movie showtimes based on whether I can catch a train or not is sad). The way business operates in this town screams: “We don’t want your business because we’re too tired to serve you.”

    Youth Engagement: Boston does a crappy job of retaining the youth population that is drawn to the city. As an academic acropolis housing an undergraduate population of over 250K, Boston misses the opportunity year after year by failing to convince people to stay. So much of Silicon valley’s startup culture is driven by innovative minds and young entrepreneurs – Zuckerberg at Facebook, Kevin Rose at Digg, the founders of DisQus, etc. I was recently told that if I ever want to have a shot at being innovative, that I MUST leave Boston because leaders here would never mentor or cultivate my professional interests. While I know of some wonderful individuals in the area who dispel this notion, as a whole, I do see a failure on the part of the area to really mobilize and engage the youth that live here.

    I look at the way industries within this city function and it’s a siloed model, crippled by archaic systems of process and tradition, void of any central forum for communication. If Boston wants to re-brand itself, it’s going to have to embrace change, and change that’s instituted not from the top down, but from the bottom up. There’s a diverse pool of talent in the city, but so much of that talent fails to be leveraged time and time again.

  • http://www.cictr.com Tim Rowe

    Thanks for this article, Wade.

    A famous city planner, Daniel H. Burnham, wrote in 1921:

    “Make no little plans; they have no magic to stir men’s blood and probably will themselves not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will not die.”

    A silver lining of the current economic crisis is that it is prompting us to be open to new answers. Lets sieze the moment, and take some bold steps.

    The suggestions you make are good ones. We should continue to solicit more suggestions of this type, perhaps the IT leadership group that the Globe wrote about can prioritize them, and we can act, together.

    One concrete to-do that I would add to your list is the goal of doing a better job keeping our brightest university students and grad students here when they graduate.

    Massachusetts is at the pinnacle of the global education hierarchy. Each year thousands of the brightest minds from around the world move their homes to Massachusetts to attend the top schools that are here. And this is a renewable resource. What are some things we can do to prompt them to choose to build careers here.

    We don’t have a lot of jobs available for these folks, so we’re going to need them to create their own jobs, meaning start their own entrepreneurial activities. There are a host of practical things we can do to encourage this.

    1) To add to your suggestion of replicating MIT inventions, replicate the MIT Venture Mentoring Service, which brings together successful businesspeople and students with ideas. Put one in each school. Fund it.

    2) Flybridge Capital’s http://www.stayinma.com program is opening the doors for these students to conferences and gatherings where they may make business connections. How can we expand this program?

    3) Cambridge Innovation Center has assembled over 170 mostly start-up companies under one roof, creating a physical place where students can come and see the entrepreneurial path modeled. We subsidize the cost of office space for interns work here, thinking those interns may create their own companies down the line. Maybe we could create a grant program for helping start-ups across the state bring interns in?

    4) Northeastern has a stand-out internship program that many businesses across the state take advantage of. I’m not sure how they do it, but I know from experience that people remark on how great their interns are. Lets replicate this program to more schools. I bet Northeastern has a far higher retention rate for their students than other schools with similar demographics.

    I’m sure there is much more we can do. I look forward to hearing the suggestions of other commentators.

  • Rahul

    Boston really needs to stop looking at itself in the mirror at every idle moment and conscientiously strive to always improve itself. That’s how greatness and leadership can be attained and maintained. Yes, there is a lot of pedigree, innovation, and intellect surrounded by Mass Pike, I-95, and I-93. So what now? It is easy to get caught up in self-entitlement and arrogance, but why let it go to waste?

    Also, the reading “Yankee brain” comment from the Sloan guy makes one shake his/her head.

  • http://www.xconomy.com/author/wroush/ Wade Roush

    I am really impressed by the caliber of the comments so far. Thanks everyone!

    @Amir, @Rahul: When Howard Anderson said in the Globe article that “The one and only real asset we still have here is the Yankee brain,” I don’t think he was talking in terms of an ethnic or demographic group. My interpretation is that he was referring to a tradition or a mindset — a kind of flinty independence, self-reliant ingenuity, or can-do spirit (there are many ways to describe it). There’s a widespread perception, with some truth to it I think, that this “Yankee ingenuity” is still an aspect of region’s diverse culture today. You certainly don’t have to be descended from a Colonial-era family to share in it.

  • http://www.xconomy.com/author/mgreeley/ Michael A. Greeley

    As a member of the IT Collaborative group, I am sympathetic to many of Wade’s observations (which were excellent). Rest assured that the group debated many of Wade’s concerns at the last meeting and is attempting to develop very specific tactics to address them. And, yes, there was a discussion around the need for a “re-branding” exercise but in no way was that the entire focus of the discussion.

    I have served as Chair of the New England Venture Capital Association (NEVCA) for the last few years – and in that capacity had the priviledge to meet with our Governor twice last month. He certainly understands that there is a crisis and is eager for input about very specific actions he can take. The Governor is looking to this group to quickly come back with those recommendations – not spend months thinking about a re-branding exercise.

    As the NEVCA Chair my agenda has been around “Building Billion Dollar Companies in New England.” As part of that – and given the crisis – I suggested two immediate steps to our Governor: (i) appoint an “Entrepreneur Czar” today – someone with national stature to drive a very public dialogue that Mass is open for business (can you say Jack Welch?) and (ii) given his tremendous access to the federal government and the new administration, he needs to work right away to get as much of the non-dilutive funding offered up in the federal stimulus package to address the staggering “capital gap” so many of our early-stage companies are struggling with.

  • http://www.xconomy.com/author/vnijhawan/ Vinit Nijhawan

    Here are some thoughts on strategy and tactics. Tactics first since your readers correctly pointed out that it is time to do not just pontificate:

    Activities:

    1) TiE Boston, http://www.tie-boston.org, has been actively supporting entrepreneurs for years. TiE charter members have been instrumental in the success of the following companies: Starent, Airvana, Airwide, Momenta Pharmaceutical, Netezza, OpenMarket, CSN Stores, Confluent Surgical, etc.

    2) I have joined Boston University as a part-time faculty and am teaching an MBA course in entrepreneurship. Two of my students from the spring 2008 class have started companies. Let’s get other accomplished entrepreneurs to join local colleges.

    3) I am working with others to make Boston University as prolific as MIT in creating startups through technology commercialization and startup mentorship.

    Strategy:

    1) Boston’s brand worldwide is our colleges and universities. I believe it is ultimately futile to try to increase (from its natural rate) the retention of the hundreds of thousands of students who study here. In the flat world let’s make Boston the hub that all these alumni communicate through and occasionally gather at. Let’s create an annual alumni gathering in Boston, coordinated by all colleges. We can have sub-fairs at this gathering with themes such innovation, arts, sustainability, healthcare, etc. Economic activity will naturally arise from making Boston the “knowledge hub” of the flat world.

    2) There is a dearth of early/seed stage VC money in Massachusetts. It is time to give the MTDC a new mandate and funds to “fill the gap”.

    3) Make Boston the leading post-carbon city in the US: dramatically increase bike usage, shared car usage, public transport usage and pedestrian traffic.

  • http://danweinreb.org/blog Daniel Weinreb

    Creating a new slogan or tag-line is backward. Real accomplishments the way to attract attention. Nicknames like “Silicon Valley” appear after that, not before.

    That said, Massachusetts’s has real strength in some areas for which it is not well-known, such as robotics and video gaming. By spreading the word among students and the industry, we can help encourage people with talents and skills in those areas to consider coming here. The Massachusetts Technology Leadership Council is focusing on this approach.

    We were told recently that high school students appear to be less interested in science and technology careers. From 1995 to 2005, reported interest fell by 30%! Efforts such as the STEMTech alliance are attempting to address this.

    Massachusetts has another great resource: experienced professionals and former entrepreneurs, who can help out the next generation of innovators. For example, many people who created and built the successful minicomputer industry are surely still around. Can we create more opportunities for them to become mentors? At the MassTLC Innovation2008 unConference, entrepreneurs were matched up with experts, who could give them advice. I found this to be successful, and I am continuing to provide tips and ideas now and then to the entrepreneurs to whom I was assigned. (And see Tim Rowe’s comments, above.)

  • Enrico Pollazo

    Interesting comments above. While it is true that great innovation does come from established (MA) companies, the budget for those will usually not materialize unless they promote the “core” business or management’s existing view of the market. If lucky, this results only in “incremental innovation”.

    Disruptive innovation creates new markets, and enables radically new business models, and the seed money fuel for that type of innovation has always been way too limited in Boston – no doubt a result of the Yankee brain. West Coast have the gold-rush mentality, which is much more appropriate for seed stage.

    Start-up funding is just too important to be left to the venture capitalist who talks the seed stage talk, but really will never settle for less than B round risk at seed stage valuation. Government research grants to start up factory university (beware the MA venture capital-educational complex) provided these VC opportunities in the past. Now, that multi-generational networked funding is too slow and limiting, and the jobs created by them are no sooner funded than they are off-shored. Times have changed, our competition is global, decentralized, empowered, cheap, and hungry.

    One has to wonder how great the MA opportunity cost has been of companies that did not get started at all because potential entrepreneurs became discouraged by the Boston VC merry go round. For the ones that started and moved, we can calculate MA loss to CA in the billions starting with Apple alone, never mind the 30 years that followed.

    Yankees may be good for Boston politics and baseball, but Governor, don’t let them continue to stifle Boston innovation. Entrepreneurs need a financial and regulatory (blue sky) bailout. Take a page out of the MA independent film industry revolution and apply it to entrepreneurs before they leave or give up. Grant every willing entrepreneur reasonable funds graduated by milestones. Make the private capital compete for the seed round. Generally, they have not proven they’ll accept the risk anyway. and given recent economic reality, the lost Yankee appetite for any risk will only widen the gap. Only wholehearted state support will reinforce a start-up brand identity, and drive intellectual capital back to the northeast. MA odds with these many small bets will be much better that its residents’ odds in a new casino.

  • http://danweinreb.org/blog Daniel Weinreb

    Enrico, Gee, that would be great. Where does the money come from?

  • Enrico Polazzo

    Daniel – Simple. The same way that millions are spent on asphalt paving a small stretch of roadway: bonds. Where’s the justification? How much tax revenue would have been raised, how many jobs and feeder companies created, if eBay stayed around the Tufts campus in Medford where it was founded? How many VC’s here passed on eBay? There are lots of examples that MA is under-utilizing its potential by relying on private seed funding networks. You can’t expect disruptive innovation rewards without seed stage risk. Who else will fill the capital gap?

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  • http://ask.com Heather Sales

    I think that you guys need to have some way to get info on the industry that Massachuetts had when it was founded.