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

2/27/09Follow @wroush

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this vital automobile, rail, bicycle, and pedestrian artery had to be shut down for safety reasons would be massive. Estimates are that rehabilitating the bridge could cost $200 million to $400 million and take 10 years to complete. All the more reason to start now—and as President Obama keeps reminding us, spending is stimulus.

3. Ease siting and permitting hassles for new technology projects. New England has a promising young cleantech sector developing new ways to generate energy from wind, sunlight, wood chips, municipal waste, cow manure, you name it—but ironically, when it comes time to build pilot facilities and go after commercial-scale customers, most of these companies look to places like Florida, Texas, or Michigan, where state and local governments are far more accommodating toward new facilities.

Part of the problem is that New England towns and cities take the “home rule” tradition to a ridiculous extreme. When I visited IST Energy last month to learn about its compact waste-to-energy machine, executives told me the biggest obstacle to selling its technology is the tangle of inspections, reviews, and permits that potential customers face, which are different from town to town. “The best support we could possibly get from the state would be clearing regulatory pathways for all new energy technologies, not just ours,” IST Energy’s vice president of corporate development David Montella told me. “No one would characterize the Northeast as an easy locale” for green energy projects, he said.

Obviously, this problem doesn’t affect information technology companies as severely as it does cleantech firms. Software developers bent over their terminals are a pretty benign bunch, environmentally speaking. But even in infotech, the expense and difficulty of building and permitting facilities like clean rooms for semiconductor research force many companies far out of their way. SiOnyx, an innovative company exploring applications for “black silicon,” settled in an office park in Beverly, MA—quite a hike from both downtown Boston and the core of the state’s electronics industry along Route 128—because that was the only place it could find an existing, unoccupied clean room.

Legislative reforms enacted in 2006 created a system that lets Massachusetts towns opt into a fast-track permitting system, but as of mid-2008, fewer than 50 of the state’s 351 cities and towns had joined, according to Boston-based research and consulting firm Mass Insight. The state government needs to do more to reward communities that adopt fast-track permitting and penalize those that don’t. (You can see how individual towns are doing along several measures of tech-friendliness at masstrack.org, a site maintained by the Massachusetts High Technology Council.)

4. Play up New England’s gay-friendly credentials. Any startup that’s trying to choose between, say, Cambridge and Palo Alto for its HQ needs to consider what kind of environment it will be asking its employees to live in. Is it one that respects the rights of all citizens equally, black or white, Hispanic or Asian, gay or straight? With the passage of Proposition 8 in California last November, outlawing gay marriage, the place that Apple, Google, Facebook, and eBay call home joined the ranks of states where voters have said gay people are not entitled to equal protection under the law.

Eventually, majorities in those states will realize that they are on the wrong side of history. But for the moment, Massachusetts and Connecticut have the right side to themselves—and as I argued in a column in November, it’s time to play up that fact. This is one area where a little marketing wouldn’t hurt. What better way to wake up California and other anti-gay-marriage states than to launch a campaign to lure their most talented gay and lesbian employees here, where they, their spouses, and their families will be fully welcomed?

5. Make non-compete agreements illegal in Massachusetts. Local venture capital leaders like Spark Capital’s Bijan Sabet have been arguing for some time now that the Massachusetts tradition of strict enforcement of non-compete clauses in employment contracts stifles innovation. It prevents qualified engineers or marketers from moving from one company where their services or ideas may not be needed to another where they may well be. It keeps the creative professionals who are germinating ideas and potentially building tomorrow’s leading companies from even talking with one another, for fear of retribution from their current employers. For the new legislative session that began in January, State Representative Will Brownsberger has introduced a bill that would (non-retroactively) disallow non-compete agreements, putting Massachusetts on an equal footing with California in this area. The Patrick Administration should get behind the Brownsberger bill.

* * *

Implementing a few of these business-friendly changes, or the many others being suggested nowadays, would help Massachusetts entrepreneurs keep doing what they’ve always done best—innovate. Take care of that, and the branding will take care of itself.

For a full list of my columns, check out the World Wide Wade Archive. You can also subscribe to the column via RSS or e-mail.

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.