A Tale of Three Cities: How Boston, Boulder, and Seattle Measure Up as Tech Innovation Hubs

11/6/09Follow @gthuang

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through the other universities—Harvard, Boston University, Babson, Brandeis, the list goes on and on. They’re all embracing startups. There’s a deep bench of entrepreneurs around Boston. On the larger companies, we’ve been lacking there at times, but I’m seeing renewed vigor from companies in terms of your ability to go in and get experienced executives. And Google and Microsoft have finally made a big commitment to Boston.

“There’s been a lot of wealth created in Boston from startups, most of it from the computer, hardware, telecom, networking industry. You’ve seen the rise of angel groups in the last 10 years in Boston. We were the first back in ’98. Today in New England there are 23 or 24 angel groups, representing 800-1,000 angels. The venture community, there are probably 20-25 active firms doing IT investments. But I think we can do more on the seed and early-stage side.

“The final building block is startup resources. Part of the challenge in Boston is, you’ve got this very dispersed ecosystem. You overlay that with a conservative culture. Trying to make connections there and get in and see the right people can be challenging, can be time-consuming. So I think that’s the gap and opportunity that TechStars Boston [led by Shawn Broderick] has identified. You can feel the energy and the buzz around that. There’s a sea change occurring in the IT industry. Boston is well known for growing up with hardware and software companies. You’re now seeing other parts of the IT space building clusters around Boston—mobile, gaming, Web, e-commerce, ad tech and marketing.”

On the Seattle front, Greg Gottesman of Madrona Venture Group pointed out the importance of anchor companies like Microsoft and Amazon. “I think the most exciting thing going on in Seattle on the entrepreneurial scene is actually Amazon and the wealth it’s creating for a lot of people who’ll be the next generation of angels and entrepreneurs,” he said. He also stressed the importance of wins in establishing an entrepreneurial culture at the University of Washington—his example was Farecast, the travel search startup co-founded by UW prof Oren Etzioni, which Microsoft bought for $115 million last year.

Steve Hall of Vulcan Capital stirred the pot a little by pointing out some of the shortcomings of Seattle. “The first is the question of whether Seattle has enough capital. It’s a very short list of funds. You need a critical mass of capital to drive entrepreneurs’ willingness to quit their jobs and burn the midnight oil to start businesses. While I think it’s good for us VCs to have the market to ourselves, you need a little more activity to jumpstart the system. The good news is there are a lot of Bay Area firms spending a lot of time up here. But I think there’s room for another fund or two, probably in the $100 million range,” Hall said.

“People outside Seattle, particularly fund investors, believe that Seattle is a little too nice. We enjoy our lifestyle too much. Boulder may have a little of this as well. That doesn’t build the most competitive companies when you’ve got people in the Valley who live and breathe this for sport,” Hall said. “There’s a very different cultural demographic to the entrepreneurs here, which I think is great from a lifestyle standpoint, but I worry sometimes if I’m betting on a company here in Seattle versus others in California. If you chalked up the hours, I know which ones are working a little bit harder sometimes. Perhaps controversial, but I think there’s a regional cultural dynamic that does influence the entrepreneurial ecosystem.”

Andy Sack of Founder’s Co-op then gave his perspective on his experiences in Seattle after coming from Boston nine years ago. “Boston was a vibrant, vibrant community. It was a great place to start a career. There was a never-ending supply of smart, inexpensive talent coming out of the universities. You could bootstrap and build early-stage companies. In 2000, moving to Seattle, it was like, whoa. I remember going to meetings and feeling like I had to downshift. It’s taken me a number of years to slow my direct style. Fast forward to where we are today, the last three to four years, there have been a number of significant improvements in the entrepreneurial ecosystem.” He cited an increase in the number and quality of tech-business publications, conferences, and resources for entrepreneurs.

Lastly, Sack aired a couple bits of constructive criticism. “There’s a greater aversion to risk here than in Silicon Valley or Boston,” he said. And he added, “As nice as the Northwest is, it often isn’t as collaborative as I’d like to see it. Competition is good, but in terms of building a world-class city of technology entrepreneurship, I think we still have some things to learn.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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