Friday, February 27, 2009

Yet Another East vs. West Coast Startup Economy

"You know, it was interesting to see that Boston entrepreneurs are...umm..... older.... mostly in 30s and 40s. Many guys in Silicon Valley are younger".

No offense to the people in their prime 30s and above (including myself), hearing this from a venture investor from the west coast was somewhat demoralizing, though not surprised at all.

Some say Boston is still going strong, and others say it lost the edge already. I don't necessarily believe that Boston lost the edge, but c'mon, Silicon Valley owns a vast majority of big, successful latest high tech startups.

Rewinding a bit to
  • my conversation with a local recruiter in Boston....... "I sort of miss the good ol' enterprise software companies. I see so many mobile/internet companies, and they started to dominate the whole startup scene in Boston".
  • Another quote from a VC.... "We like backing serial entrepreneurs who's been there, done that". Yes, we heard this many times before.
  • Yet another talk with an entrepreneur.... "Yes, we are still hiring. But, it's extremely difficult to hire the right person to fill this role. If you know someone from Yahoo, Google, DoubleClick, or MySpace, please let me know". Really? Not someone from our very best EMC, Lycos, or AthenaHealth?

Hmmmmm.... what's going on here?

Here's my hypothesis. Since the dot com 1.0 revolution, Silicon Valley pretty much sucked in a lot of young talents into its ecosystem. Young, fledgling entrepreneurs dreaming of making a big time career at a cool company like Yahoo and Google flocked to the west coast. Why not? People complain about cold 60 degrees weather, many awesome restaurants, get to see legendary entrepreneurs on the street, etc.

While B2B software is still critical and remains to be a profitable business (when done right), the dropping cost of starting a company applied mostly to those developing application layers, thanks to cloud computing, Web 2.0, and iPhone. Many of these entrepreneurs are from New England. They used to work in a high-flying companies in MA and started companies to change the world.... in a largely irrelevant sector to their root. Then, venture investors figure that they are not really "the serial entrepreneurs" they are looking for. No money, companies die.

By the way, the young, fledgling entrepreneurs from some of the greatest educational institutions in MA can't find a good job, because the companies are telling them that they need to learn from the successful companies like Yahoo, Google, Microsoft, and Facebook before proving themselves to be valuable in the mobile/internet/media startups. They listen, buy an one-way ticket, and never come back. Then, they follow their dream where they build relationship, know people, and start rooting personal lives in the west coast.

Entrepreneurs in MA get older and not nearly enough young entrepreneurs fill the talent pipeline. The younger generation fades away.

The vicious cycle goes on and on.......

Stay in MA is a great program to mitigate the problem of mass talent exodus out of MA, but there needs to be more aggressive programs and effort within the whole startup ecosystem to take the risk of hiring and training less-skilled entrepreneurs and let the young entrepreneurs start their dreams here.
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