Scott Kirsner has written a very provocative piece in Innovation Economy which questions the value of the many VC’s in the Waltham 128 beltway especially compared to VC’s in Boston.
Here is my response to his post….
Scott,
Its great that you are shaking things up, much like taking a baseball bat to hit a fly in a glass shop, but there are a number of elements that suggest your logic could use some refinement. Perhaps, go after the fly with a flyswatter and be a bit more precise.
First, with Nabeel I agree that location is not the issue — it is the partner and then the partnership. The same holds true with the West Coast. There are good and bad vc’s on every coast, regardless of the firm.
Second, blogging and/or tweeting and/or sharing information in general are no indication of an inclination to take early stage risk. I know of half a dozen top drawer, high-risk VC’s who don’t tweet or blog. Moritz among many do not blog, yet I don’t think you would suggest that they are risk averse. In fact, if you look at Sequoia’s new website it is the antithesis of your thesis – they don’t share any information readily.
Sharing info is a great way for new VC’s to break out of the pack and make a name for themselves and most of them have done it rather well. Kudos to them.
Third, passing on a deal is no sign of stodginess. A huge number of West Coast firms passed on Ebay. The question is more about how they learn from their mistakes. I would suggest that firms in Waltham have learned that they should not.
The problem is less about who is investing in what but rather where do early stage entrepreneurs go to get funding. I suspect Y-Combinator’s move was not because of a lack of local talent to start the startup – it is a lack of an ecosystem to grow and evolve it. The consumer ecosystem is not here. The big companies that startups can draft off of, steal great people from and beat at their own game are mostly on the West Coast.
My experience may be such an illustration. I had no trouble getting funding for Hangout from two great Route 128 funds here in Boston. But after a year of trying to find great senior level managers who could build a team in the Boston area, I gave up and hired a great team out of Disney and moved development to the West Coast. I tried exceptionally hard, using three great recruiters to find the mid-level to senior exec who would move from the West Coast to Boston to no avail.
But I ask you, why would a director at Google or Slide move to Boston, except for personal reasons. The Boston area does not seem like the logical place to go to further one’s consumer career.
Any startup that leverages social networks should have a presence out there because the rules are changing too quickly and the talent that knows these new rules are out there – which creates a vicious circle that is tough to break if you are on the East Coast.
Paul Maeder at Highland was right to call out that the big failure of Boston VC’s was a willingness to sell too early, creating a dearth of large consumer firms from which an ecosystem is built.
It may take another 5 years before we can create a behemoth in Boston that will be the mother ship that startup barnacles like mine can grow on.
But its great that you are swinging the bat!!
