Comparing entrepreneurial cultures
November 6, 2009
Below are some excerpts from an article on xconomy about the startup scenes in Boston, Boulder and Seattle. I highlighted the statements I thought were important to or resembled Kentucky and other areas trying build high-tech ecosystems.
Brad Feld of TechStars and Foundry Group gave a brief history of the startup scene in Boulder, CO—useful for any city with entrepreneurial aspirations. “When I showed up in ’95, what I found was on the software side you had a lot of smart engineering talent but you didn’t have much else. A handful of entrepreneurial companies in storage and cable infrastructure. Not much in the way of entrepreneurial executive leadership other than from these pockets. In the mid-90s, because of the counter-culture community—and the Internet was purpose-built for places like Boulder—you had a lot of people who were independent, very smart, doing their own things suddenly intersecting with a medium that allows you to be anywhere. It’s 100,000 people plus 25,000 college students. A pretty small town, but it has the largest percentage, per capita, in the United States of computer scientists and PhDs. Yet there wasn’t a broad wave of entrepreneurial experience,” Feld said.
“In the mid-to-late 90s, there was huge activity around the Internet. Anybody with a pulse could get a company started. The predictable thing eventually happened, there was a lot of wreckage. But from ‘95-2001, Boulder had imported a lot of executive talent—CEOs, VP sales, engineering leadership. We also had a lot of entrepreneurs who had one or two companies in that cycle. So by 2003, people were starting to come back and get re-engaged in entrepreneurial activity. There were probably 50-plus people that made $10 million or more, so there was enough of an angel community. There was critical mass around this. But what was missing was something that tied the community together. There was the endless cocktail party circuit of entrepreneurs. Eventually people got bored and stopped going….“The other thing was that one of the hardest things for first-time entrepreneurs is to have an engaged relationship with an experienced entrepreneur. We found we were creating this thing that integrated the whole value chain of entrepreneurs. It really energized the existing entrepreneurial activity.”
Chris Sheehan of CommonAngels then gave his thoughts on the Boston innovation scene. [Disclosure: Chris is on Xconomy’s board.] “In the IT ecosystem in Boston, there are a number of things going on,” Sheehan said. “It’s a wonderful place for universities and colleges. MIT has been the granddaddy in terms of the entrepreneurial ecosystem. But what I’m seeing is a fresh set of energy coming 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.
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.
