
What's the Matter with Boston VCs? - AustinEnigmatic
http://ownlocal.com/newspaper-support-group/whats-the-matter-with-boston/
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bobz
As a longtime Massachusetts / Boston resident, the culture of the city may
have something to do with it.

Boston is, at its heart, a Puritan settlement. This has been used as a sleight
against Boston, but I don't mean it that way. But it is a word that captures
the essence of what I mean.

A superficial example shows itself to visitors immediately. Most people who
visit Boston come away thinking the people are cold and unfriendly, especially
if traveling from a very outgoing culture like you find in, say, California.

Having lived here, I can say, this is often true, Bostonians are not known for
being welcoming of outsiders. But they are extremely loyal, honest, and
dependable as a rule as well. If a Bostonian tells you they will be at your
party next weekend, they probably will! I had some trouble adjusting to the
fact that this isn't really assumed in other places (California...)

Another is the work ethic. Bostonians (as a rule) abhor flash and glamour.
They prefer good old fashioned hard work. Leave the get rich quick schemes to
New York, we will get rich slow.

I think that Boston needs to adjust to the pace that the tech world works at,
and I think it will take some time. But, then again, the tech world will
probably also benefit greatly when the deliberate wisdom of Boston again rises
in the tech world.

And it will. Eventually.

To be fair, Cambridge, where I really live, has a culture of its own, and is
often more reminiscent of Berkeley than Boston. But when you're talking about
money, for the large part, you're also talking about Boston. Also, even in
Cambridge, the focus is still definitely much more on academic achievement
than entrepreneurial achievement.

~~~
Homunculiheaded
I grew up in the North East and spent a good amount of time living in Boston.
One thing I always noticed about Bostonians was that upon meeting anyone new
one of the very first questions they ask is "where are you from" (and I also
felt there was asterisk there: *in Massachusetts/NE). This may seem like a
small thing but it speaks a lot to the main focus being "which direction did
you come from" rather than "which direction are you going?" placing a lot more
value on pedigree than entrepreneurship. I later moved out West and have never
been asked this until knowing people much longer, and usually as a point of
small talk.

~~~
localhost3000
and the second question is _always_ "what do you do?" and, up until very
recently, answering with "I work at a web startup" was met with extremely
puzzled and questioning looks.

~~~
esrauch
This is definitely true, and many people seem to assume that I'm either a grad
student or working at a University and are surprised that I'm not.

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carmen
why should each city have the same skillset and specializations? that sounds
pretty boring. is SF leading the way in bio and health-care innovations? what
about open-source data-y stuff like Cornell's DuraSpace, MIT's SIMILE,
Encyclopedia of Life, Brown's Racket (our own little INRIA this side the
atlantic?!)..

i moved back to boston from TL after 3 years because all i could find for work
in SF was the least-common-denominator/proprietary/centralized/consumer webapp
startups that this article is apparently hoisting up as the end-all of
aspirations. maybe i wasn't looking hard enough but it's a lot easier to find
things i'm into in boston

~~~
jeremymims
It's a misconception that all YC startups are focused entirely on consumer web
apps (and considering the YC company I'm a part of is mostly B2B shouldn't
reinforce this notion). There are a bunch of amazing startups working on the
hard technology problems you yourself prefer to work on. Storage, databases,
application hosting, and more can all be found at YC.

New York hasn't shied away from hard technology problems either. 10gen
invented MongoDB.

~~~
rdl
YC has a surprisingly large number of b2b startups which require real
knowledge of a problem domain, using either the web or just computers/Internet
as tools to solve the problem.

A smaller number of real infrastructure companies, but there are some.

As far as I know, not many non-computer/electronics tech (life sciences,
cleantech, etc.).

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arthurgibson
Nail on the head. We have been back in Boston for about year and a half, got a
bunch of free office space (MC, CM). One of the best responses from a VC- "You
can clearly do well... but not within the revenue of >$200M which we would
hope to see in a potential investment (happy if you prove us wrong though!)"

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Symbol
I'd love it if pg chimed in and explained why, after citing Cambridge as the
best city in the world, they pulled up tent stakes. Did the author capture it
fully?

~~~
philwelch
This is what pg said at the time: <http://ycombinator.com/ycca.html>

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tibbon
I think if Boston's VCs would have had their stuff together, its very possible
that YC might not have abandoned Boston in the first place.

Also, many of the VCs are heavily invested in Biotech and other heavy-capital
industries. Dollar for dollar they invest a great deal, but it doesn't
generally go to consumer tech startups.

Now if you want to see an area with actual little high dollar investment
happening, come visit me in Ohio sometime...

~~~
philwelch
_I think if Boston's VCs would have had their stuff together, its very
possible that YC might not have abandoned Boston in the first place._

Doubtful--in the announcement, PG said:

 _But while Silicon Valley is a better place for startups than Boston, that
isn’t why we chose it. If Cambridge seemed a better place to raise kids, we
would have stayed there year round instead._

~~~
tibbon
That's interesting. I haven't spent as much time in California, but I always
figured Cambridge (especially if you have money) is a _wonderful_ place to
raise kids. A nice house near the Harvard Quad/Garden St and a good private
school smooth out pretty much any bumps that I could foresee.

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siamakt
Agree. Grasshopper is just outside of Boston and out of last 75+ VC's and PE
firms that have reached out to me, only 5 have been based in Boston with SF
and NY leading the pack.

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dr_
The author refers to pg's article on Cities and Ambition, and suggests that
what is said about NY in the article is changing.

I don't think so. The banks will come back stronger than ever, it's just a
matter of time, they always do. Other than that the mentality of people in the
city has not changed. This so called engineering school which is expected to
become top notch overnight, won't change things. If that were simply the case,
Boston should never have seen it's decline as a tech mecca in the first place.

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helwr
Also <http://news.ycombinator.com/item?id=2748869>

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suking
They can't get out of the way of their own egos (imo).

~~~
jpdoctor
A quick check of 10-year IRRs will tell you that this problem is not localized
to Boston.

~~~
suking
I don't mean their performance - I mean that relatively speaking I have found
Boston VCs to be bigger assholes than CA or NY VCs.

For example, one Boston VC said our company was too soon and if there was any
way to help let him know. So I did some research, found a co-investment he did
with an angel I wanted to talk to, asked for intro, no response. The only
other firm to do that ("can we help?" then no response) was a Seattle firm.

All CA firms have helped. Foundry Group (Boulder) has been the most helpful
and set me up some meetings with some high profile CEOs even though they knew
they wouldn't be investing.

~~~
jpdoctor
In truth, I got what you originally meant and was expanding on it.

The fact that VCs can have such a low hit rate and such a low return rate, yet
still have a job, is astounding to me.

I think the underlying problem is that there is an incestuous relationship
between retirement funds and investors. Nothing else explains why the funds
keep giving away 2+20%.

~~~
suking
Gotcha. I think if you take the avg fund size divided by # of partners the avg
partners gets $30-40mm of a fund. So management fees alone are in the millions
for showing up to work. Seems a bit high with no track record. Maybe a better
model for LPs would be 1.5-2% for yrs 0-5 (when most investments are usually
made) and then 0-0.5%. What do I know...

