The Boston House In San Francisco

A few months ago, Bostinno wrote about the Boston House, an idea that arose from a discussion I had with Boston City Council President Michelle Wu, about why startups leave Boston, and how to improve the ecosystem here. This post is about why now is the time to do this, and how it will work. I’ll start with an analysis of the startup scene in Boston, but you can skip down if you are just interested in reading about the solution.

Note: I consider Boston and Cambridge as one ecosystem here, so my analysis applies to both.

The Problems In The Boston Startup Scene

I moved here from Kentucky when Backupify (my last company) was just a few people. We took some money from First Round Capital and General Catalyst, and were looking for a CTO. I knew we had to move to a place with deeper labor pools so, I interviewed CTOs in Boston, New York, and San Francisco, which in my opinion are the three deepest tech labor markets in the country. We found our CTO here, so we moved to Boston, but I want to point out that I have no particular roots here, and I think that gives me a more balanced perspective on what is right and wrong here.

People who aren’t part of the startup scene don’t realize that big companies like Facebook, Dropbox, Zendesk, and many others started here in Boston and moved West. Many companies move, but they are always small nobodies when it happens so it doesn’t rise up to the local news level and cause a stir. Companies leave for lots of reasons. The biggest is that early stage capital is so much more abundant in the Bay Area, and it’s easier to raise. But it’s also a very creative ecosystem.

People talk about Boston’s Puritanical roots as part of the reason startups and entrepreneurs here are more conservative. I disagree. In my opinion, Boston rewards analysis over innovation, and the Bay Area rewards innovation over analysis. This comes from Boston’s heavily academic DNA as a city. You see this in the startups that get funded.

Boston excels in analytical startups. These are the companies where you identify a clear market need, and plan to go fill that void. The Bay Area excels in innovative startups, where new industries and ideas are at play, and no one really understands them yet. As a result, the distribution of ideas in the Bay Area is wider, which results in many really dumb ideas getting funded (which we mock here in Boston), and many really crazy but ultimately wildly successful ideas getting funded (which we wish were here). I don’t think you can have one without the other.

The culture in the Bay Area is to invent/test/buy the new thing just because its the new thing. That doesn’t exist in Boston where we are more analytical. But even for Talla, my new startup, almost all our early customers are in the Bay Area.

When Backupify was acquired in 2014, I rented a house in the Bay Area and decided to move there for my next company. Except that almost every venture capitalist I met told me to stay in Boston. Why? Here are some things I heard:

Talent stays one year, hits their cliff, then is off to the next startup. Employees here view it as a series of lottery tickets.

All of our companies have trouble hiring, and are all building key offices elsewhere. If you have roots and networks in Boston, better to stay.

Everyone here wants to leave their job and start a company, its ridiculous.

The Bay Area is amazing. I can see why people want to live there just for the quality of life. But the traffic is nuts, the rents are even nuttier, and the drought has made tap water a premium item. I have no roots in Boston and would move to the Bay Area in a heartbeat if I thought it was best for Talla. (In fact, we have a small office in Palo Alto, and will hire in both markets.) But Boston is HQ. Why? Because people are starting to leave the Bay Area because of all it’s craziness. Which brings me to the Boston House.

What Is The Boston House?

Some people in San Francisco have no idea Boston even has a startup scene. And the ones who do know favor the Bay Area, but don’t look down on Boston for any specific reason. They just ignore Boston (and everywhere else) because there is so much going on in the Bay Area, there is no need to look outside of it. So problem #1 is a lack of awareness in the Bay Area of the Boston startup scene.

The second problem is that Boston doesn’t do a good job of promoting what goes on here. We have MIT, Harvard, and a bunch of other amazing higher ed institutions. We have big publicly traded companies, from Akamai to Hubspot, and thousands of startups at various stages. We are also much closer to Europe, if you have reasons to go there for business, or have an office there, and much closer to NYC and DC, two places you have to go from time to time if you do anything big. Problem #2 is we don’t sell Boston very well.

The third problem is that many Boston investors will only invest in Boston, and will only invest in entrepreneurs who agree that they will stay in Boston. I think this is a mistake. (Ironically, most of these people probably disagree with President Trump’s protectionism, yet they promote Boston protectionism). Now, there are practical reasons to invest close to home, because you can help more etc, but a lot do it for ideological reasons, or because they believe that is the best way to build the Boston ecosystem. But, if you study the science of networks, the way you become a strong secondary node in the network is to attach yourself more deeply to the lead node. Of my 21 angel investments, 12 are in the Bay Area. I benefit quite a bit from their connections and perspective, and it improves my deal flow. Problem #3 is that the Boston tech scene often tries to weaken ties with the Bay Area, not strengthen them.

And finally, you have a ton of Boston tech executives and entrepreneurs who, like me, go to San Francisco somewhere between 2x and 20x per year. (I go about every 6 weeks for a full week). When we are there, we don’t connect, or if we do, it often happens randomly. I’ve run into Boston people in San Francisco restaurants, or even just walking down the street. So problem #4 is that there is no unifying point for Boston people in the Bay Area.

I think the Boston house solves all of these issues. What is it? I’m proposing that we create a non-profit that rents space in downtown San Francisco. We call it the Boston House, to help keep the Boston tech scene top of mind. When people from the Boston/Cambridge area visit the Bay Area, they can rent work desks and conference rooms for a really cheap rate, maybe $5/hr. It’s not a business, we just need to break even. This does a few things:

  1. It provides a connecting point and network density for Boston entrepreneurs in the Bay Area. I can imagine catching up with Boston people I haven’t seen in a while because we are both at Boston House.
  2. It provides an easy point for Bay Area companies to connect. I could go there to meet with business development teams at local companies and, rather than going to their offices or a coffee shop, they could come to Boston House. We could even have an even like, every Wednesday night from 5–7pm, some local company like Oracle, Google, Facebook, Slack, etc, send their biz dev team over to the Boston House and there is a networking event for all the Boston companies in town that week. It’s super efficient for both groups.
  3. It provides inter-network serendipity. One Boston entrepreneur could be hosting a meeting at Boston House, and another entrepreneur could walk in and, if they know each other, maybe the first one is meeting with someone the second one should know. This happens all the time in the Bay Area, but less so in Boston. The Boston House helps create more serendipity.
  4. It keeps Boston top of mind, which means if there are companies who may want to move here, it seems more like a viable option.

What Has To Happen to Get This Off The Ground?

Well, first of all, someone needs to run it. I have a full time job and can’t leave it to go do this. Ideally we need a general manager who wants to live in San Francisco but has deep ties and an appreciation for Boston. We also need to raise a small endowment, maybe a few million dollars, so this non-profit can survive bumps in the road without being a continual budget drain on whatever other funding source we would consider, or putting the project at risk by forcing it to be cash flow breakeven day 1. But I do think it should be designed to be self-sustaining over time, with a buffer.

If you are interested in participating, helping, or donating to the cause, contact Michelle’s office. If you want to be kept apprised of when Boston House launches so you can use it, add your email address here.

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Rob May

CTO/Founder at Dianthus, Author of a Machine Intelligence newsletter at inside.com/ai, former CEO at Talla and Backupify.