Silicon Valley is the epicenter of the universe for technology startups. Why? They have some of the best technology universities in the world. Sand Hill Road is home to the largest venture capital firms. And, they have a pool of startup talent that is unrivaled anywhere. It is a powerful combination. Boston has those elements too. Great universities like MIT, Harvard, BC, BU, Northeastern. Top notch VCs like Polaris, Matrix, Globespan, North Bridge, Highland, General Catalyst, and others. And startup talent from DEC, AltaVista, Lycos, Lotus, PTC, Akamai, Groove, and others.
Paul Graham asks “Can you buy a Silicon Valley?” and suggests that $1B invested in 1,000 startups could recreate the Silicon Valley magic. It is an interesting proposition. Even $50M invested in 50 startups would be enough to test the theory. I believe it takes the right blend of investors, entrepreneurs, big tech companies, universities, and a vibrant pool of existing startups, to attract more new startups. Can a city create the vibrant startup ecosystem by actively financing 50 or 100 startups? Maybe.
The Ycombinator experiment in Boston didn’t achieve the success it could have because the investor community, VCs and Angels, didn’t step up and invest in the 40 companies hatched there. Boston has a very active VC community that has raised over $10B in funds over the last 3 years. So, money wasn’t the problem. Maybe it was a mismatch on the types of companies Boston VCs know and understand.
Cities become famous for different things.If you think of insurance you think of Hartford. If you think of investment banks you think of New York, more specifically, Wall Street. If you think of advertising, it is Madison Avenue. Automobiles? It is Detroit. Films...it is Hollywood. Country music? Its Nashville. It is the natural order of all things that centers of excellence emerge and attract more talent.
All of these cities became the epicenter of their industries by historical serendipity. While other cities have some measure of all the elements necessary to support a particular industry, (universities, money, people, infrastructure) it is rare that any city can replicate the success of the dominant center. Success attracts success. The best and brightest people want to make it to the top where the competition is at the highest level. Employees are the same way...they want to work with well known successful people.
Sports stadium or startup center? Paul Graham points out that for the price of a football or baseball stadium a city could instead fund 500 startups with $1M each and create a startup ecosystem that could rival Silicon Valley and create more jobs than any other comparable investment. My post last week “Create 50,000 companies and 250,000 jobs for $1B” made a similar argument. These are real stimulus ideas. Government and the private sector need to work together to make it happen.