Boston Startups, Put Your Hands Up!

Sometimes I think Scott Kirsner, Boston’s most prominent and respected tech journalist, has a bi-polar relationship with the Boston tech scene.

Shots Fired

In his most recent piece, titled, “Why Entrepreneurs Still Bolt from Boston,” Kirsner published the musings of a small group of entrepreneurs that left Boston for Silicon Valley. Twitter quickly erupted in a firestorm, with tech leader Mike Volpe advocating for a more even-keeled perspective:

Accomplice VC Partner Christopher Fagan critiqued the caliber of the article’s sources:

The same rehashed points littered the page: restrictive non-compete laws, weak entrepreneur retention, lack of a betting culture from the angel investing and venture formation perspective, and a deep focus on serving the enterprise while ignoring consumer-facing products. Those arguments have been wrought out in dozens of articles and conversations, and while issues like reforming non-competes are still a black mark on the ecosystem, it’s difficult to complain when Boston’s innovation economy comes from a position of true strength in all these areas.

Add to that foundation the prominence of our educational institutions, diversity of expertise (biotechnology, robotics, healthcare, hardware, big data), and the fact that I overhear conversations on topics other than the next round of fundraising, disruption, achieving unicorn status, and growth hacking at my local watering hole.

It’s a Matter of Perspective

But the article’s implied takeaway? Boston is still a sieve. Our young, budding startup minds are leaving to build the next giants in NYC and the west coast. Silicon Valley envy bleeds through the page with every keystroke. Maybe this BU grad with the cool, bright green wire frame glasses just needs to be re-inspired by the Scott Kirsner of 2011. The guy who resolved to hit pause on comparisons with the Valley, to focus on being great and highlight what makes the tech economy in New England so awesome:

What if we stopped comparing and benchmarking? What if we stopped wondering whether we’re as innovative as New York or Silicon Valley? What if we stopped positing that New England in the 1970s or 1980s might have been more competitive than it is today? Basically, what I’m asking is: what if we put all comparisons on pause for 2011, and just focused on creating companies, solving big problems, and kicking a–?

I confess: I’m more guilty than most when it comes to making comparisons. But I promise that in 2011, I’m not going to give an exit interview to every entrepreneur who leaves Boston because they hope to do better in New York or the Valley, asking them to opine on Boston’s shortcomings. News flash: entrepreneurs can fail in those places too. When I’m at a panel discussion where the panelists start bloviating about the Valley versus Boston, or New York versus Boston, I’m walking out.

Scott Kirsner, December 27, 2010

And the best part of all this? I think the Silicon Valley envy that seemed pervasive in decades past has finally been cleaned up like the Charles River. After spending the last seven years engrossed in Boston’s innovation ecosystem, I think the region has truly come into its own.

Are Startups Actually Leaving Boston?

Every once and a while, an article will hit the wire about a startup leaving Boston for greener pastures elsewhere. For those who left, it always seemed like a natural progression. My friends at music startup Cymbal recently moved to NYC to avail of a strong music scene…makes sense. And yes, it’s natural to dream wistfully about what would have happened if Mark Zuckerberg, Drew Houston, and Joe Gebbia grew Facebook, Dropbox, and Airbnb in the same region in which they graduated. This all begs the question: are startup departures the exception or the rule?

To test this question, I decided to check in on the 86 startups identified in Kinvey’s Startup map, released in March 2013. How many startups were acquired, died, and continued to grow? More importantly, how many left the region? I did some digging (see bottom of page), and what I found wasn’t surprising:

The Verdict: Boston Startups are Staying in Beantown and Succeeding

Of the 86 companies on Kinvey’s March 2013 Startup Map:

  • 28 (32%) have been acquired
  • 48 (56%) are still alive
  • 8 (9%) shut down
  • 2 (3%) moved away (OSComp Systems to Houston and Plastiq to Silicon Valley)

These statistics are incredible, even if some of the startups aren’t still in hyper-growth mode or some of the acquisitions were actually acquihires. The Kinvey data set also erred toward well-known, growing startups at the time of publication. In addition, I did not limit the data set to startups at/near their founding. Regardless of these caveats, we can draw some conclusions:

  1. Startups who begin in Boston typically build their businesses and exit in Boston
  2. The few companies that leave seek the epicenter of their chosen industry
  3. Yes, some exited founders and developers head to Silicon Valley to become investors, engross themselves in the Valley culture, and start/join new ventures. The same can be said of serial entrepreneurs coming to Boston from all over the world to start their next venture.

The Kids are Alright

The comings and goings of entrepreneurs is natural. Boston’s startup culture is different from anywhere else in America, including Silicon Valley, and that’s ok. Founders can and do succeed in Boston even though more venture capital is invested with faster velocity to startups in the Bay Area. The best Boston startups still get funded.

Maybe we overhaul the marketing message, starting with the local tech press. Maybe we put some force behind the “Built in Boston” movement. I don’t believe we have  Silicon Valley spite, so let’s embrace our Boston bravado.

Scott, I know these Boston vs. Silicon Valley articles drive some of the highest page view counts each year, but it’s hurting how our startup ecosystem is perceived across the country. You have the loudest microphone in Boston tech, let’s not kill ourselves by a thousand little cuts.

——-

Kibits was acquired by Cisco, Plastiq moved to SV and some employees moved with the startup, Draftkings keeps raising and growing, LuckyLabs was acquired by InfoScout, Help Scout raised $6MM less than a year ago, Promoboxx just launched local ads, Smarterer was acquired by PluralSight for $75MM, BzzAgent was acquired by Dunnhumby to be their R&D office in Boston, Intelligent.ly continues to crank away, Terrible Labs was acquired by Autodesk and all employees stayed in Boston, Practically Green is now WeSpire, Fiksu just launched a self-serve mobile ad targeting platform, TIM Group remains in Boston, Google acquired Stackdriver, Quantopian continues to grow in Boston, wegowise is still on South Street, Goby was acquired by TeleNav and kept operations in Boston, Workbar just opened a new space in Arlington, Framingham-based Disruptor Beam just launched a new Star Trek game, SimpleTuition rebranded as Valore and is still running hard in Boston, Linkable Networks is building on Melcher Street, Rethink Robotics is announcing new distribution partnerships and cranking on Wormwood Street, OwnerIQ has a big team on Wormwood as well, RAMP is still in operations there as well, Space with a Soul got taken over by CIC, Dataxu over on Summer Street just got $10MM from Sky, Gradient Studios seems to have wound down a bit, Bocoup is rocking on Causeway St., Wiggio was bought by Desire2Learn, Intuit bought Aislebuyer and most former employees are still in Boston, ZMags was acquired by Gores Group and nearly everyone is still in Boston, Apperian on Summer Street just opened their API, Spindle was bought by Twitter and former employees are split between SF and Boston, the now defunct Buzzient left for SF and hardly any employees went with them, Greentown Labs is doubling down in Somerville, OSComp Systems moved to Houston to be closer to the energy industry, MassChallenge is growing across the world, virtually all employees from HarperCollins-acquired Libboo (Midlist) are still in Boston), CoachUp is running hard on Congress Street, RaceMenu is still rocking on Washington St., Rentabilities was acquired by Hubspot and all former employees stayed in Boston, Bounce Imaging is still making waves at Harvard Launch Lab, Lifeables may have died but all former employees but one are still in Boston, Freight Farms is building the future of farming in Southie, former BuysideFX employees are scattered but most are in Boston and Vermont, Swirl Networks just picked up $18MM, Follica remains on Boylston Street, Jana just picked up $57MM in funding, Trefis is still based in Boston, Mobee’s Prahar Shah may have left Boston to help run DoorDash, but the majority of his team is still running the startup in Boston, OpenBay is in growth mode in Cambridge, UberSense was acquired by HUDL and notably Amit Jardosh started his next company in SF, Localytics has offices on both coasts with the majority in Boston, Zazu has shut down operations, Bostinno was acquired by Streetwise Media and almost all current and former staff is still Boston-based, State Street-based Punchey seems to have shut down, only a couple employees from Nest-acquired MyEnergy headed out west, Lattice Engines started in Boston but grew their San Francisco office faster, Kinvey keeps up the growth in Boston on Summer Street, almost all Locately current and former employees are still in Boston, ScanScout was acquired by Tremor Media and still have plenty of personnel in Boston, Gemvara is still on High Street, Ministry of Supply launched stores in Boston and SF but keeps their corporate staff in Boston,  Abroad101 was acquired by Ledra Capital, Cloudant was acquired by IBM, AppNeta acquired Tracelytics, Navinet was acquired by NantHealth, Boundless was acquired by Valore , TurningArt is on South Street, Visible Measures is still largely Boston with a small office in NYC, EverTrue is building on Congress Street, Abine is also still at 280 Summer Street, Barracuda Networks acquired Intronis, Gazelle was acquired by CoinStar, Crimson Hexagon is growing over in the seaport, AppNeta was founded in Canada but has the majority of its employees in Boston, Kyruus is growing gangbusters with their latest funding infusion, Session M is building their product with a close-knit team near the fish pier, Happier is still based in Boston, Rue La La was acquired by GILT Group, Boston-based Lose It! is expanding internationally, PingUp is expanding their publishing network, and almost all of the FoundationDB-acquired employees at Akiban are still in Boston.

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Boston Startups, Put Your Hands Up!

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