Why is NYC great and Boston sucks?
If I ever sit on another panel to discuss “Why is NYC great and Boston sucks?” I am going to throw up. This was the topic at the NVCA panel discussion I participated today as a budding NEVCA board member (NEVCA: New England Venture Capital Association not to be confused with the NVCA: National Venture Capital Association).
Ever since Battery Ventures turned down Facebook and the social revolution went elsewhere, apparently all of us here in Boston are envious of what’s happening in the valley but especially in NYC. I find this quite amusing, actually bothersome.
Comparing NYC to Boston is silly - it is like comparing the Yankees to the Red Sox. Bear with me here. I am a fan of neither team but the Yankees have won 27 World Series and 40 AL championships. The Red Sox won 7 World series - most of them almost a 100 years ago (and 12 AL championships). The two teams may have a good series occasionally but clearly the Yankees are by far the superior franchise.
In the venture world Boston is the Yankees. It has a well established track record of excellent start-ups that span over many decades in a variety of sectors from bio-technology to telecom infrastructure. It is the birth home to many world class companies and a slew of venture funds that have done very well investing in the next revolution here and elsewhere - even in enemy territory.
What’s happening in New York City is absolutely amazing. New York companies are at the forefront of the next social revolution, and the echo-system that has emerged as a result is extremely robust - not like the last bubble. But, do you know what was the last billion dollar venture backed exit? The answer is Endeca, right here in our backyard, yet another great Boston company under the radar backed by Bessemer and Venrock, one of many. Unfortunately here in Boston we are too proud to celebrate our success or to publicize it extensively for our own benefit.
New York, on the other hand, has little to show for all this activity in actual results except for a few exits during the first internet bubble - a 100 years ago - and more recently DoubleClick - an MBO, not quite a venture backed company. Quigo, Huffington Post and Admeld (a Spark company), three of the more recent bigger exits - although all great companies in their own right, were all (way) sub $1B in exit-value - in venture terms solid doubles but not the type of home runs the industry needs to sustain itself in New York or elsewhere.
I am certain that a New York company will exit for over $1B either privately or publicly very soon - there are already way too many great companies there like Appnexus, Etsy, Tumblr, Guilt, Outbrain among others for this not to happen. Hopefully this exit will be the first of many - much like the Red Sox won a couple a few years ago - as New York has a lot to do to catch up to Boston in venture supremacy.
If you are a digital media/internet investor like our firm - Spark Capital - you have to be in New York (and in San Francisco and in Israel and …). New York is where a lot of all these companies are getting formed these days and it is our job to go find the most promising ones wherever they are.
If you are intent to invest in enterprise software, life sciences, next generation energy …, a trip to New York City would be a huge and absolute waste of time. You would be much better served taking the T to hang around the MIT campus. Unfortunately, although the magnitude of the revolution is no different, local tech companies are a lot less celebrated than the next potential social phenomenon.
Staying with baseball analogies, we are in the beginning stages of the very first inning of the digital revolution. The most amazing thing about this revolution is that it can happen anywhere - even in Chicago for all of you Groupon fans. Boston in this equation is the sleeping giant slowly waking up with some of the very smart young people that live here now focusing their energies into companies that Techcrunch would want to write about. There are already quite a few that are starting to make an impact. It is just a matter of time before many become household names. Maybe then we’ll feel good enough to not worry about what might have been and start celebrating the success of all the other great local companies that may not be Techcrunch material but will clearly change our lives equally.
