Tuesday, March 27, 2012

Building a Founders Culture in Cambridge, Mass.

Why It Will Take More than Money

My adopted hometown of Cambridge, Massachusetts, has perhaps the highest density of IQ anywhere in the world and a strong entrepreneurial spirit that helped create many great companies. It’s one of the best places in the US to nourish new Internet, info-tech and biotech companies.

What’s missing is a radically stronger founders culture that will attract and motivates the kind of entrepreneur who will found companies and work to keep them here. Multiple times. Silicon Valley has done a great job at this. Cambridge/Boston has not. I am not the first person to have said this - far from it.

In a recent Innovation Economy column, Scott Kirsner compared the paths of two companies Brightcove and Facebook that both got their starts in 2004 in Cambridge but followed clearly different paths to IPO. In analyzing why Boston let Facebook’s founders simply walk away, Spark Capital’s Todd Dagres cited a discomfort with unproven entrepreneurs, among other things.

But if we’re only willing to trust proven entrepreneurs and help them succeed, how will we attract the next wave of company founders?

My friend and trusted colleague Dave Girouard puts it the following way: “In Boston, they want somebody who has done it before. In the Valley, they want someone who could do it next.” Eight years ago, Dave made the decision to go to Google instead of moving back to his home town of Boston. He recently announced that he’s leaving Google to do a new start-up backed by Kleiner Perkins, NEA and Google Ventures and his new company, Upstart will be based in San Francisco. :(

It's Time to Lean Into Risk

We need to ensure that we’re starting the kind of companies and attracting the best talent to Boston on a regular basis. Let’s make it easy for potential recruits by leaning into risk and doing whatever it takes to attract the best and brightest entrepreneurial business talent to Cambridge.

There are a few shining examples of how it should work. Probably one of the most notable is the fantastic job that Tim Healy has done in founding and building EnerNOC here in New England.

Tim and his co-founders started EnerNOC from scratch in New England and located in Boston. They did all the unnatural acts required to start a company, took it public, and resisted temptations to sell out. EnerNOC is now an anchor of the energy cluster in Boston.

Money isn’t the problem. Venture capitalists invested $30 Billion in the US in 2011, so there’s plenty of money out there. About $3 Billion of this went to companies in Massachusetts.

If you're an entrepreneur, the question is whether you need to raise money, and on what terms is it worthwhile. Savvy entrepreneurs recognize that venture funding is just another form of capital – and it’s by far the most expensive form of capital. The partners and firms that you choose to work with have to make it worthwhile for you the entrepreneur the person with a portfolio of ONE.

Perhaps most importantly, you have to trust that those investors that you select as your partners will support you during the worst and the best of times – because doing start-ups is a guaranteed roller coaster. But as my friend Adelene Perkins at Infinity Pharmaceuticals says: “Things are never as good or as bad as you think they are in early-stage companies.”

Great start-ups and entrepreneurs can always raise money: by definition, they figure out how to get the capital they need to achieve their missions. What’s missing are the right kind of talent and support required to take ideas from their raw state to something that is Fundable regardless of whether they’re raising outside institutional funding or self-funding/bootstrapping.

The right kinds of talent and support will allow entrepreneurs to build companies that will generate huge value for shareholders by achieving an aspirational mission that has a significant positive impact on the world.

Let’s work together to make this happen. What are your ideas?

Introducing The Fundable Blog

Ideas for Start-ups and Entrepreneurship in Cambridge and Beyond

I love start-ups. My grandfather – Ray Schuster, started his own company - Illinois FWD - was a role model and inspired me to start companies. (That's him in the photo, fifth from the right – wearing a big smile as he and his team break ground on a new facility.)

I believe that the rugged individualism on which our country was founded and has prospered is a competitive cultural advantage for the US. I hope that during the 21st century we realize our country's destiny to become the most entrepreneurial and innovative country in the world.

We can do this. We just have to use our inherent cultural advantage proactively by making the US the best place for the smartest and most ambitious people in the world to start new, innovative companies. And we need to start right here in my adopted home town of Cambridge, Massachusetts.

Cambridge has perhaps the highest density of IQ anywhere in the world and a strong entrepreneurial spirit that helped create great companies such as Akamai, Biogen, Brightcove, EMC, EnerNOC, Genzyme, Harvard Bioscience, iRobot, LogMeIn, Lotus, Staples, Vertex, and Vistaprint. It is one of the best places in the US to nourish new Internet, info-tech and biotech companies.

But I believe (along with many others) that the start-up community here in Cambridge is vastly under-performing relative to its potential. I’m not the first person to have said this – far from it – but what I believe we are missing is a radically stronger “founders culture.” Among others, Scott Kirsner of The Boston Globe and Eric Paley of Founder Collective have written about this extensively. (I will talk more about this idea in my next post.)

To net it out: I think that we have exceptional technical and scientific talent, ideas and content. But we’ve done a miserable job of attracting, retaining and motivating the right type of business-oriented entrepreneurs.

On this blog, I’ll offer my opinions about some of these strengths and weaknesses, and I won’t pull any punches. I will also offer my ideas for addressing the challenges and taking advantage of the huge untapped opportunity here in Cambridge.

My intention is not to be critical but constructive: I want to help re-invigorate the entrepreneurial culture in Cambridge. I would like to ensure that the next Facebook, Google, Cisco, Amazon or Yahoo happens here in Cambridge. I am committed not only to blogging about this but also to helping found companies that will be potential candidates. I believe that we all need to work together to build world-class independent companies that not only start in Cambridge, but also grow up and flourish here as independent entities. That is, they’re not sold to companies elsewhere (even if that would mean multi-billion-dollar windfalls for local venture firms).

If we can do this a few times, we will have established the critical mass required to sustain a world-class culture of founders who bridge the academic and commercial worlds to create economic and social value like nowhere else on earth.

On this blog I’ll share ideas, insights, and practical advice to help first-time founders and CEOs build better start-ups:

How to work the entrepreneurial ecosystem to gain unfair competitive advantage.

How to inspire, empower and develop young people who aren’t constrained by habit or artificial ideas of what’s possible.

How to create a culture of founders in Cambridge that reinforces founding as a unique skill set and role within great new companies, independent of other traditional functional roles.
How to have fun doing all this while working insanely hard, treating other people with respect, and behaving with honor.

Which brings me back to my grandfather. He loved trucks - big trucks. When I was in elementary school, one of his customers was the City of Chicago Fire Department. The Fire Department had to figure out how to support the Hancock Tower, which at the time was one of the tallest buildings in the world. My grandfather sold what was at the time the tallest fire truck and ladder in the world to the City of Chicago. Before he delivered it, he brought it to my school – Tarkington Elementary – to demo it for the kids. I had a chance to ride in it to the top. Freaking AWESOME for a fifth-grader.

Besides my grandfather making me the most popular kid at school for a day, I always looked back on that memory and thought how cool it was that my grandfather was able to do a job that let him play with trucks every day – truly doing what he loved.

This same spirit drives me today. I’m mission-driven. I work on things that I’m passionate about. The money is a means to an end, not the end itself. I'm passionate about computers, chemistry, biology, drug discovery, education and the intersection of these.

I hope you’ll let me know what you think of my blog, through your comments, questions and challenges. Please also let me know what else you’d like to read about.

See you around Kendall and Harvard Squares.

I would like to thank Mike Stonebraker, Rich Miner, Tim RoweEllen Rubin, Frank Moss, Steve HoltzmanMarilyn Matz, Remy Evard and Christopher Ahlberg for their unrelenting support and commitment to moving me and my family into Cambridge. I’m truly blessed to have you as my friends, colleagues and now neighbors.