The State of MA Entrepreneurship
As I am out trying to figure out what to do next, I know that I will be doing something involving entrepreneurship. Maybe I'll stay in venture capital, maybe I'll join or found a start-up. However, it's a bit depressing thinking about the state of entrepreneurship in Massachusetts these days (at least in the high-tech sector).
There are interesting opportunities. I think that the Web is just beginning to show its promise in enhancing communications and commerce. Mobile communications are also just beginning to move beyond voice and simple text messaging. Also, I believe that energy and energy efficiency will be key investment and entrepreneurship themes in the coming years.
However, it's hard to see how the typical venture capital models can be applied to some of these sectors. There are issues of capital efficiency and timing that make it difficult. Also, Massachusetts doesn't have the anchor tenets and feeder companies to foster some of these industries. And, that's the subject of this post which will be ther first in a series on the state of entrepreneurship today.
Many times people ask what it would take to replicate Silicon Valley. I don't think it's possible, but some of the key factors are technology focused universities as a source of new ideas, a business school where entrepreneurship is a focus, sources of venture capital which are willing to take chances, and established companies in the key industries that are sources of partnerships and management talent. You can also argue that you need an established community of companies that spawn more companies, but that's hard to have at the beginning. Perhaps the way to start with that is to have entrepreneurs and VCs willing to fund a lot of opportunities before they see any initial results.
In Massachusetts, we don't have those anchor tenant companies that can be sources of management talent and partnerships. EMC is the closest, but they are focused in just a few segments. Others, like Analog Devices, don't lend themselves well to spinning off talent and ideas. There aren't a lot of others that are big enough to be candidates. Why?
I think that there are two factors -- companies that lack the vision to capture the market in the long term and VCs who decide to cash out instead of going for the long ball. These issues are probably linked. In so many industries of the past, the West Coast was 'open' and the East Coast was 'closed.' Open always wins. Now, the West Coast is 'consumer' (and 'open') and the East Coast is 'infrastructure.' Right now, the consumer wins. The consumer segment is where the spending is and where the innovation is. Also, strangely, on the Web, it's possible for consumer uptake to be rapid (hard to do offline).
So, we need feeder companies that can help us build companies in the consumer, mobile, and energy segments. If you are in a small company that has that potential, think about playing for the long ball rather than cashing in too early...
More to come in future posts.