The article sort of buries the real reason for this: the large amounts of biotech VC funding. Boston is the world-center of biotech startups and VC, and biotech VC funding is on pace to be $15-20B this year. As recently as 2013 __total__ VC activity was just $29B
The amount of money being invested (and made) in biotech today, and the level of technological advancement in the field, is disproportionately higher than mainstream awareness of the field
The greater Boston area gets overlooked a lot of the time because it’s relatively light on the web/social/mobile software businesses that SV thinks of as tech because that’s what SV majors on.
As you say Boston is strong in a lot of tech areas but they’re often different from SV tech.
I'm in Dallas, and I've noticed something similar here.
Most of the tech industry in Dallas is telecom. There are many, many reasons why I categorically refuse to ever move to SV, and one of them is that I love telecom and can't stand web/social/mobile. I'm saddened and disappointed that the biggest tech hub in the country, the part of the country whose name is synonymous with the tech industry, is just a collection of web/social/mobile developers who don't work on anything I consider interesting. SV just has this narrow definition of tech that really puts me off. OK, to be fair, there are a few telecom companies in SV, but they don't dominate the industry like they do in Dallas.
My career goals are to work in B2B telecom for the rest of my life and never ever do web/social/mobile, so I need to avoid SV.
From what I hear, the lower mobility is endemic to biotech culture. The only folks who are able to run significant research programs are junior faculty poached from the nearby medical schools. If you are a fresh PhD or postdocs you have a low ceiling on growth potential and starting salary. This is probably due to a glut of cheap highly educated (PhD+) labor in the life sciences - way more so than CS. Also, at these biotechs, the software/informatics/stats folks are just playing support roles and are treating accordingly in terms of autonomy and compensation.
This is mostly heresay from folks I know from my PhD days in a computational life science field in Boston. The other computational folks I know have either tried to stick it through in academia or have left for greener pastures in software. The wet lab people who joined biotechs are not thrilled.
I've heard the same thing. Biopharma does a pretty bad job developing young talent. Too many smart young scientists and not enough jobs, and the scientists are used to less than stellar compensation and treatment in academia
From what I've heard this is a bit worse in Boston than the Bay Area. There seems to be more hierarchy and ageism in Boston and some of the VCs are very vocal in their preference for older employees. Bay Area is a bit better, some tech VCs are trying to get into biotech by supporting young scientists but there's still a long way to go
Funny you use ageism in that context. It usually refers to preferring younger workers. I don’t know about biotech specifically but anecdotally the Boston area is probably more generally often to older workers because of things like embedded, other kernel level stuff, and other tasks that require traditional engineering disciplines and people with experience from a Boston-area computer companies.
"Reverse ageism" is actually a fairly controversial topic in biotech. After a Twitter debate, a top VC (and one of the only biotech VCs who blogs) wrote this post about why he likes older entrepreneurs [0]
IMO he has valid points, but there are all kinds of issues with his analysis, but bottom line is there isn't enough data to prove either sides point, so there's a lot of opinions presented as facts
The second class citizen for software/stats/informatics is indeed generally true but not universal. It seems like the trend is in the right direction at least. My workplace is definitely changing in that regard.
I've worked in Boston my entire life, for some of the area's bigger tech employers, and I have never-not-once had anybody even consider the prospect of having a problem with a non-compete.
Not quite banned but definitely an improvement. As I understand it, the bill imposed a fairly significant garden leave requirement on companies looking to exercise a non-compete. It also prohibits companies from retroactively imposing.
I was going to pipe up about robotics startups around Boston but we're just around $250M. Very small compared to pharma but we're still pretty significant for any region that isn't The Bay.
I'm a bioinformatics scientist. Salaries are notoriously horrible in this field and I get paid better than most wet lab scientists who have more education and experience than me.
I think biotech may be exacerbating inequality more than most industries, as the profits are most definitely not going to the employees like they do in other STEM fields.
There are some that rely very heavily on software engineers but most don't, although that is starting to change I think. The biotech startups that the tech press covers represent a tiny fraction (under 10%) of biotech startup activity. The separation between the biotech and tech startup worlds is almost at a global maximum. It used to be that major tech VCs were also major biotech VCs. Starting about 5-10 years ago tech VCs gave up on biotech. Coincidentally that's about when all the exciting stuff started happening
Pretty much all of the big biotech exits are mostly not even covered in the tech press (with the exception of stemcentrx, unity and maybe a few others)
Biotech requires several very different foundational assumptions than consumer-tech. You can't "move fast and break things" in biotech. You have to budget a lot more for R&D, and you have to be okay with dozens of experiments outright not working and not leading to anything useful. Having world-class scientific talent on your team is actually really important, while it's overkill for most software. Your iterations are usually about whether the science works, not whether the market will accept it. Technical risk dominates market risk. There's a large regulatory barrier to even getting a product to market. Your per-unit profits are often significantly higher than in consumer software, but your per-unit costs are higher, and your unit volumes are much lower.
[source: I'm in consumer tech and my brother-in-law is a cancer researcher.]
A VC's core competency is typically in knowing & applying the core industry dynamics to their investments, so if the core industry dynamics are different, it makes sense that VCs will eventually specialize in subjects that they actually know something about. Trying to apply consumer software "best practices" to biotech will get people killed and you sent to prison.
I agree, i think the biggest issue right now with tech VCs starting to get back into biotech is that they don't appreciate the technical / scientific risk, or think they can magic the risk away with AI. The tech VCs are renewing their interest bc they've seen that its possible to get $10B+ exits in under 5 years in biotech (KITE and JUNO got to $10B valuations faster than I think dropbox, snapchat and twitter), but i think some of them misunderstand the risk, as you mention, and will get burned
Cycles times are costly / more expensive, and companies usually only get a handful of chances to get it right. And it's too expensive to try to manage this risk through diversification alone -- cost of failure is too high. That's why biotech VCs spend so much time on diligence -- mostly scientific diligence -- compared to tech counterparts
Somewhere in the multiverse, all software is developed with the care that biotech requires, and there's much less of it, but people don't have to put up with crap.
We would still be in the mid-1980s software-wise if that was the case.
Once upon a time, software was developed with that care. Read up on the Multics security model, or Spark ADA, or the multiply-redundant systems that Tandem and Stratus put out. It really wasn't until the microcomputer era that software became "test it until it works" rather than "rigorously prove that it meets the specification".
And that was absolutely the right move, economically, because for most of the stuff we use consumer software for, it's really not that important. If Reddit shows the wrong point total for a story, nobody really cares. If YouTube occasionally hiccups while playing back, it's not a big deal. I'd rather have YouTube at all rather than insist that they get all the bugs out.
Someday, probably, people will insist on ironing out all the kinks in software, the same way we consider plane crashes unacceptable now (if you read the history of aviation, there was a time period where virtually all the key aviation innovators died in plane crashes or accidents). That period comes after all the major markets have been discovered and filled, though. Once computers have spread into every niche that they can, with clear market leaders for each industry, we'll see them devote their energy toward making things bug-free.
AI/ML seem to be leading to some new companies that have a big software component. But in general the “tech” crowd doesn’t think much about pharmaceutical, biotech, personalized medicine etc.
they are, but they're usually considered "IT" It's a secondary role compared to science. The computational action is for math, stats, and informatics specialists (like computational genomics).
This often translates into lower status and lower pay.
You really need some chemistry and biology to get love in a biotech firm.
I think NYC has more scientists (not just NYU and Columbia but Weill Cornell, Mt Sinai, Rockefeller etc), and may even have more NIH funding than MA (could be wrong on this though)
One reason is that there are just a ton of experienced entrepreneurs in Boston and few in NYC. One VC said that in NYC you could shoot a shotgun and not hit an experienced entrepreneur but in Boston you could shoot a water pistol and hit a dozen. Not sure why that's the case tho, maybe bostons legacy as a tech hub, more early stage VC, and more entrepreneurial culture at MIT / Harvard
There is a huge concentration of academics, VCs, startups and big pharma outposts within walking distance of each other in Kendall square. In NYC it's harder to get around, and even in the Bay Area you have several biotech clusters in Berkeley, mission bay, SSF, and the valley
We have Harvard, MIT, plus, the Broad institute (and others), the network of Harvard teaching hospitals (Brigham & Women's, Boston Children's, Mass General, Dana Farbar), with their surrounding cluster of commercial and non-commercial labs, plus the VC infrastructure.
> Boston is the world-center of biotech startups and VC
Beijing is likely far ahead. Beijing's total VC investment is much higher, it accounts for over 1/3 of Chinese domestic VC and Chinese firms have accounted for over 40% of the biotech investment in US drug startups in the beginning of this year.
I don't think that's true. China is doing some amazing things in biotech, and they have perhaps the best young drug discovery talent base in the world, but most VC and innovative startups are in the US for now.
Most of the Chinese VC investment has been in Series B or later stage rounds in US-based companies (some UK / EU as well). Most Series A rounds are led by US biotech VCs, and these VCs seed most of the funded startups as well. There are some large Series A rounds led by Chinese VCs (mostly Sequoia China), but not as many as by US VCs [0] -- disclosure: i created this database, it's still in alpha
There have been a few mega-rounds for Chinese biotechs recently, but it seems like a lot of those are aimed at developing Chinese versions of drugs originally developed in the west. There are exceptions of course, like Legend
Don't mean to knock China's biotech scene, but Beijing does not seem "far ahead" to me
Some of SV's biggest tech companies and institutions started in Boston. Reddit was in Davis, Drew started Dropbox while he was still at Bit9, Zuckerberg was in his Harvard dorm with staff meetings at Pinocchio's pizza. Hell I used to live next to the original YC office in Cambridge.
The talent exodus and missed deals was a huge wake-up call for Boston VC's to take more risk, and I think we're finally seeing the results.
It was almost as if PG and Jessica set out to prove the Boston/NYC status quo of VC wrong. If you wanted funding around here pre-2005, you had to be an experienced exec w/ a strong team of MBA's and senior engineers. Once YC + FB left and saw huge success, there was a scramble to figure out what went wrong.
Check out this meetup that a local VC set up back in 2005 [1]. Justin Kan, Emmett Shear, and Reddit's co-founders (Along with many other notables!) attended. All of them left for the West Coast.
Boston has had at least one $1B+ tech IPO (not including bio) every year for the last decade. There have been as many High nine-figure, billion-plus acquisitions in the same period.
Boston doesn't get much in the way of national PR, but it's arguably the 2nd best city in tech, measured by liquidity over the last decade, in the country.
And not just in boring security/B2B areas. Wayfair is a top 10 ecommerce player. CarGurus has thoroughly beat TrueCar. DraftKings created its category.
Boston-founded by an HBS-grad engineer who made early units himself, and bootstrapped until raising from Sequoia's growth fund. An amazing story that got almost no coverage in the tech press.
I think it has more to do with the fact that 3 of the 5 most important companies in tech are headquartered there have a combined $2.3T in market cap whereas Boston's biggest tech co's, TripAdvisor, Akamai, and Wayfair, have a combined market cap of ~$30B.
I think Boston is often taken to be a very large geographic area. For example, PillPack (one of the flagship examples in this article) was actually founded -- and still headquartered I think -- in New Hampshire. But to put that in perspective, Manchester and Nashua New Hampshire (the two largest cities in the state) are both less than an hour drive from Boston.
To be fair PullPack does have a Boston presence as well but I feel I need to point it out because I don't think New Hampshire often gets enough credit. It has a disproportionately high tech population for a state its size.
I also don't think Boston gets enough credit. The shear amount of innovation and academia happening in Boston and Cambridge, MA is astounding.
PillPack started by two people meeting at a hackathon at MIT and the company's headquarters were in Davis Square in Somerville. They have a large operation in New Hampshire, but the positions there always seemed to be related to shipping and preparation of prescriptions (i.e. pharmacists, data entry techs) vs. the engineering, designing, HR positions in Boston.
Thank you for the insight. I tried to do some research before my post but exact details of what the New Hampshire / Boston breakdown are is a little hard to find.
It is not arbitrary to include Nashua and Manchester NH in Boston statistics since those cities are included in the Boston Combined Statistical Area as defined by the US Census:
And if you go by the NECTA definition instead of the CBSA, Nashua is part of the Metropolitan NECTA which is a much tighter definition than a Combined NECTA/SA.
Northern New England hates southern New England, particularly Massachusetts (aka Taxachusetts) and the Boston area. The dislike between New Hampshire and Maine vs Boston is particularly strong because rich people in the Boston area tend to buy vacation homes in the former two, move their permanently when they want to retire and bring their politics with them.
Lumping part of New Hampshire in with Boston is like lumping Northern Ireland in with London. One side considers it a horrible insult and the other doesn't see why you wouldn't want to be associated with them.
Historically (like since the 1600s) southern New England has been a far more controlling and paternalistic society than Northern New England hence the north side of the MA/NH line being the "free" side.
In my experience, the only people in New England who call it "Taxachusetts" are the same people who would use the phrase "On the free side of the NH line."
MA doesn't even make the top 15 in terms of total state tax burden (property, income, sales).[0]
> Lumping part of New Hampshire in with Boston is like lumping Northern Ireland in with London. One side considers it a horrible insult and the other doesn't see why you wouldn't want to be associated with them.
For those reading who are not from the area, this is fun to imagine but not actually true.
The tension between Northern and Southern New England is less serious even than the Boston/New York "rivalry" which is notional and mostly confined to sports.
I'm from Maine originally and the only person I ever heard open their mouth to complain about "Taxachusetts" was...my dad, who moved away from there in a huff.
Are you from Portland? Outside of people who make their money off them (tourism industry), few North of Portland or substantially West of 95 hold the Massholes (hint: if that name offends you you're likely a Masshole, if you think it's a compliment of your driving ability you might be alright) in high regard.
> One side considers it a horrible insult and the other doesn't see why you wouldn't want to be associated with them.
It's worse than that. I've lived in Boston for 30 years and was unaware that this animosity even existed.
I have had many nice vacations in Northern New England and have friends, relatives and colleagues in NH and Vermont and I have yet to hear any serious anti-Boston sentiment uttered by any of these people (aside from their hatred of our traffic, which I share.)
> The dislike between New Hampshire and Maine vs Boston is particularly strong because rich people in the Boston area tend to buy vacation homes in the former two
eh. The animosity, particularly in the southern NH area, is due to gentrification in Massachusetts pushing "undesireables" into Nashua and Manchester.
Well the problem way many people in NH and ME see it is those "undesirables" want to vote for politicians who will turn NH and ME into MA with all it's traffic, crime and increasingly out of control cost of living.
Of course it's kind of hard to have this discussion here in particular because most of HN would be like "I don't see what the problem is, MA is fine" because HN really likes urbanization to the point of pretending the trade-offs don't exist.
Also, many would rather be slightly worse off economically and live under a slightly less authoritarian (in the dictionary sense of the word) and paternalistic government/society than the reverse.
I've lived in all three of the states in question here. It's not just the guns and the fireworks. It's really hard to explain without using imprecise and loaded words (specifically "socialist" and "individualist") or making sweeping generalizations but there's just something about society in NH and ME that's much more permissive of basically whatever an individual wants to do and nicer to people whereas in MA everyone expects everyone to step in line and act however the "right" way to act is. This difference seems to be reflected in all levels of government (government is of course made up of individuals who have personal beliefs and biases). It's also hard to over-state how much nicer people are in the rural parts of NH and ME than they are in MA.
I'd also say that the government in MA gets in everyone's way whereas in NH and ME it stays out of people's way. When I spend over an hour on public transit in MA daily and the regulars I ride with are always complaining about government (state and local). They're complaining about "the MBTA did bad thing W", "some other department did bad thing X", "the state cops are covering for their buddies doing bad thing Y", we pay all these taxes and they can't even get Z done"
That stuff is just not even a consideration in NH and ME. Then the government isn't a source of problems for people in those states. It probably sounds like I'm over-focusing but it really creeps into every aspect of your life.
And FWIW the economic argument isn't gonna resonate with me. I'm probably gonna take a huge pay cut in a few years to move to one of those places and I have in-laws who moved from MA to upstate VT because "being poor sucks less in BFE Vermont than it does in southeast MA." (I'm paraphrasing).
A lot of this is the difference between urban and rural and not the states in themselves but northern New England is much more rural than southern New England and it shows at the state level so it's effectively differences between states because you can't get the NH experience by moving somewhere rural in MA (lol, tried that).
I guess if you just want to live in a typical apartment, work a typical job, live in a typical house, pursue typical and unobtrusive hobbies, raise a typical middle of the road family, etc MA is fine but if you're gonna deviate from the norms you'll get whacked hard by society there (tall nail gets the hammer, or so the phrase goes) and would probably be better off in NH. For example, the fact that the free-staters, specifically the more extreme ones in Keene who sometimes don't register their vehicles and generally thumb their nose at authority at every opportunity continue to exist (and not behind bars) shows how tolerant NH is.
I know I'm going on a rant here but this is an internet comment, not a medium post.
So, can you give a definition of a non-typical and obtrusive hobby where MA would exercise prior restraint? Given that MA is made up of 352 municipalities (all of whom hate each other), and no significant county government, I'm finding it difficult to understand the statewide prohibitions (with the noted exception of fireworks) that you find limiting.
Also, as I'm sure you know, while MA gun laws are statewide, issuance is done by the local police department, which means that you don't even have to get outside of I-95/MA-128 to find a "shall issue" town.
Doesn't have to be middle of night. But you definitely can't do it that quickly during rush hour. Also depends on where exactly you're going and just how deep in the city it is, since the in-the-city traffic can really slow down your trip.
Either way you cut it, both are huge. And the CSA/CNECTA is even bigger (the CNECTA in particular is one of only two OMB-defined regions in the US that span five states or state-equivalents, the other being DC's CSA).
(edit: I do apologize for the HTTP links. I've been meaning to set up Let's Encrypt for a while, but I haven't gotten around to it)
Manchester Airport renamed to "Manchester-Boston Regional Airport" so travel agents/websites would list them when people were traveling to Boston. Back when Logan Airport was really bad, you could plausibly arrive at MHT and drive to Boston faster than flying in to BOS and waiting for your luggage.
Also, sometimes I see job openings, etc. to the west of Boston (Natick and Worcester in particular) that make me wonder if that region has more going on than most realize.
The route 128 and 495 corridor is where people with cars find tech jobs. A lot of established tech companies in that area. EMC, Bose, iRobot, a bunch more I drive by all the time that I can't remember off the top of my head.
Boston long had and still has many computer industry companies outside the city, especially in the Western suburbs. Maybe 25 years or so ago, there was essentially no tech of note within the city limits. It was mostly along Toute 128 and 495.
The Portsmouth area is really booming the last few years. It's starting to get a little bit of a Bay Area style housing/infrastructure crisis brewing as well, albeit on a much smaller scale. But house prices are up significantly over just the past three years, and rents are worse. So many offices have gone into the former Pease Air Force that traffic is starting to be a real problem, compounded by the the never-ending construction on the Spaulding Turnpike bridges north out of Portsmouth.
It's not the sexiest tech company, but Liberty Mutual has a huge presence in the area and employs a significant number of people in IT.
I thought I read Liberty Mutual actually started a major layoff of their IT people the seacoast area (shortly after they advertised many IT job openings). Even people outside of IT were affected. I know of a business analyst who was given the option to take a code boot camp, or lose their job. From what I heard, many people in IT were given this option.
From what I understand, they are making a big shift towards a more devops-y process, so I can believe that a lot of the more traditional IT roles are not emphasized as much. I can't say I've noticed an increase in the number of job postings, but there's always been a ton of open positions at Liberty, at least for the last six or seven years I've been around the area.
As a Boston resident, but former midwesterner, I wish the story was "Midwest competitive with East and West Coast for venture totals". I think it's a real problem that venture capital is highly concentrated in just a few places.
Terrible weather, flat terrain, socially conservative populace, lower probabilities of meeting important or rich people to create network. These qualities don't seem like they would appeal for those with money or in tech/science oriented fields.
It's a great place to start a family. Housing is a lot cheaper, and the people are hard workers.
There's a lot of really smart people in the Midwest who will dedicate themselves to your cause because they have a family to take care of. The midwest will probably never be competitive for top AI talent, but it already has some of the hardest working, and most loyal talent.
Most companies don't need genius, they just need someone with a lot of grit. The Midwest has vast swaths of folks with grit.
That same level-headedness and sense of responsibility can be a liability when it comes to startups. Most successful startups are insane when people first start working on them; if they weren't, someone would already have done them, and the market opportunity would be filled. (I had a Boston-based mentor who's already had two successful exits tell me once, "The only startups I've ever seen succeed are the ones where some engineer figured they could do something thought to be impossible.")
It's very hard to justify devoting years of your life to working on something believed to be impossible or a waste of time if you have a family to support, and a deep-seated belief in using your time productively.
So I might phrase it as "the Midwest is a great place for a startup to grow in" because what you said about families and startups is very true. When a company is ready for steady loyal employees, they can come to the Midwest and find them. As many companies are starting to do.
Large Midwestern cities like Minneapolis and Chicago are quite liberal and have a lot of rich people who could fund startups. We actually do have a lot of tech in these places, but generally only because large companies are in these places and they need a lot of engineering.
The startup culture is not here of course, but the reasons are not the ones you list.
They are, and I'm sure they are great places to live. But the person I responded to was hoping Midwest can compete with NYC/SF/SEA/DC/etc, so I offered the reasons why I think there's a structural reason that you don't see that headline, and not just because some VC fund hasn't offered money to people in the midwest. It's because the people the VC funds want to invest in also want to live in the cities with high rents.
Cost of land and rent prices. If we're talking about the people who work at startups, whose labor is among the most in demand in the world, they can basically choose to live wherever they want to. I know some of it is due to most employers being in urban areas etc etc, but I also think a lot of it is people wanting to be in those areas.
It's more complicated than that. I'd replace "usually" with "sometimes", but you also have the issue of what the overall state looks like. So you can have a "liberal and progressive" city in the middle of a fairly red state, and you end up with a liberal mayor but a conservative governor and legislature, which are constantly stymying your city's attempts to do progressive things. See WI for example.
the biggest Midwestern state by population is Illinois, which is blue, it is where both Lincoln and Obama came from. So, saying "Midwest is conservative", while the biggest state in the Midwest is actually liberal is kinda silly.
not all, but 65% of the voters are blue. I mean, it doesn't get any more blue. Every blue or red state is like that, no state 100% homogeneous. for the purpose of this discussion Illinois is no less blue than any other blue state, so political conservatism has nothing to do with the startup situation.
No, it’s not. Minnesota is blue. Wisconsin is purple. Illinois is a solidly blue state and the biggest in the Midwest. Iowa is purple. Look at this map and tell me again Midwest is politically conservative ? https://en.m.wikipedia.org/wiki/Red_states_and_blue_states#/...
Trump carried WAY more counties in 2016 despite losing the popular vote. That alone should tell you the map isn't a good representation of overall sentiment. Plus, Trump v. Hillary isn't necessarily a good proxy for "conservative v. liberal."
Considering the Cali coast has the highest cost of living, doesn't that mean it is where many people want to be?
Boston/NYC have the benefits of being in very highly populated areas with very old institutions, especially with reputations like MIT/Harvard/Columbia/etc and there's already a lot of money floating around, so that makes up for the weather part a little. It's not just one factor, it's a combination of all of these that unfortunately make some places more desirable to live in than others. And who knows, may be it will change in the future.
> Considering the Cali coast has the highest cost of living, doesn't that mean it is where many people want to be?
CA has more natural boundaries that spike the cost of living higher. For example, pretty much the entire LA area (except around Palmdale) consists of a bunch of small valleys nestled between mountains. Not only do they have the west coast in the way, but they've got mountains blocking them from expanding in every other direction.
And you can say the same thing about the Bay Area, too. If expansion isn't blocked by water, it's blocked by mountains.
NYC's COL is also in large part due to natural boundaries, but it's not as bad as CA. Manhattan is a tiny island. Long Island is also, well, an island. The Bronx and Westchester are a peninsula. But there's at least some room to expand. The Hudson Valley opens up when you get north of White Plains, and Jersey has plenty of room to sprawl. So the COL isn't nearly as bad as SF. What really keeps it as high as it is, though, is culture: Manhattan is the center of the world, and that's exactly how New Yorkers like it. There's a massive stigma to setting up shop in places like Morristown or Ossining. So instead everyone either pays $$$$$ to live near work in Manhattan or they pay $$$$ live in the suburbs but not so far out in the suburbs that they can't commute to Manhattan every day.
In the midwest and the southwest, on the other hand, there's no stigma to setting up shop in suburban edge cities. So you have metro areas like Dallas where there are large tech hubs in suburbs like Plano and Richardson, and some companies now are setting up shop in the exurbs.
>There's a massive stigma to setting up shop in places like Morristown or Ossining.
Morristown isn't some haven for bumpkins, it's a major stop on the Morristown Line with a lot of wealthy people. Maybe there's a sigma for setting up a tech shop, but it's not some backwater where nobody wants to live.
The problem isn't that nobody wants to live there; it's that nobody wants to work there.
It's a bedroom community for people who commute to Manhattan. A very nice, wealthy bedroom community, but still a bedroom community. The NY metro area has yet to embrace edge cities, and if it ever does (I'm not holding my breath) the COL will become much less of an issue.
Silicon Valley is pretty awesome as far as weather goes - it will be straight 70 degrees and sunny from March till November, and rarely gets below 50. Summers are a bit more mild than in SoCal, air pollution is less of a problem, and the fire danger has been less in recent years. There is more rain and lower temperatures in the winter, but not really enough to be annoying, and it means you might actually see running water that's not channeled by concrete in the South Bay.
Another thing that works against Midwest is that when the world things of "America", Midwest is not what comes to mind. To build a large competitive tech hub, you need to be able to attract huge numbers of Indian and Chinese developers are you scale your company to 10,000 engineers. However, most Asians (and even Europeans) prefer to stay on the coast due to the storied past, Silicon Valley name recognition, socially liberal policies, huge diversity, access to ethnic food etc.
> However, most Asians (and even Europeans) prefer to stay on the coast due to the storied past, Silicon Valley name recognition, socially liberal policies, huge diversity, access to ethnic food etc.
Tell that to the huge Asian population in Dallas. It's not quite the Midwest, but it's still the Great Plains and the culture is similar.
The Indian and Chinese food here is second to none, and we're one of the most diverse metro areas in the country. Also, while Asians may prefer the Democrats' stances on immigration, they are often deeply socially conservative, just as much as any white Southern Baptist, and they tend to form extremely conservative ethnic enclaves.
There are plenty of hiking trails throughout the midwest, and Arkansas has some of the finest rock climbing in the nation. Plenty of climbing in other Midwestern states as well. Snow skiing, not so much.
The hiking in the midwest is hardly comparable to the hiking in the rockies and west coast. It's hardly even comparable to the hiking on the east coast.
There's some good rock climbing sure, but there's no alpine climbing.
I didn't mean that it's inherently negative, I meant given the option, more people will choose mountainous/hilly terrain over flat terrain. Either for aesthetics, or hiking, or skiing, or whatever. My only proof is that property values are higher in those areas.
It's not a waste if they get better returns. In comparison, you're not going to attract many people to the Midwest when no one wants to go there, which in turn yield lower returns.
The VCs are acting rationally but it's still an inefficiency. Theoretically if a significant number of tech people chose to gather in a low-COL Midwest city you could stretch VC dollars much further while still undercutting SF/NYC.
Charlotte NC and Houston TX have had a similar if not higher population growth rate compared to major west cost and north east cities, where their housing prices have remained below the national average.
The reason why cities where tech locates in are so expensive is the lack of low cost new housing which comes from the fact that all land prices in a reasonable commutable distance are already very high. While it's bad for the environment, greenfield sprawl is the only true success we've seen in constructing affordable housing.
> where their housing prices have remained below the national average
But are they higher than they were before the population grew? That's the important metric here, and would speak to whether home building kept up with the population growth.
Except cost of living in major tech cities is usually skewed higher because of housing in particular, things like groceries are generally only a small impact.
Net land values are absolutely higher than they once were, farm/ranching fields now have housing on them. And while prices are higher than before the population grew, the prices have remained affordable for those earning the median income the entire time since the agglomeration effects of this growth has caused wages to rise.
The problem of course being that the "brain capital" in those areas doesn't compare to Boston, which has more universities in a small area than anywhere else.
I'd argue that it goes beyond tech, but all post industrial industries and ventures benefit from concentrations of talent and other agglomeration effects far more than they do from cheap land and quick availability of raw resources that industrial economies favored.
It's a shame, because if this ultimately ends up being true, even more of our economy than it already has will concentrate in fewer and fewer very expensive cities.
There are startups in the midwest, but it's very hard to get funding here: Exec teams have to spend a lot of time traveling to raise money. Still, there are sectors where the midwest is a clear competitive advantage: You can build a biotech startup working on agriculture in California, but if you need to hire crop scientists and test equipment in farms, you are better off in a midwestern metro, 45 minutes away from large corn and soybean operations.
You might want a small office in Boston or San Francisco too though, just to cut exec travel to see investors.
I assume most venture capital is currently spent on growth rounds for companies that already have traction. There are more of the companies on the coasts than within them, and they're in areas with a high concentration of talent and customers, which fuels the cycle.
As a former midwesterner, most places don't have nearly the density of schools, people, infrastructure, etc to support a large startup environment, or even a medium sized one. Too spread out, too little emphasis on education. Pittsburg and Chicago are a notable exceptions.
Now that MT splits out SF and SV differently, you can see a secular split: the (mostly) consumer-facing online businesses in SF (5.6B) and NY (2.8B) take in a lot more money than the more technology-oriented businesses of SV (3.9B) and BOS (3B). I assume that's due to risk profile; wonder what the return rate is?
We are currently in a weird place where, while compensation is growing, it's not growing fast enough to keep up with the rising property prices. There's been a huge surge to build luxury apartments in the downtown areas, but outside of that, available land is at a standstill and we are starting to see the same problem that SF has. Nothing is affordable anymore, and no one in the state/city government is really putting in an effort to slow things down.
MA, particularly the Boston area has spent just shy of 400yr embracing micro-managerial busybody government at every level (several other New England states exist because living in MA was too onerous for various groups). Local governments have a lot of power. They use this power to implement self-serving bylaws and zoning rules that cause the cost of living to skyrocket relative to cities/towns that have more of a "you want to have an adult entertainment store two blocks from a high-school, ok fine, just don't forget to pay your taxes" attitude. It's a tragedy of the commons situation. Everyone wants to zone the strip mall, the lumber supplier, the mechanic and the big box store out of existence or relegate them to some small commercial area. Every town thinks their a special snowflake that should be able to embody picturesque New England town in Yankee magazine. Well actions have consequences and all those things all have to go somewhere and if every town makes doing business (or at least the kind of business that doesn't fit their vision) hard and expensive those costs get passed on down.
You can still be a homeowner, buy good groceries and keep your fridge full of beer on a single entry level tech salary in MA. The catch is you just have to do it in one of those "bad" cities like Worcester, Fall River or Fitchburg.
I welcome the SF problems in the Boston area.. You reap what you sew.
I have long believed that the real solution to Boston's housing crunch is high speed transit to Worcester, Fall River, Lowell, New Bedford etc.
Build HSR out to these areas and drop in lower cost high density density housing. Essentially use these old mill towns as Boston's Brooklyn -as none of the closer in cities are willing to take on the role.
You already have an example of a city with HSR to Boston: Providence. Amtrak does this run in 38 minutes, Acela a few minutes faster. Providence is seeing a recent uptake in tech activity; GE Digital is hiring downcity, and other companies like Virgin Pulse and a small startup scene. Still, there are a lot of people who ride the rails between Boston and Providence every day.
It's 38 minutes to the 128 station, which is hardly Boston proper. It's an hour between Providence and Boston (South station), and the cost difference between the commuter rail or even Amtrak regional with the Acela is crazy. $12 MBTA train vs $16 Amtrak regional vs $50-$80 or more for the Acela. For what amounts to a 5-10 minute savings.
Looks like it depends on direction. Southbound trips are scheduled for 38 minutes from S. Station to Providence, but around an hour going north. MBTA is currently $11.50 each way. Amtrak is $.50 more if you buy two weeks in advance.
Quincy and Lynn could be vastly improved first. Lynn needs blue line access and Quincy needs to build up its downtown and along its four fucking Red Lines stops.
Also I would love Worcester high-speed transit, but that's a bigger and more complicated problem than just getting the wheels turning in the two big cities right next to Boston.
The property prices are largely driven by compensation increases. As long as there are more Apple/Google/Facebook engineers seeking houses than houses on the market, then there will be an incentive for housebuyers to bid up the price of available housing right up until it equals the extra money they earn from working at one of these Bay Area tech companies. Existing landowners will continue to capture basically all of these tech wage gains until the supply of housing exceeds the number of tech workers who want it.
The tech workers who are getting rich are the ones whose living situations resemble college students or service workers. They compete in the housing market for cheap apartment rentals with folks making maybe 1/5 as much, which holds down rents (well, sorta...rent is still insane, but only about 1/3 what a typical mortgage payment would be) and lets them bank the excess.
An interesting comparison would be comparison Boston to NYC without WeWork's massive funding. I think that single company has probably distorted NYC VC raise for the last couple of years.
I've been definitely seeing more and more startups popping up (or maybe I hear them in the news more) coming from Boston. But I'm not entirely sure if Tech Crunch's conclusion is sound. You can see from the past five year data graph that NYC's investment is quite high but all of sudden there is a dip this year. Boston-area startups is "overtaking" the pace of NYC not because of a boom in Boston but rather a dull in NYC.
The 2018 numbers are YTD though. Both cities seem like they're on track to do as well or better than they did in 2017 assuming that funding doesn't tend to be significantly front-loaded toward the beginning of the year (which might be the case – I honestly don't know).
The amount of money being invested (and made) in biotech today, and the level of technological advancement in the field, is disproportionately higher than mainstream awareness of the field