One of our portfolio companies, Plastiq, announced yesterday that they raised a $10M Series B led by Khosla Ventures and are planning to move their headquarters from Boston to San Francisco. We’re thrilled for the company to have a great investment partner joining the syndicate and one with deep payments expertise having backed companies like Square, Stripe, Fundbox, and others. In fact I introduced Plastiq CEO Eliot Buchanan to my former PayPal colleague Keith Rabois at Khosla.
Some lament the relocation of Plastiq and other companies who start in Boston but end up moving to Silicon Valley or other startup hubs. To these folks, Boston’s founder pool is a leaky bucket… a young founder who moves to Silicon Valley, New York, or elsewhere is a sign of frailty of Boston’s startup ecosystem.
I believe this is completely the wrong way to think about things.
Boston is utterly unique as an innovation hub, particularly when looking at the pool of young entrepreneurs starting businesses just out of undergrad or grad school. Yes the Bay Area has Stanford and Berkeley and New York has NYU and Columbia, but here we have this immense group of talented people… a quarter million in total at more than 50 colleges and universities in greater Boston, 7-10x the college population in other cities. And this is a truly renewable resource as every year a new crop of smart, ambitious people with innovative ideas walks in the doors of Harvard, MIT, Tufts, BC, BU, Babson, Northeastern, and all the other schools just as one crop walks out. Yes some will depart Boston immediately or in time, but an incredible number stay both short term and longer term. Far more than the number of my classmates who stuck around Philly after Penn.
In that regard our startup talent pool here in Boston isn’t a leaky bucket… it’s a everlasting, self-replenishing spring. And talent flows in many directions (all three co-founders of NextView are all Silicon Valley transplants to Boston).
At NextView we’ve been privileged to collaborate with Eliot and many other entrepreneurs who set out to build a company right after college or grad school. In fact if you look just at Harvard, something like 15% of NextView’s portfolio was founders starting right after Harvard undergrad or HBS. We’ve worked with entrepreneurs from other universities around Boston here too, but this is just an example of one university. Plastiq has spent the last 3+ years building here in Boston, and even after their HQ moves a good chunk of their team including some core engineering will remain here in Boston. Similarly ThredUp founder James Reinhart built his company here in Boston in the early years after graduating from Harvard (HBS/Kennedy) before deciding to continue building ThredUp in SF. But others like InsightSquared (co-founder/CEO Fred Shilmover started after HBS, now approaching 100 employees) and Whoop (co-founded by Will Ahmed & John Capodilupo as Harvard undergrads) have remained in Boston and are building great businesses here for the long term.
The Boston ecosystem may have failed young entrepreneurs 7-10 years ago. Facebook is of course the highest profile example, as Mark Zuckerberg famously moved to Palo Alto after early attempts to attract capital, advice, and mentorship here in Boston were unsuccessful. We should rightly reflect when Boston fails young entrepreneurs as we might have in the past, but this isn’t the case today. When our ecosystem supports founders and helps them thrive we should celebrate these companies, even if at some phase they expand beyond Boston.
As investors, once we join with entrepreneurs as capital partners we are 100% committed to their success. For the record I believe Plastiq, ThredUp, and other startups which build early in Boston but ultimately relocate have ample access to talent, capital, and customers here to build very large businesses for the long term in Boston if they so chose. Even Zuckerberg said shortly before Facebook’s IPO “If I were starting a company now I would have stayed in Boston.”
I would have been happy if Plastiq had decided to remain headquartered here in Boston. But by the same token we support founders who decide that their company is best served by opening offices elsewhere and even relocating their HQ. And I celebrate the companies like GrabCAD who relocate to Boston because they feel this is the best hub for their startup to prosper.
I hope that the Boston ecosystem can start to realize we don’t have a leaky bucket, we have an everlasting spring of talent which is a singular blessing. Maybe it’s the curse of the Bambino from 100 years ago when some of the first young talent departed Boston. But either way we should acknowledge that our startup hub is truly unique in terms of our constantly renewing talent pool, and celebrate when our ecosystem successfully supports these founders even if they don’t remain in Boston forever.