Startup world changes Boston
New cos. become national leaders
Once the best-kept secret in the area, Boston’s startup ecosystem — led by a couple of breakout companies and hundreds hoping to follow in their footsteps — has dramatically changed the landscape of Boston, helping to turn acres of parking lots on the waterfront into one of the hottest neighborhoods in the country and redefining Boston’s long-held corporate power structure.
“We have seen a generation of founders with greater diversity than what the city had traditionally found with the banks and insurance companies here,” said Sheila Lirio Marcelo, founder and chief executive of Care.com. “This has been a transformative time for Boston’s startup community. A number of the tech startups have grown into industry-leading brands in their markets, including several that have gone public over the past few years.”
Boston startups have become national leaders in everything from self-driving cars to online payments from daily fantasy sports to metal 3-D printing.
“It’s a physics thing. To me it’s all about critical mass and momentum. There are so many people interested in this it becomes integrated into the fabric of the city,” said Diane Hessan, chairwoman of C Space and a longtime startup investor and founder. “There’s a critical mass of people who are interested in being entrepreneurs, there’s a critical mass of startups and they’re all together.”
Marcelo is one of a few startup CEOs who have taken the lead in Boston’s corporate leadership. She and Niraj Shah, chief executive of Wayfair, are members of the board of directors of the Massachusetts Competitive Partnership, a group of executives that includes the heads of Fidelity, Bank of America and Partners Healthcare. The group played a key role in trying to bring the Olympics to Boston, and was part of the group that helped lure GE to the city. Earlier this year, the Competitive Partnership wrote a letter to Gov. Charlie Baker and legislative leaders, advocating for more renewable energy.
Shah is also on the Boston College Chief Executives Club board of governors with Hessan. He declined to be interviewed for this story.
Kiki Mills Johnston, managing director of startup program Mass-Challenge, said Boston’s success is in part because of an intentional effort years ago to try to foster the right environment for entrepreneurship and innovation.
“What I have seen over the past seven years is how much that early collective effort has helped to spur,” she said. “We’re starting to see a domino effect.”
Still, there is some room for improvement, several said, including when the mindset of a startup diverges from government’s. And like nearly every city that has a strong startup industry, women and people of color are underrepresented in Boston.
“Ongoing access to funding is still something that’s really important,” Johnston said.
For years, many startup advocates have pushed for Beacon Hill to reform noncompete agreements, which employers use to prevent workers from starting a competing company when they leave. Those agreements force some to give up on starting a company or move to a state where the agreements are banned, such as California, the advocates say.
“Policy creation is a slow, collaborative process where people put one foot in front of another,” Hessan said. “Building a startup is not like that.”