While the universities have always been seen as a key source of new technologies, today their role in producing student entrepreneurs is equally important. Spurred in part by a fear of missing out on the next Zuckerberg, venture capitalists are actively courting students and their dorm-room start-ups. General Catalyst, one of the younger of Boston’s premier VC firms, has gone so far as to formalise this effort by creating Rough Draft Ventures, a mini-VC fund backed by the firm but run by students. With Rough Draft, General Catalyst brought together the city’s most talented student entrepreneurs, and tasked them with making small investments in their peers. The fund has made several such investments so far, and in July, General Catalyst hired Peter Boyce, a graduating member of the initial Rough Draft team, as an associate.
Universities are also expanding their support for entrepreneurship, with ideas like Harvard’s i-Lab, which functions as both an incubator for student start-ups and as a single resource centre to connect entrepreneurial activities across campus. This echoes MIT’s pioneering Media Lab, which was set up in 1985 and has long been encouraging entrepreneurship in areas ranging from wearable computing to stackable electric cars for cities.
The other big difference between today and the Route 128 days is the shifting centre of gravity from the suburbs to the city. Kendall Square, the home of MIT in neighbouring Cambridge and a long-time start-up hub, has exploded with activity in the past several years. “You can't walk down the street in Kendall Square, Cambridge, without running into venture capitalists, Nobel laureates, start-up CEOs,” says Tim Rowe, founder of the Kendall-based Cambridge Innovation Center. Rowe’s CIC, founded in 1999, is a big part of that. It has served as an early incubator for many of Boston’s current crop of growing tech start-ups, including HubSpot, which makes marketing software. HubSpot spent four years in the CIC from 2004, growing to nearly 200 employees by the time it moved to its own office space. As of the end of 2012, the company claimed $52.5m (£33.9m) in annual revenue and 450 employees; it is expected to go public in the next year.
Kendall is not the only beneficiary of Boston’s increasingly urbanised tech cluster. An “Innovation District” championed by Mayor Thomas Menino has attracted young tech companies - including Rethink Robotics- and more established innovators like Zipcar and EnerNOC. Many VC firms have also relocated from the suburbs, opening offices in Boston or Cambridge. And most of these mini-clusters are connected by the red line of the city’s subway system, making them easy to travel to without a car.
Despite these shifts, some things about Boston’s tech scene are unchanged. It remains comparatively strong in areas where it can flex its academic muscles, like healthcare and biotech, robotics, and big data. Its successes in software have been concentrated more in business solutions - Endeca, ITA Software, Demandware, now HubSpot - than the consumer technologies that tend to garner more attention. That mix is in stark contrast to New York, which is more narrowly concentrated in web and mobile software startups. But while the two cities are intense rivals when it comes to sports, their geographical closeness is creating a significant degree of collaboration, with investors splitting time between the two cities or opening satellite offices.
New York’s advantage is its size, as well as its status as a global leader in both finance and culture. As Destin put it: “[Boston’s] main weakness lies in the fact that it is not a great aspirational city or region, in the way that New York, London or the Bay Area can be. Young people come to study at its great institutions then leave. If Boston became aspirational in terms of culture and lifestyle it could take the next step up,” he says.