Empirical Reality

In the CNBC special “Inside The Mind of Google“, aired December 4th 2009, Noel Gorelick, the lead engineer on the Google Astro Project, said: “If you are 24 and single, it is kind of like programmer nirvana.” … “I used twelve text books in my courses [for my masters in computer science]. Ten of the guys that wrote those text books work here [at Google].”

This anecdote answers one question that has emerged in the past several months in discussions of reinvigorating innovation in Massachusetts — how to keep more of the area’s graduating students in technology fields from leaving Massachusetts.

The answer from Noel is that interesting companies and work environments attract graduating students.

However, only 1 S&P-1500 Technology company was created in the Boston area during the Internet era of the past 20 years compared to 19 companies in Silicon Valley. Thus, regional advantage mostly favors Silicon Valley.

No amount of marketing is going to change this fact. We need instead to remove the hurdles that retard the creation of innovative new companies.

A recent blog dialog touched on some of the issues.

Vivek Wadhwa, affiliated with Duke and Harvard, and now visiting UC Berkeley, wrote a post called “The Valley of My Dreams: Why Silicon Valley Left Boston’s Route 128 In The Dust“:

“In the 1980’s the Silicon Valley and Route 128 looked very similar … By the mid-1990s the east had missed the shift from minicomputers to personal computers as the flexible Silicon Valley ecosystem sped ahead with innovation across a diversifying range of components and systems going from chips, routers, and application software to ecommerce and search engines.”

In response, Scott Kirsner, the Innovation Economy Columnist at the Boston Globe, wrote Sparks fly over Silicon Valley vs. Bay State:

“[W]e in New England are playing a different set of games, and are (hopefully) getting better at each of them. We’re playing these games as a region of the world that needs to be competitive in the global economy, not against Silicon Valley.”

Scott lists several components of the game plan, including pointing out that we need to: “Grow innovative start-ups into industry-defining big companies. (We need a lot of improvement here.)”

A relevant piece of data comes from a recent report from Vivek and colleagues, Education and Tech Entrepreneurship. Figure 8 in the report shows the percentage of founders who started their company in the same state they received their degree.

Average = 45%, Massachusetts = 29%, California = 69%. There are probably ways to explain away some of Massachusetts’ below average showing. For example, Massachusetts attracts students from all over the US and all over the world; thus, there will be a tendency for graduating students to return to their home locales. However, the same global attraction dynamic can be said for California universities, and such explanations are unlikely to cover the >2 to 1 difference between Massachusetts and California.

This then raises the unanswered question of what percentage of Massachusetts students are founding companies in California and other states, and vice versa.

Another interesting chart in the report shows the founder’s age when founding a technology company. The chart shows a normal distribution, so that roughly just as many older individuals as younger individuals found companies, which runs counter to popular conventional wisdom.

The report states that average age difference from degree to founding a company is 16.4 years. Thus, the average individual needs to work somewhere interesting for about 16 years before founding a company — somewhere like the 19 Internet era SP-1500 Tech companies founded in Silicon Valley.

This is another way of saying that a few factor in reinvigorating innovation in the Boston area is to identify and to remove the hurdles that retard the creation of innovative new companies.

References

Inside the Mind of Google. CNBC, December 2009.
http://www.cnbc.com/id/33831099

Scott Kirsner. Sparks fly over Silicon Valley vs. Bay State. Boston Globe. November 23, 2009.
http://www.boston.com/business/technology/articles/2009/11/23/sparks_fly_over_silicon_valley_vs_bay_state/?s_campaign=8315

Scott Kirsner. Connecting Students with Cool Companies. Innovation Economy Blog, June 30, 2009.
http://www.innoeco.com/2009/06/connecting-students-with-cool-companies.html
http://www.facebook.com/group.php?gid=106149241684&ref=ts

Vivek Wadhwa. The Valley of My Dreams: Why Silicon Valley Left Boston’s Route 128 In The Dust. TechCrunch, October 31, 2009.
http://www.techcrunch.com/2009/10/31/the-valley-of-my-dreams-why-silicon-valley-left-bostons-route-128-in-the-dust/

Vivek Wadhwa, Richard Freeman, Ben Rissing. Report: Education and Tech Entrepreneurship. Kauffman Foundation, May 2008.
http://www.kauffman.org/research-and-policy/education-and-tech-entrepreneurship.aspx
http://www.kauffman.org/uploadedfiles/Education_Tech_Ent_061108.pdf