How does Boston compare to SV and what do MIT and Stanford have to do with it?

This is an archive of an old Google Buzz conversation on MIT vs. Stanford and Silicon Valley vs. Boston

There’s no reason why the Boston area shouldn’t be as much a hotbed of startups as Silicon Valley is. By contrast, there are lots of reasons why NYC is no good for startups. Nevertheless, Paul Graham gave up on the Boston area, so there must be something that hinders startup formation in the area.

Kevin: This has nothing to do with money, or talents, or what it. All it matters is “entrepreneur density”.

Boston may have the money, the talent, the intelligence, but does it have an entrepreneurial spirit and enough of a density?

Marya: From http://www.xconomy.com/boston/2009/01/22/paul-graham-and-y-combinator-to-leave-cambridge-stay-in-silicon-valley-year-round/ “Graham says the reasons are mostly personal, having to do with the impending birth of his child and the desire not to try and be a bi-coastal parent” But then immediately after, we see he says: “Boston just doesn’t have the startup culture that the Valley does. It has more startup culture than anywhere else, but the gap between number 1 and number 2 is huge; nothing makes that clearer than alternating between them.” Here’s an interview: http://www.xconomy.com/boston/2009/03/10/paul-graham-on-why-boston-should-worry-about-its-future-as-a-tech-hub-says-region-focuses-on-ideas-not-startups-while-investors-lack-confidence/ Funny, because Graham seemed partial to the Boston area, earlier: http://www.paulgraham.com/cities.html http://www.paulgraham.com/siliconvalley.html

Rebecca: I think he’s partial because he likes the intellectual side of Boston, enough to make him sad that it doesn’t match SV for startup culture. I know the feeling. I guess I have seen things picking up here recently, enough to make me a little wistful that I have given my intellectual side priority over any entrepreneurial urges I might have, for the time being.

Scoble: I disagree that Boston is #2. Seattle and Tel Aviv are better and even Boulder is better, in my view.

Piaw: Seattle does have a large number of Amazon and Microsoft millionaires funding startups. They just don’t get much press. I wasn’t aware that Boulder is a hot-bed of startup activity.

Rebecca: On the comment “there is no reason Boston shouldn’t be a hotbed of startups…” Culture matters. MIT’s culture is more intellectual than entrepreneurial, and Harvard even more so. I’ll tell you a story: I was hanging out in the MIT computer club in the early nineties, when the web was just starting, and someone suggested that one could claim domain names to make money reselling them. Everyone in the room agreed that was the dumbest idea they had ever heard. It was crazy. Everything was available back then, you know. And everyone in that room kindof knew they were leaving money on the ground. And yet we were part of this club that culturally needed to feel ourselves above wanting to make money that way. Or later, in the late nineties I was hanging around Philip Greenspun, who was writing a book on database backed web development. He was really getting picked on by professors for doing stuff that wasn’t academic enough, that wasn’t generating new ideas. He only barely graduated because he was seen as too entrepreneurial, too commercial, not original enough. Would that have happened at Stanford? I read an interview with Rajiv Motwani where he said he dug up extra disk drives whenever the Google founders asked for them, while they were still grad students. I don’t think that wouldn’t happen at MIT: a professor wouldn’t give a grad student lots of stuff just to build something on their own that they were going to commercialize eventually. They probably would encounter complaints they weren’t doing enough “real science”. There was much resentment of Greenspun for the bandwidth he “stole” from MIT while starting his venture, for instance, and people weren’t shy about telling him. I’m not sure I like this about MIT.

Piaw: One my friends once turned down a full time offer at Netscape (after his internship) to return to graduate school. He said at that time, “I didn’t go to graduate school to get rich.” Years later he said, “I succeeded… at not getting rich.”

Dan: As the friend in question (I interned at Netscape in ‘96 and ‘97), I’m reasonably sure I wouldn’t have gotten very rich by dropping out of grad school. Instead, by sticking with academia, I’ve managed to do reasonably well for myself with consulting on the side, and it’s not like academics are paid peanuts, either.

Now, if I’d blown off academia altogether and joined Netscape in ‘93, which I have to say was a strong temptation, things would have worked out very differently.

Piaw: Well, there’s always going to be another hot startup. :-) That’s what Reed Hastings told me in 1995.

Rebecca: A venture capitalist with Silicon Valley habits (a very singular and strange beast around here) recently set up camp at MIT, and I tried to give him a little “Toto, you’re not in Kansas anymore” speech. That is to say, I was trying to tell him that the habits one got from making money from Stanford students wouldn’t work at MIT. It isn’t that one couldn’t make money investing in MIT students – if one was patient enough, maybe one could make more, maybe a lot more. But it would only work if one understood how utterly different MIT culture is, and did something different out of an understanding of what one was buying. I didn’t do a very good job talking to him, though; maybe I should try again by stepping back and talking more generally about the essential difference of MIT culture. You know, if I did that, maybe the Boston mayor’s office might want to hear this too. Hmmm… you’ve given me an idea.

Marya: Apropos, Philip G just posted about his experience attending a conference on angel investing in Boston: http://blogs.law.harvard.edu/philg/2010/06/01/boston-angel-investors/ He’s in cranky old man mode, as usual. I imagine him shaking his cane at the conference presenters from the rocking chair on his front porch. Fun quotes: ‘Asked if it wouldn’t make more sense to apply capital in rapidly developing countries such as Brazil and China, the speakers responded that being an angel was more about having fun than getting a good return on investment. (Not sure whose idea of “fun” included sitting in board meetings with frustrated entrepreneurs, but personally I would rather be flying a helicopter or going to the beach.)… ‘Nobody had thought about the question of whether Boston in fact needs more angel investors or venture capital. Nobody could point to an example of a good startup that had been unable to obtain funding. However, there were examples of startups, notably Facebook, that had moved to California because of superior access to capital and other resources out there… ‘Nobody at the conference could answer a macro question: With the US private GDP shrinking, why do we need capital at all?’

Piaw: The GDP question is easily answered. Not all sectors are shrinking. For instance, Silicon Valley is growing dramatically right now. I wouldn’t be able to help people negotiate 30% increases in compensation otherwise (well, more like 50% increases, depending on how you compute). The number of pre-IPO companies that are extremely profitable is also surprisingly high.

And personally, I think that investing in places like China and Brazil is asking for trouble unless you are well attuned to the local culture, so whoever answered the question with “it’s fun” is being an idiot.

The fact that Facebook was asked by Accel to move to Palo Alto should definitely be something Boston area VCs should berate themselves about. But that “forced move” was very good for Facebook. They acquired Jeff Rothschild, Marc Kwiatkowski, Steve Grimm, Paul Bucheit, Sanjeev Singh, and many others by being in Palo Alto that would not have moved to Boston for Facebook no matter what. It’s not clear to me that staying in Boston was an optimal move for Facebook no matter what. At least, not before things got dramatically better in Boston for startups.

Marya: The GDP question is easily answered. Not all sectors are shrinking. For instance, Silicon Valley is growing dramatically right now

I’m guessing medical technology and biotech are still growing. What else?

Someone pointed this out in the comments, and Philip addressed it; he argues that angel investors are unlikely to get a good return on their investment (partial quote): “…we definitely need some sources of capital… But every part of the U.S. financial system, from venture capital right up through investment banks, is sized for an expanding private economy. That means it is oversized for the economy that we have. Which means that the returns to additional capital should be very small….”

He doesn’t provide any supporting evidence, though.

Piaw: Social networks and social gaming is growing dramatically and fast.

Rebecca: Thanks, Marya, for pointing out Philip’s blog post. I think the telling quote from it is this: “What evidence is there that the Boston area has ever been a sustainable place for startups to flourish? When the skills necessary to build a computer were extremely rare, minicomputer makers were successful. As soon as the skills … became more widespread, nearly all of the new companies started up in California, Texas, Seattle, etc. When building a functional Internet application required working at the state of the art, the Boston area was home to a lot of pioneering Internet companies, e.g., Lycos. As soon as it became possible for an average programmer to … work effectively, Boston faded to insignificance.” Philip is saying Boston can only compete when it can leverage skills that only it has. That’s because its ability to handle business and commercialization are so comparatively terrible that when the technological skill becomes commoditized, other cities will do much better.

But it does often get cutting-edge technical insight and skills first – and then completely drops the ball on developing them. I find this frustrating. Now that I think about it, it seems like Boston’s leaders are frustrated by this too. But I think they’re making a mistake trying to remake Boston in Silicon Valley’s image. If we tried to be you, at best we would be a pathetic shadow of you. We could only be successful by being ourselves, but getting better at it.

There is a fundamental problem: the people at the cutting edge aren’t interested in practical things, or they wouldn’t be bothering with the cutting edge. Though it might seem strange to say now, the guy who set up the hundredth web server was quite an impractical intellectual. Who needs a web server when there are only 99 others (and no browsers yet, remember)? We were laughing at him, and he was protesting the worth of this endeavor merely out of a deep intellectual faith that this was the future, no matter how silly it seemed. Over and over I have seen the lonely obsessions of impractical intellectuals become practical in two or three years, become lucrative in five or eight, and become massive industries in seven to twelve years.

So if the nascent idea that will become a huge industry in a dozen years shows up first in Boston, why can’t we take advantage of it? The problem is that the people who hone their skill at nascent ideas that won’t be truly lucrative for half a decade at least, are by definition impractical, too impractical to know how to take advantage of being first. But maybe Boston could become a winner if it could figure out how to pair these people up with practical types who could take advantage of the early warning about the shape of the future, and leverage the competitive advantage of access to skills no-one else has. It would take a very particular kind of practicality, different from the standard SV thing. Maybe I’m wrong, though; maybe the market just doesn’t reward being first, especially if it means being on the bleeding edge of practicality. What do you think?

Piaw: Being 5 or 10 years ahead of your time is terrible. What you want to be is just 18 months or even 12 months ahead of your time, so you have just enough time to build product before the market explodes. My book covers this part as well. :-)

Marya: Rebecca, I don’t know the Boston area well enough to form an opinion. I’ve been here two years, but I’m certainly not in the thick of things (if there is a “thick” to speak of, I haven’t seen it). My guess would be that Boston doesn’t have the population to be a huge center of anything, but that’s a stab in the dark.

Even so, this old survey (2004) says that Boston is #2 in biotech, close behind San Diego: http://www.forbes.com/2004/06/07/cz_kd_0607biotechclusters.html So why is Boston so successful in biotech if the people here broadly lack an interest in business, or are “impractical”? (Here’s a snippet from the article: “…When the most successful San Diego biotech company, IDEC Pharmaceuticals, merged with Biogen last year to become Biogen Idec (nasdaq: BIIB - news - people ), it officially moved its headquarters to Biogen’s hometown of Cambridge, Mass.” Take that, San Diego!)

When you talk about a certain type of person being “impractical”, I don’t think that’s really the issue. Such people can be very practical when it comes to pursuing their own particular kind of ambition. But their interests may not lie in the commercialization of an idea. Some extremely intelligent, highly skilled people just don’t care about money and commerce, and may even despise them.

Even with all that, I find it hard to believe that the intelligentsia of New England are so much more cerebral than their cousins in Silicon Valley. There’s certainly a puritan ethic in New England, but I don’t think that drives the business culture.

Rebecca: Marya, thanks for pointing out to me I wasn’t being clear (I’m kindof practicing explaining something on you, that I might try to say more formally later, hence the spam of your comment field. I hope you don’t mind.) You question “ why is Boston so successful in biotech if the people here broadly lack an interest in business?” made me realize I’m not talking about people broadly – there are plenty of business people in Boston, as everywhere. I’m talking about a particular kind of person, or even more specifically, a particular kind of relationship. Remember I contrasted the reports of Rajeev Motwani’s treatment of the Google guys with the MIT CS lab’s treatment of Philip? In general, I am saying that a university town like Palo Alto or Cambridge will be a magnet for ultra-ambitious young people who look for help realizing their ambitions, and a group of adults who are looking to attract such young people and enable those ambition, and there is a characteristic relationship between them with (perhaps unspoken) terms and expectations. The idea I’m really dancing around is that these terms & expectations are very different at MIT than (I’ve heard) they are at Stanford. Though there may not be very many people total directly involved in this relationship, it will still determine a great deal of what the city can and can’t accomplish, because it is a combination of the energy of very ambitious young people and the mentorship of experienced adults that makes big things possible.

My impression is that the most ambitious people at Stanford dream of starting the next big internet company, and if they show enough energy and talent, they will impress professors who will then open their Rolodex and tell their network of VC’s “this kid will make you tons of money if you support his work.” The VC’s who know that this professor has been right many times before will trust this judgement. So kids with this kind of dream go to Stanford and work to impress their professors in a particular kind of way, because it puts them on a fast track to a particular kind of success.

The ambitious students most cultivated by professors in Boston have a different kind of dream: they might dream of cracking strong AI, or discovering the essential properties of programming languages that will enable fault-tolerant or parallel programming, or really understanding the calculus of lambda calculus, or revolutionizing personal genomics, or building the foundations of Bladerunner-style synthetic biology. If professors are sufficiently impressed with their student’s energy and talent, they will open their Rolodex of program managers at DARPA (and NSF and NIH), and tell them “what this kid is doing isn’t practical or lucrative now, nor will it be for many years to come, but nonetheless it is critical for the future economic and military competitiveness of the US that this work is supported.” The program managers’ who know that this professor has been right many times before will trust this judgment. In this way, the kid is put on a fast track to success – but it is a very different kind of success than the Stanford kid was looking for, and a different kind of kid who will fight to get onto this track. The meaning of success is very different, much more intellectual and much less practical, at least in the short term.

That’s what I mean when I say “Boston” is less interested in business, more impractical, less entrepreneurial. It isn’t that there aren’t plenty of people here who have these qualities. But the “ecosystem” that gives ultra-ambitious young people the chance to do something singular which could be done no-where else – an ecosystem which that it does have, but in a very different kind of way – doesn’t foster skill at commercialization or an interest in the immediate practical application of technology.

Maybe there is nothing wrong with that: Boston’s ecosystem just fosters a different kind of achievement. However, I can see it is frustrating to the mayor of Boston, because the young people whose ambitions are enabled by Boston’s ecosystem may be doing work crucial to the economic and military competitiveness of the US in the long term, but they might not help the economy of Boston very much! What often happens in the “long term” is that the work supported by grants in Boston develops to the point it becomes practical and lucrative, and then it gets commercialized in California, Seattle, New York, etc… The program managers at DARPA who funded the work are perfectly happy with this outcome, but I can imagine that the mayor of Boston is not! The kid also might not be 100% happy with this deal, because the success which he is offered isn’t much like SV success – its a fantastic amount of work, rather hermit-like and self-abnegating, which mostly ends up making it possible for other people far away to get very, very rich using the results of his labors. At best he sees only a minuscule slice of the wealth he enabled.

What one might want instead is that the professors in Boston have two sections in their Rolodex. The first section has the names of all the relevant program managers at DARPA, and the professor flips to this section first. The second section has the names of suitable cofounders, and friendly investors, and after the student has slaved away for five to seven years making a technology practical, the professor flips to the second section and sets the student up a second time to be the chief scientist or something like that at an appropriate startup.

And its not like this doesn’t happen. It does happen. But it doesn’t happen as much as it could, and I think the reason why it doesn’t may be that it just takes a lot of work to maintain a really good Rolodex. These professors are busy and they just don’t have enough energy to be the linchpin of a really top-quality ecosystem in two different ways at the same time.

If the mayor of Boston is upset that Boston is economically getting the short end of the stick in this whole deal (which I think it is), a practical thing he could do is give these professors some help in beefing up the second section of their Rolodex, or perhaps try to build another network of mentors which was in the appropriate way Rolodex-enabled. If he took the later route, he should understand that this second network shouldn’t try to be a clone of the similar thing at Stanford (because at best it would only be a pale shadow) but instead be particularly tailored to incorporating the DARPA-project graduates that are unique to Boston’s ecosystem. That way he could make Boston a center of entrepreneurship in a way that was uniquely its own and not merely a wannabe version of something else – which it would inevitably do badly. That’s what I meant when I said Boston should be itself better, rather than trying to be a poor pale copy of Silicon Valley.

Piaw: I like that line of thought Rebecca. Here’s the counter-example: Facebook. Facebook clearly was interested in monetizing something that was very developed, and in fact, had been tried and failed many times because the timing wasn’t right. Yet Facebook had to go to Palo Alto to get funding. So the business culture has to change sufficiently that the people with money are willing to risk it on very high risk ventures like the Facebook that was around 4 years ago.

Having invested my own money in startups, I find that it’s definitely something very challenging. It takes a lot to convince yourself that this risk is worth taking, even if it’s a relatively small portion of your portfolio. To get enough people to build critical mass, you have to have enough success in prior ventures to gain the kind of confidence that lets you fund Facebook where it was 4 years ago. I don’t think I would have been able to fund Google or Facebook at the seed stage, and I’ve lived in the valley and worked at startups my entire career, so if anyone would be comfortable with risk, it should be me.

Dan: Rebecca: a side note on “opening a rolodex for DARPA”. It doesn’t really work quite like that. It’s more like “hey, kid, you should go to grad school” and you write letters of recommendation to get the kid into a top school. You, of course, steer the kid to a research group where you feel he or she will do awesome work, by whatever biased idea of awesomeness.

My own professorial take: if one of my undergrads says “I want to go to grad school”, then I do as above. If he or she says “I want to go work for a cool startup”, then I bust out the VC contacts in my rolodex.

Rebecca: Dan: I know. I was oversimplifying for dramatic effect, just because qualifying it would have made my story longer, and it was already pushing the limits of the reasonable length for a comment. Of course the SV version of the story isn’t that simple either.

I have seen it happen that sufficiently brilliant undergraduates (and even high school students – some amazing prodigies show up at MIT) can get direct support. But realize also I’m really talking about grad students – after all, my comparison is with the relationship between the Google guys and Rajeev Motwani, which happened when they were graduate students. The exercise was to compare the opportunities they encountered with the opportunities similarly brilliant, energetic and ultra-ambitious students at MIT would have access to, and talk about how it would be similar and different. Maybe I shouldn’t have called such people “kids,” but it simplified and shortened my story, which was pushing its length limit anyway. Thanks for the feedback; I’m testing out this story on you, and its useful to know what ways of saying things work and what doesn’t.

Rebecca: Piaw: I understand that investing in startups by individual is very scary. I know some Boston angels (personally more than professionally) and I hear stories about how cautious their angel groups are. I should explain some context: the Boston city government recently announced a big initiative to support startups in Boston, and renovate some land opened up by the Big Dig next to some decaying seaport buildings to create a new Innovation District. I was thinking about what they could do to make that kind of initiative a success rather than a painful embarrassment (which it could easily become). So I was thinking about the investment priorities of city governments, more than individual investors like you.

Cities invest in all sorts of crazy things, like Olympic stadiums, for instance, that lose money horrifyingly … but when you remember that the city collects 6% hotel tax on every extra visitor, and benefits from extra publicity, and collects extra property tax when new people move to the city, it suddenly doesn’t look so bad anymore. Boston is losing out because there is a gap in the funding of technology between when DARPA stops funding something, because it is developed to the point where it is commercializable, and when the cautious Boston angels will start funding something – and other states step into the gap and get rich off of the product of Massachusetts’ tax dollars. That can’t make the local government too happy.

Maybe the Boston city or state government might have an incentive to do something to plug that hole. They might be more tolerant of losing money directly because even a modestly lucrative venture, or one very, very slow to generate big returns, which nonetheless successfully drew talent to the city would make them money in hotel & property tax, publicity etc. etc. – or just not losing the huge investment they have already made in their universities! I briefly worked for someone who was funded by Boston Community Capital, an organization which, I think, divided its energies between developing low income housing and and funding selected startups that were deemed socially redeeming for Boston. When half your portfolio is low-income housing, you might have a different outlook on risk and return! I was hugely impressed by what great investors they were – generous, helpful & patient. Patience is necessary for us because the young prodigies in Boston go into fields whose time horizon is so long – my friends are working on synthetic biology, but it will be a long, long time before you can buy a Bladerunner-style snake!

Again, thanks for the feedback. You are helping me understand what I am not making clear.

Marya: Rebecca, you said The idea I’m really dancing around is that these terms & expectations are very different at MIT than (I’ve heard) they are at Stanford

I read your initial comments as being about general business conditions for startups in Boston. But now I think you’re mainly talking about internet startups or at least startups that are based around work in computer science. You’re saying MIT’s computer science department in particular does a poor job of pointing students in an entrepreneurial direction, because they are too oriented towards academic topics.

Both MIT and Stanford have top computer science and business school rankings. Maybe the problem is that Stanford’s business school is more inclined to “mine” the computer science department than MIT’s?

Doug: Rebecca, your description of MIT vs. Stanford sounds right to me (though I don’t know Stanford well). What’s interesting is that I remember UC Berkeley as being very similar to how you describe MIT: the brightest/most ambitious students at Cal ended up working on BSD or Postgres or The Gimp or Gnutella, rather than going commercial. Well, I haven’t kept up with Berkeley since the mid-90s, but have there been any significant startups there since Berkeley Softworks?

Piaw: Doug: Inktomi. It was very significant for its time.

Dan: John Ousterhout built a company around Tcl. Eric Allman built a company around sendmail. Mike Stonebreaker did Ingres, but that was old news by the time the Internet boom started. Margo Seltzer built a company around Berkeley DB. None of them were Berkeley undergrads, though Seltzer was a grad student. Insik Rhee did a bunch of Internet-ish startup companies, but none of them had the visibility of something like Google or Yahoo.

Rebecca: Dan: I was thinking more about what you said about not involving undergraduates, but instead telling them to go to grad school. Sometimes MIT is in the nice sedate academic mode which steers undergrads to the appropriate research group when they are ready to work on their PhD. But sometimes it isn’t. Let me tell you more about the story of the scene in the computer club concerning installation of the first web server. It was about the 100th web server anywhere, and its maintainer accosted me with an absurd chart “proving” the exponential growth of the web – i.e. a graph going exponentially from 0 to 100ish, which he extrapolated forward in time to over a million – you know the standard completely bogus argument – except this one was exceptionally audacious in its absurdity. Yet he argued for it with such intensity and conviction, as if he was saying that this graph should convince me to drop everything and work on nothing but building the Internet, because it was the only thing that mattered!

I fended him off with the biggest stick I could find: I was determined to get my money’s worth for my education, do my psets, get good grades (I cared back then), and there is no way I would let that be hurt by this insane Internet obsession. But it continued like that. The Internet crowd only grew with time, and they got more insistent that they were working on the only thing that mattered and I should drop everything and join them. That I was an undergraduate did not matter a bit to anyone. Undergrads were involved, grad students were involved, everyone was involved. It wasn’t just a research project; eventually so many different research projects blended together that it became a mass obsession of an entire community, a total “Be Involved or Be Square” kind of thing. I’d love to say that I did get involved. But I didn’t; I simply sat in the office on the couch and did psets, proving theorems and solving the Schrodinger’s equation, and fended them off with the biggest stick I could find. I was determined to get a Real Education, to get my money’s worth at MIT, you know.

My point is that when the MIT ecosystem really does its thing, it is capable of tackling projects that are much bigger than ordinary research projects, because it can get a critical mass of research projects working together, involving enough grad students and also sucking in undergrads and everyone else, so that the community ends up with an emotional energy and cohesion that goes way, way beyond the normal energy of a grad student trying to finish a PhD.

There’s something else too, though I cannot report on this with that much certainty, because was too young to see it all at the time. You might ask: if MIT had this kind of emotional energy focused on something in the 90’s, then what is it doing in a similar way now? And the answer I’d have to say, painfully, is that it is frustrated and miserable about being an empty shell of what it once was.

Why? Because in 2000 Bush got elected and he killed the version of DARPA with which so many professors had had such a long relationship. I didn’t I understand this in the 90’s – like a kid I took the things that were happening around me for granted without seeing the funding that made them possible – but now I see that that the kind of emotional energy expended by the Internet crowd at MIT in the 90’s costs a lot of money, and needs an intelligent force behind it, and that scale of money and planning can only come from the military, not from NSF.

More recently I’ve watched professors who clearly feel it is their birthright to be able to mobilize lots of student to do really large-scale projects, but then they try to find money for it out of NSF, and they spend all their time killing themselves writing grant proposals, never getting enough money to make themselves happy, and complaining about the cowardice of academia, and wishing they could still work with their old friends at DARPA. They aren’t happy because they are merely doing big successful research projects, but a mere research project isn’t enough… when MIT is really MIT it can do more. It is an empty shell of itself when it is merely a collection of merely successful but not cohesive NSF funded research projects. As I was saying, the Boston “ecosystem” has in itself the ability to do something singular, but it is singular in an entirely different way than SV’s thing.

This may seem obscure, a tale of funding woes at a distant university, but perhaps it is something you should be aware of, because maybe it affects your life. The reason you should care is that when MIT was fully funded and really itself, it was building the foundations of the things that are now making you rich.

One might think of the relationship between technology and wealth like a story about potential energy: when you talk about finding a “product/market” fit, its like pushing a big stone up a hill, until you get the “fit” at the top of the hill, and then the stone rolls down and the energy you put into it spins out and generates lots of money. In SV you focus on pushing stones up short hills – like Piaw said, no more than 12-18 months of pushing before the “fit” happens.

But MIT in its golden age could tackle much, much bigger hills – the whole community could focus itself on ten years of nothing but pushing a really big stone up a really big hill. The potential energy that the obsessed Internet Crowd in the 90’s was pushing into the system has been playing out in your life ever since. They got a really big stone over a really big hill and sent it down onto you, and then you pushed it over little bumps on the way down, and made lots of money doing it, and you thought the potential energy you were profiting from came entirely from yourselves. Some of it was, certainly, but not all. Some of it was from us. If we aren’t working on pushing up another such stone, if we can’t send something else over a huge hill to crash into you, then the future might not be like the past for you. Be worried.

So you might ask, how did this story end? If I’m claiming that there was intense emotional energy being poured into developing the Internet at MIT in the 90’s, why didn’t those same people fan out and create the Internet industry in Boston? If we were once such winners, how did we turn into such losers? What happened to this energetic, cohesive group?

I can tell you about this, because after years of fending off the emotional gravitation pull of this obsession, towards the end I began to relent. First I said “No way!” and then I said “No!” and then I said “Maybe Later,” and then I said “OK, Definitely Later”… and then when I finally got around to Later, and (perhaps the standard story of my life) Later turned out to be Too Late. By 2000 I was ready to join the crowd and remake myself as an Internet Person in the MIT style. So I ended up becoming seriously involved just at the time it fell apart. Because 2000ish, almost the beginning of the Internet Era for you, was the end for us.

This weekend I was thinking of how to tell this story, and I was composing it in my head in a comic style, thinking to tell a story of myself as “Parable of Boston Loser” to talk about all my absurd mistakes as a microcosm of the difficulties of a whole city. I can pick on myself, can’t I; no one will get upset at that? The short story is that in 2000ish the Internet crowd had achieved their product/market fit, DARPA popped the champagne – you won guys! Congratulations! Now go forth and commercialize! – and pushed us out of the nest into the big world to tackle the standard tasks of commercializing a technology – the tasks that you guys can do in your sleep. I was there, right of the middle of things, during that transition. I thought to tell you a comic story about the absurdity of my efforts in that direction, and make you laugh at me.

But when I was trying to figure out how to explain what was making it so terribly hard for me, to my great surprise I was suddenly crying really hard. All Saturday night I was thinking about it and crying. I had repressed the memory, decided I didn’t care that much – but really it was too terrible to face. All the things you can do without thinking, for us hurt terribly. The declaration of victory, the “achievement of product/market fit”, the thing you long for more than anything, I – and I think many of the people I knew – experienced as a massive trauma. This is maybe why I’ve reacted so vehemently and spammed your comment field, because I have big repressed personal trauma about all this. I realized I had a much more earnest story to tell than I had previously planned.

For instance, I was reflecting on my previous comment about what cities spend money on, and thinking that I sounded like the biggest jerk ever. Was I seriously suggesting that the city take money that they would have spent on housing for poor black babies and instead spend it on overeducated white kids with plenty of other prodigiously lucrative economic opportunities? Where do I get off suggesting something like that? If I really mean it I have a big, big burden of proof.

So I’ll try to combine my more earnest story with at least a sketch of how I’d tackle this burden of proof (and try to keep it short, to keep the spam factor to a minimum. The javascript is getting slow, so I’ll cut this here and continue.)

Ruchira: Interlude (hope Rebecca continues soon!): Rebecca says “that scale of money and planning can only come from the military, not from NSF.” Indeed, it may be useful to check out this NY Times infographic of the federal budget: http://www.nytimes.com/interactive/2010/02/01/us/budget.html

I’ll cite below some of the 2011 figures from this graphic that were proposed at that time; although these may have changed, the relative magnitudes of one sector versus another are not very different. I’ve mostly listed sectors in decreasing order of budget size for research, except I listed “General science & technology” sector (which includes NSF) before “Health” sector (which includes NIH) since Rebecca had contrasted the military with NSF.

The “Research, development, test, and evaluation” segment of the “National Defense” sector is $76.77B. I guess DARPA, ONR, etc. fit there.

The “General science & technology” sector is down near the lower right. The “National Science Foundation programs” segment gets $7.36B. There’s also another $0.1B for “National Science Foundation and other”. The “Science, exploration, and NASA supporting activities” segment gets $12.78B. (I don’t know to what extent satellite technology that is relevant to the national defense is also involved here, or in the $4.89B “Space operations” segment, or in the $0.18B “NASA Inspector General, education, and other” segment.) The “Department of Energy science programs” segment gets $5.12B. The “Department of Homeland Security science and technology programs” segment gets $1.02B.

In the “Health” sector, the “National Institutes of Health” segment gets $32.09B. The “Disease control, research, and training” segment gets $6.13B (presumably this includes the CDC). There’s also “Other health research and training” at $0.14B and “Diabetes research and other” at $0.095B.

In the “Natural resources and environment sector”, the “National Oceanic and Atmospheric Administration” gets $5.66B. “Regulatory, enforcement, and research programs” gets $3.86B (is this the entire EPA?).

In the “Community and regional development” sector, the “National Infrastructure Innovation and Finance fund” (new this year) gets $4B.

In the “Agriculture” sector, which presumably includes USDA-funded research, “Research and education programs” gets $1.97B, “Research and statistical analysis” gets $0.25B, and “Integrated research, education, and extension programs” gets $0.025B.

In the “Transportation” sector, “Aeronautical research and technology” gets $1.15B, which by the way would be a large (130%) relative increase. (Didn’t MIT find a way of increasing jet fuel efficiency by 75% recently?)

In the “Commerce and housing credit” sector, “Science and technology” gets $0.94B. I find this rather mysterious.

In the “Education, training, employment” sector, “Research and general education aids: Other” gets $1.14B. The “Institute for Education Sciences” gets $0.74B.

In the “Energy” sector, “Nuclear energy R&D” gets $0.82B and “Research and development” gets $0.024B (presumably this is the portion outside the DoE).

In the “Veterans’ benefits and services” sector, “Medical and prosthetic research” gets $0.59B.

In the “Income Security” sector there’s a tiny segment “Children’s research and technical assistance” $0.052B. Not sure what that means.

Rebecca: I’ll start with a non-sequitur which I hope to use to get at the hear of the difference between MIT and Stanford: recently I was at a Marine publicity event and I asked the recruiter what differentiates the Army from the Marines? Since they both train soldiers to fight, why don’t they do it together? He answered vehemently that they must be separate because of one simple attribute in which they are utterly opposed: how they think about the effect they want to have on the life their recruits have after they retire from the service. He characterized the Army as an organization which had two goals: first, to train good soldiers, and second, to give them skills that would get them a good start in the life they would have after they left. If you want to be a Senator, you might get your start in the Army, get connections, get job skills, have “honorable service” on your resume, and generally use it to start your climb up the ladder. The Army aspires to create a legacy of winners who began their career in the Army.

By contrast the Marines, he said, have only one goal: they want to create the very best soldiers, the elite, the soldiers they can trust in the most difficult and dangerous situations to keep the Army guys behind them alive. This elite training, he said, comes with a price. The price you pay is that the training you get does not prepare you for anything at all in the civilian world. You can be the best of the best in the Marines, and then come home and discover that you have no salable civilian job skills, that you are nearly unemployable, that you have to start all over again at the bottom of the ladder. And starting over is a lot harder than starting the first time. It can be a huge trauma. It is legendary that Marines do not come back to civilian life and turn into winners: instead they often self-destruct – the “transition to civilian life” can be violently hard for them.

He said this calmly and without apology. Did I say he was a recruiter? He said vehemently: “I will not try to recruit you! I want to you to understand everything about how painful a price you will pay to be a Marine. I will tell you straight out it probably isn’t for you! The only reason you could possibly want it is because you want more than anything to be a soldier, and not just to be a soldier, but to be in the elite, the best of the best.” He was saying: we don’t help our alumni get started, we set them up to self-destruct, and we will not apologize for it – it is merely the price you pay for training the elite!

This story gets to the heart of what I am trying to say is the essential difference between Stanford and MIT. Stanford is like the Army: for its best students, it has two goals – to make them engineers, and to make them winners after they leave. And MIT is like the Marines: it has only one goal – to make its very best student into the engineering elite, the people about whom they can truthfully tell program managers at DARPA: you can utterly trust these engineers with the future of America’s economic and military competitiveness. There is a strange property to the training you get to enter into that elite, much like the strange property the non-recruiter attributed to the training of the Marines: even though it is extremely rigorous training, once you leave you can find yourself utterly without any salable skills whatever.

The skills you need to acquire to build the infrastructure ten years ahead of the market’s demand for it may have zero intersection with the skills in demand in the commercial world. Not only are you not prepared to be a winner, you may not even be prepared to be basically employable. You leave and start again at the bottom. Worse than the bottom: you may have been trained with habits commercial entities find objectionable (like a visceral unwillingness to push pointers quickly, or a regrettable tendency to fight with the boss before the interview process is even over.) This can be fantastically traumatic. Much as ex-Marines suffer a difficult “transition to civilian life,” the chosen children of MIT suffer a traumatic “transition to commercial life.” And the leaders at MIT do not apologize for this: as the Marine said, it is just the price you pay for training the elite.

This is the general grounds which I might use to appeal to the city officials in Boston. There’s more to explain, but the shape of the idea would be roughly this: much a cities often pay for programs to help ex-Marines transition to civilian life, on the principal that they represent valuable human capital that ought not to be allowed to self-destruct, it might pay off for the city to understand the peculiar predicament of graduates of MIT’s intense DARPA projects, and provide them with help with the “transition to commercial life.” There’s something in it for them! Even though people who know nothing but how to think about the infrastructure of the next decade aren’t generically commercially valuable, if you put them in proximity to normal business people, their perspective would rub off in a useful way. That’s the way that Boston could have catalyzed an Internet industry of its own – not by expecting MIT students to commercialize their work, which (with the possible exception of Philip) they were constitutionally incapable of, but by giving people who wanted to commercialize something but didn’t know what a chance to learn from the accumulated (nearly ten years!) of experience and expertise of the Internet Crowd.

On that note, I wanted to say – funny you should mention Facebook. You think of Mark Zuckerberg as the social networking visionary in Boston, and Boston could have won if they had paid to keep him. I think that strange – Zuckerberg is fundamentally one of you, not one of us. It was right he should leave. But I’ll ask you a question you’ve probably never thought about. Suppose the Internet had not broken into the public consciousness at the time it did; suppose the world had willfully ignored it for a few more years, so the transition from a DARPA-funded research project to a commercial proposition would have happened a few years later. There was an Internet Crowd at MIT constantly asking DARPA to let them build the “next thing,” where “next” is defined as “what the market will discover it wants ten years from now.” So if this crowd had gotten a few more years of government support, what would they have built?

I’m pretty sure it would have been a social networking infrastructure, not like Facebook, really, but more like the Diaspora proposal. I’m not sure, but I remember in ‘98/‘99 that’s what all the emotional energy was pointing toward. It wasn’t technically possible to build yet, but the instant it was that’s what people wanted. I think it strange that everyone is talking about social networking and how it should be designed now; it feels to me like deja vu all over again, and echo from a decade ago. If the city or state had picked up these people after DARPA dropped them, and given them just a little more time, a bit more government support – say by a Mass ARPA – they could have made Boston the home, not of the big social networking company, but of the open social networking infrastructure and and all the expertise and little industries such a thing would have thrown off. And it would have started years and years ago! That’s how Boston could have become a leader by being itself better, rather than trying to be you badly.

Dan: I think you’re perhaps overstating the impact of DARPA. DARPA, by and large, funds two kinds of university activities. First, it funds professors, which pays for post-docs, grad students, and sometimes full-time research staff. Second, DARPA also funds groups that have relatively little to do with academia, such as the BSD effort at Berkeley (although I don’t know for a fact that they had DARPA money, they didn’t do “publish or perish” academic research; they produced Berkeley Unix).

Undergrads at a place like MIT got an impressive immersion in computer science, with a rigor and verve that wasn’t available most other places (although Berkeley basically cloned 6.001, and others did as well). They call it “drinking from a firehose” for a reason. MIT, Berkeley, and other big schools of the late 80’s and early 90’s had more CS students than they knew what to do with, so they cranked up the difficulty of the major and produced very strong students, while others left for easier pursuits.

The key inflection point is how popular culture at the university, and how the faculty, treat their “rock star” students. What are the expectations? At MIT, it’s that you go to grad school, get a PhD, become a researcher. At Stanford, it’s that you run off and get rich.

The decline in DARPA funding (or, more precisely, the micromanagement and short-term thinking) in recent years can perhaps be attributed to the leadership of Tony Tether. He’s now gone, and the “new DARPA” is very much planning to come back in a big way. We’ll see how it goes.

One last point: I don’t buy the Army vs. Marines analogy. MIT vs. Stanford train students similarly, in terms of their preparation to go out and make money, and large numbers of MIT people are quite successfully out there making money. MIT had no lack of companies spin out of research there, notably including Akamai. The differences we’re talking about here are not night vs. day, they’re not Army vs. Marines. They’re more subtle but still significant.

Rebecca: Yes, I’ve been hearing about the “unTethered Darpa.” I should have mentioned that, but left it out to stay (vaguely) short. And yes, I am overstating to make it possible to make a simple statement of what I might be asking for that would be couched in terms a city or state government official might be able to relate to. Maybe that’s irresponsible; that’s why I’m testing it on you first, to give you a chance to yell at me and tell me if you think that’s so.

They are casting about for a narrative of why Boston ceded its role as leaders of the Internet industry to SV, that would point them to something to do about it. So I was talking specifically about the sense in which Boston was once a leader in internet technology and the weaknesses that might have caused it to lose its lead. Paul Graham says that Boston has the weakness in developing industries that it is “too good” at other things, so I wanted to tell a dramatized story specifically about what the other things were and why that would lead to fatal weakness – how being “too strong” in a particular way can also make you weak.

I certainly am overstating, but perhaps I am because I am trying to exert force against another prediliction I find pernicious: the tendency to be eternally vague about the internal emotional logic that makes things happen in the world. If people build a competent, cohesive, energetic community, and then it suddenly fizzles, fails to achieve its potential, and disbands, it might be important to know what weakness caused this surprising outcome so you know how to ask for the help that would keep it from happening the next time.

And to tell the truth, I’m not sure I entirely trust your objection. I’ve wondered why so often I hear such weak, vague narratives about the internal emotional logic that causes things to happen in the world. Vague narratives make you helpless to solve problems! I don’t cling to the right to overstate things, but I do cling to the right to sleuth out the emotional logic of cause and effect that drives the world around me. I feel sometimes that I am fighting some force that wants to thwart me in that goal – and I suspect that that force sometimes originates, not always in rationality, but in in a male tendency to not want to admit to weakness just for the sake of “seeming strong.” A facade of strength can exact a high price in the currency of the real competence of the world, since often the most important action that actually makes the world better is the action of asking for help. I was really impressed with that Marine for being willing to admit to the price he paid, to the trauma he faced. That guy didn’t need to fake strength! So maybe I am holding out the image of him as an example. We have government officials who are actively going out of their way to offer to help us; we have a community that accomplishes many of its greatest achievements because of government support; we shouldn’t squander an opportunity to ask for what might help us. And this narrative might be wrong; that’s why I’m testing it first. I’m open to criticism. But I don’t want to pass by an opportunity, an opening to ask for help from someone who is offering it, merely because I’m too timid to say anything for the fear of overstatement.

Dan: Certainly, Boston’s biggest strength is the huge number of universities in and around the area. Nowhere else in the country comes close. And, unsurprisingly, there are a large number of high-tech companies in and around Boston. Another MIT spin-out I forgot to mention above is iRobot, the Roomba people, which also does a variety of military robots.

To the extent that Boston “lost” the Internet revolution to Silicon Valley, consider the founding of Netscape. A few guys from Illinois and one from Kansas. They could well have gone anywhere. (Simplifying the story, but) they hooked up with a an angel investor (Jim Clark) and he draged them out to the valley where they promptly hired a bunch of ex-SGI talent and hit the road running. Could they have gone to Boston? Sure. But they didn’t.

What seems to be happening is that different cities are developing their own specialties and that’s where people go. Dallas, for example, has carved out a niche in telecom, and all the big players (Nortel, Alcatel, Cisco, etc.) do telecom work there. In Houston, needless to say, it’s all about oilfield engineering. It’s not that there’s any particular Houston tax advantage or city/state funding that brings these companies here. Rather, the whole industry (or, at least the white collar part of it) is in Houston, and many of the big refineries are close nearby (but far enough away that you don’t smell them).

Greater Boston, historically, was where the minicomputer companies were, notably DEC and Data General. Their whole world got nuked by workstations and PCs. DEC is now a vanishing part of HP and DG is now a vanishing part of EMC. The question is what sort of thing the greater Boston area will become a magnet for, in the future, and how you can use whatever leverage you’ve got to help make it happen. Certainly, there’s no lack of smart talent graduating from Boston-area universities. The question is whether you can incentivize them to stay put.

I’d suggest that you could make headway, that way, by getting cheap office space in and around Cambridge (an “incubator”) plus building a local pot of VC money. I don’t think you can decide, in advance, what you want the city’s specialty to be. You pretty much just have to hope that it evolves organically. And, once you see a trend emerging, you might want to take financial steps to reinforce it.

Thomas: BBN (which does DARPA funded research) has long been considered a halfway house between MIT and the real world.

Piaw: It looks like there’s another conversation about this thread over at Hacker News: http://news.ycombinator.com/item?id=1416348 I love conversation fragmentation.

Doug: Conversation fragmentation can be annoying, but do you really want all those Hacker News readers posting on this thread?

Piaw: Why not? Then I don’t have to track things in two places.

Ruchira: hga over at Hacker News says: “Self-selection by applicants is so strong (MIT survived for a dozen year without a professional as the Director), whatever gloss the Office is now putting on the Institute, it’s able to change things only so much. E.g. MIT remains the a place where you don’t graduate without taking (or placing out of) a year of the calculus and classical physics (taught at MIT speed), for all majors.”

Well, the requirements for all majors at Caltech are: two years of calculus, two years of physics (including quantum physics), a year of chemistry, and a year of biology (the biology requirement was added after I went there); freshman chemistry lab and another introductory lab; and a total of four years of humanities and social sciences classes. The main incubator I know of near Caltech is the Idealab. Certainly JPL (the Jet Propulsion Laboratory) as well as Hollywood CGI and animation have drawn from the ranks of Caltech grads. The size of the Caltech freshman class is also much smaller than those at Stanford or MIT.

I don’t know enough to gauge the relative success of Caltech grads at transitioning to local industry, versus Stanford or MIT, does anyone else?

Rebecca: The comments are teaching me what I didn’t make clear, and this is one of the worst ones. When I talked about the “transition to the commercial world” I didn’t mainly mean grads transitioning to industry. I was thinking more about the transition that a project goes through when it achieves product/market fit.

This might not be something that you think of as such a big deal, because when companies embark on projects, they usually start with a fairly specific plan of the market they mean to tackle and what they mean to do if and when the market does adopt their product. There is no difficult transition because they were planning for it all along. After all, that’s the whole point of a company! But a ten year research project has no such plan. The web server enthusiast did not know when the market would adopt his “product” – remember, browsers were still primitive then – nor did he really know what it would look like when they did. Some projects are even longer term than that: a programming language professor said that the expected time from the conception of a new programming language idea to its widespread adoption is thirty years. That’s a good chunk of a lifetime.

When you’ve spent a good bit of your life involved with something as a research project that no-one besides your small crowd cares about, when people do notice, when commercial opportunities show up, when money starts pouring out of the sky, its a huge shock! You haven’t planned for it at all. Have you heard Philip’s story of how he got his first contract for what became ArsDigita? I couldn’t find the story exactly, but it was something like this: he had posted some of the code for his forum software online, and HP called him up and asked him to install and configure it for them. He said “No! I’m busy! Go away!” They said “we’ll pay you $100,000.” He’s in shock: “You’ll give me $100000 for 2 weeks of work?”

He wasn’t exactly planning for money to start raining down out of the sky. When he started doing internet applications, he said, people had told him he was crazy, there was no future in it. I remember when I first started seeing URL’s in ads on the side of buses, and I was just bowled over – all the time my friends had been doing web stuff, I had never really believed they would ever be adopted. URL’s are just so geeky, after all! I mean, seriously, if some wild-eyed nerd told you that in five years people would print “http://“,on the side of a bus, what would you think? I paid attention to what they were doing because they thought it was cool, I thought it was cool, and the fact that I had no real faith anyone else ever would made no difference. So when the world actually did, it was entering a new world that none of us were prepared for, that nobody had planned for, that we had not given any thought to developing skills to be able to deal with. I guess this is a little hard to convey, because it wouldn’t happen in a company. You wouldn’t ever do something just because you thought it was cool, without any faith that anyone would ever agree with you, and then get completely caught by surprise, completely bowled over, when the rest of the world goes crazy about what you thought was your esoteric geeky obsession.

Piaw: I think we were all bowled over by how quickly people started exchanging e-mail addresses, and then web-sites, etc. I was stunned. But it took a really long time for real profits to show up! It took 20 or so search engine companies to start up and fail before someone succeeded!

Rebecca: Of course; you are bringing up what was in fact the big problem. The question was: in what mode is it reasonable to ask the local government for help? And if you are in the situation where $100,000 checks are raining on you out of the sky without you seeming to make the slightest effort to even solicit them, then it seems like only the biggest jerk on the planet would claim to the government that they were Needy and Deserving. Black babies without roofs on their heads are needy and deserving; rich white obnoxious nerds with money raining down on them are not. But remember though Philip doesn’t seem to be expending much effort in his story, he also said in the late 90’s that he had been building web apps for ten years. Who else on the planet in 1999 could show someone a ten year long resume of web app development?

As Piaw said, it isn’t like picking up the potential wealth really was just a matter of holding out your hand as money rained from the sky. Quite the contrary. It wasn’t easy; in fact it was singularly difficult. Sure, Philip talked like it was easy, until you think about how hard it would have been to amass the resume he had in 1999.

When the local government talks about how it wants to attract innovators to Boston, to turn the city into a Hub of Innovation, my knee-jerk reaction is – and what are we, chopped liver? But then I realize that when they say they want to attract innovators, what they really mean is not that they want innovators, but that they want people who can innovate for a reasonable, manageable amount of time, preferably short, and then turn around, quick as quicksilver, and scoop up all the return on investment in that innovation before anyone else can get at it – and give a big cut in taxes to the city and state! Those are the kind of innovators who are attractive! Those are the kind who properly make your Boston the kind of Hub of Innovation the Mayor of Boston wants it to be. Innovators like those in Tech Square or Stata, not so much. We definitely qualify for the Chopped Liver department.

And this hurts. It hurts to think that the Mayor of Boston might be treating us with more respect now if we had been better in ~2000 at turning around, quick as quicksilver, and remaking ourselves into people who could scoop up all, or some, or even a tiny fraction of the return on investment of the innovation at which we were then, in a technical sense, well ahead of anyone else. But remaking yourself is not easy! Especially when you realize that the state from which we were remaking ourselves was sort of like the Marines – a somewhat ascetic state, one that gave you the nerd equivalent of military rations, a tent, maybe a shower every two weeks, and no training in any immediately salable skills whatsoever – but also one that also gave you a community, an identity, a purpose, a sense of who you were that you never expected to change. But all of a sudden we “won,” and all of a sudden there was a tremendous pressure to change. It was like being thrown in the deep end of the pool without swim lessons, and yes we sank, we sank like a stone with barely a dog paddle before making a beeline for the bottom. So we get no respect now. But was this a reasonable thing to expect? What does the mayor of Boston really want? Yes, the sense in which Boston is a Hub of Innovation (for it already is one, it is silly for it to try to become what it already is!) is problematic and not exactly what a Mayor would wish for. I understand his frustration. But I think he would do better to work with his city for what it is, in all its problematic incompetence and glory, than to try to remake it in the image of something else it is not.

Rebecca: On the subject of Problematic Innovators, I was thinking back to the scene in the computer lab where everyone agreed that hoarding domain names was the dumbest idea they had ever heard of. I’m arguing that scooping up return on the investment in innovation was hard, but registering a domain name is the easiest thing in the world. I think they were free back then, even. If I remember right, they started out free, and then Procter & Gamble registered en-mass every name that had even the vaguest entomological relation with the idea of “soap,” at which point the administrators of the system said “Oops!” and instituted registration fees to discourage that kind of behavior – which, of course, would have done little to deter P&G. They really do want to utterly own the concept of soap. (I find it amusing that P&G was the first at bat in the domain name scramble – they are not exactly the world’s image of a cutting-edge tech-savvy company – but when it comes to the problem of marketing soap, they quietly dominate.)

How can I can explain that we were not able to expend even the utterly minimal effort in capturing the return on investment in innovation of registering a free domain name, so as to keep the resulting tax revenues in Massachusetts?

Thinking back on it, I don’t think it was either incapacity, or lack of foresight, or a will to fail in our duty as Boston and Massachusetts taxpayers. It was something else: it was almost a “semper fidelis”-like group spirit that made it seem dishonorable to hoard a domain name that someone else might want, just to profit from it later. Now one might ask, why should you refrain from hoarding it sooner just so that someone else could grab it and hoard it later? That kind of honor doesn’t accomplish anything for anyone!

But you have to realize, this was right at the beginning, when the domain name system was brand new and it wasn’t at all clear it would be adopted. These were the people who were trying to convince the world to accept this system they had designed and whose adoption they fervently desired. In that situation, honor did make a difference. It wouldn’t look good to ask the world to accept a naming system with all the good names already taken. You actually noticed back then when something (like “soap”) got taken – the question wasn’t what was available, the question was what was taken, and by whom. You’d think it wouldn’t hurt too much to take one cool name: recently I heard that someone got a $38 million offer for “cool.com.” That’s a lot of money! – would it have hurt that much to offer the world a system with all the names available except, you know, one cool one? But there was a group spirit that was quite worried that once you started down that slope, who knew where it would lead?

There were other aspects of infrastructure, deeper down, harder to talk about, where this group ethos was even more critical. You can game an infrastructure to make it easier to personally profit from it – but it hurts the infrastructure itself to do that. So there was a vehement group discipline that maintained a will to fight any such urge to diminish the value of the infrastructure for individual profit.

This partly explains why we were not able, when the time came, to turn around, quick as quicksilver, and scoop up the big profits. To do that would have meant changing, not only what we were good at, but what we thought was right.

When I think back, I wonder, why people weren’t more scared? When we chose not to register “cool.com” or similar names, why didn’t we think, life is hard, the future is uncertain, and money does really make a difference in what you can do? I think this group ethic was only possible because there was a certain confidence – the group felt itself party to a deal: in return for being who we are, the government would take care of us, forever. Not until the time when the product achieved sufficient product/market fit that it became appropriate to expect return on investment. Forever.

This story might give a different perspective on why it hurts when the Mayor of Boston announces that he wants to make the city a Hub of Innovation. The innovators he already has are chopped liver? Well, its understandable that he isn’t too pleased with the innovators in this story, because they aren’t exactly a tax base. But that is the diametric opposition of the deal with the government we thought we had.