In Competition For Amazon, Boston Misses The Big One. Again

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In this Jan. 28, 2016, file photo, billionaire Amazon founder and Washington Post owner Jeff Bezos speaks in Washington. (J. Scott Applewhite/AP)
In this Jan. 28, 2016, file photo, billionaire Amazon founder and Washington Post owner Jeff Bezos speaks in Washington. (J. Scott Applewhite/AP)

Amazon's decision to snub Boston has reopened some old wounds. Massachusetts has a long history of missed opportunities to attract large technology companies.

Robert Noyce got his Ph.D. at MIT but picked California to launch Intel in the 1960s.

Bill Gates was a Harvard student in the 1970s when he hatched the idea that became Microsoft. Then he dropped out and started the company in Albuquerque.

More recently, Mark Zuckerberg founded Facebook in his Harvard dorm room in 2004 but moved the company to Silicon Valley. Years later, in a cruel twist, he said, "If I were starting now, I would have just stayed in Boston. ... I had a conversation with Bezos about this one time."

"Bezos," of course, is Amazon founder Jeff Bezos.

Boston's habit of losing out on tech titans haunts industry insiders like Jeff Bussgang, a general partner at Flybridge Capital.

"In my network, people are really concerned about the fact that Boston does not seem to groom scaled companies," he said. "We have not scaled many companies beyond $1 billion of revenue or $10 billion of market cap."

There are exceptions, such as EMC and Akamai — and others knocking on the door. But most struggle to hit those huge numbers as standalone businesses.

Just this week, Watertown software company Athenahealth sold for $5.7 billion. The buyers were in New York and Silicon Valley.

The deal is what venture capitalists like Bussgang would call a terrific return on investment. Yet it's also evidence of Boston's glass ceiling.

So, what's the problem?

"I think it's history," said David Cancel, cofounder of the Boston digital marketing firm Drift.

He points out that there were some really big tech companies in the area before the dot-com bubble burst.

Remember Digital Equipment Corporation and CMGI?

"We had just seen a whole wave of them," Cancel said, "and then we spent the next decade under-investing in that ecosystem here. Now we're trying to come back from that under-investment. It takes a long time to build the ecosystem again."

An Amazon headquarters might have helped the rebuilding process. But Jesse Mermell, president of the Alliance for Business Leadership in Boston, calls this a "moment of reflection for Boston."

"For me, the real question is: How do we invest in the businesses and the workers that have already committed to make Massachusetts home?" she said. "And I feel like by doing that, then if we decide it’s what we want, we can be competitive when the next Amazon — whatever it is; some company we probably haven’t even heard of yet — goes forward with an HQ2-type situation in the future."

Notice the caveat: "If we decide it’s what we want." There's a case to be made that Boston is doing just fine, thank you very much, with a cluster of home-grown, medium-size tech firms.

"To me, and I think to many people, it’s not a big deal" to not get Amazon's HQ2, said Chris Anderson, president of the Massachusetts High Technology Council. "We’ve got tons of other innovative companies in a lot of different sectors that are really driving the Massachusetts economy."

And there could be more innovative companies on the way, at the very sites pitched to Amazon.

At Suffolk Downs — the centerpiece of Boston's HQ2 proposal — developer Tom O'Brien said he's confident he'll find other tenants.

Somerville Mayor Joe Curtatone, whose city proposed a more spread-out headquarters along the Orange Line, said the same.

"Whether Amazon comes or not it wasn't gonna make us, and it's not gonna break us," he said. "Just in the corridor of the proposal we announced, we have several million square feet of projects already on the way, or permitted, or about to get underway."

This segment aired on November 14, 2018.


Headshot of Callum Borchers

Callum Borchers Reporter
Callum covered the Greater Boston business community for Bostonomix.



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