I am meeting with a local politician for lunch on Friday, and I want to make sure that I represent YOUR perspective as entrepreneurs. Please email me or comment below on issues such as:

• visas for technology workers, researchers & engineers
• research funding for univiersities, hospitals & other institutions
• enforcability of non-competes, particularly for those of you based in MA
• crowd funding

Please let me know what you think. I want to represent you well in this conversation. Thanks! 

There is nothing like a few days in Silicon Valley to make you feel totally inferior with respect to hustle, value creation and entrepreneurial spirit. I always love spending time in Silicon Valley, and I believe it expands my knowledge and networks in a way that is important for my clients as well for my own career.

Being in Silicon Valley also helps me get context for my clients, my career and how we compare to what is going on in the epicenter of the entrepreneurial universe. I was reflecting on this last night, especially in light of hearing comments over the past few days like “Boston so missed the last wave of innovation”, “is there anything interesting going on in Boston”, and “I don’t think Boston is ever coming back”, many of these comments from people who are thought leaders in Silicon Valley and beyond. For the most part, I disagree with these statements, but I also just can’t dismiss them. We need to address our perception problem, especially in centers of influence like Silicon Valley.

So, I started plotting out a SWOT analysis for Boston, something I do periodically for myself and for my own business. I thought I would share that with you as I would love to get your feedback. And I would also love to work with you to help build on Boston’s strengths, to neutralize our weaknesses, to capitalize on our opportunities and to fend off our threats. Also, this is probably a good time to remind you that the views expressed in this blog are mine and not necessarily those of my employer Silicon Valley Bank!

Strengths

1)      MIT: The Massachusetts Institute of Technology is a national treasure, and it is ours. The Globe did a great job of highlighting many of the ways that MIT is so important last year during the University’s 150th Anniversary. The annual revenue associated with technology and companies spun out of MIT rivals that of the GDP of many sovereign nations. Incredible.

2)      Annual influx of University students: Thankfully for us, MIT is not the only game in town. There are over 50 colleges and over 200,000 students in the Boston area. Not all of these students are a fit for the innovation economy and not all are from outside Boston, but there is no denying that many of the world’s best students come here to study and spend some formative years in our city. Most innovation economies would kill for what we have here in Boston with respect to student populations.

3)      Legacy: No resting on our laurels, but let’s also not forget who we are. Boston has a legacy of building incredible companies and incredible value. At SVB Boston, we have named our conference rooms after Boston innovators, and it is with much pride that we hold our meetings in the Digital, Biogen, Lotus and Doriot rooms, just to name a few. It is a good reminder of what is possible in Boston.

Weaknesses

1)      Overly formulaic: Innovation is not typically something that fits a certain mold or a certain process. By definition, it is new and different. Certainly, there are best practices to be applied to help make the process of innovation and value creation more efficient, but the process itself needs to be in permanent beta. In Boston, we have a reputation for being slow to make decisions, especially around a) what is innovative and b) how to finance it once we decide it is innovative. The due diligence models that applied ten years ago are still relevant, especially prior to large investments, but the initial risk of undertaking most new projects has dropped as less capital and time is required to get to proof points about technology and product market fit. It makes sense to allocate some time and dollars to marginal risk taking in an effort to cast a wider net around what innovation might be possible.  

2)      Struggling VC community: This is certainly not unique to Boston, but it is an acute problem here because we have been a hub for the management and deployment of venture capital funds for so long. Many of our VCs are struggling to raise new funds, partially related to the issues described above. This is reflecting poorly on Boston as capital is such an important and visible part of the overall ecosystem. That said, several newer funds and a few older, established funds continue to do well from a fund-raising standpoint, and if you examine their strategies, in most cases you will see that they have changed their formulas in that they are partnering with entrepreneurs in a different way than those who are struggling to raise – seeding companies, supporting entrepreneurs with time, space & advice, leveraging Boston’s infrastructure & resources to support foreign entrepreneurs or foreign markets, etc. They have innovated on their own models and put themselves in permanent beta. I believe these efforts will translate into superior IRR and long relationships with entrepreneurs and LPs alike.

3)      Perspectives on success: We have a strange perspective on success. For some reason, we want to be #2, although I’m not sure why – too many years of watching the Red Sox miss the pennant maybe? And when we do win, we are really fixated on the outcome in a binary way which allows us to still say that we were not really that successful. Case in point: Endeca gets acquired for over a billion dollars but somehow it is a problem in our collective minds that it will no longer be an independent company, even though angels, VCs and management made tons of money which will in turn fund several new companies, any of which may be even more successful in terms of value creation. I know it sounds cliché, but we need to celebrate our successes in all their many shades of grey. Other markets do this much better than we do, and it is informing the perspectives that the outside world has of us. I’m sure it sounds like I am preaching to the local media, but this also applies to entrepreneurs themselves, as well as those of us who support them. We all need to do more telling the great stories that we are part of.

Opportunities

1)      Enterprise expertise: While we have made some good strides with respect to consumer internet, we know that it is not our strength. That’s OK. The good news is that enterprise applications and infrastructure are coming back. That plays to our strengths in solving hard problems and allows us leverage our many leaders and managers with expertise in selling into the enterprise. And the consumer expertise that we have picked up recently will come in handy as well as enterprise IT is quickly being “consumerized” by a younger, more tech savvy workforce.

2)      Winning the talent war: To put this in military terms, we have the high ground in the war for talent and we need to take advantage of that. The best and the brightest from all over the world are educated here. Our universities are incented to place them in the best jobs available, regardless of whether they are in Boston or not, but we have an opportunity to market the city and the economy and the companies that make it up in a way that tilts the odds in our favor. To do this effectively, we need to engage students while they are still students, not just when they start looking for jobs (or for investment in the case of young entrepreneurs). I am so excited about what Katie Rae, Aaron O’Hearn and others are doing with Boston Startup School because I think this is exactly the type of innovative model that will help Boston win the talent war. Having Microsoft, Google, Amazon, Red Hat and others employing large numbers of people in Kendall Square and beyond helps, too – let’s support them!

3)      Angel investors: We recently helped put on a dinner for 60+ angel investors and potential angel investors, and I was really encouraged by what I saw there. Essentially, it was a room full of successful entrepreneurs, some who made their money 20+ years ago and many who have made it in the past year or so. The best angels are typically entrepreneurs themselves. They think differently, they are more likely to break molds, and they are typically quicker to act than institutional investors. If Boston can figure out the lever to cause these potential angels to become active angels, the impact will be significant in terms of company formation and value creation. Few other markets have the near-term potential to have their capital landscape as significantly altered by angel investment as we have here in Boston. Jon Pierce has been a real leader for Boston in this regard, and I applaud his efforts and urge you to help support what he is doing with his angel bootcamps.

Threats

1)      Brian drain: So, this is what happens if we do not capitalize on the opportunity to win the talent war. Boston is a highly educated place. I do not see that changing. However, we do run the risk of losing the newest wave of highly educated people each year as they are attracted to a newer, shinier object. However, smart people like to be challenged, and I do believe that if we showcase the hard problems that we are solving in the innovation economy, and if we engage people inside our universities to help us solve them, then we will give ourselves a sustainable advantage that other markets do not have.

2)      Migration of the VC industry: The number of venture capital fund managers and the amount of assets under management is going to shrink in Boston and around the world. I have come to grips with that. My concern is that there would be a proportional shift in number of managers and amount of assets under management relative to other markets – i.e. that Boston would decline faster than others in terms of managers and AUM or even that others would gain managers and AUM as Boston declines. Capital is only one element of an innovation economy, but it is a very important element. If this proportional shift occurred, it would follow that a similar proportional shift would occur in terms of company formation and value creation.

3)      Self-fulfilling prophecies: Are we our own worst enemy? Possibly. Am I guilty of that even in my own post here? Maybe, but I’ve tried to be objective and balanced. Entrepreneurship is as much about courage and optimism as it is about innovation and leverage and opportunity. We certainly cannot “hope” our way into a better position relative to company formation and value creation, but we probably can “despair” our way into a place where we have no chance.

Thanks for reading. I would love to hear your thoughts, and I would love to partner with you to address all of the points discussed above!

On the recommendation of my business partner Tuan Pham, I spent some time on a recent vacation reading The Startup of You by Reid Hoffman (founder & chairman of LinkedIn and partner at Greylock) and co-author Ben Casnocha, and I am now, in turn, recommending it to you.

The basic premise of the book is that people, like great entrepreneurial companies, are in permanent beta. You should think like an entrepreneur in order to make your career one that is defined by curiosity, creativity and breakout opportunities. But you don’t need to be an entrepreneur, a techie, a VC, etc. to get something out of this book. I’m a banker and middle manager at a bank with $20 billion in assets and nearly 2000 employees worldwide. That probably does not seem very entrepreneurial, but it certainly does not stop me (or my colleagues) from thinking entrepreneurially about our business. And this book led me to think even more entrepreneurially about my own career, especially with respect to plans, risks & networks.

Plans

How many times have you asked yourself or an employee or a mentee, “where do you want to be in 1 year, 5 years, 10 years?” Hoffman makes a good argument that such planning is severely limiting, essentially because we are confined to today’s known options when we plan this way. Planning is better guided by vision & values but flexible as to which avenues present themselves as means to achieving the vision. This is what great companies do. They know what they value and generally know where they are heading, but they constantly evaluate how they are getting there.

This jives well with changes we have been making on my team at the bank as to how we think about planning. Like all business people, we sign up for a few significant annual goals and metrics, but we have shifted to “seasonal priorities” as we think about how to achieve these goals. This keeps our team fresh and our plans relevant with respect to our strengths, our passions and as importantly, the market realities. Hoffman talks a lot about aligning these three variables in the book. 

With respect to personal career planning, the book really stretched me to consider what I’m good at and what I’m passionate about. I’m not going to go into that right now, but several of you with whom I’m close, will be hearing a lot more about this over coffee sometime soon - I can’t wait to hear your ideas! As importantly, it made me think about the markets that I play in and how they’re changing. The fact of the matter is that banking is going to look completely different in 10 years. I feel like I’m adding a new client every month that is in some way leveraging new technology to compete with banks. This is a huge threat to business as usual and likewise a huge opportunity for those who can figure out how to harness technology and offer financial services in a more transparent, efficient and customer friendly way. I want to be on the right side of that change. Better yet, I want to help make that change happen.

Risks

While advocating that individuals think of themselves as entrepreneurial start-ups, in no way does Hoffman encourage cowboy-like behavior and wild risk-taking. What he does encourage is action. One piece of advice in the book that really stuck with me is to act even when you are unsure of what the next step should be, but when you do so, make sure that step is one with high option value. A good first step is one that opens up a large number of potential second steps. Sounds like common sense, but this is not the way we typically think about risk. We think about how to mitigate or eliminate the downside versus this perspective of opening up other options.

Life is about taking risks. This perspective allows us to think about how, not whether, to take those risks. What is involved in pivoting to the next step if things go poorly - opportunity cost, tarnished reputation, lost income, etc.? Can you live with those risks? If so, act. If not, how can you alter the first step so that you can continue to thrive during your personal pivot to the next step?

Everyone will have different tolerances for risk and reward, based on age, stage and other circumstances. It is prudent to think of risk relative to the people and institutions that we care about and to assess risk and reward based on the values we share with those people and institutions, but it is also good to remember, as Hoffman points out, that breakout opportunities will have a higher degree of “perceived” risk. The key is to be thoughtful about what others see as real risk and to decipher for ourselves if it is really perceived risk and thereby a unique and valuable opportunity.

Networks

Of course the founder of LinkedIn had plenty to say about networks in his book. To some extent, the book reinforces a lot of things that people reading this blog already know, namely that an individual’s influence and power is significantly enhanced by leveraging his or her network.

What is unique about Hoffman’s analysis is the way he talks about multiple approaches to leveraging a network, from passive interactions such as social networking to intimate connections like trusted partnerships (and everything in between). Throughout this analysis, he stresses that valuable networks are built on genuine relationships, not transactional ones. Hoffman says that a genuine relationship depends on 1) seeing things from another person’s perspective, and 2) considering what you can contribute to the relationship versus what you can take from it.

Hoffman does not diminish the value of weak connections in a network; however, even with these connections, he notes the importance of contributing to these relationships as well. One great example he gives is utilizing social media to give value to your network. He says that “seeing what someone is reading is like seeing the first derivative of their thinking”. I could not agree more, and this is one of the things I love most about Twitter and LinkedIn. Having articles and blog posts recommended to me by people whom I have chosen to follow or to associate with professionally tells me a lot about those people and more often than not, endears me to them.

Having said that, Hoffman does say that the size of your address book is not what matters most and that an emphasis on quantity over quality inevitably leads to a weak network or one that is purely transactional and likely always in flux. He likens a network to the memory card in a digital camera. You can fill it up with lots of low quality images, or you can focus on the highest and richest quality media, recognizing that you can not “fit” as much on the card.

But how do you build strong networks? I believe it comes back to thinking about our strengths, our passions and the market realities. How do your knowledge, connections and abilities matter to others? My partners and I spend a lot of time thinking about this and doing our best to act on it. And thankfully, we are surrounded by people in our networks who do the same. This is truly the most rewarding part of being in business. Whether we are entrepreneurs, investors, lawyers, bankers, whatever, it is the people part of the business that matters the most. And it is lots of fun.

When I moved to Boston five years ago, I heard so many warnings of how insular this town can be and just how hard it is for outsiders to break in. However, I have found quite the opposite to be true, especially in the tech & startup circles. I was recently reviewing a list of new clients from 2011, and I was floored by the number of entrepreneurs who have moved to Boston in the past year to start and grow their companies here. I reached out to a few of them to have them contribute to this post, as a means of telling some of their stories and also a means of shining a light on what makes Boston so attractive as a destination for entrepreneurs.

One of Boston’s key strengths is the availability of capital. Everyone knows about the VC funds resident in Boston, but the angel community here is vibrant as well. As the cost of starting a company has decreased dramatically, this group has also gained favor with entrepreneurs and shown an ability to exert real influence on the companies where they invest their time and money. Perhaps as importantly, the angel community has become much more open, approachable and willing to advise startups. As the old adage says, “if you ask for money, you get advice and if you ask for advice, you get money.”

Nick Francis and his team at HelpScout moved to Boston from Nashville a year ago as part of the TechStars 2011 class, and he wanted to share about his experience with Boston’s angel community and the culture of mentoring for which our city is starting to be known:

·         “One thing that’s blown us away from day one about Boston is the active angel investing community. Current and former entrepreneurs come out of the woodwork to offer advice, make introductions and invest capital in local companies. Our seed round consisted of 17 truly incredible entrepreneurs, all of which would go out of their way to help us on a moment’s notice. That’s one of the biggest reasons we’re glad Help Scout calls Boston home.”

Here in Boston, we love to talk about all of the things we are not good at, which is a real shame because there are so many sectors where we are incredibly strong in terms of talent, customers and capital. A couple of weeks ago, I caught up with an entrepreneur doing a big data play that leverages academic research data to sell to biotechs, pharmas and money managers. That sounds like a company made for Boston.

Fred Lalonde started Hopper in Montreal and recently raised money from Atlas Venture and moved to Boston to grow his company. Investors all over the world (including Silicon Valley) wanted in on the Hopper opportunity, but when Fred and I caught up about his decision to move here, it was clear what gave Boston the nod:

·         “Hopper is a big data company. We run our own data center and up until recently we used to make our own servers. Most of our days are spent trying to run algorithms on a thousand computer cores.  Late last year we decided to move Hopper headquarters from Montreal, Canada to Cambridge.  Our two primary motivations where: the balmy January weather and the tragic outcome of the 2011 Stanley Cup playoffs. In truth, when we decided to come to Cambridge we made a bet that we would meet super smart people that share our love for solving insanely hard problems – and that in itself would justify all the pain and cost of relocating. Now that we are here, we are discovering a bustling community of big data practitioners, entrepreneurs and venture firms. Every week there is another big data meet-up in Cambridge or Boston where we bump into someone brilliant form Vertica, Cloudant, ITA, Basho, Bluefin or Hadapt. It really feels like Kendall Square is becoming the Haight-Ashbury of big data, and we are psyched to be here.”

You’ve really got to love that Haight-Ashbury metaphor, and I think that Fred may end up being our Jerry Garcia.

As many of you know, I moved to Boston from Durham NC five years ago, and in that time I’ve been asked about a million times about how I’ve found the transition from NC to MA, usually with a not so subtle tone implying that only a fool would leave the sunny south for New England. I love getting that question because it tees me up to talk about just how great life here is. I believe that I live and work in one of the greatest cities in the world. Even beyond the tech scene, we have great schools, museums, sports, beaches, mountains, and I could go on and on. Sometimes you just need an outsider to give you fresh perspective on yourself.

Sravish Sridhar and I first met about three years ago when he was starting an energy monitoring company in Austin. I loved the guy from the first meeting, and about a year ago, when I found out that he was moving here to start Kinvey, I was thrilled. I always appreciate his perspective, whether we’re talking about start-ups or the best restaurants in town or whatever, so I was excited to get his perspective on Boston for this post:

·         “It amuses me that Boston’s Green Grass is being seen as Dirty Snow:  I moved to Boston from Texas, via entrepreneurial stints in Austin, Chennai, Pune, London, Zurich and Paris.  After a few weeks in Boston, I was in absolute awe of the startup firepower in this city. Game-changing companies, talented and committed people, amazingly helpful mentors and an investment firehouse drawing funds from many billions of dollars of assets.  I felt I was in entrepreneur-heaven, and continue to believe that even today.  But, I have one negative observation. The locals don’t know how good they have it.  Try moving to any of the other cities I’ve lived in, and start a successful company there.  MUCH harder!  My goal as a community member is to do my bit to change the impression from within.  Let’s become proud of calling ourselves Boston Built!”

Finally, there is a personal element that connects many people to Boston. We all make decisions about where to live and work based on many variables, many of which are personal such as where we went to school, where our family lives, where we want to raise kids, what kind of neighborhood we want to call home, etc.

I have been getting to know Nick Ducoff who is the former CEO of InfoChimps since he moved to Boston a few months ago, and I thought his personal perspective on Boston was helpful:

·         “For us, we were deciding between SF, Austin, and NYC, all cities we had lived in, and Boston, where my wife’s family is from (well, RI). The levers we were optimizing for were: startup community, long term career opportunities, proximity to family, and city feel. We have a preference for dense cities where we don’t have to commute. SF scored high on all but proximity to family and lost some points for being spread between the city and the peninsula. Austin scored high on startup community and proximity to family (my parents live in Houston) but lost points elsewhere. NYC is the greatest city in the world, but isn’t close to our families. For us, Boston had it all: multiple top tier universities, dozens of VC funds, hundreds of startups, a diverse business community, proximity to family, all the major sports teams, and good public transportation. We’ve been welcomed with enthusiasm and already feel at home. We fully expect this to be our last stop, and are happy to be part of this vibrant startup community!”

So, is Boston a melting pot, or is it the insular community that so many have painted it to be? It is obvious what I think, but I would love to hear more from you. What do you think? And if you are new to Boston yourself, tell us your story. Thanks for reading, and thanks to all of my guest contributors!

I am wrapping up a stretch where I’ve had 10 consecutive days off. I take my fair share of vacations, but 10 days off is a real treat. We spent 4 days in NC with my parents, Steph’s parents and our siblings, and we also got to see my best friend from college while we were there. Then we came back to Boston and spent some good time together as a family. Steph and I got to watch some movies together, I made some good progress on the Steve Jobs biography, and I spent a lot of time playing my new guitar, an awesome gift from my lovely wife. 

But now, on the eve of getting back to work, I’m really excited to do so. I like to think of excitement as a place of disembarkation, leaving for another port of call known as reality. You never know what that destination is actually like or if you will even enjoy it, but the journey is usually a lot of fun. 

Here are three reasons why I am so excited about getting back to work in 2012:

1) My team. As corny as it sounds, I really miss these guys. Ten days away from the guys I spend most of my days with is enough to remind me that I genuinely like my teammates. I spent part of my time off mapping out strategies and goals for 2012 and I can’t wait to share these ideas with my team to get their feedback and ideas.

On top of missing my existing team, we also have a new relationship advisor starting on 1/3/12 to accommodate our expanding client base, which is further cause for excitement. What a great way to start the new year!

2) Our new clients from 2011. We brought on a record number of new client relationships in 2011, evidence of the incredible wave of start-up activity in Boston in 2011. As we enter a new year, I am really excited to see these companies grow in their second year, and obviously, I am excited for us to do whatever we can do make these companies be successful as they start to scale. I think back to the talk that Eric Ries gave at the SVB CEO Summit in Mountain View CA in October 2011 when he discussed the “boring” second year of a start-up’s life as being the most pivotal, even though the hype and big announcements come in the first year and the big numbers and results come later. We have so many clients that are at the threshold of that “boring” year, and I can’t wait to help them block, tackle and build their companies this year.

3) Being more analytical. I’m really big on setting goals, including those that stretch me and my team. This is a stretch goal for me in 2012. I value my gut over number crunching, pro/con lists or other means of analysis, especially relative to most bankers. While that is not altogether bad, in 2012 my team and I are testing several new approaches to our business to make sure that we are maximizing the way we spend our time and other resources and to make sure that we are bringing the right products and solutions to bear for our clients, at the right time and in a manner that will benefit our shareholders. Don’t expect me to become a slave to spreadsheets or focus groups, but I know I can further improve performance through thoughtful analysis, and I look forward to tackling this goal this year.

So, here’s to 2012 and to the journey. See you out there!