the onda

Andrew got this monkey from his grandfather (who doubtlessly got it after giving Stanford money) that I've been staring at while changing diapers over the last two years. The wide-eyed stare combined with the Stanford t-shirt always reminds me of the heady times during the end of the last decade during my stay there: people in the engineering school were awash with the boundless optimism that is so endemic to Silicon Valley, and over at the business school, just about every embah was convinced their next job would be their last. When friends visited me, they would inevitably point out how foreign the culture felt, not because the crazy dot-com fever wasn't raging on the east coast (it was), but because everywhere but in the Valley, it was somehow tempered by that east coast stoicism (or is it cynicism?) that keeps people from really believing that 60lbs of dog food shipped overnight for $19.95 was really the beginning of something new.

I'm thinking about this because tomorrow morning I'm going to give a talk to the Stanford Alumni Club of New England about entrepreneurs outside the Valley, or more specifically what the key differences are between the east coast and west coast when it comes to starting companies. I'm not sure that I am particularly qualified to do this— after all, despite having worked at 4 startups, none of them were actually begun on the west coast. So the talk may instead be more of a "grass is greener" kind of thing. In fact most of what I'll be talking about is how at Tabblo we were always of the mindset that our next round of funding had to come from a west coast fund in order for us to stay relevant as we scaled. Having had six months of time post-acquisition to reflect on this, I'm not sure I completely agree with our original sentiment. But before I get to that, at the cost of spoiling tomorrow's fun talk, here is what does blow about entrepreneurship on the east coast:

1. When the 495 corridor lost the reigns of the technology-led revolution that started through the mainframe, continued through the minicomputer, and eventually transitioned to the PC and the Internet, we lost a lot more than an industry. We in fact lost a key ingredient in what the Economist has come to call an "economic cluster:" the combination of solid technical research universities, a young workforce, a risk-seeking set of capitalists, and what we lost here after Digital and Lotus navel-gazed their way into extinction: large successful industry bellwethers to train the next generation of entrepreneurial managers.

The hardest part of embarking on a consumer Internet startup here in New England is finding wealthy veins of talent to mine out of big companies that provide relevant experience sets. From my non-technical entrepreneur friends I often hear about how hard it is to find class-A engineers that know "web stuff," and we ourselves at Tabblo had a very hard time finding good direct marketing talent that understood how factors like viral adoption could be weaved into a coherent user acquisition plan. Both skills can be learned by those who are really talented, but this takes time and discipline— something is hard to cultivate because:

2. Thanks to the more conservative nature of investors here, ventures in the consumer Internet space often fall prey to the business equivalent of premature optimization, favoring getting to revenue at the expense of adequate distribution (users) or product refinement. I don't know that I would go so far as to espouse the Y-Combinator idea that you just need to "make something users want" and everything else will take care of itself— in fact if you've taken venture capital and are expected to deliver venture returns, it is irresponsible not to understand what the path to positive cashflow is, and to be testing the key assumptions at every step of the way. But an over-emphasis on this can lead to a dangerous situation where amidst slower growth than expected (which happens to just about every startup I've known at some point), the management team gets distracted by the "monetization problem" just to focus on something that might in the short-term appear to be more directly controllable. And when you've got a board of investors that encourage this trap, things can get ugly quickly.

Incidentally, the VC fund which we raised our money from at Tabblo, Matrix Partners, and our board member David Skok were A+ at helping us to avoid this trap. David was always pushing us to focus on solving the distribution problem at the cost of prematurely optimizing a business which would not at that point not have been at scale. Revenue is important, as is understanding the drivers of the business, but I've seen way too many entrepreneurs prepare for board meetings replete with spreadsheets and powerpoints that are more fitting of HP's printer business than of a rag-tag bunch trying to find a market with their product.

Both of these shortcomings can together create a vicious downward cycle that takes anyone who is not sitting on top of a golden egg idea down quickly.

Now what do we have on the flip side? The short answer: lots. Every other element of the Economist's cluster abounds here— universities, youth, capital— and we've got a whole bunch of other things to boot: access to the media companies from NY (who thanks to Google and Apple are now paranoid of anything that smells of the Pacific ocean), and an undeterred willingness to tackle really hard technical problems for periods of time that would seem like Paleolithic eras on the west coast.

But best of all, the best thing about starting a company that will eventually need regular users to scale (which is the case with all consumer Internet businesses) is that we are much less subject to the echo chamber effect of the Valley. In the Valley everyone is twittering, sharing links on Delicious, digging articles left and right, and uploading pictures to Flickr from their super phones, but the rest of the country is really not quite ready for a lot of these applications. And the sad part is that most of the companies that I've seen started appear to be aping a lot of these initial Web 2.0 experiments instead of trying to think about how to move the adoption curve back into the mainstream.

To be sure, there are some great companies that burst out of the echo chamber and into the mainstream from the Valley: Google, eBay, and YouTube strike me as three really great examples. But monocultures can be very self-reinforcing for most of us, for both good and bad. When I first came to the States, I was a fairly ok student but had the good fortune to go to a private school where there was a strong monoculture of academic achievement. And guess what? It worked its magic on me.

In the same way, I'm sure that were I on the west coast, I would probably not have embarked on Tabblo, worrying about moving bits to atoms, and building better tools out there for folks who just wanted to feel more creative. Instead, I might have been more willing to drop vowels from the name (Tbbl, Tbbblz, ...) and gone with some sort folksonomy-based social platform for content digestion. Over RSS and ATOM, of course.

I love California for its bright-eyed optimism and willingness to experiment (back to the monkey here). For sure. In fact, I'll be surprised if I don't make it out there at some point for more than my 6 day/month average. But for where I am now, I'll take a pass from the monoculture for a while and think through some of what makes the consumer Internet work for the rest of the non-early adopters.