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Innovation Economy

A scene in hibernation

Pondering how the pandemic might change Boston’s startup `ecosystem’ going forward

District Hall used to be one of the epicenters of the Boston startup ecosystem, with several events every week and usually a crowded coworking space as well.
District Hall used to be one of the epicenters of the Boston startup ecosystem, with several events every week and usually a crowded coworking space as well.David L. Ryan/Globe Staff

Even if you think you have no connection to Boston’s startup ecosystem, the startup ecosystem is connected to you.

For about the last 75 years, Boston has been a pretty good place to start a company, get venture capital funding, hire people, and grow — whether you’re a Moderna making vaccines or a tech startup like Toast, making it possible for people to use their mobile phones to order take-out.

But the nebulous idea of an ecosystem is what has caused these companies to set up shop in Kendall Square, the Fenway, and the Seaport. It has kept cafés crowded and dry cleaners busy, sent taxes to cities and the state, and driven up both office and apartment rents around much of Greater Boston. The flow of people to and from work every day caused time-sucking traffic — but it also kept public transit full, created work for Uber and Lyft drivers, and generated strong advocacy for bike lanes.

The expansion of this tech and biotech ecosystem supported lots of jobs at law firms and accounting firms, not to mention the construction of hotels to host business guests from out of town. It also benefited the bars, bowling alleys, and movie theaters that entertained everybody after work. Be honest — 10 years ago, did you imagine someone would find it economically viable to build a bowling alley next to a federal courthouse in Boston?

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That ecosystem isn’t dead; it’s just in hibernation. But when it comes out, perhaps next summer or fall, what will it be like, and will it produce the same level of activity and economic growth?

Last week, I brought together a group of people who work at venture capital firms, run trade associations, operate shared workspaces, and have built startups in Boston, and asked them to try to tackle those questions.. We used an app called Space, created by a local entrepreneur, which aims to make it easy to schedule and conduct audio-only conference calls. (You can listen to our conversation replayed here.)

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I’ll list some of the concerns first, followed by the more optimistic takes on the ecosystem’s ability to bounce back.

Tom Hopcroft runs the Mass Technology Leadership Council, a trade association with members such as Microsoft, Amazon Robotics, and the design software company PTC, which last year opened a headquarters tower in the Seaport. Hopcroft is perpetually “bullish about the ecosystem,” he said during our call, but Hopcroft also noted that we’ll see major changes to how companies use office space. “No company has said they’ll force people to go back into the office,” he says.

Offices will be “more for team meetings, socializing, and serendipity,” Hopcroft explained, adding that he’s hearing member companies talk about “downsizing their office footprints and moving out of the city — a really negative cycle that would invariably have real tax consequences.” Hopcroft also notes that his association’s surveys have suggested we could see a COVID-sparked increase of about 161 percent in the state’s remote workforce,compared with before the pandemic.

Bobbie Carlton runs a speaker’s network called Innovation Women, a public relations firm, and a series of monthly networking events that feature newly launched products. “Boston has a bit of a reputation for being cliquey and a closed community,” she said. Without in-person networking events that bring company founders, investors, and professional services providers including lawyers together in one room, Carlton said, “I get very concerned with women and marginalized entrepreneurs, that they’re not able to break in.”

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Katja Wald, executive director of the MIT Enterprise Forum of Cambridge, a nonprofit that seeks to foster entrepreneurship, said she has noticed that without the need to be in an office every day, people are moving further from the city or to other states entirely. One of the entrepreneurs on the call, Michael Burtov, whom I used to bump into frequently in Kendall Square and who has appeared on the TV show “Shark Tank,” said he was bullish on Boston’s future. But when I asked where he was dialed in from, he admitted he had been riding out the public health crisis in Miami.

When I followed up with Burtov later, he told me that his pre-pandemic plan was to move to Miami with his family for about a year. But now he said their stay is more open-ended. While the startup ecosystem in South Florida is relatively young, “I thought I could meaningfully contribute here, far more than I could in Boston,” he said.

Of the 10 companies chosen to participate in the Techstars Boston program this winter, just two are based in Massachusetts — though the other eight seek to “leverage things that Boston is world-class at,” said managing director Clement Cazalot. That’s nice, but it may not lead to companies creating jobs and growing here.

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Rob May, a venture capitalist at the Boston venture capital firm PJC, said he moved from Brookline to Natick this year, in part so his family could have more space and a swimming pool. “I believe people will work a little more remote — like one or two days a week — but I think people are going to go back to the office,” May said. “You get face time with your boss and peers,” and if you want to advance in the company, “other people are forced to do that” rather than working from home.

When the Cambridge venture capital firm Founder Collective surveyed the startups into which it had invested, “only 4 percent said they were staying remote, post-COVID,” said Joseph Flaherty, the firm’s director of content and community. “Though there are these potential gains in being able to hire from anywhere, we found a real big mental health burden” when everybody at a startup is working from home, rather than collaborating in a shared office.

A 96 percent bounce-back to the office would be good news for urban hubs, commercial realtors, and owners of office space.

Wald at the MIT Enterprise Forum and Emily Reichert, CEO of the Greentown Labs incubator in Somerville, both said that their organizations have broadened their reach in 2020 by conducting events online. At a recent summit on technologies to address climate change, Reichert said, Greentown attracted 2,200 participants from about 30 countries. But Reichert admitted that Greentown’s physical space in Somerville has been somewhat sparsely populated for most of the year.

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In the past, she said, “We have always had waiting lists” of startups that need office and laboratory space. “Maybe we’ll get there at the end of next year.”

Reichert said that many other regions around the world look to Boston as a model of how to foster interactions among academic researchers, entrepreneurs, and investors that can solve big problems and create jobs. “We can embrace that future, as continuing to be a light for how you do entrepreneurship — or focus on whether or not our buildings are full,” she said. “We have to adjust. It’s going to be a partly virtual world going forward. How do we maximize our strengths?”

One of those strengths is cultivating startups that have a real impact on people’s lives — like Moderna, the company shepherding what seems to be a highly effective COVID-19 vaccine to market. “The most important startup globally is going to be Moderna,” said Flaherty at Founder Collective. “It’s important to beat our chests” and promote the fact that companies like Moderna were born here.

The problem is that the Boston startup ethos, our formula for starting and growing companies, doesn’t pay office rent, fill hotel rooms, or buy $5 lattes.

“We should be the broader, global Boston,” said Hopcroft at the Mass Tech Leadership Council. “But we also have to care about what is happening here.”


Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.