The secret to Boston’s innovation economy

Nick Lu for The Boston Globe

This week, Boston will play host to two major gatherings: more than 16,000 biotech and pharma executives attending the annual BIO International Convention, which officially opens Monday, and approximately 250 US city mayors, who are taking part in the US Conference of Mayors, starting Friday.

What might I tell a biotech entrepreneur from Berlin, or a mayor from Missouri, about the things that make Boston's innovation economy work — and some of the things that could still use improvement?

We like our history in Boston, and you need to go back to the 1630s to understand the foundation of what exists today — when the first public school in America was founded here, and when the state Legislature appropriated the first 400 pounds sterling for a "schoale or colledge." The former institution, Boston Latin School, is regularly ranked as one of the top 50 high schools in the country, and has produced several presidents of the latter institution: Harvard University.

A few centuries later, we can lay claim to the most educated workforce in the United States, and a cluster of universities — including newbies like Tufts (1852) and MIT (1861) — that pull in hundreds of millions of dollars of philanthropic donations and federal grants annually to support their research.

But even by burning that cash to fuel scientific breakthroughs in university labs, you don't automatically get job creation or economic value. Plenty of universities have file cabinets full of patents that do nothing. You need entrepreneurially minded students and professors, and investors willing to give them money to transform a breakthrough research paper into a real business. Alexander Graham Bell was a professor at Boston University when he invented the telephone in 1876.

Georges Doriot was a professor at Harvard Business School in 1946, the year he founded American Research and Development, one of the earliest venture capital firms in the United States. Its biggest home run was a computer maker called Digital Equipment Corp., founded by MIT alumni. Digital's success helped create the Route 128 technology corridor in Boston's suburbs. At one point, it was the second biggest technology company in the world, after IBM.

From the 1970s on, university researchers here began unraveling the secrets of DNA and RNA — racking up a few Nobel Prizes in the process. That led to another wave of innovation and spinout companies. Biogen, Genzyme (now Sanofi Genzyme), and Alnylam Pharmaceuticals all trace their roots to academic research. They employ thousands of people, generate billions of dollars in revenue, and are clustered a short walk from the Kendall Square T stop.

In the 1980s, the neighborhood was known as "AI Alley" for all of the MIT-spawned startups that were making artificial intelligence software. The name "Genetown" was floated but never stuck.

Today, there are biotech companies everywhere — they even fill the old brick building on Cambridge's Main Street where Alexander Graham Bell's assistant, Thomas A. Watson, set up a telephone for the first demonstration of a long-distance, two-way phone call.

Much of the enthusiasm in the 'hood in 2018 is about being able to "edit out" disease-causing errors in our genetic code, adjusting the microbial colony that lives on us and in our guts to treat diseases, or stimulating the body's immune system to fight cancer, says Pearl Freier, founder of the advisory firm Cambridge BioPartners.

Joost Bonsen, a lecturer at MIT's Media Lab, notes that as new kinds of software and robotic automation technology are introduced to scientific labs, they might be accelerating scientific progress. The "rate-limiting step is no longer how long it will take you to run the experiment," Bonsen says, "but what better experiments can you think of to run?"

Since 2012 — the last time that BIO came to Boston — the local biotech ecosystem has been on fire. According to the Massachusetts Biotechnology Council, in 2012, venture capital firms invested about $900 million into startup companies here. Last year, that figure was $3 billion.

In 2012, one of these firms, Boston-based Third Rock Ventures, had put money into about 26 companies, which occupied about 400,000 square feet of office and laboratory space locally, according to Cynthia Clayton, the firm's head of communications. By the time this year's convention begins, Clayton says Third Rock will have helped launch about 50 companies that occupy 1.3 million square feet of space around town.

Proximity matters, which is why companies pay a premium to be in Cambridge. Professors need to find it easy to visit the startups they start, venture capitalists to visit companies they fund, and everyone else has to be close by — making it easy to meet over lunch or coffee to keep one another apprised of their progress.

Phillip Sharp, a Nobel laureate, MIT professor, and a cofounder of Biogen and Alnylam, says that big pharmaceutical companies were once content to have their labs "hidden away in the countryside," in states like Connecticut, New Jersey, and Pennsylvania. "Now, the science is moving so fast, and the opportunities are emerging so fast, that being close to the heat is essential. That is how this whole industry is now structured." And it's why pharma giants like Pfizer, Novartis, and Bristol-Myers Squibb run research centers here.

The result is a city where newly formed startups have to hunt for affordable office space, and where all those university grad students and researchers working on the next generation of scientific breakthroughs have to hunt to find an affordable place to live, Bonsen notes. In the shadow of Boston's biotech boom are other problems — like income inequality, aging subways and packed highways, a dearth of skilled job candidates, and the inconvenient fact that many of these innovative companies create incredible drugs that prolong lives but often cost $100,000 or more. Those are complex challenges for policy makers and their constituents.

At first glance, mayors and biotech industry innovators might not have that much in common. But both are playing a long game — shaping cities, shepherding new treatments to market — that needs to be played with a sense of urgency. The next election, the next crisis, the next cash crunch is never far off. Voters and investors are perennially on the verge of being dissatisfied — or mutinous. And there are no quick fixes or simple answers.

You know you've won if you stay focused on the future, and in a few decades (or centuries), you look back and see something good in the rearview mirror.