SCHWARTZ CROSSROADS

Does Boston "Get it"?

Remember the 80s? I do. Yes, I wore a jacket with the sleeves rolled up and Topsider shoes with no socks. I even had a poster of Max Headroom on my wall (I also had the Coke give-away Max Headroom watch and matching wall clock).

It all seemed so cool then. In fact, there were those people who looked down on you if you didn’t have the latest clothes or listened to the coolest tunes. Now it just seems as silly and frivolous as music with lots of synthesizers (take that Gary Numan!).

That’s the kind of frivolity that I sometimes feel pervades Silicon Valley. They’re always chasing the next trend, looking for the next big thing, riding the wave and thumbing their nose at anyone who doesn’t “get it.”

I keep hearing that the Valley understands Web 2.0 while Boston VCs don’t “get it” and are missing out on some great opportunities. Everyone knows Facebook was founded in a Harvard dorm but ended up in the Valley. I keep hearing a number of companies getting pressure from their VCs to move from Boston to the Valley in order to truly make it.

Yes, Web 2.0 is all the rage now and yes, I do think that a lot of elements from Web 2.0 will change the world. After all, my business cards say “New Media Strategist” on them and I’ve been singing the praises of “user-generated content” and “social networking” for years. But that doesn’t mean that Facebook is the be-all and end-all of the social networking world. In this environment another company can come up and eat its users as fast as it overtook MySpace and as fast as MySpace overtook Friendster.

Honestly, I’m not all that convinced that the value of Web 2.0 lies in the consumer world. Yes, there are a lot of great things you can do as a consumer, but as a company, can you really make money by giving just about everything away for free?

Here in New England, where we tend to favor navy and black, polo shirts and sweaters that can come out of the closet year after year without fear of going out of style, the VCs tend to focus on more stable, if less sexy investments. No, securing a database isn’t sexy, but it is necessary, especially in the enterprise. And you know what? Companies are actually willing to pay money, real money, to have their database secured. Wow, imagine that, a revenue model! Yes, real opportunity is in the enterprise.

The main problem with Web 2.0 is that it takes full advantage of the desktop and Web browsers. Why is that a problem? Because usage is shifting to cell phones and mobile devices. Yes, the iPhone has made it possible to have a small computer in your pocket, but most Web 2.0 companies still look at the desktop as a final destination. In Boston a lot of companies are looking well beyond the desktop. Take Schwartz client Vaultus, which specializes in making enterprise applications work on mobile devices. Or even look at LocaModa, which focuses on display technologies that bring the Web off the desktop.

These companies are well ahead of the curve and focus on the not-so-sexy world of back end technology. No, they’re not on the cover of BusinessWeek yet, but they’ll be written about on the inside pages where it really counts. They’re the companies that are actually leading the way.

I’m sure you’ll hear about similar companies in a few years, when the Valley starts to think they’re sexy and drops millions of dollars into them. Of course, that’s when hearing the name “Facebook” may elicit the same snickers as “Max Headroom.”

Posted by Chuck Tanowitz on June 16, 2008 at 5:59 PM
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