Catching up on reading over some holiday downtime, I eagerly digested last week’s Red Herring (on the beach, good old-fashioned print still works the best!). The cover story explored the notion that New England has not come back as strongly as Silicon Valley in the last two years. It points out facts such as how the LA/Orange County/San Diego region edged out New England in VC dollars and late 2006 and into 2007. Or how Mark Zuckerberg fled for Palo Alto after starting Facebook and dropping out of Harvard.
Two factors put forth about why VC investment continues to lag in the region are 1) Silicon Valley companies like Google draw talent away from New England, and 2) VC’s tend to focus on later stage investments here. The article concludes with:
Undeterred, locals keep plugging away, and take courage in the region’s traditional strengths.
The point about where VC money is focused, combined with what the last sentence states, I believe tells much of the story about the difference between the east and west coasts these days. East coast companies are focused on building businesses that make money and are profitable, and that just isn’t as sexy as the typical startup blogged about on TechCrunch. A case in point is a post a couple of months ago about a panel discussion at Google about people search. ZoomInfo, one of the companies to watch called out in a sidebar in the Red Herring feature, was described as a “black sheep” — as compared to the other panelists, Silicon Valley-based Spock and Wink — because (among other reasons) it is profitable.