Can East Coast Compete in Web 2.0?

I just saw an article posted on this site that got me thinking. It linked to an article by the Boston Globe entitled Why Facebook Went West. The article made me realize that if Facebook had stayed in Boston, it would never have achieved the same success. The East Coast just doesn’t have the right mentality, the right analysis of risk, the right knowledge base to really propel a consumer Internet company into the stratosphere.

The article makes two points about Facebook’s success:

1. Boston VCs totally missed out. They had the first opportunity to invest early but declined. In the case of the VC firm Battery Ventures, they declined to invest because of their relationship with another social networking site.

2. The second reason is that even if Facebook stayed in Boston, it might not have thrived in the same way. Boston may not have the deep network of connections that provides the right environment for an Internet business.

I think point 1 is somewhat valid. VCs in Boston will tell you that they don’t have a lot of experience with consumer driven social networking sites. In some ways, the entire consumer market has been given to the West Coast. Another Boston.com article earlier in the year made this point. Boston VCs are staffed by former executives from technology and product companies that serve mainly corporate markets. They don’t have the same level of experience dealing with large consumer driven sites and aren’t as comfortable with the business models.

The second point may also be valid. Facebook has been successful so far because developed an app that consumers wanted to use and then made some adroit moves to expand the audience and the applications on the site. The app was developed in Boston so we know that can be done on the East Coast. The question is, would Facebook have opened up its site to non-college students, would it have implemented its controversial Feed strategy, would it have opened its site up on the East Coast? My guess is – no. Conservative investors and management would have vetoed many of these moves as potentially too risky. In addition, the Boston tech community isn’t as forward thinking as California. Everyone in Boston is still trying to wrap their arms around social networking, rss feeds, widgets, etc while these are already passé in SV. The overall attitude is also just different. In Boston, Facebook would have played to be acquired, instead of playing to win the whole game.

I live on the East Coast so I take no pleasure in writing this. These are just my observations. But until a dominant consumer Internet company develops in Boston or New York, it’s hard to argue that Silicon Valley isn’t the place to be. And that being on the East Coast may be one of the worst strategic decisions.