Edgelings

Massachusetts Biotech: Failure is an Option

By Robert A. Grove, Edgelings 

There’s a reason the oldest marathon in the world is in Boston. The marathon is as much a race against your own limits as it is against competitors. And just finishing is considered winning . . . at least it is in Boston.  It’s a fatalistic philosophy that embodies the New England Yankee spirit. While the crowds at other marathons leave after the lead runners cross the finish line, in Boston they wait and cheer on into the dark of night, encouraging the stragglers who are fighting their own demons, struggling to “win” by just finishing. The fact that they are hours behind and totally out of the race is inconsequential.  Still, as Vince Lombardi once said, “If you’re going to run, run to win”.  He didn’t mean ‘run to simply finish.’ 

Similarly, in the competition of the marketplace, Boston, and the entire New England region, has historically started quickly but finished (often quite contentedly) far behind. Boston led the nation’s banking industry throughout the 18th century…until New York came along.  In tyhe 1800’s Donald McKay built the finest ships in the world.  But ship construction techniques changed and, unable to compete, the industry moved away from New England forever. The river towns throughout New England are dotted with vacant 19th century mills. Water power drove the development of textile mills, some with more footage than a modern international airport. Today, they sit vacant – a blight on the landscape and a depressing reminder of yet another industry lost.  These stories are endless. The region has the brain power and research capabilities to be the envy of most nations. And Yankees are legendary innovators.  But, for some reason, the region simply can’t compete when the pressure is on. It doesn’t matter if New England lose industries through competition or simply by giving them away through arrogance, laziness or neglect; the results are the same.  

Maybe the biggest debacle was the battering of the Route 128 High Tech companies, the crown jewel of Mike Dukakis’ long-forgotten Massachusetts Miracle.  During the 1960s and 1970s, a handful of tech companies on the beltway surrounding Boston dominated the computer world.  And none was bigger than Digital Equipment Corp.  But their reign didn’t last long:  by the early 1990’s, the faster-moving, more adaptive tech companies in Silicon Valley had begun to leave Route 128 in its dust.   It was during this latter era that, as DEC was bleeding billions of dollars, that I remember Ken Olsen, DEC’s founder, telling me that “you learn from the hard times” —  and that while he would like to see the good times return, “DEC hadn’t learned its lessons and wasn’t ready for the good times yet“.  Had any Silicon Valley CEO, heading up a company that was losing money and market share as quickly as DEC , said such a thing, he would have been fired on the spot.  And rightly so.  But in Boston, Olsen was revered – the philosophy was pure New England Calvinism. It’s as if the hand of Jonathon Edwards and his “Sinners in the hand of an angry God” had reached out 300 years beyond the grave to run an $18 Billion dollar tech company.  And that’s why DEC has disappeared without a trace, without a whimper, without a clue and without a fight.  Today, the old DEC HQ, one of those abandoned Mill buildings that was once proudly displayed as exemplifying the rejuvenation of New England, is no longer the home of the 2nd largest computer maker on earth. It’s now just the new reminder on the landscape of another industry lost.  

In Massachusetts, they take the idea of “Commonwealth” a bit too seriously. In 1620 the idea may have been necessary for survival. But eventually, the idea of the individual took hold. Unfortunately, those entrepreneurial types lit out for the frontier – and for two centuries now the state has sorely missed them.  Instead, the region seems trapped by it’s history. As I write this, it’s Bunker Hill Day, a legal holiday in Boston commemorating the Battle of Bunker (Breed’s) Hill. Public workers have the day off. They also have holidays for Patriots Day (the battle of Lexington and Concord) and Evacuation Day (the day Washington drove the British out of town). Being here, you are surrounded by constant reminders of history; in the cemeteries, in the architecture and in the hearts of the locals.  Entrepreneurship, by comparison is notoriously anti-history, and dismissive of the past – which is why it is largely unwelcome here.  Innovation is quite enough thank you, says the New England soul, leave that messy, disrespectful entrepreneurialism to those cowboys out in California.   

Now it’s BioTech that is the new battleground and, despite have played a crucial role in pioneering the industry, Boston is already having to play catch up. The Bay State has all the native advantages one could ask for including intellectual capital (Harvard, MIT, etc.), a well-educated workforce, and a vast health sciences industry. On top of that, Monday the Governor of Massachusetts announced $1Billion dollar package aimed at keeping Mass Bio competitive on the world stage. Is the expense of all those taxpayer dollars really necessary? Maybe. Will it work? In the long run: No. Not if history holds true. It was government R&D money, funneled through the colleges and universities of the region, that gave rise to many of the technologies that became the Mass High Tech industry. The handful of innovators in academia struck out on a course of entrepreneurship. They initially succeeded in building a number of terrific companies — which you would expect from companies that take the lead in an entirely new field. But many have since disappeared in the face of competition from places like Silicon Valley.  New industries demand speed and an insatiable drive to stay ahead.  It has no room for fatalism, nor time to coast. Relax too soon and your company, even an $18 billion one like DEC, one can disappear almost overnight. Emerging industries are dominated by ruthless CEO’s driven to win at almost all costs. By comparison, Massachusetts has too much concern for the “Commonwealth” – doing good and being socially responsible. There is plenty of time for that later, after the laggards, have been pushed aside.  While excess riches are applauded elsewhere, the “nouveau riche” and their gaudy displays of money are met with distain and contempt here by the Old Money. And for the latter, the primary concern isn’t capital accumulation, but capital conservation. Family money, you understand, passed down for more years than California has been a state.  And why take risks if you don’t have to? In the end it comes done to what’s in the heart. In Silicon Valley folks want to start companies, go public and get stinking rich. Then they’ll spend their wealth on having fun or doing good. In Massachusetts, people want to do good from the beginning, and any money they make along the way is a nice bonus.   After all, like the mills, good times never last for long – so you have to be prepared for the worst.  But don’t’ worry, something else good will certainly come along again in a generation or two.  

Ironically, in this race for leadership in Biotech, Massachusetts may have an unlikely ally: the FDA. The Fed regulators often put the breaks on companies, slowing the pace of development and commercialization. This “go slow” attitude may just be the factor that helps MA win against its speedier, and less patient, competitors.  Yet, Massachusetts, even with every advantage, may still win in the short-term, but lose in the long.   That’s because Mass Bio’s biggest obstacle isn’t other regions like Silicon Valley and San Diego, but its own fatalistic culture.  

So, don’t be surprised if the Massachusett’s bioitech industry starts strong, yet still finishes last. But I’m still pulling for them. I’ll be there, rooting them on as they run through the dark of night, long after the winners have taken their position atop the podium, fighting their own demons and believing that winning means just reaching the finish line.