The Most Entrepreneurial Place on Earth
What it's like to build a business in East Cambridge, Mass.
I think you get hooked on the adrenaline. And terror is part of what makes the adrenaline flow."
The speaker is C. David Seuss, chief executive officer of Spinnaker Software Corp., a producer of inexpensive office and education programs for personal computers. Adrenaline? Terror? Founded in 1982, Spinnaker blossomed through 1984, contracted by more than half, expanded again this year. All of which is normal for any ambitious fledgling except for one factor: the company is based in East Cambridge, Mass., a tiny neighborhood that is perhaps the most entrepreneurial place on earth. And that, say the people who build businesses there, makes the highs higher -- and the lows more devastating.
Bordered by the Massachusetts Institute of Technology, just across the Charles River from Boston, East Cambridge covers less than a square mile. A decade ago it was a wasteland, its streets crowded with gargantuan old factories, some still reeking of the soap once manufactured there. The industrial canal on the neighborhood's northwest corner was a storage area for highway salt.
Today those same streets are brushed clean and lined with sidewalk cafés and trendy shops, many of them renovated to look smartly old-fashioned; the canal has become a focal point for a polished new office-and-condo development. But the change may be even more dramatic behind the facades.
* Roughly 10% of Massachusetts's software companies make their home in East Cambridge. Nearly one-quarter of the state's 140 biotechnology companies do too. In all, says David L. Birch of Cognetics Inc., some 17,000 new jobs have been created in East Cambridge over the past eight years.
* Roughly 3.5 million square feet of new office space have been added to a base of 2.2 million square feet over that same eight-year period, according to the real-estate firm of Spaulding & Slye. Metropolitan Boston may be suffering from cutbacks in the defense and computer industries. East Cambridge has scarcely noticed.
* At the American Twine Office Park, in the middle of East Cambridge, developers had expected to lure law firms attracted by the nearby courthouse and big companies desperate for presentable office space. What they got instead were tiny businesses such as Inscribe Inc. (which computerized Ronald Reagan's signature) and Funk Software Inc. (which turned the unwieldy Lotus 1-2-3 spreadsheet right side up).
"The building wasn't intended to be a high-tech incubator," says Mitchell Roberts, marketing and leasing manager for the developers. "That came as a surprise." Some 50 to 60 young companies have been based at American Twine since it opened in 1983.
And what is it like for an entrepreneur to do business in a place so jam-packed with compatriots? At Spinnaker, what Seuss calls the adrenaline and the terror coexist with more pedestrian factors. Spinnaker's proximity to MIT makes it easy to recruit programmers, and to take advantage of the pool of students seeking part-time work. The company has also been able to expand and contract without difficulty; with so many fast-growing companies looking for space, says Seuss, you can sublet yours when you're on a downward spiral and rent someone else's when you begin growing again.
Then there's the onslaught of professional-service firms: Big Eight accountants; slick public-relations outfits; tony consultants like Alliance Consulting Group, spun off from Boston Consulting Group -- even a day-care center, Bright Horizons. All offer help, albeit at a price. "That phone will ring, and you'll have no idea what question will come over the line," says Joseph S. Tibbetts Jr., the Price Waterhouse partner who founded the firm's Entrepreneurial Service Center three years ago. "A guy will say, ' I want to fire my chief financial officer -- how do I do it?' " Robert Johnson, a venture capitalist, launched Founders Capital Partners two years ago to bridge the gap between good idea and start-up; he helps entrepreneurial hopefuls get their acts together. "East Cambridge is sort of a primordial soup," he says. "You have to be down in the weeds to catch something new."
The company that stands as a symbol of all this -- a focus of envy as much as of admiration -- is Lotus Development Corp., which in 1981 had but three employees. Two years later, when it shipped the software package that changed the way American business did its numbers, Lotus became the ultimate all-American success story. "You know, tremendously quick success, with a really good product," says Janet Axelrod, the company's first hired employee.
Axelrod was in part responsible for bringing the company, now a nearly $500-million giant, to East Cambridge. Having shipped the pathbreaking 1-2-3 program from its old headquarters on the city's west side, Lotus had to grow more rapidly than expected. So Axelrod found a decaying glue factory on First Street in East Cambridge.
That decision, along with the closeness of MIT, has made the area what it is today. Lotus's eight East Cambridge locations constitute a campus of sorts, connected by a line of ubiquitous white vans with the company's name prominently displayed on their sides. And Lotus, some say, provides the inspiration for the area's other entrepreneurs. "You can't look up to IBM and say, 'I'm going to get there some day,' " says Noubar B. Afeyan, 27, founder and executive vice-president of Perseptive Biosystems Inc. "But Lotus -- that isn't so far away." Indirectly, Lotus even symbolizes the downside of entrepreneurship: founder Mitchell Kapor left Lotus in 1986 for another start-up, this one called ON Technology. And since ON hasn't yet lived up to expectations, Kapor is now in the same maybe-we-won't-make-it boat as everyone else.
Indeed, failure may be the real terror of doing business in an environment so crammed with hopefuls. At The Office, a facility where the newest entrepreneurs can rent a room or two with a desk and phone, 25% of the tenants don't survive. Neither do a lot of better-established companies. When Afeyan moved into new quarters on the edge of East Cambridge, the first thing he stumbled on were the business cards of the former tenant, a company that had gone under. For Charles Digate, a former Lotus senior vice-president now launching a software company called Beyond Inc., seeing the tenant across the hall fold was a moment of truth. "I was happy when they took the name off the door," he says, unwilling to see so flagrant a reminder of failure.
Excitement and fear -- adrenaline and terror -- exist in uneasy symbiosis. At the headquarters of booming Interleaf Inc., CEO David Boucher points admiringly to the spiral staircase winding like a spine through the center of the facility. The building, Boucher explains, "fosters a sense of oneness -- that we're all in this together." Other entrepreneurs in the area echo Boucher's sentiments. Asked about doing business in such an environment, they talk about the easy flow of ideas from campus to company, about the sharing of ideas and facilities among start-ups, even those in the same industry.
But the ever-present specter of failure appears to have produced exactly the opposite effect: a nervousness, a recoiling from one another. Digate, in fact, says "a notion of privacy" is really what pervades the area. "People are very loathe to talk about what they are doing. I think that's part of the [East Cambridge] mystique. People know there's so much going on, and they don't know what it is. There's this underlying anticipation that some day, somebody will come up with something brand-new."
As East Cambridge matures, many believe that rising rents will put an end to the freewheeling entrepreneurial culture. But as Spinnaker's Seuss says, more than a few company founders may already be hooked. Late last spring I talked with The Saddlebrook Corp.'s founder, Mike Kinkead, in his spectacular office, the Charles River a sparkling ribbon of blue under the Boston skyline. At the end of June Kinkead was out, fired by the company's venture capitalists. A month later the business itself was padlocked.
Launching a new company right away, Kinkead found space fast in suburban Wellesley. But he dreams of finding space in the environment he knows best.
"There's real magic in East Cambridge," says Kinkead.* * *
Liz Roman Gallese is a free-lance writer based in Wellesley, Mass.