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It was a little more than three years ago now that Paul Graham wrote “Cities and Ambition”. It’s a wonderful read and mostly correct (except New York has changed quite a bit). It was right before I entered Y Combinator and my team was part of the last batch of startups that would ever graduate from the Cambridge YC HQ. By all logic, Boston should have been one of the epicenters of the new tech boom. But it wasn’t.

In 2005, I moved to Cambridge. It had everything a budding entrepreneur could want. I had smart roommates (PhDs at Harvard and M.I.T.), low rent near Central Square, and the Charles River to keep me company on my daily runs. But I actually knew nothing of the startup scene around me. In my little fishbowl in my first floor apartment, I had no idea what I was doing and I didn’t know what I should be looking for so I kept plugging away. In the Fall of 2005, there was a bright shining moment. Some folks I had never heard of called Y Combinator were throwing a Startup School Conference at Harvard nearby! I read about it on Wired.com, hopefully applied to attend, and was overjoyed when I was accepted. Many coincidences led to this moment, but I can pinpoint it as one of the most course changing of my life.

There were many future YC founders who attended and we all sat there listening to folks like Steve Wozniak, Chris Sacca, Stephen Wolfram, Paul Graham, and more tell us how to get moving on our dreams. And then we had a Q&A with the first batch of YC Founders. Alexis Ohanian has since told me that he thought his performance was particularly disappointing. He wasn’t and I was absolutely smitten with the idea that if it was possible for these guys, then I could do it too.

I’m actually sure that this event was the high watermark for what might have become of the Boston Tech Scene. Well, actually perhaps it was the next day. Wayne Chang (founder of i2hub and partner to the Winklevosses in ConnectU — which wasn’t vaporware BTW) organized a brunch at Top of the Hub Restaurant in Downtown Boston. It’s a beautiful, luxurious and unbelievably expensive way to eat breakfast at the top of the Prudential Tower. It was there that I met my future cofounder, sat next to Drew Houston before he had started working on Dropbox, and met many people at this brunch who have gone on to do amazing things. It would be fair to say that hundreds of millions of dollars in value were created by people in that room (and that’s if you exclude Drew… otherwise it would be billions). If a Boston VC had had the foresight to show up and throw $100,000 dollars at each person at the table, it would have changed the Boston entrepreneurial landscape forever. Drew alone would have made sure of that.

But the Boston VCs never showed up.

And this was true for YC as well. Boston VCs invested only once or twice in Y Combinator companies and after one (I believe) of the Y Combinator companies in the Summer of 2008 received investment from Boston, YC pulled up stakes, headed permanently to Mountain View, and absolutely nothing changed… except now almost all YC teams were now closer to where they were ultimately going to move to and get their funding from anyway.

While the signs of Boston’s irrelevance from the tech scene were unmistakeable, the true downfall of Boston as a tech hub began with the economic downturn in New York City. It’s been my home for the past five years and except for the fact that the tech scene used to be kind of lame, the rent is too damn high, and it lacks a direct equivalent to Stanford or M.I.T. (which looks like it might change by the way), it is a truly wonderful place to live. Banking has become less sexy and the newest millionaires and billionaires haven’t always made their fortunes from shuffling money from one place to another.

PG has always maintained that the timing and location of Silicon Valley was merely a coincidence. The guys that struck it rich from National Semiconductor started investing in new companies. And as new companies made their fortunes, those guys started investing too. It became a vortex for talent and the effect compounded on itself. I’ve always wished that it had happened coincidentally in NYC, but New York has seen the same sort of effect as of late. Ken and Ben Lerer made fortunes and set up their fund which invests quickly and aggressively, the founders of DoubleClick started an incubator which has spun out 10gen, Gilt Groupe, and Business Insider. Mike Brown from Aol Ventures is based here and has largely picked winners. The experience is here, the money is here, and did I mention it really is a wonderful place to live?

Of course this never could have happened if Boston’s complacency hadn’t let it. There are more than a dozen YC companies located in New York City now (pretty much all in the last year). More than ever stayed in Boston. All the investors had to do was show up.

I recently met with an old friend and investor in my previous YC company. He’s spent the last two years working for a prestigious VC Firm in Boston. They had a meeting a few months ago remarking on the fact that they were missing out on all these hot New York City startups and they wanted to know if anyone would be willing to relocate to capture some of that deal flow. No one raised their hand but him. I didn’t mention it, but I couldn’t help but think that it’s not so hard to set up a new office. We’re watching a shift of power and we’ll likely watch the money and the offices move. Sure, some won’t make the trip from Rome to Constantinople, but the change is real and palpable.

So, what is wrong with Boston VCs? They’re timid for sure, but the ingredients for a successful tech community haven’t changed. And Boston still has them in spades. They have money, tech schools, previously successful entrepreneurs, lower rent than San Francisco and New York, a pretty decent mass transit system… It’s just that damn timidity. Maybe they need to forget those gorgeous offices in Waltham and Downtown Boston. Maybe they need to go set themselves up in Central Square. Or, maybe when they set up offices in New York City things will finally change.

What do you think?

Update: I incorrectly stated a belief that no startups from the S08 Y Combinator batch received funding from a Boston VC. Alan from Cloudant has reminded me that their team actually did (although the Avalon Ventures website lists their primary office in California). The article has been updated to reflect this fact but I believe the major point still stands. The majority of the YCS08 class took funding from Silicon Valley as have the majority of YC companies in all rounds.

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