Consumer Is Alive and Well in Boston
Our city is rich with the knowledge, talent and experience to fuel the next generation of pillar consumer companies.
I’ve helped to build a few consumer companies in Boston that have all grown to become thriving businesses with successful exits (very little credit due to me). So I can’t help but find myself on the defensive when I hear this––
“Boston is a terrible place to build a consumer company.”
It just isn’t true.
While it is undeniable that the west coast has been a hub for multi-billion dollar consumer companies during the last decade, Boston is home to more than a few pillars of our own––Wayfair ($9.7B), TripAdvisor ($7.7B), Car Gurus ($4.49B), iRobot ($2.46B), DraftKings ($1.5B) and PillPack ($1B), to name a few. There’s plenty of consumer knowledge, talent and experience in our city. It’s just not the same flavor you’d find in SF or NYC.
I’ve seen a joke floating around Twitter over the last few months that goes something like this––
What’s the fastest way to build a consumer company?
Pick a category, raise as much money as you can, hire the most expensive branding agency, then plaster the NYC MTA with ads.
Earns a good chuckle. New York does have one of the best creative agency ecosystems in the world. The city is strong on marketing and brand talent, so it’s an attractive launch pad for startups focused on re-inventing consumer home goods (sheets, pots & pans, toaster ovens, mattresses, you name it).
We’re not strong on brand in Boston. You might even say we’re weak on brand. HubSpot CEO, Brian Halligan, remarks that Boston has a Puritan problem; we shy away from PR or anything that attracts attention to ourselves. But we also have Puritan work ethic; we’re disciplined and diligent. When we meet a hearty challenge, we roll up our sleeves and dig in. We’re big on research––our region is home to 35 colleges and universities. We’re deep thinkers. We’re analytical. We know how to identify a worthwhile problem to solve. (As a rare California transplant in Boston, I hope some of this has rubbed off on me through proximity.)
Boston is big on research. We’re deep thinkers. We’re analytical. We know how to identify a worthwhile problem to solve.
The consumer companies that thrive here are ones that capitalize on these leanings. When I left Carbonite to lead marketing at Runkeeper, I asked around to find out where we should scout strong marketing talent. Vistaprint was a favorite poaching ground at the time; people described the company’s employees as “analytics freaks” who lived and died by the numbers. Growth marketing masters.
Jason Robins, CEO of DraftKings, and his co-founders, Matt Kalish and Paul Liberman, came out of Vistaprint. Makes sense. The company was founded on the back of a big idea, but not an original one––the team just out-performed the competition. They were ambitious, deliberate, operating machines.
There are plenty of places where you can buy a car online, so like DraftKings, the fundamental idea of creating a marketplace for purchasing wasn’t a novel one when CEO, Langley Steinert set out to launch CarGurus. What was novel was the former TripAdvisor co-founder’s vision for using data and transparency to differentiate their marketplace — two things Boston knows well. The company didn’t pour millions of dollars into advertising, putting the brand first; they led with simplicity, focusing on a seamless customer experience powered by rich data.
Wayfair got its start when founders, Niraj Shah and Steve Conine, launched over 270 category-specific websites focused on the home goods space. It was a smart and thoughtful strategy––own every category in the early days of the Internet, and you’ll own SEO––but not a brand play. In fact, the brand was so fragmented across Wayfair’s hundreds of web properties that it was almost an afterthought; certainly not the driving force in the company’s initial success. To this day, you’ll find more MBAs and recovering consultants inside Wayfair than you will brand marketers.
All of these companies align well with our region’s strengths, and all are worth north of $1 billion (with Wayfair nearing $10B). Much more exciting than the mere existence of these companies is the fact that each has become a breeding ground for talent. Future founders who’ve had a front row seat to watching the evolution of a high-growth consumer company, who understand what it takes to win. (If you’re a leader in one of these companies pondering the idea of venturing out on your own, I’d love to connect — email@example.com)
So what does this all mean for the future of consumer in Boston? Call me a skeptic, but I don’t think Boston will be home to the next great “brand-first” company. We’re positioned to lead in areas that take advantage of the talent community we’ve already built, in the areas in which our region is already strong. Here are just a few that we’re thinking about at Pillar:
- Digital Health: Boston arguably has the strongest biotech ecosystem in the country; Massachusetts biotech companies received $3.1 billion in funding in 2017 alone. PillPack had the right idea in creating a consumer-oriented company that tapped into the vast expertise available locally in healthcare. Connected devices for smart monitoring, improved ownership of your personal health data, and AI-driven decision-making and discovery all represent promising opportunities in this category.
- The Middlers: There’s been a lot of chatter about millennials in recent years, but Boomers have a median net worth of ~$200K and control the majority of disposable income spend in the US. Lightspeed’s Ashley Brasier coined the term “Middlers” to describe a segment of the Boomer population in their 60s and 70s who lead active lifestyles and avidly use technology––not quite what you imagine when you think “senior citizen.” Our region’s expertise in healthcare and travel align well with opportunities in elder care, elder tech, lifestyle and leisure that she and her colleague, Nicole Quinn, describe here and in this post. Hometap is a great example of a local company that’s helping Middlers — among others — leverage the equity they’ve built in their homes (we’re investors).
- Travel: From mobile to AI, the travel sector continues to evolve in the direction of new more seamless, flexible and personalized models. Boston is home to two of the leading travel companies, TripAdvisor and Kayak, and Hopper is a great example of a next-generation travel company that’s capitalizing on the talent ecosystem we’ve built in this space.
- Insurance. Consumers rank health insurance providers among the top 5 worst industries in the U.S. for customer service––there’s good reason to tackle this space. Powered by the evolution of the gig economy and the growth of the millennial population, the world we live in is becoming increasingly fluid, transparent and “available on demand”; insurance companies need to follow suit. With Liberty Mutual’s world headquarters nestled right in the heart of Back Bay, this space is a natural fit for our talent ecosystem.
If you’re working on a consumer company in one of these categories or any other, don’t listen to naysayers who encourage you to head west. Boston is rich with the people, resources and experience you need to build the next great pillar consumer company right in your own backyard.