In the 1980s, Cambridge was home to “A.I. Alley,” a cluster of startups that were building a new generation of powerful computers and software for extracting insights from data.
But these days, San Francisco has grabbed the baton, with a neighborhood in that city dubbed “Cerebral Valley,” packed with artificial intelligence startups and regular networking events. Not to mention heavily funded companies like OpenAI and Anthropic.
Massachusetts is hustling to build momentum in this new era, when AI systems are able to ingest vast quantities of data and produce not just written answers to questions, but poetry, pictures, and music. An AI task force was created by Governor Maura Healey in February, and her administration has proposed $100 million in funding to create an “Applied AI Hub” that would look at ways the technology could be applied in sectors where Massachusetts is strong, like health care, financial services, and education.
Meanwhile, AI-related events have ramped up locally. A conference last week at the MIT Media Lab brought together entrepreneurs, academic researchers, and executives from Meta, Nvidia, and Google, and in June, Judah Phillips, a local entrepreneur, is organizing an AI-focused career fair at the Hynes Convention Center. A volunteer-organized effort called the AI Blueprint for Massachusetts is focused on attracting and retaining talent, and began meeting regularly in March.
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These efforts are meant in part to address a challenge that hasn’t gone away in the ChatGPT era: Many tech entrepreneurs, particularly in AI-related software, leave the Boston area for places like San Francisco and New York.
“I do think there’s critical mass here if you’re a startup person,” says Shahid Azim, CEO of C10 Labs, a Cambridge firm that supports and makes investments in AI startups. But Azim adds that many AI software developers are being “heavily recruited” by Bay Area companies.
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One local startup generating buzz is a music-creation app, Suno, founded in 2022 and backed by Cambridge venture capital firms Matrix Partners and Founder Collective. Currently free, it lets users create and share polished songs — with no compositional skill required. (One of the top 10 hits on the site: “AI Took My Job.”) Maven AGI, based in Boston, has raised $8 million to bring AI to customer support, reducing response times and the cost of handling problems. Maven’s three founders were all educated in Boston, and were hired into tech companies here, such as HubSpot and Lotus Development Corp., early in their careers. Same with Suno’s cofounders, who earned doctorates at Harvard.
A big recent investment in local AI went to Liquid.ai, an MIT spinout that raised $37.5 million in December. But by comparison, Amazon invested $2.75 billion in Anthropic, the San Francisco startup that makes the chatbot Claude, last month. And Liquid.ai’s CEO, Ramin Hasani, is based in New York; while the company is currently working remotely, he says it will soon open offices in Cambridge and Palo Alto, Calif.
An April report from the Bay Area Council Economic Institute, a nonprofit business group, found that of the $31 billion invested in AI companies last year in the US, $22 billion went to Bay Area companies. The report also noted that AI startups there have been leasing big blocks of office space in San Francisco — 230,000 square feet for Anthropic, for instance. That’s “not enough to absorb the large pool of vacancies, but a positive sign of growth,” wrote Sean Randolph, a senior director at the group.
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There’s always been concern in Boston’s tech sector about the magnetic pull of San Francisco, New York, and other cities.
“I’m seeing the exodus every week,” says Abhi Yadav, a Boston entrepreneur and founder of the networking group AI Innovators Community. “Founders are trying to make inroads in New York or the Bay Area.” The cofounder of Yadav’s group, Rob May, is a former Boston venture capitalist and entrepreneur now building an AI startup, BrandGuard, in New York.
The reasons for leaving Boston are often a mix of things, but entrepreneurs tend to be looking for better information flow and networking, and more chances to connect with risk-taking investors.
Božanka Vitanova attended Brandeis University on a Fulbright scholarship, and then started a company focused on using AI to engineer more efficient teams; it is now known as TeamLift. After participating in the MassChallenge entrepreneurship program in Boston, and sampling other cities during the COVID era, she decided to relocate to New York.
Without wanting to knock Boston — “Boston gave me that early push” — Vitanova says that a key factor was that New York felt more dynamic. “It’s easier to meet people — there are more events, more opportunities to meet clients, to meet investors.”
Leila Pirhaji earned a doctorate at MIT, and stayed on as a postdoctoral researcher, before starting ReviveMed in 2018. The company uses AI to better understand the role that metabolites — molecules like glucose and cholesterol — play in diseases and the workings of the immune system. ReviveMed started life in LabCentral, a shared laboratory space in Cambridge, but Pirhaji, its CEO, now lives in San Francisco.
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“The AI scene here is definitely bigger than the Boston area,” she says. “You randomly meet people who do cool stuff.”
She considers ReviveMed to still be a Cambridge company — its mail gets sent there, and the employees are covered by Blue Cross Blue Shield of Massachusetts — but only one person goes in to use a shared office space in Cambridge these days, Pirhaji says. “I’m gradually hiring people in other places since the pandemic.”
Vivjan Myrto, managing partner at the Boston venture capital firm Hyperplane, says that when he invests in AI companies, “bicoastal is far more common now,” with founders living in Boston or New York and San Francisco.
That’s the case with Lighty AI, a startup that wants to streamline some of the mindless but time-consuming tasks of business — like managing meeting requests. The CEO, Richard Rabbat, lives in Newton, but his chief technology officer and chief operating officer are both in San Francisco. The company doesn’t have a headquarters office, but once a quarter, all 10 of Lighty’s employees get together for an off-site meeting. (The most recent one was held in San Diego.)
Some point to positive signs locally. “I’ve been seeing an increase in sabbaticals from faculty — and faculty are building companies here,” says Habib Haddad, an investor who runs the E14 Fund, an MIT-affiliated venture capital firm.
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Venture capitalist John Werner, who organized last week’s conference at the Media Lab, helps teach a course about creating AI businesses at MIT, and he acknowledges that he’s seen some students “dropping out to do Y Combinator” — a startup accelerator in San Francisco that has helped launch companies like Airbnb and Reddit.
“There need to be some more innovations and developments to make Boston a leader and relevant,” Werner says. But, he adds, AI “is the Wild West. So it’s possible.”
Scott Kirsner can be reached at kirsner@pobox.com. Follow him @ScottKirsner.