Inside Boston's AI problem as companies flee to San Francisco

• Boston was at the forefront of artificial intelligence development in the 1980s
• But it is now struggling to retain talent with founders leaving for the Bay Area 

Boston has launched an AI taskforce in an attempt to stop an ‘exodus’ of companies fleeing the former hub for the bright lights of the Bay Area and New York.

Despite its status as a leading light of the 1980s AI revolution – once nicknamed AI Alley – and being home to two of the top universities in the world, MIT and Harvard,  Boston is struggling to retain top tech talent.

Drawn in by the promise of networking opportunities and investors, founders are increasingly ditching the Massachusetts city and moving to bigger technology hubs.

Co-founder of networking group AI Innovators Community, Abhi Yadav, told The Boston Globe: ‘I’m seeing the exodus every week. Founders are trying to make inroads in New York or the Bay Area.’

Boston has been forced to take action to try to stem the flow, with Governor Maura Healey setting up a 26-person AI taskforce and proposing $100 million in funding to create an ‘Applied AI Hub’.

Last week Boston put on a conference at the MIT Media Lab for entrepreneurs, researchers and top executives

Pictured: A 1978 billboard from Boston’s by-gone AI boom era, listing a number of top tech firms along with the anecdotal nickname for the area, ‘AI Alley.’ Boston was a leading light of the 1980s AI revolution but is now struggling to retain top talent

In an effort to stop the exodus, Governor Maura Healey (pictured) has set up an AI taskforce and proposed $100 million in funding to create an ‘Applied AI Hub’

For start-ups, the financial draw of the Bay Area is clear.

An April report from nonprofit Bay Area Council Economic Institute, seen by The Globe, found that of the $31billion invested in US AI companies last year, $22billion went to companies based in the Bay Area.

The heavy investment and high density of big name tech companies has earned the Hayes Valley neighborhood in San Francisco the nickname ‘Cerebral Valley’.

The area is filled with erudite start-ups and networking events with high-flying investors – including industry leaders OpenAI, founded by Sam Altman, and chatbot start-up Anthropic, which just received a $2.75billion investment from Amazon.

The influx has made San Francisco the epicenter of AI development, drawing businesses back in after many had fled to escape the city’s ‘doom loop’ which has seen soaring crime and homelessness.

Meanwhile Boston, despite its high-density Ivy Leagues churning out stellar tech and AI whizzes after graduation, is increasingly viewed as a good launchpad for companies that then move on elsewhere.

CEO of Cambridge-based C10 Labs, Shahid Azim, told The Globe: ‘I do think there’s critical mass here if you’re a startup person.’

The issue is keeping the companies in the city once they grow beyond the initial stages, Azim said many developers are being ‘heavily recruited’ by alluring San Francisco companies.

Heavy investment and high density of big name tech companies has earned a neighborhood in San Francisco the nickname ‘Cerebral Valley’

Pictured: Sam Altman, the founder of OpenAI, whose offices are in San Francisco

The area is filled with start-ups and networking events with investors, as well as industry leader OpenAI

Other intelligence computer system founders are fleeing down to the East Coast’s financial and cultural hub – New York – after getting an initial boost in Massachusetts.

Božanka Vitanova founded her AI company TeamLift after taking part in the MassChallenge entrepreneurship program in Boston.

But after the pandemic, she decided to relocate to New York.

She told the Globe, ‘Boston gave me that early push,’ but New York feels more dynamic. She said: ‘It’s easier to meet people — there are more events, more opportunities to meet clients, to meet investors.’

Leila Pirhaji, founder of ReviveMed, earned a doctorate at MIT and stayed on as researcher before founding her company.

ReviveMed started out in a shared lab space in Cambridge, but Pirhaji has now moved to San Francisco.

She said: ‘The AI scene here is definitely bigger than the Boston area. You randomly meet people who do cool stuff.’

Images of crowds of experts at ‘Forging the Future of Business with AI Summit’ at MIT

Panelist included world-renowned AI industry experts, hosted at the Boston school

Gov Healey’s AI taskforce is testament to the city’s commitment to keep talent from fleeing – but as the lucrative industry continues to grow, $100 million in funding may not be sufficient in the face of the Bay Area’s multi-billion-dollar AI ecosystem.

The proposed AI hub will examine how artificial intelligence can be used in Massachusetts’ health care, financial services, and education sectors.

The governor said earlier this year: ‘Massachusetts has the opportunity to be a global leader in Applied AI – but it’s going to take us bringing together the brightest minds in tech, business, education, health care and government.

‘That’s exactly what this task force will do. Members of the task force will collaborate on strategies that keep us ahead of the curve by leveraging AI and GenAI technology, which will bring significant benefit to our economy and communities across the state.’

Lieutenant Governor Kim Driscoll said: ‘Our administration acknowledges AI as a transformative technology set to influence various aspects of our nation’s economy.

‘This Task Force will position Massachusetts as a hub for talent and business excellence, as we examine economic shifts driven by AI with the goal of establishing our state as a global leader in its effective and responsible utilization.’

Božanka Vitanova founded her AI company TeamLift in Boston but now lives in New York

CEO of Cambridge-based C10 Labs, Shahid Azim, told The Globe: ‘I do think there’s critical mass here if you’re a startup person’

The AI Strategic Task Force will consist of 26 individuals ‘representing members of the business community, higher education institutions, and state and local government.’

Among those appointed to the force are Erica Bradshaw, Harvard’s Chief Technology Officer and Mike Milligan, University of Massachusetts’ Vice President.

Mayor Michelle Wu also welcomed the task force, saying: ‘Technology is critical to delivering services and connecting residents in Boston and across Massachusetts to opportunity.’

Secretary of Technology Services and Security and State Chief Information Officer Jason Snyder added: ‘We have the conditions in place here in Massachusetts to cement our standing as the hub of AI and emerging technology in the future.

‘[This] recognizes the urgent need for the state to engage with AI now, with the understanding that we do our best work together, with state policy leaders, the innovation industry, and higher education all at the table.

‘We are working on projects that capitalize on this rich ecosystem to move our entire state forward.’

Last week the city put on a conference at the MIT Media Lab for entrepreneurs, researchers and top executives from Meta, Nvidia, and Google.

The ‘Forging the Future of Business with AI’ conference described itself as ‘an exclusive, breakthrough event featuring the most innovative minds leveraging the power of AI.’

During Boston’s heyday as ‘AI Alley’, companies including Palladian Software, Lisp Machines and Symbolics were created at MIT’s groundbreaking AI Lab.

The city was once thought of as the home of ‘Great Beginnings’, but it’s not clear if these new schemes will be enough to turn the tide flowing into Cerebral Valley.

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