All About Boston
The Red Sox, the Pru, beantown, snow, Allston, Back Bay, Faniel Hall, Harvard, the birthplace of the American revolution, burgers, venture capital, Charles river, love that dirty water, Boston, Massachusetts.
I’m in America, writing this vignette from the Boston public library, and if I look up there are students studying, tourists relaxing, it’s easy to mistake the fountain and easy atmosphere for a courtyard in Europe, where I’ll be next week.
Right now it’s autumn, and people are generally relaxed, moving in and getting ready for the fall school year, soaking up the last few days of summer before the fall, and long, brutal northeast winter ahead. I’m here for business and pleasure, contemplating life, liberty and the pursuit thereof. And as always, asking the question: how can one benefit from planting a flag in this State?
Quality of Life
Most people plant a flag in Boston because they were born here, wound up staying after college, or because they just enjoy the beauty of the city and surrounding area. However, one perpective of this town could be decaying beauty. A woman once young and beautiful, a few years beyond her time – still beautiful, charming, authentic – but not quite as attractive as she once was. This diatribe might be seen in the stadium of major sports team’s stadium: Fenway park.
If you catch a baseball game in this city, you’ll sit in small wooden seat, in a medium sized stadium seating around 30,000 people in a neighborhood called “the Fens”. The distinguishing aspect of Fenway park is undoubtedly the green monster, a large wall in Left field that makes for interesting baseball plays when balls remain in play after ricochet off the structure and back onto the field. Recently, Fenway got a makeover and the owners built seats on top of the Green Monster, in a savvy move to increase seating and revenue.
Fenway has an inescapable charm, a place that’s almost sacrosanct in Boston sports history. But walking through the innards of Fenway, you can’t help but notice Fenway is old, antiquated, past her prime. Still, Bostonians would never consider tearing down the “Green Monster” – even if it makes financial and practical sense to do so.
What I don’t like about Boston
Another example of Luddite preference for yesteryear’s technology might be the subway system, also known as “The T”. One line of this old beast, the green line, runs on many of the same roads as cars do. Traveling into the city from the surrounding suburbs less than 10 miles could take well over an hour, and is rarely the fastest way to get from point A to B.
Contrast this with Bangkok – where the BTS is the quickest way to get around the oft gridlocked city, or Singapore – where the MRT makes it possible to travel anywhere in the country in less than 2 hours, and it’s now Boston that could be considered “3rd world”. In the US, most public transport is publicly owned. However, in Bangkok and Singapore – the train systems are privately owned companies. It should come as no surprise that they function more efficiently, are super clean, and turn a profit.
However, in Boston – for all its institutions of higher learning, has a public transportation system with certain sections dating back to 1897. Despite the need for replacement of this antiquated embarrassment, there are no plans from the government to invest and build new transportation infrastructure. This is partially because no one politician would stand to directly benefit from this decision. Also because one recent and infamous Boston infrastructure projects known as the “Big Dig” was horrendously over-budget, most likely due to graft. And so the T remains a relic, as there are no incentives for change, even though the current subway system is badly broken.
What I’m trying to say is that in many ways, the infrastructure is years behind its time. Comparing sitting on public transportation in traffic in Boston compared to riding the Subway across the entire country of Singapore – or hundreds of feet above traffic in Bangkok.
It’s cold in the winter. Very cold. Laughably cold. “Why do people live here” cold, but the summer – as it is right now, is an absolute gem of a city. Young people are always out and the entire city has a very college vibe. The food (if you eat at the right places) rivals that of any international hub. Stephanie’s on Newbury Street, Great Eastern are two places I sampled the local fare. The average person tends to be intelligent, friendly and reasonable. If you ask them for directions, they will politely and articulately explain where you’ll need to go.
And however bad the Subway system might be, there are some advantages to planting a flag in Boston. Boston was one of the first US colonies, the birthplace of the revolutionary war, and maintains it’s importance as a cornerstone of America for educations of higher learning, medical care and venture capital, among other industries.
What I do Like About Boston…
Talent / Hiring
The talent in Boston is undeniable. Every year, tens of thousands of students graduate from truly world class universities. With Harvard, MIT, Northeastern, Boston University, Boston College all being located in Boston larger, and small schools such as Wentworth, Simmons, Wellsley, etc.
The number of any graduating class far surpasses the saturation limit of the local job market. Many of these students are encumbered by debt, and largely unskilled. Those who do get snatched by local companies (mostly those with a technical degree) are overpaid by global standards.
Companies interested in outsourcing can get a team of 4 senior software developers and a project manager in Cambodia, Thailand or Vietnam for $10,000 a month. If the startup were to plant a corporate flag, set up a proper legal entity to employ staff overseas, there would also be opportunity to legally avoid tax and move profit offshore, just like google does.
Or, the startup company could use this $10,000 to pay just one developer in Boston. There is an arbitrage to be obtained with working with college students, but it requires a specific type of company. None the less, Boston is a recruiters market and if you are looking for graduates, you’ll have a fresh market every spring.
Boston has some of the best and most cutting edge medical care in the world. Boston Medical Center, Mass General, Bringham Women’s and Children’s, as well as countless labs and research facilities make Boston one of the centers for Medical innovation.
You don’t have to look far to find a qualified general practitioner or any type of specialist. I spoke to one doctor at a dinner that told me it was actually quite challenging for him to find employment in Boston as a doctor, because there are so many schools in the area, and most want to stay in the city. He mentioned Texas as one place where it would be easy for a MD to find work.
There are a number of high quality venture capital funds, as well as active angel groups in Boston. One particularly interesting group I met with was Rough Draft Venture Capital. They invest uncapped convertible bonds in college startups. An uncapped convertible bond defers any valuation to the next round of valuation (because it is uncapped) and is generally perceived as a bad deal for investors and great deal for the startup.
The Cambridge innovation center was an absolute joy to work from. Located on MIT campus and owned by MIT, this building is bustling with smart teams of ambitious entrepreneurs. Unlimited food and coffee power sprints late into the early morning hours, and it feels like things are happening. I love places like this, and I’ll be back.
Boston is an international city, with an airport, and walking the streets you’ll see people of every demographic. This is where the United states, and increasingly global Youth go to college. There is an increasing Chinese influence on the city (as is many places around the world). Property investment is popular in Boston, and I talked to one broker who told me Chinese are buying apartments in droves, some of them never even see the building. The rent is 100% passive income, maintained by a property manager who takes a 2-5% fee.
When I caught an UberX from the airport, my driver turned out to be an Albanian immigrant here for just 7 months. His wife and family were here on green card. He told me his left his financial consulting business in Albania to come here and drive a car for a living. The American dream lives on, and for many – Boston represents a place where many an immigrant has planted a flag in search of permanent residency (green card) or American passport.
Real estate investors willing to roll up their sleeves in Boston can find some interesting investments.The city where turnover is consistent and predictable, rents invariably trend up, and financing is generally easy to come by. The tax advantages for investment property in America are tremendous, and rules like the “1031 exchange” allow investors to potentially parlay the sale of one property into the purchase of another, tax free.
The challenge is in finding property for sale at a reasonable price. Rents are sky high and rarely give a reason for a landlord to dispose of property. It’s hard to find distressed property in a market that generally did very well following the 2008 sub-prime mortgage collapse. My suggestion would be areas certain to see further gentrification, such as Roxbury, Dorchester, Jamaica Plain.
Areas that were traditionally low income (Charlestown, South Boston) have in the past decades seen apartments rented to young upwardly mobile professionals. Mass has very generous laws protecting tenants, so you’d do well to qualify an Asset Protection Trust, or set up a Wyoming or NV entity to hold your assets.
Are somewhat high as Massachusetts does levy a state income tax. I also find indirect taxes in Boston to be burdensome, as there is always some kind of fee to do anything. Massachusetts was one of the first states.
If you live full time in Massachusetts, there is no benefit to you setting up an offshore company. Set up a Mass LLC, or as I suggest above, foreign qualify a company from WY or DE – states that have more pro business laws.
Banking – Companies
The Commonwealth of Massachusetts is not a strategic place to plant a company flag. There is a good deal of red tape to set up certain types of companies, and LLC’s in Mass face state income tax. Furthermore, the state requires a high franchise fee and functions differently from other states in terms of Registered Agents and privacy. Delaware, Nevada, or Wyoming represent better options for company formation. However, if you do form an LLC in Mass, it’s a relatively simple process to do on your own, just walk into the secretary of states office, pay the $600 and you are done.
However it would be to your advantage to set up an LLC in Wyoming and foreign qualify that company into Massachusetts. This is an easy and simple move that will provide you with additional legal protection, in the form of charging order protection, which could help deter frivolous lawsuits, provide additional privacy, and provide that the sole remedy in event of a lawsuit is a charging order. I spoke to one lawyer, Mr. Walker of Northeast Legal Services, who said he routinely set up Wyoming LLC’s for MA residents, and then foreign qualified the LLC for additional protection. Let me know if you live in MA and I’ll provide an introduction.
So what is there to do in Boston as an international man? Well the food is amazing, the hotels are quite nice, and you might send your kid to school here. If you are looking for VC money – you could be in worse places, and talent is certainly there. Y-combinator started here, as did Facebook, and number of other startups. You might say there’s something in that dirty water. Until next time Boston – I’m just Passing Through.