Boston Globe Magazine • May 3, 1998
Boston is booming again, but with a difference: Today's newly wealthy are less flashy -- and often much younger.
Andrew Perlman looks just like any urban dweller in his early 20s, bicycling along the Charles River on his way to work in the pale early-morning light. Tieless and carrying a backpack, he could be an office temp. Or maybe a store clerk.
When he arrives at his office, in a four-story building across from the CambridgeSide Galleria, on First Street, he parks the bike in an inner courtyard, rides the elevator to the top floor, and walks through the doorway of Cignal Global Telecommunications, a company that only a few months ago landed $22 million in start-up financing.
Cignal is his company.
As a young boy growing up in Newton, Perlman, now 22, set a goal for himself: He wanted to be a millionaire by the time he was 21. He missed, but not by much; if the company goes public as planned late next year, he will be an extraordinarily wealthy young man.
Like other young entrepreneurs with ideas and initiative, Perlman and his 23-year-old business partner, Mark Land, couldn't have asked for a better time to try to find financing. Encouraged by a stock market that's been rising with dizzying speed, investors are looking for ways to make even higher returns. And they aren't shy about funding new ventures, even when those ventures are run by people who are barely old enough to vote.
Money, it seems is everywhere. Each and every day, rivers of it flow into Boston's mutual-fund industry, supporting seven-figure incomes for star money managers. Every few weeks, another high-tech company goes public, creating another cluster of millionaires. Older investors who salted away some of their savings in the stock market are now preparing to reap a financial bonanza, as the markets have doubled in value in the past three years.
But the human face of the current boom is, like Perlman's, and unusually young one. Entrepreneurs and financial types in their 20s and 30s are starting new companies, managing big money, building new houses, frequenting new restaurants, and transforming the economy. The boom they are fueling is less ostentatious than the one during the go-go '80s, and more grounded. Some say they are creating nothing less than a new Gilded Age, comparable to the one a century ago, when a revolution in technology led to the accumulation of great fortunes.
Fired by the twin turbines of high-technology and mutual-fund industries, Boston's economy is one of the hottest in the nation. In February alone, people eager to cash in on the stick market poured $2.5 billion into Boston-based Fidelity investments, the world's largest mutual-fund firm; that's an average of more than $132 million each working day. Venture capital firms invested a record $1.31 billion in 347 emerging New England companies last year, most of them in Massachusetts. The sate was 12th in the nation in per capita income in 1980; by 1996, it had risen to third, behind New Jersey and Connecticut.
Lots of people, many of them young, are getting rich. The stories of instant wealth in high tech have become commonplace, and not only for company founders. In the mutual-fund industry, seven-figure incomes are not uncommon for portfolio managers and sales people.
It's only been 10 years since the last big boom in Boston, and many people remember that it ended with a thud in 1987. But even at the peak of the last cycle, trouble was looming, says Frederick Breimyer, chief economist at State Street Bank.
Though it appeared healthy, New England's economy was lagging behind the nation's, losing market share to faster-growing regions. In addition, the deregulation of the banking system in the 1980s fueled bidding wars among banks battling for market dominance. The quickest way to build a bank, many discovered, was to lend money on increasingly speculative real estate deals. When the stock market nose-dived in October 1987, the flimsy foundations of the boom became apparent.
"But we don't see anything like that now," Breimyer says. "It's been a remarkable recover, without question."
Meanwhile, a cottage industry devoted to personal service for the wealthy and the busy is thriving. When Mark Kushinsky opened his MaidPro residential cleaning service in a 240-square-foot office on Beacon Hill in 1991, he thought it would provide little more than a tidy living for him. Today, Kushinsky, 32, operates seven MaidPro offices in Greater Boston and one in Connecticut. In the next few months, he will open branches in Philadelphia and Scottsdale, Arizona, followed by 30 more across the country within the next few years, if all goes according to plan. The original downtown Boston office did $1 million in business last year, up from $600,000 the previous year, he says, and this year Kushinsky estimates that the figure will approach $2 million.
The best historical precedent for the current boom may be the opulent Gilded Age. Named by Mark Twain, the era stretched
for several decades after the end of the Civil War and was known, among other things, for great technological growth and
showy displays of wealth. The mansions of Newport, Rhode Island, built by New York City's business and social elite,
are a product of the era. So are many other grand, if somewhat less spectacular, homes all over New England.