Startup Ecosystem in Seattle – perspectives

Today I was reading Sandi MacPhearson’s Medium article discussing Startup Ecosystem mentions that Seattle is lagging behind other places. Compass’  group report on global startup ecosystem provides more depth. Over the past year I had been more exposed to startups in Seattle area. Now that I am in a startup and advising a few startups, I can reflect on the learnings.

Seattle is fabled for being the home base for Alaskan Gold exploration. Many companies, small and large, have formed over the decades. We stand as home for several giant technology companies including Microsoft, Amazon, Expedia (always acquiring others), etc. Several of my past co-workers and managers from Microsoft have embarked on a journey of change. Thanks to increasing awareness, availability of cloud technology, and a realization to do good in a different perspective, there is a gradual flow of folks stepping out to venture into startups.

1. Talent Seattle has attracted worldwide talent to work in the big companies like Microsoft, Amazon, Expedia, and 10s of big tech companies. University of Washington, with its growing strength of Computer Science and Data Sciences program also provides a continuous flow of trained graduates and entrepreneurial professors participating in companies. That said, the talent is often fully engaged in the day-to-day work at their main jobs. Engineers at the big companies have high pay limiting the need to explore. Not to mention that long working hours also limit time to discuss and explore ideas. Creating an open environment for discussion and connection can help with talent movement.
2. Funding Seattle has a handful of venture firms and not as much as the number of firms in the Silicon Valley or New York City. There is a growing bench of angel investors which can power the early stage efforts. Still I hear that founders often have to fly out to other places for Series A or Series B funding. Many long standing employees at big companies are probably comfortable investing in their own company stock or general stock market instead of entering the risk world of venture funds. If at all, folks set a lower limit at quarter a million or half a million of investment, not creating the surplus required to power 1000s of startups.
3. Type of Business There is a prevailing sentiment that Seattle is good for B2B businesses (Tableau, Docusign, Apptio, etc.) while the big exit and fast growing B2C companies are founded elsewhere. Notable exceptions include: Expedia, Zillow, Real Networks, etc. B2B businesses have a long gestation period and grow organically over time. While this provides a stable pattern of growth, it is not an accelerating pace as one would see in the B2C business.
4. Migration Routinely some talented and risk taking folks depart Seattle to work in Silicon Valley working for startups. Some of my top talent employees in the past decade at Microsoft had chosen that route, depriving of potential participation of folks in Seattle area. As I am starting to hire for a startup, I find that there are many talented folks from outside Seattle want to apply instead of folks from within Seattle area.
5. Comfort Startup environments are very different at the start. Once an employee starts working at a big company it takes a lot to break out of the inertia habit. Personally I had considered change for nearly 5 years and only in 2016, I was able to break away. A deep network is formed within the big company employees (and often within the employees of the same company) which means there is less opportunity to break out of the comfort.

All said, there is a growing awareness about startups.I routinely talk with engineers in this area who consider change. 90% of the time they snap back to stay at their original big company instead of coming into startups. The good news is that folks are having the conversation. And in the coming five years, I anticipate more folks being interested in startups to step out and explore. Perhaps funding will follow along. Provided there are a few more successful exits, the ecosystem can grow up to be stronger and better.