Seattle wants the tech scene, but not the division that could come with it

The Emerald City is brewing plenty of startups, thanks in part to tech giants like Microsoft and Amazon. But can it avoid a rift in the community?

Laura Hautala Former Senior Writer
Laura wrote about e-commerce and Amazon, and she occasionally covered cool science topics. Previously, she broke down cybersecurity and privacy issues for CNET readers. Laura is based in Tacoma, Washington, and was into sourdough before the pandemic.
Expertise E-commerce, Amazon, earned wage access, online marketplaces, direct to consumer, unions, labor and employment, supply chain, cybersecurity, privacy, stalkerware, hacking. Credentials
  • 2022 Eddie Award for a single article in consumer technology
Laura Hautala
7 min read

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Peyton Bowles, a Luxe driver in Seattle, moved from out of state to help friends launch a startup. He's in good company, as Amazon and Microsoft employees jump ship to become entrepreneurs. Laura Hautala/CNET

SEATTLE -- Peyton Bowles is hurrying to his next job parking cars. Working for Luxe, a mobile phone app that sends helpful people out to park your car when you're driving in the city, he doesn't have much time to chat. But he makes it clear this job isn't why he moved here from out of state.

This is just to put some money in his pocket. He came to help get his friends' startup off the ground.

A walk around Bowles' stomping ground in the southern end of Lake Union is enough to prove the tech economy is booming in Seattle. The cranes, construction pits and traffic detours are hard to miss. And while most of it will become Amazon offices, some of the development is condos and work spaces for a growing community of tech-focused entrepreneurs.

Experienced workers have begun leaving the region's tech giants to start their own companies, and it's possible Seattle will see a proliferation of tech-based businesses throughout the city.

But as in any number of cities on the cusp of a tech-fueled revitalization, some in Seattle are concerned about leaving people behind. For that reason, activists, the city government and the University of Washington are trying to learn how the region can ensure everyone benefits from an increase in tech businesses.

Gleaming high rises and smart growth

As the startup scene is taking off in Seattle, so is general anxiety about the region's future as a tech-dominated economy. Seattle got its own tech bus protests -- a common occurrence in the San Francisco Bay Area in which protesters block chartered shuttles full of tech workers -- in early 2014 when activists targeted a Microsoft bus.

Check out all the places we've been on CNET Road Trip 2015.

The Seattle Times covered hostility toward Amazon workers as recently as July, and alternative weekly publications have rallied for the cause of non-tech residents who fear losing their homes to rising rents.

In response to these fears, the city government is working with startups to encourage them to tackle some civic-minded initiatives. As part of this goal, the city sponsored two contests to foster good ideas for the city and connect potential mentors with groups that are underrepresented in the tech industry.

At the city's Hack the Commute event in May, the winning team created an app that helps people in wheelchairs plan their bus trips. And last September, the city sponsored a programming competition in the predominantly black Central District. The winners created an app that compared local politicians' election promises to reality.

Rebecca Lovell serves as an advocate for startups in the city government, and says Seattle is in a good position to think about improving the city as a whole. Startups are still mostly starting up, and the city has been able to learn from Silicon Valley.

"San Francisco is both a role model and a cautionary tale," she said, when it comes to social issues, traffic and the housing market.

The University of Washington also wants to pair entrepreneurship with opportunities for as many people as possible. To this end, it runs Startup Hall, which rents space to entrepreneurs and hosts a yearly program called TechStars that helps startups get off the ground.

Located just at the edge of the University of Washington campus, where a neighborhood of big wooden houses and low-rise retail outlets spreads west, Startup Hall is hoping to draw students into entrepreneurship and attract startups to bring growth and prosperity to the neighborhood. Nathan Daum, the program's startup manager, said he envisions "gleaming skyscrapers" that will house offices and residents near the school.

But Daum is a city planner by education, and he said one of Startup Hall's goals is to make sure the whole neighborhood prospers alongside the nascent businesses it attracts.

For example, nearby University Way, known as The Ave, is an iconic strip of restaurants and two- and three-story shops that Daum wouldn't want to see turned into high rises. He hopes this can be addressed in part with zoning. "That would help in retaining that character and diversity of businesses," he said.

Pulling the trigger

Whether the city and university can harness a tech boom for good, the race for entrepreneurial success has begun in earnest here. That's in part because the region's two biggest tech companies have fostered a pool of skilled tech workers who are starting their own companies.

Sandi Lin, an alumna of Amazon, co-founded a software company called Skilljar. Three out of the other five employees also came from the online retail giant. Their first investors were colleagues at Amazon, and they're all relying on the skills and contacts they built up at the company.

"It's a strong credential," Lin said.

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Jedd Parker of Rain City Promotions is one of several entrepreneurs who rent office space at WeWork, hoping for "serendipitous collisions" with likeminded business people. Laura Hautala/CNET

When asked about the local tech scene, Lin listed seven other startups off the top of her head that recently got funding from investors.

Avi Cavale worked at Microsoft for more than 11 years before founding Shippable, a company that sells software that streamlines the process of producing -- you guessed it -- software. He also relied on personal contacts at his job with the tech giant to get some of his initial funding.

While starting a company was very different than working for a massive company, the demanding atmosphere at Microsoft helped prepare him to be on point for his customers two years into the life of his business, he said. And others are interested in following his lead.

"I get invited to quite a few events about transitioning from large corporations to startups, and I feel like most of these events end up with 80 to 100 people," Cavale said. Far fewer are ready to "pull the trigger," he said, but the interest is there.

That's evidenced in the South Lake Union location of WeWork, a co-working space where small companies rent office space and network in break rooms with ping pong and foosball tables. WeWork, which has locations all over the country, knows tenants want to take advantage of "serendipitous collisions" with other entrepreneurs to build partnerships and foster ideas, said Gina Phillips, who leads the company's community team in Seattle.

Branching into new neighborhoods

Driven out of Amazon's atmosphere by skyrocketing real estate prices, many startups are setting up shop in cheaper parts of the city. These pioneering firms are already proving to be a spear tip for further commercial development in otherwise sleepy places.

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Sandi Lin co-founded Skilljar after leaving Amazon. Laura Hautala/CNET

Pioneer Square might be the perfect example of this. Skilljar and Shippable both operate near the neighborhood, which is just south of Seattle's famous Pike Place Market. Sitting on the hill that rises from Seattle's port and and ferry terminals, the area is a great place to find tourists, fishmongers and residents seeking out social services. There aren't a lot of office towers there -- for now.

Skilljar keeps its small office in a characteristic five-story brick building on the broad First Avenue. Next door, another brick warehouse building bears the painted legend "Paul Bunyon Outer Wear," the name of a long-defunct business. Skilljar's furnishings are the height of startup chic: tables and desks nailed together out of old wooden doors and beams. Next to the pale blue walls of the office, they bring to mind loft beds in a dorm room, or perhaps a rural yard sale. But behind their building, a new tower is rising.

That tower's owner will be Weyerhaeuser, a lumber services company that has been in the region for more than 100 years. It's not a tech company, but it's relocating from the suburbs to be close to skilled workers like the ones at Skilljar and Shippable.

A tech scene decades in the making

The entrepreneurs follow on a long history of successful technology companies that have called the Seattle area home. Microsoft, based in nearby Redmond, has anchored this trend since 1980. The region got the second of its current tech giants when Amazon started up in Seattle in 1994. What's more, T-Mobile's US operations are headquartered in Bellevue, the city next door to Microsoft. Expedia and Zulily are also in the region.

One of Washington's current US senators, Maria Cantwell, built her 2000 election war chest off the success of music download company RealNetworks, where she worked and owned stock options. Though she'd previously served in the state legislature, she was eyed at the time for being the first "dot-com millionaire" to successfully enter national politics.

Cantwell's 2000 campaign contained an early rustle of the concerns voiced today about the rapid growth successful technology companies can create in a region. She stumped on the idea of increasing access to Internet technology throughout the state, decrying the "digital divide" that held back commerce and job-seekers in places like the more rural eastern half of the state.

To this day, planners, politicians and activists spar over just how to make sure leaps forward in technology help a whole region prosper. Seattle is no exception.

Funding woes

The thing Seattle doesn't have, the thing that would complete the tech boom ecosystem, is an overabundance of venture capital investors. Seattle entrepreneurs are armed with arguments for why they're a safer bet than a lot of Silicon Valley startups. The cost of hiring isn't as high here, engineers are happy to live in a state where there's no income tax, workers in Seattle are more loyal, and company valuations tend to be more realistic, they say.

Compare that to Silicon Valley, Lin said, where trying to win over a prospective engineer can be like a "knife fight" with other companies.

But they also concede that firms that might fund their ventures aren't as eager about them as they could be. Not enough startups are getting checks in the $500,000 to $1 million range from funders once they've developed a prototype of their product and proven it fits a need in the market, Lin said.

One of the entrepreneurial community's current hopes is that fewer interested funders will require them to move their businesses to Silicon Valley. If they get to stay after proving their worth, Seattle will likely be making room for even more growth.