How to Start a Business in Seattle
Much like Google and eBay are synonymous with Silicon Valley, Seattle has long been known as the company town that launched the likes of Boeing, Microsoft, Amazon, and Starbucks. But, while these companies have employed quite of few of Seattle residents, Seattle also has a strong and growing entrepreneurial community that has contributed greatly to the profile of the city within the past decade.
While there may appear to be a significant divide between the larger public sector and the small private sector in Seattle, there is actually a good deal of camaraderie between start-ups and their bigger brothers, according to local entrepreneurs. In short, Seattle is a great place to be an entrepreneur, and the bigger companies have much to offer start-ups in the way of resources and even ideas. We've gotten tips from Seattle-based entrepreneurs on how to navigate the business climate of the city, and benefit from the presence of your bigger neighbors.
Starting a Business in Seattle: Identify Needs That Larger Companies Might be Overlooking
Eric Best, the founder of Mercent, a provider of online marketing technology designed to help retailers with e-commerce strategy, hit on the idea for his company while working on a business-development project for Amazon in Seattle. While Amazon excelled at becoming the preeminent online shopping platform for consumer retail, it wasn't focusing any efforts on helping the retailers navigate the increasingly complex electronic selling marketplace, Best noticed. Best determined that most retailers selling products through e-commerce platforms could benefit from marketing tools that would increase their business opportunities online.
"In starting Mercent, we were validating those customers needs by looking at what established players like Amazon are focusing on and then figuring out where they might not have the agility or bandwidth to solve a particular problem," says Best. And, because of Amazon's size in the market, Best says they are actually creating a sense of urgency around Mercent's online marketing services.
Locating a hole in a particular market and then finding a way to fill it may seem like common-sense advice to any entrepreneur, but several software and technology start-ups in Seattle have emerged as a result of observing needs that the larger, Seattle-based companies in that field have created. Beside the big three anchor companies – Microsoft, Amazon, and Starbucks – Seattle is home to many sought-after global brands including retail outfitters REI, K2, and Nordstrom, as well as engineering giant Boeing. And while a good majority of Seattle entrepreneurs have gained experience by matriculating from those companies, you don't have to be a former insider to benefit from the presence of these businesses.
"These companies are here in the region and they're investing in research and pursuing exciting new areas in innovation, which presents a lot of opportunities for entrepreneurs to build a complementary business," Best says. So, start thinking like an entrepreneur and look for ways that the big guys can be an asset to your start up.
Starting a Business in Seattle: Find Groups That Offer Support and Inside Knowledge
One of Seattle's unique characteristics is that networking can actually be intimate. Often in bigger cities, there can be an overwhelming number of entrepreneurs trying to meet each other and make connections, and a small business can often get lost in that maze.
"One of the great things about Seattle as a city, and especially within the entrepreneurial community, is that it's without pretention," says Dave Hanley, the co-founder of Banyan Branch, a social-media consulting firm based in the Fremont neighborhood of Seattle. "The business community here is very open and they just let you in," Hanley says.
So, if you're an entrepreneur that's just getting your feet wet, or even if you've started your company and you're seeking some specific advice, chances are you can find a local networking group or organization where you can get personalized attention from more established entrepreneurs, and even the investor community. The more you put yourself out there, the better, says Hanley, and there is no such thing as an "in group" that wouldn't welcome you to join.
Here's a list of local organizations to check out, and what they have to offer for entrepreneurs:
Washington Technology Alliance: A statewide non-profit made up of leaders in a variety of technology-based businesses. The group holds educational and policy events that entrepreneurs can attend and get to know other business leaders working in the technology space.
Alliance of Angels: One of the programs of the Technology Alliance, this non-profit organization is made up of angel investors that focus on funding early-stage technology companies in the Pacific Northwest. The group holds regular pitch clinics for entrepreneurs to help prepare those who are planning to seek out venture capital for their company.
Best pitched his idea for Mercent at a meeting of the Alliance of Angels, and as a result of the positive feedback he received, he had a better idea of the path he wanted to take when it was time to pursue capital for Mercent. "I leveraged the program in getting some early feedback on my business plan, which is probably those most valuable thing an early stage entrepreneur can do," says Best.
According to Hanley, who also attends Alliance of Angel events, the local angel community in Seattle is very accessible, and many of them are more than happy to meet with you and discuss ideas, or at least take a phone call. Even if you're not sure you want to take investment capital, Hanley says it can be valuable just to connect with some angels in the local community. Besides getting involved with Alliance of Angels, another good way to get familiar with Seattle's angel community is to talk to other companies that have angel investors and ask them about their experience. "Talk about your business and see if there is someone that another entrepreneur would recommend talking with," says Hanley.
Hops & Chops – A small group of Seattle entrepreneurs that gets together for weekly happy hours to socialize, provide peer support, and just talk shop.
Northwest Entrepreneur Network – A group dedicated to helping entrepreneurs in the Northwest connect with each other, and provide them with the resources needed to succeed. In addition to an abundance of seminars that offer coaching and mentorship, the NWEN also has some popular social gatherings to get entrepreneurs together on a regular basis. Their Breakfast Buzz and Pub nights are held monthly at various locations in and around the Seattle area.
Zino Society – A membership-based organization designed to connect investors with entrepreneurs seeking funding. Their regular networking events often involve wine tasting and socializing with restaurateurs, and brings together roundtables of some of the most sought-after investors in the Seattle area.
Something else to keep in mind: While there are many advantages to the closeness of the Seattle entrepreneurial community, Hanley also cautions against companies becoming too regionally focused. "It's not like being in New York," says Hanley. "It's important to remember that the size of the Seattle market is finite." Therefore, if you're looking to grow your business beyond the Seattle area – and most start-ups eventually do – don't limit yourself to only making connections in the city.
It's a good idea to use entrepreneurs in the community as a launching pad to get to know other contacts or VCs in cities around the country.
Starting a Business in Seattle: Get to Know the Offerings of Each Neighborhood
Another way to become engrained in the Seattle entrepreneurial community is to choose a neighborhood location for your business that's made up of other link-minded companies. While geographically the city may not be that expansive, there are plenty of unique neighborhoods that offer something for everyone.
Best, who chose the neighborhood of Belltown as the site for Mercent, says the most important factor for him in picking a location was access to talent. "Belltown is a popular community with the types of employees that we're looking to attract. They're tech savvy, early-stage software engineers and project managers that have the right academic credentials," says Best. The neighborhood also has a trendy feel and is in close proximity to downtown, both pluses in Best's mind.
Two other neighborhoods in particular, Fremont and Pioneer Square, tend to attract quite a few startups. Fremont, which is where Google and Adobe have their Seattle offices, is well located across from the Space Needle and Lake Union. The area is a little bit eclectic, but has seen a lot of growth in the past few years. It is also home to a flourishing artist community. Pioneer Square, which is on the southern edge of downtown Seattle, is one of the oldest neighborhoods in Seattle. Because rent is typically more affordable in this area, it can be a great place for a small start-up to get its bearings, and to find a cool loft space that fosters employee interaction. The neighborhood is also a hub of sorts in relation to the rest of the city. All the train and bus routes terminate in Pioneer Square.
"Go around to different neighborhoods and find the one that's right for you," says Hanley, whose Banyan Branch office is located in Fremont. There are also options for start-ups that aren't quite ready to commit to an office space, or don't need to because they are operating on a project basis and growing or shrinking their staff frequently. One of Banyan Branch's clients has space for his company at a shared workspace called StartPad. The company owns space in a building downtown and you can rent a given number of desks on a month-to-month basis.
Often getting out in the neighborhood and interacting with other businesses can fuel growth, too. With Seattle being a coffee-focused town, there's an abundance of coffee shops around Seattle that double as conference spaces for many agile start-ups. Best says he often holds team meetings at a coffee shop down the street from Mercent's offices, as a break from being inside the building, and as a way for his employees to get to know the neighborhood they work in and build a comfort level there.
Starting a Business in Seattle: Don't be Afraid to Reach Out to the Big Guys
By virtue of the smaller size of Seattle, it is less of a beast than places like Silicon Valley when it comes to integrating with the larger companies there.
In many ways, the Seattle start-up community functions as an artery of the companies at the heart of the city. "Companies that provide specific services to the big companies that are here, often end up doing really well and growing quickly," says Hanley.
According to Hanley, Microsoft tends to be very supportive of local start-ups' products and services. "If Microsoft can get what they need from a local company, they seem to go with that," says Hanley. "They really help support the growth of local agencies."
Best had a similar experience in working with some of the big Seattle-based retail companies to build Mercent. He says one of the things that characterizes the decision makers in Seattle that isn't necessarily true of other tech hubs in the country, is that they are willing to take bets on start ups. "REI and Nordstrom were very supportive during our early stages of developments," says Best. "We worked very closely with them as early stakeholders in the business."
Without a personal contact, it can be challenging to get the bigger companies to notice you, but it's definitely not impossible. T.A. McCann, worked for Microsoft before founding Gist, an online service that helps people keep track of all their contacts in one place. His company's software is now integrated with Microsoft Outlook. McCann's advice when it comes to working with companies like Microsoft is to first do your research. Also, focus around what value your product or service can bring to a company like Microsoft. "Be very specific about what product group you want to align with because a company like Microsoft is very structured around their product groups, and you will have more success pitching directly to the right one," says McCann.
One avenue for companies looking to work with Microsoft is to go through its preferred vendor program. The program was set up so that companies have a way to reach out to Microsoft and a forum to describe and pitch their products and services. According to Hanley, whose company recently became one of Microsoft's preferred vendors, the process is very selective, so keep in mind that the application process could be rigorous. Still, Hanley says their efforts were well worth it and the experience of partnering with Microsoft has been exciting.
Starting a Business in Seattle: Be Constantly on the Lookout for Talent
The big software and tech companies continue to bring good engineers to Seattle, but a growing startup doesn't just need engineers. "A lot of companies that are based in the Bay Area like Google, Adobe, and MySpace, have also opened up large offices in Seattle," McCann says. "As a result, there is an abundance of all kinds of talent coming to this city. We don't just get great engineers, there are also HR professionals, and sales people."
Finding the right talent for your startup is perhaps one of the most important building blocks to success, and there are many ways to take advantage of the talent pool that exists in the city. Just by virtue of Microsoft, Amazon, and Starbucks being anchor tenants means that there will be a constant cycle of employees coming and going with the big companies.
"What those big three do is they recruit some of the most talented people from the best schools and companies in America," says Hanley. "They are making an investment in Seattle, because these are employees that typically stay in the city." As a result, many startups don't have much trouble finding qualified employees. Every company approaches hiring differently, but Hanley's advice to entrepreneurs who are looking to hire employees directly out of a bigger company is to look to those companies that are more inherently entrepreneurial. That way, you can be more certain that the candidate is committed to working in what often is a less structured environment.
Overall, among Seattle residents, there is a high satisfaction level with the type of lifestyle and professional options that the city has to offer. "There's a lot of independent thought and creativity in Seattle, and that makes it a very exciting place to be," Best says.
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