Seattle is the world's cloud capital -- and not just because of its overcast winter weather. During a panel at this month's iCONIC event in Seattle, Julie Sandler, principal at Madrona Venture Group, said that the area was the world's cloud capital, with two of the industry's biggest players, Amazon and Microsoft, in residence.

 inline image

I'm always eager to learn more about the cloud -- and also about the Seattle area, which has been my home for the past year and a half. So I followed up with Sandler to ask what (besides the presence of the two big cloud players) makes Seattle the cloud capital, and what that means to entrepreneurs. 

Here are her answers. They explain why Seattle is a great place to consider if you're thinking of starting a business and wondering where to locate it.

1. There's a lot of cloud expertise here.

"If you look at where cloud is happening -- where the talent, innovation, and opportunity is -- it is hard to deny that the worldwide center of gravity is here in Seattle," Sandler says. Not only are Microsoft and  Amazon headquartered here, Google Cloud has located a a large part of its engineering team here. "You can even look at VMware, in many ways also a key player, and trace the critical members of its leadership team, including its founder, back to Seattle," Sandler says. 

"The talent is simply here," she continues. "If you believe that cloud is the next critical platform that will power the world -- and I do -- then the reality is that Seattle holds the ammunition."

2. A lot of local startups expand on the power of cloud.

"There are massive ecosystems built around these cloud platforms," Sandler says. "You can buy a bunch of individual services and assemble them in a custom way for your company, and then build smart applications on top." 

Many local companies help enterprises do this, and also help power key applications, she adds. "Not surprisingly, this kind of innovation in cloud is also an area where Seattle leads. Companies like 2nd Watch and Chef, both based here help with this. Apptio, which helps CIOs better understand and manage use of IT tools such as the cloud is another high-growth company here." Big companies have  purchased several local early-stage innovators in this category, she adds.

3. The cloud industry is set for massive growth.

Seattle once had a rep as a boom-and-bust town that might experience rapid growth but could also hit the economic skids quickly, for instance if Boeing had layoffs. Not anymore, Sandler says, because the cloud industry is headed nowhere but up.

"The spend on cloud is not going anywhere," she explains. "Data management, storage and processing is a source of competitive advantage for frankly most companies, and enterprises are only going to accelerate their spend around these services and solutions as time goes on. Analysts see cloud and related software and services growing to over half a trillion dollars by 2020."

Being the cloud capital makes the city somewhat recession-proof, she adds. "As a company that wants to stay competitive, you simply can't stop spending on cloud or on managing your data. Regardless of what the future holds, this gives Seattle a nice competitive advantage as a city."

4. Seattle's business ecosystem is more diverse than you think.

"Cloud is just one of many verticals that make Seattle a vibrant community," Sandler says. "We have robust talent, innovation, and company wins across ecommerce and retail, data technology, software, health care, biotech, travel and hospitality, real estate, telecom, food and beverage, and many more."

In fact, if you think the area's biggest employers are cloud, or even high-tech companies, you're only partly right. The biggest , unsurprisingly, is Boeing, with about 80,000 employees. The second biggest is Joint Base Lewis-McChord, a massive combined U.S. Army and Air Force installation. Third is Microsoft, and fourth is the University of Washington, locally referred to as "U-Dub." Amazon comes in fifth, with 22,000 employees.

5. It pays to be located near your cloud provider.

"There is a home court advantage in building a business in the same place as Amazon, for instance," Sandler says. "Like Microsoft, the company is friendly to startups, serving as a customer for many early-stage enterprise-focused companies.  It also doesn't hurt to call the guys who power your company's infrastructure and data capabilities 'neighbor.'" 

Amazon Web Services leadership goes out of its way to create strong relationships with local companies, she adds, to support the local innovation community. "Microsoft and Amazon are also, incidentally, both active local startup investors -- and what's more, are fairly acquisitive," she notes. 

6. Seattle is still relatively affordable.

This wasn't among Sandler's arguments, but it's worth considering. According to the website Rent Jungle, the average rent for a one-bedroom apartment in San Francisco is just under $3,100. The average rent for a one-bedroom in New York City is just over $3,100. The average rent in Seattle is $1,604. 

The city is vibrant, cosmopolitan and multicultural -- and for now, you can still afford to find a place to live. What more could an entrepreneur ask?