Seattle, the startup tech hub?

Over the last several weeks, Seattle has earned some coverage in The Wall Street Journal, The Information, and The SF Chronicle about our ranking as a “tech” city, or more directly as an alternative to San Francisco.

It seems like Seattle has been the city of potential since I was a kid growing up here in the shadow of Microsoft. What might all those talented (and wealthy) tech workers leave Microsoft to create? But it’s never really come to pass.

When I first got to know Stewart Alsop (I am now a partner at Alsop Louie Partners), he asked me: “So are you in Seattle by choice?”

I remember being surprised by the question — but I shouldn’t have been. San Francisco is the uncontested king of venture-backed startup activity, and despite all the ink about New York, Miami, Seattle, Los Angeles, or wherever else, I think San Francisco will remain the heart of the industry for the foreseeable future.

I am in Seattle by choice, and I remain enchanted by this city. So it’s cool to see Seattle move higher in people’s minds as a place to live or a place to work in tech and a place to start a company. But that thinking is not universal.

I was on a call earlier today with another investor who spends about half the year in San Francisco. “I love Seattle, and it’s where my family is,” he told me, “but the ecosystem is thin.”

He’s right — for now.

I spend a fair amount of time in San Francisco as well. There is a vast cultural difference between Seattle and the Bay Area for the time being. The Information has it pegged:

Linda Lian, co-founder and CEO of Seattle-based startup Common Room and a former Amazon product manager, told me that Seattle AI excitement is “more centered around ‘how do we apply AI technologies to killer features’ and less about leading with AI,” or launching a startup entirely focused on generative AI. To that end, Common Room is integrating AI into its business software product. “Seattle is a little bit more practical than the Bay,” she added.

She’s right. That’s one reason why Seattle has long been relegated to a second-tier status among tech hubs, despite having a fantastic university churning out great engineering talent and several mature tech giants nearby. The area’s techies are less willing to take the leap into entrepreneurship, at least compared to San Francisco techies, founders say.

Some of this has to do with how many Seattle tech workers are immigrants who rely on their companies for sponsorship to live in the United States. Sometimes they have kids who were born here and that adds extra risk to the equation, because losing your Visa means a pretty big family disruption.

That said, as more people move to Seattle, the culture around risk-taking may shift. The University of Washington is brimming with new programs and opportunities like DubHacks Next, a student-run accelerator that produces more and more interesting teams each year. This region has some deep experience in tech fields that are likely to bloom over the next decade, like health, AI, and games.

Also, the pandemic changed the rules on building startup teams. Now you can recruit top-level executive talent living in San Francisco for a startup based in Seattle, and maybe eventually that executive might choose to move here. You don’t need the whole team to be here, you just need enough of the team to be here.

The Wall Street Journal cited work from The Burning Glass Institute, which ranked Seattle as the most cutting-edge large city:

The methodology they describe basically amounts to talent density in fields that are in high demand today. So Seattle is home to lots of tech talent with experience in the most in-demand fields like AI and cloud computing. These same skills are likely to be at the vanguard of the most interesting startups.

In short, I think we are set up to succeed, and I continue to meet really interesting teams in Seattle who are working on exciting and potentially impactful companies. I don’t think anyone is going to replace Silicon Valley, but I do think that we are poised to benefit from great innovation and company building in other cities in the United States, and Seattle should be one of those other cities.