Startup Guy Still Misses Seattle

Don’t Sleep on Seattle as #2 Startup Market for Founders

When people hear my founder journey (both through my companies and the locations I traveled with them), I often get asked: “So which was the best — where would you pick to start your next company all else being equal?”

It’s a good question. Depending on the date, my mood and my current challenges I may give a different answer. But the real crux of the question is “where’s the best place for a startup founder to build her companies?” Not which is the best startup city or has the most venture capital firms — but where would I as a founder want to start up?

The Easy Way: Ranking by VC Dollars

It’s somewhat easy for people to rank the quality of a startup market by one single number: amount of VC dollars invested.

It’s easy because the data is easily captured, there is a presumption that every dollars is an equal proxy for the outcomes it *should* produce, and metrics about outcomes and exits are lumpy, challenging and easy to fight about. And frankly this approach biases regions where there are stronger pools of capital — namely where VCs are located as arguably there is a greater visibility in the companies in your backyard than those across the country and vice versa.

And if you are purely looking at dollars and access to dollars, then it’s an easy choice (like no choice at all). But here’s the thing… building a business that is venture-backed is the exception, not the rule. And honestly I believe the next big wave of startup building (think what we used to call “lifestyle businesses” — the million dollar plus businesses primarily built with tech but without VC) won’t be on the backs of venture. Building great SaaS businesses doesn’t always take venture. It takes some startup capital (like most businesses) but even that is less than before.

And I’m not saying VC dollars is a wrong measure — it may be the best measure to determine the overall health of a startup ecosystem. Investors go where they can find good founders and companies. There is alignment there for sure. But once you get past the Bay Area, all the other ecosystems are a bit more “clustered.” Does that make LA better than Boston? Or Seattle worse that NYC? Hard to say…

But to me that’s only part of the story — especially when you think of where founders want to be. Remember, venture-backed startups are a small piece of the market for founders AND frankly not a great way for the ‘median’ founder to create wealth. So let’s ignore venture dollars as a single metric to pick where is best for founders unless it is 100% clear you are only starting venture-backed companies. Then it’s probably easier to raise if you live in SF and have all the great stuff needed to raise venture (great team, traction, big market, huge vision, etc.)

The Fight for #2

So assuming you don’t want to live in SF (maybe you are not that interested venture-only businesses and let’s say cost of living is too high for you). Then who’s next?

Most people would say SF, NYC, LA, Seattle plus Boston are the top five startup ecosystems — although Twitter can offer some debates about who is rated where after the Bay Area. You’ll often also hear Austin included in that group and it’s probably the one I wrestled with the most to exclude from the “Fierce Five”. But I picked 5 and am sticking with it (based on Dave McClure’s tweet below).

In many ways, I got my start in #SeattleTech. Lived in Seattle for five years and learned a ton about the game there. I left and cofounded Zaarly in the Bay Area and got a taste of living and founding inside the vortex. Again, great experiences and taught me so much. I had briefer stays in LA (Zaarly was actually started at a Startup Weekend in Silicon Beach at CoLoft, RIP, but we went there regularly) and NYC (we opened an office in NYC for about six months and so I was there for about a week or two each month during that window.) And most recently I’ve spent the past 3 years in DC but had the good fortune to travel regularly to places like Research Triangle, Atlanta, Baltimore and Chicago.

And while I’ve enjoyed being in places like Research Triangle, NC, Atlanta, Chicago and even DC, I wouldn’t necessarily say those cities are quite like being in the five biggies. Nothing wrong with them and honestly I’d say I’ve been very very impressed particularly by Research Triangle and Atlanta. My time in Austin has been limited to SxSW, so not sure I can even fully include Austin in my analysis. But let’s just stick to the “big five” for the purposes of this discussion.

Ranking Cities on Founder Potential

Where among the “second four” would I want to start my next company? I say all of this with the caveat that it’s my opinion alone (and honestly can’t fairly evaluate Boston since I have spent too little time there). But I’d pick Seattle if I had a choice again.

There are definite downsides to Seattle. Capital is hard to come by comparatively. Talent is getting tighter thanks to Amazon, Microsoft and the other companies setting up outposts there. And it’s on the edge of the world (traveling to the East Coast is a total bear).

But for me one of the single most important things about starting companies is building a community of peer-founders. And while everywhere has great people, I found the ecosystem of Seattle founders to be one of the most embracing ever.

I think it has the highest density of humans with the right Founder DNA. And the reason that is important is being a founder is the loneliest job out there. So if you don’t have founders you can be open, honest and embracing with… I think you are toast.

If you’ve read any of the stuff from Founder Institute about their study of founders, they identified 4 main criteria: (a) professional experience, (b) high fluid intelligence, (c ) high openness; and (d) moderate agreeableness. I think Seattle scores highly on #1, #3 and #4 among the founder ecosystem, making it a great place to be a founder (ie., finding a group of likeminded people who can support you on your journey.

Source: FI.co/DNA

Here’s the interesting thing about Seattle comparatively… whatever you think about Amazon and Microsoft, those organizations have trained people how to build and run scaled (and scalable) organizations. And as a result that type of experience is deep and rich in Puget Sound. That makes a difference — being able to find someone who knows what it’ll take. That professional experience is unique and powerful when building technology-centric companies. I’ve noticed in newer hubs, that depth just doesn’t exist.

Second, in comparing Seattle/SF with the East Coast, I think the openness is wildly different. It’s not that people are jerks or anything on the East Coast, but it’s simply that there is a slight tinge of fear/doubt/uncertainty around total transparency or openness among fellow founders I’ve hung with in NYC, DC, Baltimore, Atlanta or NC. All really good folks, but just more skeptical about sharing real information with their peers. Not so in Seattle or SF. In fact, I still have groups of friends in both places that communicate regularly and share openly about their numbers, challenges and details. That’s what you need and was one of the more challenging things for me to break into when I moved to DC with my wife.

And finally there is something cultural about moderate agreeableness, especially in Seattle. Seattle has a strong Norwegian cultural bend to it. If you’ve ever been to Seattle, you’ll quickly find that people don’t honk at you. They don’t jaywalk. And they typically don’t say negative things to your face. That can be annoying for a new transplant, but it’s helpful when you need a bit of hope when launching what feels like a constantly failing endeavor. And it’s something that Seattle has in strong supply.

Seattle, the Emerald City

The debate on Twitter that I screen-shotted above is one of many I’ve seen. The crux usually revolves around comparing Seattle to NYC or LA or Boston. Lots of people were celebrating #LATech after the Dollar Shave Club exit. But Seattle folks were quick to point out that while a $1 billion exit is nice, Seattle has been creating more than its share of publicly traded tech companies.

Is one thing right or is another thing wrong? Who knows, but I think my pal Todd Sawicki is right — Seattle seems to have a really strong hit rate, but maybe the absolute number of initial investments is just low by comparison.

Just this week another company most people have never heard of outside of the enterprise space filed to go public. It’s another example of a strong set of founders with a great pedigree who just keep on doing what they do… and when I was there, one easy introduction led me to lunch with one of the founders. Was different and what made/makes the city special.

In the end, there’s no right or wrong place to start your company. But if you are debating what accelerator to join (picking one in Seattle or LA or somewhere else) or figuring where you want to live to get in the game, it does mean you should think about the community of founders — not just VC dollars. Be sure to look at the founders that’ll become your community of peers. While I definitely admit I had a more time to develop these relationships, I think that Seattle offered me something unique and critical as I learned how (and keep learning how) to be a startup founder.

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