Commentary: Why we had to leave Seattle to build Box.net

Photo via Razvan Orendovici

Just to start off, let me say that Seattle is an amazing city. I definitely couldn’t have asked for a better place to grow up, and everyone I know loves it up there. But it’s not so amazing for professional sports and early stage startups.

Or at least that was the case in the summer of 2005, when the Mariners were well on to their way to finishing at the bottom of the League, and my co-founder and I were having similar luck chasing our dreams in the Northwest.

Box – which now competes with Redmond’s very own Microsoft SharePoint – had been started in early ‘05 from college dorm rooms in California and North Carolina. My co-founder Dylan Smith and I had both grown up on “the rock” (Mercer Island) but split apart to go to our respective colleges, expecting that we’d perhaps reconnect mostly during summers and class reunions.

But then the idea for Box came about, and we pooled our limited resources to attract early users and traffic.

The Box.net story is a reminder that Seattle needs to support young talent

When this worked, we decided to spend the summer in our hometown, working out of an extra room in Dylan’s house. From there, our knowledge about the tech world was derived from reading a few blogs (including John Cook’s very own Venture Capital Blog), talking with our faithful attorney (Dylan’s dad), and the extremely limited family contacts we could muster up between the two of us.

Needless to say, we didn’t have a lot of resources, so we hit the road to meet potential investors and possibly even early compatriots who would take on the world with us. And this is where fractures in the Seattle ecosystem started to emerge.

To be fair, 2005 wasn’t the most obvious time to be starting a new web company in Seattle, or anywhere for that matter. People were still reeling in from the damage caused by the dot-com bubble: Seattle loft offices were emptied, investors had pared down their interests, and the Emerald City was a ghost town as far as deal flow was concerned.

Aaron Levie

Sure, there were vague signs of new life elsewhere, but you had to be looking pretty closely under a lot of rocks to find it. Facebook had been launched a year earlier, YouTube was just getting started, and MySpace being acquired for $580 million was only days old news. And in Seattle, the tech landscape was still fairly bleak, and our presence certainly did nothing to change that.

Even so, we did end up getting more than a handful of meetings with investors, yet pitch after pitch we were treated like the 19 and 20-year-olds we were – lacking experience, lacking credibility, with only a starry-eyed vision for what we thought the future would be. Some investors in the Valley actually select for this, but we were just sent packing.

And while we had some pretty good early customer traction, it was apparently not enough to place a bet on. In response to all our pitches to angel investors and firms, we received a consistent stream of “No’s,” “No thanks,” “This is a neat project,” “We’re no longer making early-stage investments,” and “Come back when you have more users.”

Not all was lost, though. One exceptional break came from a managing partner of a legacy Seattle VC firm who decided to invest with a small syndicate of his friends.

It wasn’t your typical seed-stage round that you might see in 2011, but it was enough to keep us afloat and this particular investor deserves a massive amount of credit for going against the grain at the time. Weeks later, riding the momentum of our new luck, we got in touch with Mark Cuban, who subsequently put in a much larger check to help the business scale up even further.

Then things really started to change. We returned to school for the next semester of classes, but traffic and interest in Box began to rise, forcing us to choose between continuing our education or chasing our dreams full-time with no distractions.

After a few rationale-filled conferences with parents and friends, we dispensed with reason and decided to move to the Bay Area and build out Box as a real Silicon Valley startup.

Given the previous summer’s experience – running dry of contacts in the investor community, attending a few eerily quiet technology meetups, and making acquaintances with a disappointingly low number of like-minded and like-aged entrepreneurs (maybe a total of 1) – we knew right away that northern California was our next and best shot. And it lived up to nearly every expectation we had.

Literally within hours of settling into our new Berkeley digs, we were having conversations with local college students who were building companies. An unsolicited email to an early Facebook employee had us hanging out at their offices when they were hovering around a mere 50 employees. And weeks later, we were showing off our wares to the likes of Michael Arrington and dozens of other critical influencers.

Signing up for pitch events was a breeze, in fact there were a few too many if you wanted to keep your schedule sane. And after just three months of spending every ounce of energy we had on our company, we were already well connected to dozens of young entrepreneurs, prospective partners, potential employees, and eager investors within the Valley.

Welcome to Silicon Valley (Mark Coggins photo)

I suspect you couldn’t accomplish the same in two years in Seattle. At least not in 2005.

There’s just something in the air down here, and it’s not smog. That’s LA.

In the Valley, you’re basically drinking from an Ethernet-shaped firehose at all times.

Whether it’s the startup neighbors in your apartment building, or a waiter at your favorite restaurant showing off his new app, you just can’t avoid technology out here.

Whether you’re at Stanford, on Sand Hill Road, or at one of the thousands of companies that litter the 101, you are unendingly absorbing technology out here. It’s definitely not the lifestyle for everyone, but I can assure you Seattle doesn’t have a monopoly on people going hiking or skiing.

So that’s why we moved, and why we stayed. Now for some unsolicited feedback:

Perception is reality, and Seattle needs to work on both

I have faith, and there’s plenty of evidence to suggest, that in the past six years, much has been improved about the process of founding a company, raising capital, and building up a team in Seattle. The fact that off the top of my head I can name nearly a dozen Seattle startups — Zillow, Opscode, Redfin, Wetpaint, Payscale, HasOffers, LiquidPlanner, SmartSheet, Parallels, Yapta, Onehub – means that something is going very right.

And there certainly never has been a shortage of technical talent in the area, a point that hasn’t been lost on Zynga or Facebook in particular.

But that doesn’t mean Seattle’s job of igniting its tech community is over. On the whole, I would say not enough is known about the Seattle tech scene by outsiders, and even some insiders. Including one of the young entrepreneurs who left a comment in the last post on this subject:

“Being a 23 yr. old starting a company in Seattle myself, I still struggle to connect with a large number of young entrepreneurs like I would in SF. At times it seemed like there was nobody like us. It wasn’t until a techstars event that my co-founder and I found like minded 19-24 year olds.”

It caused me to wonder: Who’s driving the community up in Seattle? Who’s organizing the major events? Why hasn’t there been enough demand to warrant a TechCrunch Disrupt Seattle? Why do I hear about endless software conferences in New York, Boston and San Francisco, but not Seattle?

I promise we don’t need any more, but your absence is certainly felt. Why isn’t there an incubator program for U.W. students to get them before they funnel out to the Borg? Why isn’t there a legitimate Microsoft or Amazon mafia that stays in Seattle instead of spreading out elsewhere? Why isn’t there a Fred Wilson of Seattle blogging and pundit-izing incessantly? I can think of more than a few people who could take on this role, including Brad Silverberg and Bill Bryant. But I’m sure there are many others.

Also, why aren’t more Seattle startups going REALLY BIG?

Seattle has a rich history of introducing ground-breaking, game changing technology, and still harbors most of the people and energy that built these creations. Take advantage of this.

Unlike New York or LA, which are plagued with ecosystems of social media startups obsessed with changing the minutia of our lives, Seattle knows how to bring innovation to the masses. Hell, it got so bad that the Department of Justice had to step in. Now the DoJ just hangs out in Mountain View and Cupertino. Lame.

Of course that doesn’t mean Seattle investors get to just fund the startups that know they want to take over the world. Facebook didn’t at first.

Sometimes it takes a little nurturing, and a lot of small bets.

There shouldn’t be any shortage of talent or interest. You’re sitting on an untapped goldmine: there are hundreds of potential startups among the thousands of top engineers that have started their careers in the past decade at Microsoft or Amazon and the hundreds of entrepreneurial computer scientists and business students that churn out of UW every year.

If the goal is to build an entrepreneurial community that retains talent, generates return on investment, and goes through the cycle again and again, then Seattle needs vastly more of two things: great people inspired to start great companies, and risk-averse investors willing to fund them. And, actually, a third thing: communicating all this to the world.

All that said, from what I can tell, Seattle has changed dramatically in just the past few years, and is definitely on the right track.

I think if my co-founder and I were to go through the same process we did in ’05, today, there may have been a different outcome. But for now, we’re happy with our 10 months of sun.

Aaron Levie is CEO of Box.net, a Palo Alto, California-based startup with 275 employees. Editor’s note: GeekWire asked Levie to share some thoughts after we published the story “Box.net: A case study on why Seattle needs to hold onto young talent.”

Related: Seattle angel to rich Microsoft and Amazon alumni: Get off your duffs and start investing in startups

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • Christopher Griffin

    Great, great post. As someone who shuttles between Seattle, San Francisco, and Austin TX frequently enough, the Seattle/SF differences are well described here. I think momentum is growing in both Seattle and the ATX, especially since both locales are ever more embracing their particular characteristics and not just trying to “copy” the Valley in a purely replicative way, which was the anecdotal meme a couple of years ago. That said, I still have strong memories of working out of Coupa Cafe on Ramona in Palo Alto, after great partner chats with then 150-employee Facebook, then striking up a conversation with a stranger at the next table who saw me reading a book by Jeff Hawkins (founder of Palm, for starters), learning that he’d been friends with Jeff for years and was a co-founder of Evolved Machines, etc., looking to my left at a stop sign and seeing Marc Andreessen (side note: do not try to out-race him down Embarcadero) etc., etc. That said, I have similar, “smaller” stories sitting at Mozart’s in Austin. My hope is that Seattle & Austin don’t *just* become “outposts” for SF companies (although their presence is a net positive sign IMO)–it’ll be good for the overall ecosystem to see a lot of flowers bloom in different climates.

  • http://www.wac6.typepad.com William Carleton

    So well argued and written. The point that resonates most with me: “pitch after pitch we were treated like the 19 and 20-year-olds we were – lacking experience, lacking credibility, with only a starry-eyed vision for what we thought the future would be. Some investors in the Valley actually select for this, but we were just sent packing.” I’m of the opinion that there is more angel activity here than gets surfaced, but it generally does privilege entrepreneurs that have done tours elsewhere or have some sort of pedigree.

  • http://www.lonsblog.com Lon McGowan

    Aaron, we have used box.net exclusively for the past two years at iClick.  We love it and wish you all the best in your future endeavors.  Great story.  Just too bad you couldn’t build it in Seattle

  • http://www.facebook.com/people/Devin-Miller/100001051294818 Devin Miller

    Thanks for taking the time to write this post Aaron.  My experience fundraising in 2011 seems a lot different.  Seattle definitely is still quite sleepy compared to the Valley and the ecosystem is drastically smaller but an interesting thing has emerged it seems.  The divide between the Valley and Seattle seems to be shrinking making it easier for Seattle startups to raise money from the Valley but stay in Seattle. 

    Building a startup with 100% Seattle investors, mentors and employees may still not be feasible unless you already have the connections from a previous project. Good news is that it seems Valley investors are more willing to fund good projects out of the Valley and Seattle investors are getting better networked with Valley Angels and micro VCs.  

    When we went through fundraising this year and ultimately closed a $1.5M round we found a healthy base of investors and support.  We also found a very eager to invest group of Valley investors who had no problem with us staying in Seattle based on the strong local support we had.

    Seattle could do better though. 

  • http://twitter.com/scottporad Scott Porad

    First, I’m bothered that GeekWire even ran this article.  GW doesn’t need to be completely rah-rah about Seattle, but what value does this provide to anybody?  Essentially, it says that if you’re 19-20 years old with no experience then Silicon Valley is a better place to start a start a company…but it frames that in the context of how Seattle is lame.  Well, I think that’s lame.

    Second, this article is ridiculously subjective, so I’ll pick on just one of things said: 

    “Signing up for pitch events was a breeze, in fact there were a few too many if you wanted to keep your schedule sane…I suspect you couldn’t accomplish the same in two years in Seattle. At least not in 2005.”

    Now, I can’t speak for 2005, but I can speak for 2011.  Check out http://www.seattletechcalendar.com/.  Today, there are 11 events you could attend.  Yesterday there was 9 and tomorrow there are 5.  Pick your poison.

    Regarding startup events in 2005, I’ll return to my original point: what is the value of this article?  To talk about how 6 years ago the community wasn’t as good as the Valley?  Who does that help and how does that help them?

    • johnhcook

      Scott. I appreciate your perspective, but I have to disagree. As an old history major, I am of the belief that we have to know where we’ve been in order to know where we are going. I think Aaron’s post does offer an interesting perspective, and that’s why we included it here. 

      You are right that the ecosystem has changed a lot, and I’d argue for the better. (Aaron also mentions this too). But there are still things that are lacking, as pointed out so eloquently by Chris DeVore at Founder’s Co-op this week. 

      http://www.geekwire.com/2011/seattle-angel-rich-microsoft-amazon-alumni-duffs-start-investing-startups

      The cool thing is, we are in a position to do something about it. 

      The post has forced me personally to do some thinking about Seattle. How can GeekWire help create a better ecosystem by hosting a kick-ass event that draws attention and attendees from across the country? (BTW, we are working on this). How can we help highlight the stories of successful entrepreneurs and investors who might not otherwise get attention?

      As it relates to investors, I think the post could help spark others to step up, do their part and drive more money into the community to make sure we don’t “lose” another Box.net. 

      As you know, we spend a lot of our time at GeekWire to trying to focus on the cutting-edge technologies and cool entrepreneurial ventures going on in the region. And we are here to celebrate the next-generation of entrepreneurs (I’ve taken a personal interest in making sure they get the attention they deserve since I believe entrepreneurs under the age of 30 are critical). 

      Folks like this:

      http://www.geekwire.com/2011/19yearold-dropped-wharton-sleep-air-mattress-start-company

      And this:

      http://www.geekwire.com/2011/rewind-meet-15yearold-sold-tech-startup

      Anyway, sorry for the long comment. But I actually think this guest post is one of the most valuable commentaries we’ve run on GeekWire since we started.

      • Wesley Zhao

        I agree that the value of the piece is to show where Seattle has come since 2005 and how we still need to take steps forward. 

        I do not remember/know about the environment in 2005 but can say Aaron correctly pointed out we’ve come far from that but not far enough. Which is why if I decided to raise I would probably go down to the Valley because I think I might have a better shot there. But eventually would love to bring it all back to Seattle and be a part of the spark/growth.

    • http://twitter.com/rishtal Rishi Talwar

      For me, this article serves as an example of what we can do to keep our eyes and ears open to the next big startup here in Seattle. We should be reminded of this story so that in the future we don’t let a potential startup move down to the bay area. After all we want to grow our tech community, right?

      At the end of the article Aaron does mention this: ”I think if my co-founder and I were to go through the same process we did in ’05, today, there may have been a different outcome.”

      As a 22 year old UW grad, looking for opportunities in technology, I see this an inspiration more than anything to help grow the local tech scene by building a company in the future here or other means.

  • http://pop-pr.blogspot.com Jeremy Pepper

    Great post from Aaron.

  • http://pop-pr.blogspot.com Jeremy Pepper

    Great post from Aaron.

  • http://twitter.com/RedRussak ‘Red’ Russak

    I’ll keep this short: You hit the problem on the head. We have all the pieces, we’re headed in the right direction, but we’re not there yet. @twitter-15876737:disqus is right, it really is THAT EASY, but for some odd reason, people still want to complain. Working on fixing that. When I do, let’s go out, drinks on me!

    It’s easy to identify problems, it’s harder to fix them. Let’s see more articles proposing solutions and crowd-source responses. Looking forward to doing everything I can to help remove the complaints and increase the connections ;-)

  • Anonymous

    Well spoken and a good capture of the ‘emotional content’ of Seattle investor practices. It has long been said that Seattle investors are very good at ‘Pattern Recognition.’ They seek out and invest in what has worked before; the antithesis of the risk-taking investing needed to invest in young founders. 

    I agree, that what is needed for course correction is younger investors. A call to action to the youthful Seattle millionaires might result in a larger pool of resources. But just because they have the money doesn’t mean they will spend it. I know of at least three current Amazon employees who stash their millions in traditional investments. They are not sharing that wealth by investing in others. The money is earmarked for their own effort, post Amazon. They learned from the master. Fund your own effort until it gains traction and then go after investors. The money is cheaper and the  ease of getting it improved. 

    If Seattle does make that step towards investing in untried 20-something founders, a backbone of experienced/successful advisors will increase the probability of success. 

    I am not referring to investor advisors, I am talking about a cadre of 30 somethings working within established organizations who hit the bricks daily solving early stage product and project issues. Their expertise is current, real and extremely valuable. Creating easy access to that expertise may mean investors are more likely to invest in 20-something ideas and may also mean more successful start-ups.

    My last point is controversial. The ubiquity of entrepreneurial events is NOT an indication of access to money or cohorts. One must look at quality; what is the typical outcome from attending these events. Merely collecting contact information from kindred spirits does not make a receptive investor community. Nor does it speak to the quality of those connections. Not all young entrepreneurs are created equal… the really good ones are too busy creating to attend such events. IMHO.

  • Anonymous

    Well spoken and a good capture of the ‘emotional content’ of Seattle investor practices. It has long been said that Seattle investors are very good at ‘Pattern Recognition.’ They seek out and invest in what has worked before; the antithesis of the risk-taking investing needed to invest in young founders. 

    I agree, that what is needed for course correction is younger investors. A call to action to the youthful Seattle millionaires might result in a larger pool of resources. But just because they have the money doesn’t mean they will spend it. I know of at least three current Amazon employees who stash their millions in traditional investments. They are not sharing that wealth by investing in others. The money is earmarked for their own effort, post Amazon. They learned from the master. Fund your own effort until it gains traction and then go after investors. The money is cheaper and the  ease of getting it improved. 

    If Seattle does make that step towards investing in untried 20-something founders, a backbone of experienced/successful advisors will increase the probability of success. 

    I am not referring to investor advisors, I am talking about a cadre of 30 somethings working within established organizations who hit the bricks daily solving early stage product and project issues. Their expertise is current, real and extremely valuable. Creating easy access to that expertise may mean investors are more likely to invest in 20-something ideas and may also mean more successful start-ups.

    My last point is controversial. The ubiquity of entrepreneurial events is NOT an indication of access to money or cohorts. One must look at quality; what is the typical outcome from attending these events. Merely collecting contact information from kindred spirits does not make a receptive investor community. Nor does it speak to the quality of those connections. Not all young entrepreneurs are created equal… the really good ones are too busy creating to attend such events. IMHO.

  • Anonymous

    Well spoken and a good capture of the ‘emotional content’ of Seattle investor practices. It has long been said that Seattle investors are very good at ‘Pattern Recognition.’ They seek out and invest in what has worked before; the antithesis of the risk-taking investing needed to invest in young founders. 

    I agree, that what is needed for course correction is younger investors. A call to action to the youthful Seattle millionaires might result in a larger pool of resources. But just because they have the money doesn’t mean they will spend it. I know of at least three current Amazon employees who stash their millions in traditional investments. They are not sharing that wealth by investing in others. The money is earmarked for their own effort, post Amazon. They learned from the master. Fund your own effort until it gains traction and then go after investors. The money is cheaper and the  ease of getting it improved. 

    If Seattle does make that step towards investing in untried 20-something founders, a backbone of experienced/successful advisors will increase the probability of success. 

    I am not referring to investor advisors, I am talking about a cadre of 30 somethings working within established organizations who hit the bricks daily solving early stage product and project issues. Their expertise is current, real and extremely valuable. Creating easy access to that expertise may mean investors are more likely to invest in 20-something ideas and may also mean more successful start-ups.

    My last point is controversial. The ubiquity of entrepreneurial events is NOT an indication of access to money or cohorts. One must look at quality; what is the typical outcome from attending these events. Merely collecting contact information from kindred spirits does not make a receptive investor community. Nor does it speak to the quality of those connections. Not all young entrepreneurs are created equal… the really good ones are too busy creating to attend such events. IMHO.

  • Anonymous

    Well spoken and a good capture of the ‘emotional content’ of Seattle investor practices. It has long been said that Seattle investors are very good at ‘Pattern Recognition.’ They seek out and invest in what has worked before; the antithesis of the risk-taking investing needed to invest in young founders. 

    I agree, that what is needed for course correction is younger investors. A call to action to the youthful Seattle millionaires might result in a larger pool of resources. But just because they have the money doesn’t mean they will spend it. I know of at least three current Amazon employees who stash their millions in traditional investments. They are not sharing that wealth by investing in others. The money is earmarked for their own effort, post Amazon. They learned from the master. Fund your own effort until it gains traction and then go after investors. The money is cheaper and the  ease of getting it improved. 

    If Seattle does make that step towards investing in untried 20-something founders, a backbone of experienced/successful advisors will increase the probability of success. 

    I am not referring to investor advisors, I am talking about a cadre of 30 somethings working within established organizations who hit the bricks daily solving early stage product and project issues. Their expertise is current, real and extremely valuable. Creating easy access to that expertise may mean investors are more likely to invest in 20-something ideas and may also mean more successful start-ups.

    My last point is controversial. The ubiquity of entrepreneurial events is NOT an indication of access to money or cohorts. One must look at quality; what is the typical outcome from attending these events. Merely collecting contact information from kindred spirits does not make a receptive investor community. Nor does it speak to the quality of those connections. Not all young entrepreneurs are created equal… the really good ones are too busy creating to attend such events. IMHO.

  • http://twitter.com/alwaysbshipping Tom Leung

    If the feedback that Seattle VC’s aren’t willing to take enough chances on young entrepreneurs is true, maybe BillG or Bezos should fund a $500M Seattle-only angel/VC matching program?  

    This would allow the city to take more chances on new ventures with the sole purpose of jump starting the region’s entrepreneurial surge. For Bill or Jeff, I’d say help your town out.  Consider it an experiment / stimulus / community service.    

  • http://twitter.com/alwaysbshipping Tom Leung

    If the feedback that Seattle VC’s aren’t willing to take enough chances on young entrepreneurs is true, maybe BillG or Bezos should fund a $500M Seattle-only angel/VC matching program?  

    This would allow the city to take more chances on new ventures with the sole purpose of jump starting the region’s entrepreneurial surge. For Bill or Jeff, I’d say help your town out.  Consider it an experiment / stimulus / community service.    

  • http://www.rescuetime.com Anonymous

    Good post, though it’d be more relevant to hear about a startup that was exploring the ecosystem here this year rather than 6-7 years ago.  My biggest takewaway from this story is that I’m glad Seattle has come as far as it has– 2005 sounds pretty bleak!

  • Crashintoty

    Seattle has managed to be a forever aging city with a bad habit of losing its youth (young transplants do not count). She doesn’t want things to change, shies away from ambition and cringes at the thought of achieving celebrity status. This has been her personality for most of her existence… why is there any surprise she’s not putting out?

  • Crashintoty

    Seattle has managed to be a forever aging city with a bad habit of losing its youth (young transplants do not count). She doesn’t want things to change, shies away from ambition and cringes at the thought of achieving celebrity status. This has been her personality for most of her existence… why is there any surprise she’s not putting out?

  • Guest

    I’m boggled by all the folks agreeing with the author’s opinion about Seattle’s startup scene. They got funding from a Seattle VC!  How is that evidence that they couldn’t build their startup in Seattle?  I’m totally cool that they wanted to move to the Valley, but the notion that it was because they couldn’t build their startup here in Seattle just isn’t supported by the evidence in this story. 

    • Frank

      I agree.  Mr. Louie may well be right, but he hasn’t proven it here.

  • Ron Faith

    I have had the pleasure and honor of working in Seattle-based startups since 1997. Before that, I worked in Silicon Valley. I always find the Silicon Valley envy discussions curious. Lately, these discussions seem to be more heated. The debate always seems to degrade into “chicken and egg” arguments. Recent example – “we need more young angels to fund young entrepreneurs, but we need to have more successful young entrepreneurs so they have the capital to become young angels”. Seattle is a successful, entrepreneurial community. We can build it into a even more successful entrepreneurial community. The path that we take will be a uniquely “Seattle” path. Referencing and following the Silicon Valley ecosystem is informative, but not likely to produce the same result. We have unique assets and strengths as an entrepreneurial community. We should seek to capitalize on these assets and strengths and not pine away for why we don’t have all of the assets of silicon valley.  As Yoda would say, Seattle entrepreneurs need to “do or do not, there is no try.”

  • Brad Silverberg

    Thank you, Aaron, for your candid post.  To take the time to write such a heartfelt post shows how much you still care about your hometown.  You’re an inspiration, and your post should motivate us here in Seattle even further to support our entrepreneurs, so that the next Aaron Levie will not get away.  Luckily, folks like Glenn Kelman and Rand Fishkin have stayed, and we need more.

    Your post is also a good reminder that building great startups is first and foremost about the people.  And having the insight and courage to support people with extraordinary talent, however young they may be or wherever they live.

  • Guest

    Building a great community takes a lot of work and risk taking over a long period of time. Seattle has earned its way to relative stagnation after a decade of conservative, smug, arrogance. You have to wonder why investors and business leaders weren’t panicking at the horrible state of the scene here 5-7 years ago. You can draw a direct line between that, and where we are today. 

    It’s getting better, but it’s got a very, very long way to go. I personally would love to help, but the advantages of the valley are overwhelming at this point. It’s very hard to have a great career here outside of MS and AMZN, and I didn’t make tons of money at MS or Amazon back in the day. I’ve got to go to a funded company. That narrows the list dramatically. Then, if you want a company that’s growing, and that isn’t some sort of turnaround, well, it narrows further.

    Finally, I can’t see working for a company that’s the just like several in the valley, but without the startup experience, access to media outlets, partnerships, or capital that their competitors have.

    The state of Seattle does benefit Microsoft and Amazon tremendously, however. I’d wager that thousands of people are locked up there with no where to go because they can’t work for free. That’s why the outposts move in. Not startups, but remote engineering offices. They’re practically offshore development centers from the perspective of the companies. People in those offices are certainly not getting the experience and exposure they need to build new fantastic companies.

    Humility, honesty, and hard work applied diligently over the course of several years might fix things. But the later it gets, the more work and resources that are required, and catching up just gets harder and harder.

  • Peter H

    Nice piece – but too long.

    So many of the issues here are low duty cycle.  Funding happens rarely, you can hop a plane to the valley (SF VCs will give us money too), be done with it, get back to coding.  Also yes having startup types in your apartment is nice but the cited NY or Boston don’t really have that either – it’s unique to the valley.

    I think the one durable advantage that affects you every day — and Brad mentioned this too — is People.  Can you get great people.  I’ve been doing this for 20 years and I have a strong network, and I still find it hard.  Maybe as a 19 year old with no network you find it impossible. 

    For the Seattle startup scene to be great we need to have great people.  As a state we need to retain the things that make smart people want to live here.  Part of it is a virtuous cycle because smart people want to live near other smart people.  But also at least for me that includes a great natural environment, and not having to fork over 10% of your earnings to Sacremento.

    I think this article could have been more accurate and compact if it just said it’s about having the highest concentration of great people.

  • Peter H

    Nice piece – but too long.

    So many of the issues here are low duty cycle.  Funding happens rarely, you can hop a plane to the valley (SF VCs will give us money too), be done with it, get back to coding.  Also yes having startup types in your apartment is nice but the cited NY or Boston don’t really have that either – it’s unique to the valley.

    I think the one durable advantage that affects you every day — and Brad mentioned this too — is People.  Can you get great people.  I’ve been doing this for 20 years and I have a strong network, and I still find it hard.  Maybe as a 19 year old with no network you find it impossible. 

    For the Seattle startup scene to be great we need to have great people.  As a state we need to retain the things that make smart people want to live here.  Part of it is a virtuous cycle because smart people want to live near other smart people.  But also at least for me that includes a great natural environment, and not having to fork over 10% of your earnings to Sacremento.

    I think this article could have been more accurate and compact if it just said it’s about having the highest concentration of great people.

  • Peter H

    Nice piece – but too long.

    So many of the issues here are low duty cycle.  Funding happens rarely, you can hop a plane to the valley (SF VCs will give us money too), be done with it, get back to coding.  Also yes having startup types in your apartment is nice but the cited NY or Boston don’t really have that either – it’s unique to the valley.

    I think the one durable advantage that affects you every day — and Brad mentioned this too — is People.  Can you get great people.  I’ve been doing this for 20 years and I have a strong network, and I still find it hard.  Maybe as a 19 year old with no network you find it impossible. 

    For the Seattle startup scene to be great we need to have great people.  As a state we need to retain the things that make smart people want to live here.  Part of it is a virtuous cycle because smart people want to live near other smart people.  But also at least for me that includes a great natural environment, and not having to fork over 10% of your earnings to Sacremento.

    I think this article could have been more accurate and compact if it just said it’s about having the highest concentration of great people.

  • Bill Bryant

    Aaron, thank you first of all for building what looks to be an iconic enterprise software company in the making.  While we all wish (today, in retrospect) that Box was still here in Seattle, the important message here is that startup entrepreneurs should persist despite whatever initial obstacles they may encounter. 

    I don’t doubt that in 2005, you would have been met with skepticism by Seattle angels and venture investors.  Candidly, I suspect you’d experience close to the same reaction today – “really, I’m going to back a 19 and 20 year old with nothing more than a (very) good idea?” – an idea that you’ve openly acknowledged required pivoting along the road to success.  You did the right thing to move to the Bay Area. 

    However, I would argue that you would likely have encountered the same biases had you started in Austin, or NYC, or Denver, or DC, let alone Shanghai, or Mumbai, or Herzliya Israel.  I’d argue that Silicon Valley was and likely still is the *ONLY* startup ecosystem that would support a Box.net entity.  If you’re a 19 year old aspiring filmmaker, you don’t try to get started in Phoenix.  If you’re a 19 year old aspiring fashion designer, you don’t get started in Portland.

    That fact doesn’t make Seattle “bad”.  It just means that we aren’t the Bay Area.  I can accept that. 

    Comparing Seattle to the Bay Area means Seattle will fall short for decades to come.  The Bay Area is and will continue to be Mecca for entrepreneurs, for the same reasons that Hollywood is where you go if you’re a filmmaker, and NYC if you’re a fashion designer.  For all places not named Silicon Valley, a better comparison is whether things are substantially better today than 5-10 years ago.  On that basis, I’d argue that Seattle has come a long ways  – the Seattle 2.0 index is one measure, Scott Porad’s Seattle Tech Calendar stats are another.  There are thriving startups that are being built in Seattle as you’ve noted, and we could add to that list PopCap, Big Fish, Tableau, Aptio, Z2Live, Nintex, Winshuttle, Swype, Cheezeburger, K2, WhitePages, Socrata, Zulilly, and many others.

    By any measure, Seattle has improved as a place for entrepreneurship over the past years.  We can argue whether we’ve kept up with Austin, or NYC, but in the Bigger Picture, Seattle is a viable place to create iconic startups, like a Box. 

    Aaron, I hope we can get you engaged with a couple of Seattle startups that would greatly benefit from your involvement.

    Thank you for your contribution !