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.
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.
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.
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?
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.”