Q&A: Rich Barton and Nick Hanauer on why Seattle is a great ‘startup cake’ (and NYC has a ‘sell out’ culture)

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Nick Hanauer and Rich Barton

We had a blast catching up with Seattle technology entrepreneurs and investors Rich Barton and Nick Hanauer on last weekend’s GeekWire podcast and radio show. Barton, the former CEO of Expedia and co-founder of Zillow, and Hanauer, an early investor in Amazon.com and aQuantive, like to think big as they look at ways to be provocateurs in business.

We talked about a wide-range of topics during the show, including politics, mobile technologies and the role of Amazon.com in the Seattle community. But one the highlights was hearing their perspectives on startups and investing, and Seattle’s place as it relates to Silicon Valley and New York.

Great stuff here, so enjoy!

On why they look to invest in the unusual companies that are off the traditional path (Minute 14): 

Hanauer: “If you are working on something that everybody already thinks is a good idea, you are actually probably not advancing a very interesting or disruptive idea. The big opportunities in all domains in life — in investing, in the civics sphere, which you know is where I put a lot of my energy — are always found in doing things that are sort of running against the grain or are disruptive. One of the great challenges of venture capital and the structure of that business is that you raise a bunch of money usually against a thesis, but usually by the time you’ve raised the money against the thesis, it is likely that the thesis has already been played out, or is wrong. And so, there is a lot of hay to be made in the cracks in between these theses that people create, and run against, essentially, the convention wisdom.”

barton 183 X 225Barton: “What we share in our outlook is provocation. I would say that both Nick and I enjoy in an abnormal way provoking. And we think in provocation that there is progress…. Most everything I’ve done in my business career is about coming up with provocative information that was probably already there — what is the value of your home; what does that Google engineer make; was the liposuction surgery worth it; is that a good lawyer. All of these are provocative ideas, and to a certain extent they empower consumers and stick-it-to-the-man a little bit. People love to be provoked, and when you have a provocative idea … what happens is, it markets itself, because people like to talk about it.”

On the importance of experiencing new ideas and places as a way to open the entrepreneurial mind: (Minute 40):

Barton: “When you go to places with gigantic open skies — be that in the middle of the Black Rock desert in Nevada, or floating down a river in Montana, or running after rooster fish on a beach in Baja — when you put yourself in an existential situation, when you see how small you are relative to the universe, you begin to forget yourself and think bigger thoughts. You really do. And people need to do more of this. I realize not everybody has the opportunity we have to be able to do this, but we — Nick and I together and with our families, as well — we work hard at putting ourselves in these situations, and that provides a backdrop for being able to talk and think about big ideas. And it’s fun.”

Hanauer: “We share a tolerance for risk that makes most people extremely uncomfortable in every domain in our lives. Big ideas require a certain kind of risk-taking.”

On where that risk-taking philosophy comes from: (Minute 42)

Hanauer: “Genes. Genes.”

Barton: “But I gotta believe it’s because I felt safe growing up.”

Hanauer: “We both had great, fantastic families that were super supportive. But it is a virtuous cycle. You start taking risks early, those risks are rewarded, which encourages you to take bigger risks, and so on.”

Barton: “Just like the startup ecosystem here. It’s OK to take risks, it’s OK to fail, it’s OK to succeed, it’s OK to succeed big. That fuels the ecosystem here.”

Photo via Will Clayton

Photo via Will Clayton

On Seattle as a ‘wonderful startup cake’: (Minute 43)

Barton: “We do have all of the ingredients for a great cake.”

Todd Bishop: Do we really, though?

Barton: Yeah, sure. It is the ecosystem we were just talking about. We have great talent. Such great talent. We have a great and getting better university that is cranking out talent. Now, they need 10X the capacity…. And we’ve got money. All three of these things are fundamental.”

Todd Bishop: So, why doesn’t the cake taste better?

Barton: “The cake does taste good! It does! You are just impatient. It is going really well.”

Hanauer: “Seattle, Washington, by most measures, is one of the most prosperous and dynamic places on Earth. I don’t know what you are hoping for. People are never satisfied. It feels to me like it is going pretty well. It could always go better, and there’s no doubt that, again, coming back to the eco-systemic nature of these things, that it is a virtuous cycle. So, the more you have, the more you can get. And the more you get, the more you have, so places like Silicon Valley, which are bigger, do enjoy an advantage in some dimensions. But, you know, there is this other thing that we have, and there is a value in being cut off from the mainstream by being in this corner of the world, which is the absence of group think here that dominates places like the Valley. And, wow, Washington D.C., a place that I am spending more and more time in.”

On whether there’s enough money flowing through Seattle and how it compares to New York: (Minute 45)

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Nick Hanauer

Hanauer: “There is an infinite amount of capital available for great ideas backed by great people. It is not true that there is not capital available.”

Barton: “The stuff that is being started in New York is way different. It is. You are doing that comparison, but it is not the same. There is so much more money, and there is so much media stuff going on. It is easy call that venture capital, but that is not really venture. It is pure media stuff. Also, what exits have happened out of (New York?) For whatever reason, the New York culture doesn’t seem— it is a sell-out culture.”

Cook: Tumblr?

Barton: “It’s a sell out culture. They get to a certain stage. Why is that? They don’t have good examples before them? I don’t understand. But they don’t think like we do. I would way rather be investing here in Seattle and in Silicon Valley than in New York.”

On the Seattle startup psychology and its relationship to Silicon Valley: (Minute 47)

Barton: “We are more polite. We are closer to Canada…. Really, people are more balanced. They are less entitled. They are less promiscuous. They are a little more in touch with nature, and the world. It’s a different scene.”

Hanauer: “They are more loyal. The Silicon Valley culture has turned into this sort of: ‘Make-me-a-better-offer-and-I’m-out-culture….’ And there is a lot of great stuff going on, but it is kind of fun to build a company with a bunch of people who actually care about it and want to see it succeed and will stick with it, through thick and thin.”

Barton: “We have a special relationship with Silicon Valley. They are our big brother. We are their little brother. And we can feel bad about being their little brother, and say: ‘Well, why doesn’t he come to my soccer game, I go to his?”

Hanauer: “Part of the reason is that they are 20 years older.”

Barton: “But this special relationship. It is a very high-bandwidth path for people and money that flow between here and Silicon Valley. We as a community have embraced that, and we should  continue to embrace that. It is a competitive advantage for us.”

Tune in to the full podcast below:


Previously on GeekWireEarly Amazon investor Nick Hanauer disappointed Amazon isn’t more civically engagedNick Hanauer and Rich Barton on investing, technology, open skies and big bets

  • FD

    I wish Hanauer would take his New York politics right back to New York…