How the Silicon Valley tech invasion has reshaped Seattle’s startup landscape, 15 years after it began

How the Silicon Valley tech invasion has reshaped Seattle’s startup landscape, 15 years after it began

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googlesouthlakeunion_133734-630x473.jpgGoogle is building a new campus in Seattle’s South Lake Union neighborhood, just across the street from Amazon’s headquarters. (GeekWire Photo / Taylor Soper)

Back in 2005, when tech veteran Peter Wilson joined Google to build its fledgling Seattle-area outpost, recruiting was straightforward. As the first in a new wave of Silicon Valley tech giants to establish an engineering center in the region, Google set up shop in Kirkland, Wash., just down the road from Microsoft, which was suffering at the time from a stagnant stock price and sagging employee morale.

Google capitalized on Microsoft’s struggles and its own status as an emerging tech icon to expand its office to 400 people over the course of four years.

Peter-Wilson-Square-300x300.jpegMicrosoft veteran Peter Wilson was instrumental in building the Google and Facebook engineering offices in Seattle. (File Photo)

“For a lot of the people we hired, they basically came to us and said, ‘Hey, I think what you’re doing is right, and I’d like to come work with you,’ ” Wilson recalled in an interview with GeekWire this week.

Tech recruiters today can only dream of having it so easy.

Fifteen years after Google arrived, it’s not a stretch to see Seattle as Silicon Valley North. Nearly 120 out-of-town tech companies have established engineering centers in the Seattle area, many of them from the San Francisco Bay Area. Apple, Salesforce, Oracle, Uber and Twitter are just a few of the tech powerhouses building large teams in the region. Facebook employs more than 3,000 people here, with no signs of slowing down.

In the meantime, many homegrown tech companies are also surging. Microsoft is experiencing a renaissance as the world’s most valuable company. Amazon employs nearly 50,000 people in the Seattle region. Tableau, Zillow, Avalara, Smartsheet, T-Mobile, and F5 Networks recruit engineers aggressively.

And Google, with 3,000 employees of its own in the area, is preparing to expand to a new South Lake Union campus — this time within poaching distance of Amazon’s headquarters.

RELATED CONTENTCheck out GeekWire's list of Seattle-Area Engineering Centers established by out-of-town companies.

Data from Seattle-based recruiting agency Fuel Talent shows more than 65,000 software engineers now in the Seattle area. But even with all that engineering horsepower close at hand, the growth of the major tech brands can make it more difficult for startups to land the talent they need to grow their businesses.

“Every year since 2008, it has become more competitive, more challenging, and requires more creativity to attract senior engineering talent,” said Albert Squires, director of Fuel Talent’s technology practice. “Is it easier to identify engineers now than 10 years ago? Yes. Is it more difficult and expensive to hire engineers in Seattle? 100 percent.”

So what does this mean for Seattle’s startup scene? From the beginning, the concern has been that the Silicon Valley influx could prevent Seattle from realizing its potential as a startup mecca, keep talent away from promising upstarts. That still happens, and it’s still a big risk.

But the long-term impact of these engineering centers is now becoming clear, and it’s more nuanced than it might have seemed.

“They are really good for the Seattle startup ecosystem, but it’s not direct,” said Tim Prouty, vice president of engineering at trucking logistics startup Convoy. “It takes a little time to play out.”

Startup stepping stone Convo-630x473-1-630x473.jpgConvoy’s leadership team now includes Viraj Mody (far left), who previously led the Dropbox Seattle office; Divya Mahalingam, who worked at Palantir’s Seattle office; Vishnu Challam, who led Twitter’s Seattle office; and Tim Prouty, who helped build Uber’s Seattle office. (Convoy Photo)

Prouty’s own career tells the story. He graduated from the University of Washington in 2006 and joined Isilon, a fast-growing Seattle startup that had launched five years prior. He spent nine years there as Isilon went public and was later acquired by EMC, the data storage giant

San Francisco-based Uber then recruited Prouty to establish a Seattle engineering office that grew from a few people to nearly 200 employees under his leadership.

 The remote offices are really good for the Seattle startup ecosystem, but it’s not direct. It takes a little time to play out.

But after two years, he wanted to be at a company based in Seattle that “had all the benefits of being at the center where the energy is happening, where decisions are getting made, and where the core business is operating,” Prouty said. He landed at Convoy, an up-and-coming company backed by the biggest names in tech that has become one of Seattle’s most valuable startups.

Other leaders from remote offices in Seattle followed Prouty, including Vishnu Challam, who previously led Twitter’s Seattle office; Viraj Mody, who led Dropbox Seattle; and Divya Mahalingam, who was development team lead at Palantir Technologies in Seattle.

Prouty said the engineering centers offer a new “risk profile” or stepping stone that lets workers go from a big tech company such as Microsoft or Amazon to something smaller, but not as extreme as joining an early-stage startup.

“The great thing about that is it sets the stage for them to go to a startup next,” Prouty said.

The high-paying salaries might also benefit the Seattle startup scene in the long run, providing enough capital for future founders to chase their business ideas.

In that vein, the engineering centers could be a key part of laying the groundwork for Seattle’s next billion-dollar startups. And more startup success stories may help encourage people at companies such as Amazon, Microsoft, Google, or Facebook to build on their experience and make the entrepreneurial leap.

That’s what happened to Jeff Spector, co-founder of Seattle startup Karat, and his business partner Mo Bhende. The pair spent years at larger enterprises such as Microsoft and the Gates Foundation.

“At some level you ask yourself, how do I make sure I’m building something as opposed to executing someone else’s vision?” Spector said. “Then you can find real problems that you’ve experienced and you want to go build that thing. We had a desire to build something meaningful and mission-driven that had a big impact. It was just a matter of time and phase of life that allowed us to do that.”

Options, options, options IMG_7121-630x420.jpgGoogle’s campus in Kirkland, Wash. (GeekWire Photo / Taylor Soper)

It’s a lucrative time to be an engineer in Seattle. Spector said most top engineers looking for a job in the region will have six or seven offers on the table.

“They are basically getting to dictate what type of company they work at,” Spector said. “They can optimize for whatever they want to optimize for — upside, security, career growth, etc. They can pick and choose what they want to do.”

 If you’ve got a worthwhile mission, top talent will be attracted to you. Then, you’ll welcome having those large soul-sucking corporations in your backyard.

Employer demand for technology roles in the Seattle metro area has grown by 23 percent over the past year, according to Indeed data. A search on Indeed for “software engineer” shows nearly 15,000 open positions.

Seattle has become a battleground of sorts, with big companies and small startups competing for the same highly-skilled engineers, a crucial key to success for any tech operation.

It can be tough to turn down a $200,000 salary with stock options at a deep-pocketed well-known company developing cutting-edge technologies. And Seattle is also developing a reputation where big tech companies thrive, with many employees at bigger orgs content to ride out their careers in comfort.

“Trying to woo people away from those big names is extraordinarily difficult, if not all out impossible,” said Kristin Ireland, CEO of IT intelligence startup Movere.

But there’s still something attractive about joining a nascent startup, even though it may not be the logical or rational financial choice.

Daryn Nakhuda, CEO and co-founder at Seattle startup Mighty AI, said large companies are at a disadvantage when recruiting people who want more ownership of their work, want to have a bigger impact on the product and customer, and want more opportunities to grow into upper management positions.

“It’s really all about the individual you’re recruiting and what they value,” said Nakhuda.

Tony Huang, co-founder and CEO of Possible Finance, likes having giant companies down the street that help make Seattle a world-class hub for engineering talent. He said his pitch to candidates often comes down to offering “fulfillment.”

“If you’ve got a worthwhile mission, top talent will be attracted to you,” Huang said. “Then, you’ll welcome having those large soul-sucking corporations in your backyard.”

Middle ground 20180313_Facebook_Westlake_67-630x420.jpgFacebook’s Seattle engineering center. (GeekWire Photo / Kevin Lisota)

The wide array of engineering centers offer something in the middle.

“At Dropbox Seattle, we have a special advantage in that we have the intimate feel of a smaller office that many candidates are looking for, while also having the resources and impact of a global company with more than 500 million users,” said Jamie Turner, director of engineering for Dropbox.

 Having all that great talent isn’t worth anything if you can’t afford it.

Marcus Womack, who leads a 400-person office in Seattle for Uber, said remote sites “often round out the gaps between big and small companies, offering new missions and hard problems to solve.”

Ari Steinberg helped open Facebook’s first office here nearly a decade ago. He left to launch a startup, sold it to Airbnb, and is now in charge of growing a Seattle hub for the travel giant.

“I have really enjoyed being a part of the smaller community of Seattle offices that is a little more startup-like,” Steinberg said in a GeekWire ‘Working Geek’ profile. “I am really proud of the team culture in Airbnb’s Seattle office right now. Employees play much more active roles in making this a fun place to work than they tend to at larger companies and offices where employees tend to be more passive.”

There can be downsides to joining these offices, given the separation from a company’s headquarters.

“One of the most important parts of managing a ‘remote’ office is making sure it doesn’t feel like a remote office,” said Vijaye Raji, vice president of gaming and the Facebook Seattle site lead. “To do that, we work really hard to make sure we’re scaling Facebook’s culture. It’s a big challenge.”

But there are also other benefits to being remote. For example, it provides an opportunity to craft a space to fit the culture of a local community.

To that point, Raji said the impact of remote engineering centers goes beyond simply adding more talented coders to the Seattle ecosystem. Facebook’s Seattle employees have started “Resource Groups” around issues that matter to them and work with similar groups at other local companies. They participate in the South Lake Union Chamber of Commerce; the Washington Tech Alliance; and other civic engagement programs. Facebook Seattle also hosts community events and partnered with the University of Washington to create a virtual reality lab.

“All of these touch points make us a better company, and, we believe, make the local tech scene stronger and more robust,” Raji said.

But while companies such as Facebook reap the benefits of operating a remote office in a talent-rich region, startups could suffer, especially given salary demands. The average annual paycheck for a senior software engineer in Seattle is $144,000, according to ZipRecruiter, but that number can swell for positions within the larger giants.

“Having all that great talent isn’t worth anything if you can’t afford it,” said Wilson, the Microsoft veteran who led Google’s early growth in the region.

Wilson went on to play a similar role for Facebook Seattle before returning for another stint at Google. In 2016, he joined mobile marketplace company OfferUp as vice president of engineering. And by then, the recruiting scene had completely changed. With engineers enjoying an abundance of job opportunities, OfferUp was forced to sink a significant amount of time and money into recruiting, with no guarantee of success.

If he were starting a company today, Wilson said he’d think twice about doing so in Seattle because of the costs. That’s in line with a recent trend of founders beginning to look at cities outside of San Francisco or Seattle for their headquarters.

Wilson, who has since returned to London to serve as Blockchain’s vice president of engineering, said he hopes companies in Seattle can do more to help each other out rather than wasting valuable resources trying to poach one another’s top employees.

“They’ve created this zero-sum game of recruiting,” Wilson said of the engineering outposts. “It’s fabulous all these companies have moved in and created opportunities for engineers, but it would be very cool if they could work out between them how to make it more of a win-win.”

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