It’s boom time again in the technology sector and every major region in the country is busy stretching the truth to declare itself America’s “next Silicon Valley”.
Most of these claims are silly on their face; the Bay Area has an 80-year head start as the global leader in tech entrepreneurship and no region in the world is likely to replace it. But there’s a very good reason why traditional tech laggards like New York and Los Angeles are trying so hard to convince young people that they really (no, really!) are on the cutting edge of tech innovation: because that’s where the jobs of the future are.
Economies are built on jobs.
Most good jobs – the kind that pay competitive wages and come with benefits like health insurance and ongoing skills training – are provided by companies. And every company in the world is now scrambling to keep up with the accelerating pace of technological change.
Software and data are now the backbone of competitive advantage for every company, meaning the “tech sector” and the global economy have become one and the same. The cities and regions of the world that establish themselves as leaders in technology innovation are already calling the tune in global markets, and that advantage will only increase as talent and capital continue to flow disproportionately toward the firms most likely to power our digital future.
Seattle and the Puget Sound region were lucky to have been the chosen home of two of the world’s most important technology companies of the past 20 years: Microsoft and Amazon. Both companies have played a critical role in putting the region on the global map as a destination for high-performing tech innovators and a productive area of focus for innovation-centric investors.
But every successful company has a natural lifecycle from early growth, to industry leadership, to stable maturity. Microsoft and Amazon are no exception. In fact, the rate of technology change has accelerated this lifecycle for most companies, shortening the window in which their class of innovation is the one that matters most.
Because of our successful history as a center for world-changing tech innovation, the Pacific Northwest is one of the few regions in the world that can credibly aspire to a sustained leadership role in our increasingly tech-centric global economy. But – and this is a big ‘but’ – only if we are able to build an innovation ecosystem that produces new tech leaders faster than the maturity cycle flattens out the performance of our current high performers.
During boom times, the headline-grabbing tech companies are the little ones that get acquired for big prices – $19 billion for WhatsApp, $2 billion for Oculus Rift, $1 billion for Instagram. But the companies that produce real value to a tech ecosystem aren’t the eye-popping early exits, but the slow-and-steady growth stories that wind up as large, profitable and well-led public companies.
Often lumped together under the dismissive heading of “middle-market” companies, these firms form the backbone of any region’s employment and labor mobility system. Tech sector examples in Puget Sound include Concur, Tableau, Zillow and Zulily.
Not only do such companies recruit and develop the bulk of the new talent in the area, they also provide a liquid local marketplace for high-performing human capital, ensuring that the talent that moves to a city stays there, because they have so many attractive options for advancing their careers without having to uproot their families to seek opportunity elsewhere.
We’ve been lucky in the past, but the stakes are higher than ever before and luck is not a strategy.
If the Pacific Northwest hopes to maintain and extend its current leadership role in the global innovation economy we need to fully embrace the future of all work as ‘knowledge work” whether in traditional industries like aerospace, fisheries and agriculture, or in the industries that are powering our current and future economic strength: software, technology infrastructure and software-based services.
Every middle market company begins life as a startup, and the entrepreneurs and venture capitalists who support startup companies can be counted on to do their work without any expectation of help from the broader community. But the cultural change that places innovation at the center of our regional economy will only come when leaders of all kinds – elected officials, civic leaders, academics and educators, and traditional business and nonprofit executives – embrace knowledge work as the future of all employment, not just the province of the college-educated elite.
Our region has a real opportunity to claim a sustainable leadership role in the global economy, creating a broad base of shared prosperity for all, if leaders across our region commit themselves to creating a culture of innovation. That means raising the bar for STEM and computer science learning in our K-12 schools; funding hundreds more engineering degrees in our public universities; improving access to technology skills training for traditionally underserved populations; and removing regulatory barriers to new venture formation and early-stage financing for entrepreneurs.
There are early glimmers of hope that Washington’s leadership class is beginning to get the message. Twenty years after Amazon was founded here the City of Seattle finally assigned an economic development officer to understand the needs of the startup ecosystem. After decades of support for higher education, the last budget cycle included a modest increase in funding for engineering degrees in state universities. But the tide of global competition is rolling much faster than these small and belated efforts.
It makes little sense to throw billions of dollars of tax breaks at companies that long ago signaled their commitment to shift employment elsewhere, or to expect one maturing “tentpole” company to carry our whole economy forward. We need to stop fighting yesterday’s fights and commit ourselves to building a broad and deep middle market of Northwest companies that can sustain our labor market in good times and bad.
Doing so will take all our effort as a community. It will require hard dollars to go with our brave words. But the dividends of leadership will come faster than we expect, and be shared more broadly, if we all pull together.
Grow Manufacturing and New Product Development – PLAN Washington Economic Development Strategy #2.
Chris DeVore is a founder and General Partner at Founders’ Co-op, the Pacific Northwest’s leading seed-stage venture capital fund, and also a Director of TechStars Seattle, the region’s top startup accelerator program. A Seattle native, Chris also chairs the City of Seattle’s Economic Development Commission and serves on the board of the Washington Technology Industry Association. Chris holds a BA from Yale and attended the MBA program at Stanford’s Graduate School of Business.
* Editor’s Note: This is a guest authored piece and does not necessarily reflect the views of the Washington Business Alliance.
The Washington Business Alliance frequently features guest authored content on our blog Catalyst. If you would like to become a featured guest author, guidelines and information can be found in the post “Contribute To This Blog: Here’s How”.