Do Seattle Startups Care Too Much About Retail, Too Little About Building a Huge Audience?

11/23/09Follow @gthuang

Oh no you didn’t. Come on, Andrew Chen, you know better than to call out Seattle tech startups for not producing a world-changing consumer Internet company in the past few years. You’re an outsider now, having left Seattle for the San Francisco Bay Area after 2006. And now you’re telling us why you left? Them’s fighting words.

I’m intentionally fanning the flames here, of course. Chen is a startup exec in advertising and social media who used to work at Bellevue, WA-based Revenue Science (now called AudienceScience). His thesis, laid out in a blog post today, is that Seattle’s strong history in retail and commerce—Amazon, Starbucks, Nordstrom, Expedia, Blue Nile, Redfin, and others—still influences the kinds of companies that get started here. But then he takes it further.

“These retail and transactionally-focused businesses are great money-makers, but because they target in-market buyers for a particular good or service, it means that you’re not really building a huge audience,” Chen writes. “The classic way to build a huge audience is to focus on ad-driven businesses in the world of communication or content publishing, and there just aren’t that many of them in Seattle.” (Though he does give props to Ben Huh’s Cheezburger Network.)

“My hypothesis is that Seattle hasn’t produced mass audience consumer products mainly because it’s focused on down-to-earth charge-users-for-a-product types of businesses that are more transactional than community,” Chen continues. “I don’t think that’s a good or bad thing—just as you’ll get more biotech in Boston, there’s a specialization in Seattle around commerce/retail. But if you’re doing a social [user generated content] thing, the Bay area is the best place to be.”

In case you didn’t know, Seattle got sick of being compared to the Bay Area at least five years ago—yet the comparisons keep cropping up, sometimes for good reason. (See recent comments from UW TechTransfer’s Janis Machala, Vulcan Capital’s Steve Hall, and the UW’s Ed Lazowska.) So Chen’s remarks have triggered some heated discussion in the blogosphere today, especially around Seattle.

Is there anything constructive here? In a blog post of his own, entrepreneur and investor Chris DeVore of Seattle-based Founder’s Co-op doesn’t disagree with Chen’s basic premise. Instead he wonders how the community can broaden its impact. “Investment capital is a major input in the startup equation—many of the most successful angel and VC investors in Seattle made their biggest money on Amazon and Starbucks, and investors tend to look for patterns of success that are repeatable. It’s not surprising to see local money flowing toward the same kind of deals that delivered wins in the past,” DeVore writes. “If we want Seattle to be the kind of town that fosters a broader variety of software innovation, what kind of investment culture do we need to create?”

As an observer, I can see why local techies get irritated with cultural and geographic comparisons. And personally, I’ll take Amazon’s long-term business prospects over Twitter’s any day, but that’s not really the point. The point is how Seattle-area innovation and entrepreneurship can keep rising, keep changing the world (across gaming, mobile, and other areas)—and the issue that DeVore raises would seem to be a good place to start.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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  • lance98004

    Seattle vs. SF? It’s about building a good company. You can do that anywhere.

    And according to CrunchBase Andrew’s startup raised money from Ignition in Seattle.

    http://www.crunchbase.com/company/kickball-labs

  • http://www.digitalscirocco.com Bruce

    Maybe sour grapes, but here goes: Going for huge eyeball counts, for an entrepreneur, is a sucker’s game, part of the “winner take all” mentality that misleads huge numbers of ppl to waste their effort for the benefit of the few fat cats who can afford to diversify over a large number of long shots. Give me a group of talented entrepreneurs and supporting talent who can create real, sustainable, businesses any day, rather than a bunch of dreamers doomed to failure. Yeah, they created twitter. One out of how many?

  • Marc Fawzi

    For so-called “dreamers” it’s mostly about the passion of pursuing an idea and making it happen, with money being realized if and only if the dream is realized in a big way. In other words, if the “dreamer” gets tens (or hundreds) of millions of people to enjoy the fruit of their labor/creativity then they will have realized their dream in the biggest way possible, after which, Google or someone big, who wants their audience, buy them and figure out how to monetize their traffic.

    The retail/commercial orientation is for people who want to build businesses and RUN them. Dreamers want to build something that achieves mass adoption. They don’t want to RUN businesses. It’s not what they’re in it for.

    Two different types of people.