It’s tempting to proclaim that the Eastside is the next Silicon Valley, but some tech-industry experts wonder whether it’s a title we should care about — or even avoid.
A competition is under way in the tech industry, and it has nothing to do with who will create the next cool gadget for your home or time-saving app for your smartphone. It’s a name game over which American region will be deemed the next Silicon Valley.
The rivalry is long-running and kind of inane. Here is a recent sample:
- In 2014, The Huffington Post said Miami; Boston; Detroit; New Orleans; Chattanooga; Cincinnati; Houston; and Washington, D.C.; are the cities vying to be the next Silicon Valley.
- One year later, Forbes created its own list of cities: Austin, Seattle, Chicago, Dallas, and Miami.
- The competition also has fostered nicknames. The metropolitan area of Portland, Oregon, for example, is called the Silicon Forest. The region between Washington state and Vancouver, B.C., is the Cascadia Innovation Corridor. An area of Manhattan is Silicon Alley. Some Canadian cities compete over who will be named Silicon Valley North.
- Two years ago, The New Yorker crowned the entire state of Utah the next Silicon Valley.
- Feeling left out? Don’t worry. Just perform a Google search for “The Next Silicon Valley,” and your city will probably show up somewhere in the results.
Does it matter which region claims the next Silicon Valley crown? Moreover, is it a title for which our region should vie?
“I understand why there is an inclination toward viewing ourselves in comparative terms because the world at large thinks of Silicon Valley as the epicenter of technology, and I really don’t see that changing anytime soon — probably not in our lifetimes,” said Washington Technology Industry Association CEO Michael Schutzler. “That region has had a foundation and an ecosystem to spawn tech companies much longer than any other region. If you think about the history of the tech industry, Silicon Valley has been the epicenter of tech for 80 years.”
Bay Area cities that comprise Silicon Valley — such as San Jose, Palo Alto, Mountain View, Sunnyvale, Cupertino, and others — have earned the reputation and the recognition as the birthplace of technology. Hewlett-Packard was founded in a Palo Alto garage in 1939. The Lawrence Livermore National Laboratory was created in the Valley in 1952. And Apple Computer’s history dates back to 1976 and a Los Altos garage (the company was incorporated a year later in Cupertino). More than 40 years later, Silicon Valley continues to be the hub for startups and venture capitalists.
The goal of becoming the next Silicon Valley is misguided, Schutzler argued.
“Comparing ourselves to Silicon Valley or labeling ourselves as the next Silicon Valley would indicate that we’re not as good as, or we’re the junior version of Silicon Valley, and that’s just a complete mischaracterization,” he said. “We are very much the center of the universe when it comes to some of the most influential components of the tech industry and uses of the internet.”
Those components include desktop software, online retail, mobile application development, cloud computing, and online gaming — all which, Schutzler said, were created in the Puget Sound region and have stronger presences here than in Silicon Valley.
“It’s not like it was in the old days, when Oracle, Hewlett-Packard, and Intel had sales offices here,” said Schutzler. “New large technology companies are building huge product-development engineering facilities here because we have that unique skill set and that unique talent pool. That makes us a very distinct and unique tech ecosystem, and it’s why so many large tech companies from California have placed themselves here.”
But when Bay Area tech companies open offices in Seattle and on the Eastside, it’s hard not to make comparisons.
“Every major city has some envy of Silicon Valley because the boom in technology and software has no end in sight,” said Hadi Partovi, a Bellevue-based venture capitalist who made his name in the tech world as an early investor in Airbnb, Dropbox, Facebook, Uber, and Zappos, and the co-founder of two tech companies acquired by Microsoft. He currently is the CEO of Code.org, a nonprofit that teaches kids to code. “Whether it’s Austin, New York, Los Angeles, Seattle, or even cities that don’t yet have a big tech scene, they’re all competing to be known as Number Two to Silicon Valley.”
Partovi said there are a couple reasons Bay Area tech companies are moving to our area.
First, is the cost of living. “Costs are ludicrous,” said Partovi. “Any employee of a major Bay Area company can probably get an instant financial return on moving (here), staying with the same employer, just paying a much lower rent or mortgage.”
Also, while Class A office space is cheaper in the Puget Sound region than the Bay Area, the real draw is the area’s talent, according to Partovi. “The primary reason for a tech company to open a remote office isn’t to save money,” he said. “It’s because there literally aren’t enough software engineers in the Bay Area, and a growing number of companies are competing over a limited pool of talent. More than anything else, it boils down to where they believe they can hire engineers.”
One person who has closely followed the growing presence of Bay Area tech companies on the Eastside is Bobby Shanahan, a senior research associate for Colliers International in Bellevue. In October, Shanahan wrote a detailed and well-researched blog post that covered the migration of Bay Area tech companies to the Pacific Northwest.
He also compiled a list of 20 significant Silicon Valley-based companies with branch offices in the Puget Sound region, and noted that more than one-third of those companies have presences on the Eastside: Alibaba, Oracle, Salesforce, and Okta (the San Francisco-based software company) operate offices in Bellevue; Google operates offices in Kirkland and Bothell; and Elon Musk’s SpaceX and Facebook-owned Oculus VR operate offices in Redmond.
Other Silicon Valley-based tech heavyweights that didn’t make his list but have set up offices on the Eastside include Intel, which operates in Redmond, and eBay, which operates in Bellevue.
“It’s definitely something that can tend to get blown out of proportion at times,” said Shanahan of the rivalry between the Puget Sound area and Silicon Valley. “I don’t know if we are going to get our own nickname up here, but I think (our region) is definitely setting itself apart from San Francisco. In terms of comparing and contrasting, I do think it’s distinct in certain ways.”
Schutzler had two concerns regarding the race over which city will be the next Silicon Valley.
“I’m concerned that our DNA tends to be a little too self-deprecating,” said Schutzler. “Quite frankly, we have a lot to be proud of. (But) we don’t beat our chests here. We’re not overtly proud of our accomplishments. That concerns me.”
Also, he cautions against the tech industry modeling itself after Silicon Valley, which has seen pronounced imbalances between tech industry workers and non-tech industry workers. The 2017 Silicon Valley Index, a study compiled by Joint Venture Silicon Valley and released in February, showed that while jobs, income levels, and new construction continued to rise in the Bay Area, so had traffic congestion, housing costs, and disparities in earnings between tech and non-tech workers.
“There are a lot of things that are messed up with the way the tech industry has grown in the Valley,” said Schutzler. “I think it’s great to learn from history and make sure that we don’t repeat those mistakes. I wouldn’t want to think of us as a copy or a younger version of what they ended up as. I don’t think we want to have the kind of animosity that we have seen in the Valley between those in tech and those not in tech. We have a very integrated community here, and the tech industry is actively engaged in being a part of that. We have our own way of doing things.”