How Eastside Suburbs are Becoming Startup Hubs

The Eastside is known as a friendly environment for startups and small businesses. Coworking spaces are sprouting up across the region, and businesses from all over the country are relocating or opening offices on the Eastside to take advantage of a deep talent pool.

Much of that action is taking place in Bellevue, Kirkland, and Redmond, but some of the smaller cities are ready to capture their piece of the startup pie.

From the outside, Issaquah appears to be a bedroom community of 33,000 people who commute into Bellevue and Seattle for work. That’s part of Issaquah’s picture, but not all of it. Costco Wholesale and Microsoft, for example, lease hundreds of thousands of square feet of office space in the city. Then there are smaller startups that have decided to anchor in Issaquah.

Impact Studio Pro is one such startup.

20150203_Suburbs-ImpactStudio_31After graduating from Bellevue College, Nathan Bosseler interned at a video production studio in Redmond. When that business shut down in 2004, Bosseler realized there was still a need for video production in the area, so he decided to start his own studio: Impact Studio Pro.

Bosseler started Impact Studio Pro in his Sammamish bedroom in 2004. That same year, Jonathan Campbell joined Bosseler as a business partner. The duo moved the company to an apartment in Issaquah, turning bedrooms into offices and the living room into a studio. Impact Studio Pro was able to spin off a second company, television broadcast scheduling software provider Castus Corporation, in 2010 from that apartment.

“We truly are a bootstrap, do-it-yourself company,” Bosseler says. “It was all self-funded, and we survived the 2008 crisis and kept going.”

The studio, with its eight employees and interns, now operates out of 2,300 square feet of commercial office space on First Avenue Northeast in Issaquah. The apartment wouldn’t cut it these days.

Andrea Snyder, Issaquah’s economic development manager, says Impact Studio Pro’s story is a typical one for companies in her city. People start a business in their home, and only after a number of years and sustained growth do they look for commercial office space.

“We were able to help them find vacancies that would suit their needs,” says Snyder, who served as a contact for Bosseler in his search for a new office location. The city keeps a working list of vacant office space as a resource for growing businesses.

“We’re not Realtors, but being able to point people toward space that would fit their needs is valuable,” Snyder says.

The startup community in Issaquah is still at ground level compared with a city such as Seattle. But with well-known major employers in the area, the community is not short on talent or initiative. “A lot of what we do is making sure we are fostering the ecosystem and making it easy for startups to occur and then flourish.” Snyder says. “That means supporting the Chamber of Commerce, Small Business Development Center, and making sure tax policies make sense.”

An adjustment to Issaquah’s business and occupation tax went into effect in January as part of an effort to make the city more business-friendly. Companies with a gross income of less than $100,000 do not pay a B&O tax, an increase from the previous $20,000 threshold. To offset the benefit for small companies, the rate of tax was increased from .08 percent to .15 percent for manufacture, wholesale, and retail businesses. All other businesses are taxed at .12 percent of gross income. The new tax rates take effect for the first quarter payments on April 1.

Jahn Flaatrud works on a project.

Jahn Flaatrud works on a project.

“As a city, we’re in more of a supportive role of things that are happening in the greater community, and we’re lucky that we don’t have to be the ones that are creating it,” Snyder says. “We already have a great entrepreneurial spirit in the city; we don’t need to try to influence that situation at all.”

Issaquah is home to entrepreneurial networks such as the Issaquah Highlands Entrepreneur Club, grassroots events such as IH (Issaquah Highlands) Makers, and a vibrant chamber of commerce and coworking space.

“The chamber (is committed) to supporting the startup community,” says former chamber chairman Richard Gabel. “Whatever we can do in the tender years of a startup is going to be good for the community’s economic health as a whole.”

Gabel owns Meadow Creek Business Center and Issaquah’s only coworking space, The White Board. He says Issaquah’s entrepreneurs have a commitment to a certain quality of life that makes the area ideal for startups.

“We have a community that is unique in its high level of education, business experience, and a degree of personal wealth where people are able to form startups,” he says, adding that staying close to home and families is important to the community’s entrepreneurs.

Like other Eastside cities, Issaquah’s startups largely fall in the tech sector, but there’s a splash of creativity there too. Issaquah is fostering a community of graphic designers, videographers, and marketers.

Biotech in Bothell

Graphic by Mike Forbush

Graphic by Mike Forbush

Bothell also is developing its own flavor of startup culture; here, biotechnology is dominant. In the middle of May, for example, Brian Crouch and his network of entrepreneurs are organizing Startup Weekend Health, which will be hosted at University of Washington Bothell. Crouch says he pitched the idea of organizing a Startup Weekend to Up Global, which sponsors the May 15-17 event, but with a refined focus on health devices.

“They told me the subject was too narrow, but we could do health, which they already had a template for,” Crouch says. “I agreed to do it, but next year, depending on what happens this year, I think the interest and the ideas are there to go with a more narrow focus.”

Crouch operates a consulting business, The Avatar Group, LLC, from his home in Bothell. He and his wife, a nurse at Seattle Children’s Hospital, were drawn to the area because it was equidistant from Children’s and Crouch’s former workplace and it offered a high-quality school district for the kids. Even after Crouch left his day job and no longer needed to commute to work, he and his wife remained in Bothell to maintain their quality of life.

UW Bothell’s Biotechnology & Biomedical Technology Institute and incubator spaces Mercury Medical Technologies and the Biomedical Manufacturing Innovation Zone form a strong
network of knowledge, experience, and innovation in medical devices and technology. Crouch hopes Startup Weekend will tap into that network.

“This is not a one-off event. This is the beginning of a sustainable community of innovators so it becomes an ecosystem with things like coworking spaces and active participation, and lots of opportunities to napkin stuff,” Crouch says.

Nathan Bosseler’s dog, Hurley, is the company’s office dog.

Nathan Bosseler’s dog, Hurley, is the company’s office dog.

Renton Revitalization

Renton is looking to build a more diverse business and startup community by revitalizing its downtown. John Collum, Renton’s community development project manager, says the city hopes to capitalize on the talent at Boeing, independent business owners, restaurants, and the arts community to rework its image. One factor working in Renton’s favor is affordable real estate.

“When I decided to move my business, I purposefully selected Renton because I could get the kind of space I was looking for at a price I could handle,” says Steven Matsumoto, founder of Seattle Fashion Incubator. “It was a great decision to move down here. The community is vibrant and supportive.”

Matsumoto started the incubator online in 2010 as a resource for local fledging fashion designers. The business operated exclusively online until 2013, when it moved into a 200-square-foot space in Renton. Once a physical space for operation was established, business rapidly increased. Matsumoto moved the incubator to a space with 3,600 square feet in 2014.

Each Eastside city is in a different stage of business and startup development. Issaquah is tapping into the creativity and tech expertise of its residents. Bothell is fast becoming a biotech hub. Renton is envisioning a revitalized business district. The efforts of these less-populous Eastside cities could yield a more well-rounded startup community.

“Startups start with the talent and the idea, and as a region we have a lot of that,” Snyder, Issaquah’s economic development manager, says. “We’re at a good starting place for a good startup community. We’re not known for that, but it’s happening out here at a fast pace as well.”

Editor’s note: This article has been updated to reflect the new date of Startup Weekend Bothell on May 15-17. The startup event is sponsored by Up Global, which is supported by Google for Entrepreneurs.