The former logging town angles itself to be a stronger tech hub through innovative economic development tactics.

 

Mayor John Marchione, a longtime resident of Redmond, remembers his city vividly in the 1970s and ’80s, when his mom was a city council member and mayor. Though the tech-centered city is vastly different now than what it was those few decades ago, Marchione said its core challenges are very much the same: growth and traffic.

Before Redmond was home to dozens of tech companies, it was a modest logging town with only a few hundred residents. In 1940, for example, the town’s population was 503. In 1963, the completion of the 520 floating bridge over Lake Washington, connecting the Eastside to Seattle, kicked off residential growth and ignited the city’s high-tech industry.

People in Redmond

United Control, a manufacturer of aircraft electronics, was the first tech company to open in Redmond (it’s now owned by Honeywell Corporation), followed by Rocket Research Company — now named Aerojet Rocketdyne — in 1968.

“I remember very strongly that (people) in about three out of every four houses in my neighborhood worked at Boeing, and the 1970s is when they had a big layoff,” Marchione said.

In some respects, Redmond’s tech industry grew rapidly in the ’70s and ’80s because the city had a high concentration of laid-off engineers searching for work and building their own companies, Marchione said. When Microsoft and Nintendo opened offices in the city in the 1980s, it put Redmond on the map as a developing tech hub, and the city’s daytime population quickly surpassed its nighttime population.

A few years ago, the city welcomed Elon Musk’s space exploration corporation, SpaceX. Marchione recalled humorously that during the opening ceremony, Musk said he’d been trying to get Washington’s engineers to move to Los Angeles for years, but finally relented and opened an office in Redmond.

“We have a workforce that people want, and we have a quality of life that people want,” Marchione said. “Our workers aren’t leaving for Los Angeles because they want to have the quality of life that they want. It’s not just Redmond; it’s Washington also. It’s an hour to go skiing, and 30 minutes to go to a lake. Our park system is a great success, our trail system, our school district, and our tax level is low compared to our neighbors. We also have high-quality government services.”

Building a Tech City

OneRedmond is an organization tasked with expanding and retaining local employers, attracting new companies, and fostering “community vitality.” Marchione said it launched five years ago out of a necessity to bring community organizations together to help the city prosper. It’s had some growing pains, but the organizations are finding balance as they collaborate.

“People in the Chamber wanted to make sure small businesses had a voice,” he said. “Economic Development wanted to make sure big companies could recruit outside of the area because that makes (the city) more vibrant, and the community part was interested in festivals and arts and things that make us a quality place.”

OneRedmond initially rallied its efforts around economic development to reinvigorate the area in the midst of the recession. Its initiative created 2,500 jobs and was instrumental in recruiting SpaceX, and global tech company Tata Consultancy Group.

SpaceX in Redmond

OneRedmond also was one of the players — along with Bellevue and Kirkland officials — that created the Innovation Triangle, said OneRedmond CEO Bart Phillips

Bart Phillips of OneRedmond

Bart Phillips of OneRedmond

“It came about, one, because businesses don’t look at city boundaries. They don’t acknowledge them. This is a tech region. If you look collectively at the Eastside, we really share a lot of the same attributes,” Phillips said. “I started working with James Henderson, the economic development director (in Bellevue), and Ellen Miller Wolfe, who’s the economic development manager of Kirkland. We wanted to do a joint recruitment effort instead of promoting Bellevue, Kirkland, and Redmond (individually). It made a lot of sense to brand the Eastside and market the region as a whole.”

The idea is that a win for Redmond is a win for Bellevue and Kirkland, and vice-versa. The collaboration saves thousands of dollars when going to nationwide recruiting events, including Select USA, which can cost each individual city $12,000 a year if it attended separately.

It’s also led to ideas that will help the cities attract foreign companies that are drawn to the workforce talent and the market, but need help setting up their business once they arrive. The Innovation Triangle partners are developing a packet of services such as accountants, licensing, office space, and talent acquisition to make the transition smoother.

The organization recently launched OneRedmond 2.0, which marks the next phase of economic development — adding 2,500 more jobs over the next five years, helping current Redmond companies expand, and diversifying. Phillips said OneRedmond is focused on recruiting more tech companies in commercial space, interactive media and gaming (especially virtual reality), cloud computing, and enterprise software. 

Women walking in Redmond

Fostering Startups

Greg Paley, a business advisor with the Small Business Development Center located in Redmond, advises striving entrepreneurs in Redmond and Bellevue. The Small Business Development Center is part of a comprehensive state program offered through Washington State University and funded by the university, the federal government, and local stakeholders.

The center advises clients on how to start a company, grow and scale a business, develop financial projections, business plans, customer acquisition, strategies, and access capital. Paley predominantly works with tech companies that are in the very early stages. The average profile of his clients is young adults shortly out of or currently attending college, and longtime employees in the tech industry who are looking to break out on their own. Paley started his own tech company in the late ‘90s, so he’s navigated the same waters his current clients are.

This past year, Paley worked with 170 companies — 70 of which were emerging tech companies — resulting in about $6 million of economic impact, and helping companies get access to $2 million to $3 million in funding.

But Redmond has some challenges when it comes to startups. There’s limited office space, so entrepreneurs find that the economics oftentimes drive them to leave Redmond.

So, Paley sees a lot of startup entrepreneurs who live in Redmond, but open an office elsewhere. Bloomz, however, a social media platform company that connects parents to their child’s teacher, is a born-and-raised Redmond startup. Founder and CEO Chaks Appalabattula said Bloomz was growing rapidly, and he worked with Paley to grow and scale the company. The Bloomz app has reached teachers in 25,000 schools and is operated by a core team of six people.

“(Paley’s) been really helpful in reviewing our plans and our models, making sure we have the right strategy,” Appalabattula said. “For us to have a review with a detailed expert, that’s where I found it valuable to identify where we need to focus on and review our financial model.”

Even as Bloomz grows, Appalabattula said the company will stay in Redmond. It’s where his family lives, and commuting to Seattle would be difficult. He agreed that Redmond has some challenges, though.

Bloomz in Redmond

“People who are young out of college prefer to be in the Seattle area,” he said. “That’s what we’ve seen. But if you’re attracting talent that’s a little more senior (they’re more willing to live here).”

Paley has noticed a trend in large tech companies that have in-house incubator and accelerator programs to help foster startups — an ideal setting that he would like to see more of in the Redmond area. It would be another avenue in which he could offer his services, help startups grow, and stay in Redmond.

Redmond has certainly come a long way from the one stop-light city Marchione remembers, and while some lament about its quieter past, he said the difficulties they have — consistent growth and increasing traffic — stem from prosperity.

“Our problems are because we have good jobs,” Marchione said. “Because we have good jobs, the demand for housing is higher. Because we have so many jobs and housing is so high, that creates traffic. People don’t like the growth, they don’t like the traffic, but they like their jobs and they like what their job is paying them. Yes, these are problems and we’re probably always going to be addressing them, but they’re problems because we’re successful, not because we’re spiraling downwards.”

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