This article was first published in the November 2015 issue of 425 Business.
The Eastside’s recent growth is enticing companies to set up shop on the “other” side of Lake Washington
Grow or die.
Veterans of the business world know this mantra to be true, but grow your business too fast and inevitably you’ll find yourself overwhelmed. Grow too slowly, and business becomes stale and customer loyalty can be lost. So where is the sweet spot for growth?
Several companies have found the Eastside to be that sweet spot. The urban backdrop of Seattle and the scenic, rolling landscape of the Cascades help make it such. And there’s also Bellevue, the state’s rapidly growing fifth-largest city.
Downtown Bellevue alone had more than 46,000 individuals in its workforce in 2014. By 2030, that number is expected to climb to approximately 70,000. Additionally, downtown is expected to have more than 19,000 residents by 2030, up from 11,100 in 2014. Bellevue’s tourism industry — more than 1.4 million people visited the city in 2013 — also significantly boosts revenue for retail businesses.
“The days of the Eastside being just a boring, suburban location are over,” said Kurt Dammeier, owner and founder of Beecher’s Handmade Cheese. “More sophisticated businesses that would do well in Seattle have a place in the Eastside now.” Beecher’s recently expanded to downtown Bellevue, supplementing its Pike Place Market location, storefront at Sea-Tac airport, and its store and restaurant in New York City. Dammeier chose center court at Bellevue Square for the newest location of his handmade-cheese empire.
“We looked for another iconic, high-traffic location where we would be able to have more people experience our Beecher’s brand upfront and then still want to go home and buy the cheese in their grocery store,” he said.
The Eastside’s growing population also has helped it grow its talent pool. Nearby University of Washington campuses in Seattle and Bothell offer employers a wellspring of educated talent ready to hit the ground running.
According to business consultant Keith McFarland, businesses not only should tap into this wellspring, but they should get involved. One option for integrating college and universities into the hiring process is mentoring young academics through internships and residency programs.
“While it goes without saying that most fast-growing companies struggle to find good employees, the breakthrough companies have included colleges and universities in their scaffolding to facilitate talent pipelines for both graduates and top academics,” McFarland wrote in his book, The Breakthrough Company: How Everyday Companies Become Extraordinary Performers, regarding his case study of more than 7,000 growing companies.
Additionally, tech companies that expand to the Eastside can look to tech giants like Microsoft for time-tested veterans of the trade to add to their arsenal.
Arnold Blinn, GoDaddy’s chief architect, is one such Microsoft veteran. Blinn said the Kirkland branch of GoDaddy, which opened in 2013, was teeming with Microsoft talent from the get-go.
“There was a certain kind of person we wanted to attract. We were looking for people who were a little more seasoned, a little more senior,” said Blinn. “We knew that we could attract a large number of people from the Microsoft and the ex-Microsoft network, and we felt we could better attract them if we were on the Eastside.”
Blinn said that many other businesses that have expanded to the Eastside, like eBay, also have nabbed some of their leadership from Microsoft’s talent pool to make expansion possible.
“If you look at all the other companies who have expanded to the area, a large percentage of them have some ex-Microsoft senior-level person who runs their office,” said Blinn.
This certainly was the draw that brought New Zealand-born app company Pushpay to the United States. Pushpay’s mobile app brings church collection plates into this century by providing churches with a way to collect donations through digital means.
“The amount of growth, talent, and exciting development in this region was something that we wanted to be a part of,” said Pushpay CEO Chris Heaslip. “It’s proved to be the right decision because it’s helped us build out our core business, and supported tremendous growth.”
After Pushpay arrived in Redmond in 2013, its revenue grew from $1 million to $10 million in 10 months. Heaslip attributes much of Pushpay’s success to the talent the company has been able to hire, but the Pacific Northwest also holds a certain appeal to Heaslip and his personnel.
“The natural environment, from the water to the mountains, makes it an attractive place to live, and that makes it easy for us to find the talent we need to be successful,” he said. “Though the United States doesn’t quite have the same affinity for rugby as New Zealand … I am now a fan of the Seahawks.”
The ambiance of the Pacific Northwest didn’t escape Blinn’s notice either.
“We landed on Carillon Point in Kirkland and we are right on the water, on the marina. One of the reasons we landed there was because there was a great view, it’s beautiful and people who come to our office can appreciate our view.”
Blinn said a number of practical business reasons led to choosing Kirkland, including from its proximity to Bellevue and an easy commute for GoDaddy’s Seattle employees. But there was also a personal reason to keep the Carillon Point location in the back of his mind.
“There’s a marina there,” Blinn said. “I live on Lake Washington and so I actually commute to the office by boat that’s kinda unique I can’t do that in downtown Seattle. Of course the commute home is just lovely because there’s no traffic on Lake Washington. I think it’s kind of a cool factor.”
Once top personnel are recruited, expanding a business is one of the best ways to retain that talent — more locations means more leadership positions. These positions provide employees with opportunities for advancement within an organization, which fosters employee loyalty.
“When you only need five engineers, great, but when you need to hire 500, there’s a problem: The pool isn’t that big,” said Blinn. “The Bay Area had so much talent but there is so much competition for that talent, nobody is loyal, everyone is just thinking about their next gig. Alternatively, what we have here in the Pacific Northwest is a nice mix of talent and loyalty.”
Metropolitan Market made its first move into the Eastside market in 2010 with a Kirkland location, bringing the company to a total of six locations around the Puget Sound. The grocer’s most recent addition is slated to open in Sammamish in early 2017.
Todd Korman, President and co-CEO of Met Market, has found with growth comes higher employee loyalty and retention.
“Our retention levels have been at a pretty high rate for years. We have a number of people who opened our Proctor store in Tacoma that started with us when they were in their 40s and now they are retiring,” he said.
According to McFarland, it isn’t just about employee retention; it’s about how employees feel about coming to work every day. Happy employees are a huge driver in the success of a company, and those workers are the ones that will stick around.
“A key discovery, driven home in our visits to one breakthrough company after another, was that the task of building a great place to work wasn’t delegated to the human resources department alone,” McFarland wrote in his book. “The top people in the company thought about it every day.”
Met Market strives to do just this by asking employees to be more involved in decision making throughout the store and be involved in the product-buying process.
In addition to keeping employees, Korman explains that expansion will greatly impact customer loyalty by giving shoppers more opportunities to interact with a brand they love.
“Some families have grown up in a neighborhood like Queen Anne, in Seattle, and then they move away,” said Korman. “I get it all the time: ‘I’ve moved to this new area and I’d really love to have a Met Market in my neighborhood instead of driving all the way back to Queen Anne.’ In that regard, a great part of growth is having strong loyalty. It took years to earn that loyalty.”
And the old real estate saying still rings true when you’re looking for a retail or business space: It’s all about location, location, location.
Each Met Market expansion has been timely, methodical, and calculated. “Growing rapidly isn’t always the best answer,” said chairman and co-CEO Terry Halverson. “We’ve been fortunate enough to grow at a great rate. It’s a very viable pace for us.”
Korman says the best way to find a location for expansion is doing your homework and knowing the market you want to break into.
“We do a fair amount of research with each new location, whether it’s Eastside or west side,” he said. “In most of the places that we’ve gone, we tend to be the No. 1 requested grocery store in those markets. We do a lot of investigation along those lines before we make a big commitment to expanding.”
Korman and Halverson are playing their cards close to the vest but say they are looking for a Bellevue location.
“We don’t have anything to announce yet,” said Korman. “There has been a great expansion of retail, office, and residential development (in Bellevue). For years, we tried to find a good location to support that neighborhood, and we are in discussions with a number of developers right now to try to find a good fit for us.”
Many businesses, such as Beecher’s Cheese, have tested the Eastside waters first by expanding product and personnel into the market before diving in and buying or leasing a brick-and-mortar location.
“In some ways we opened on the Eastside in 2005, in that we started selling our product in PCC stores,” said Dammeier. “The grocery stores on the Eastside do really well with our product; we knew that we had a lot of fans on the Eastside.”
Met Market, in fact, was one of the grocery stores that picked up the Beecher’s products, as it does with many Northwest small businesses.
“The great thing about our company is that about 30 percent of the products that we sell are unique in the quality, and a lot of them are products that are produced by great vendors in the Northwest,” said Halverson. “When companies come to us, we try to eliminate some of the red tape and make doing business with us as easy as possible.”
Ultimately, each company should do what is right for it at that time. Halverson says expansion is tricky, but it’s ultimately the way to go if the timing is right. “Growing rapidly is a challenge,” he said. “I think that in business, growing at a reasonable rate and making sure that you can build your support team, your leadership team, and the vendors are able to grow with you, it’s really the right course of action.”