A majority of top startups in Seattle and the Pacific Northwest are seeing little or no impact on their businesses from the pandemic, or even a positive impact.
Most plan to hire more employees this year. And many are optimistic about the regional economy over the next 18 months.
Those are some of the takeaways from the first-ever GeekWire 200 CEO Insights survey. We polled the leaders of companies ranked on the GeekWire 200, our list of the top privately-held tech startups in the Pacific Northwest, and received nearly 50 responses. Topics included everything from the timing of bringing employees back to the physical office to whether a Trump or Biden administration would have a more positive impact on the U.S. tech and business climate.
The results, collected anonymously, provide a unique snapshot of the regional startup ecosystem and broader tech industry. Here are some of the highlights.
- More than half of CEOs say their business is not negatively impacted by COVID-19, and about a quarter project year-over-year revenue increases. “Seeing negative impact for some of our customers causing loss of revenue, however other sectors are thriving and driving new business opportunities for us,” one CEO said.
- A quarter of CEOs aren’t comfortable sending workers to the office until a vaccine is readily available, while 10% are allowing the majority of staff in the office now. “We are productive working from home and will not put our employees or their families at risk until we can be more certain all are protected,” another CEO said. A few noted that employees only want to come into an office a few days a week, even when it is safe to do so.
- Nearly half say there is no change in access to capital due to the pandemic, while 20% said it is harder now. “Raising VC funds via Zoom can be challenging,” one CEO said.
- About 40% are optimistic about the Pacific Northwest economy over the next 18 months, with many pointing to the strength of Amazon and Microsoft. Both Seattle-area giants have increased their market capitalization substantially this year as millions rely on their services and products. “Amazon and Microsoft will save us,” one CEO said.
- However, another CEO has pulled their company out of Seattle and King County, blaming the City Council and an “overall negative environment for businesses.” “The anti-Amazon and increased penchant from local governments for increased tax revenue is not a place that I want to run a business,” the CEO said.
- None of the CEOs say they plan to reduce headcount this year, while more than 70% plan to grow their employee base. Layoffs hit the tech industry hard when the pandemic began, but many companies are now hiring.
- About 70% of respondents think a Biden-Harris administration would have a more positive impact on the U.S. technology and business climate. The rest feel better with a Trump-Pence second term, with some citing a pro-business/pro-growth approach. One CEO said that the administration change in 2016 created or accelerated a number of significant workplace tensions that did not exist prior to the election.
This survey is an independent editorial project conducted by GeekWire’s news team, with underwriting support from Martin Selig Real Estate.
After reviewing the results from the survey, we followed up with some of the GeekWire 200 CEOs to learn more about how they are navigating through an unprecedented year. A key pattern emerged: tech startups braced for the worst as the pandemic began earlier this year, implementing pay cuts and slashing unnecessary expenses. But many have emerged as even stronger businesses and some are even setting sales records.
Allie Magyar, CEO at Vancouver, Wash.-based event management software startup Hubb, quickly pivoted her company after the events industry froze as COVID-19 put a hold on physical gatherings. Hubb, ranked No. 159 on the GeekWire 200, is now helping clients put on virtual events and will grow 5X from last year.
“Any time there is a massive amount of change, that means there’s a massive amount of opportunity,” Magyar said. “For entrepreneurs, that’s your time to understand where the opportunities are and to create something incredibly meaningful.”
Seattle 3D laser printer maker Glowforge, ranked No. 53, also went into crisis mode earlier this year amid supply chain concerns and decreased sales. Its leadership team took pay cuts and additional layoffs loomed.
But then, as people started spending more time at home, many turned to Glowforge as they looked for ways to stay busy. Glowforge users also came together to help print ear savers for medical masks. Now the business is “better than it has ever been” and is nearing profitability for the first time, said CEO Dan Shapiro.
“When you’re stuck at home, there’s nothing like having a Star Trek replicator that lets you create the things that you dream of,” he said.
The pandemic has placed an increased importance on technology, which is boosting many enterprise software businesses such as Portland, Ore.-based cloud infrastructure startup Puppet, ranked No. 12 on the GeekWire 200.
“Puppet’s technology runs some of the most critical businesses, governments and municipalities around the globe,” said CEO Yvonne Wassenaar. “This segment has been less impacted than others during the pandemic which in turn has supported ongoing strength in Puppet’s business.”
But tech leaders are still staying cautious about the future despite promising metrics in recent months. Fran Dunaway, CEO of Seattle-based women’s apparel maker TomboyX, said she’s pleased that “people are in the mood for comfortable underwear made by people with ethical values.”
“However, with unemployment benefits running out, businesses cutting jobs and the vast uncertainty for the future, both economically and politically, we are looking forward with cautious optimism,” said Dunaway, whose company is ranked No. 136.
John Lauer, CEO of business texting startup Zipwhip (ranked No. 30), said he’s concerned about local mom-and-pop shops that are facing unique challenges.
“For some businesses, no amount of creativity could solve for the lack of customers visiting a physical store in the way they always have,” Lauer said. “So while I’m optimistic on a macro-scale, I am deeply worried about the impact that the pandemic has had on our small business community.”
The survey results also line up with data we’ve reported in recent months. The Seattle Startup Hiring Tracker, for example, shows that 84% of local tech companies are hiring, up from 67% in August.
Pacific Northwest tech companies are also raising cash at unprecedented levels. The number of deals and dollars invested in the first half of 2020 — $2.3 billion into 135 deals — significantly outpaced the number in 2019 and 2018, according to a GeekWire analysis. Startups such as Remitly and Auth0 have also raised large rounds this summer.
In addition, three Washington state companies went public this year: marketing startup ZoomInfo, health tech startup Accolade, and biotech Athira Pharma.
The Seattle tech industry is somewhat of an outlier in the city itself. Indeed reported a 35.3% year-over-year decrease in Seattle-area job postings as of Sept. 18, the third highest rate in the nation. Tech hiring across the nation has also slowed compared to other sectors of the U.S. economy, CNBC reported.