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Seattle - The Rise of the next global innovation hub

Over the last several years I have been studying the Seattle innovation economy, it's history, and a snapshot of where we are today. Seattle has come a long way, but has a ways to go before it can claim the mantle of a global innovation center. Here is a bulleted summary.

A Brief History Of Seattle’s Innovation Economy

1851 – Seattle is founded by the Denny Party Scouts

1852 – Henry Yesler builds steam sawmill and becomes first Seattle Millionaire. Seattle dominates lumber industry.

WWI – Rise of Maritime and ship building industries

1916 – Boeing Company Founded leading to major aerospace industry

1962 – World’s Fair brings 10 million people to Seattle, and leaves

behind the Space Needle, Alweg Monorail, Key Arena, Seattle

Center, and other foundational structures.

1975 – Microsoft founded by Bill Gates and Paul Allen, leads to

dominance in computer operating system software with

Windows during PC revolution

1994 – Amazon is founded by Jeff Bezos who left D.E. Shaw in NY for

Seattle, and became a leader in ecommerce, and now many

other industries

Make-Up Of Seattle’s Innovation Economy Today

Aerospace – Thanks to Boeing the aerospace industry accounts for 11% of Greater Seattle’s Economy and employs 132,500 workers in 1,350 firms

ICT (Tech) – Thanks to Microsoft and Amazon the Information and Communications Technology sector generates $18.6 billion in state income and employs 200,000 people in 14,000 firms

Life Sciences – Thanks to UW Medical, the Fred Hutch, Allen Institute and other healthcare organizations, Washington State generates $11.1 billion in income from healthcare and life sciences

Amazon Impact – In Seattle Amazon generates $400 million in taxes, employs 30,000 people and growing, and occupies 10 million SF of office space or roughly 25% of total premium downtown office space

Ranking of Seattle’s Innovation Ecosystem including IP (High)

  • UW is the 5th most innovative University in the country as ranked by Reuters

  • UW is #2 in total federal funding with over $1.3 billion mostly life sciences

  • Microsoft ranks #4 and Amazon ranks # 7 in R&D funding globally

  • Pacific Northwest National Laboratories (PNNL) spent over $1 billion in R&D

Ranking of Seattle’s Start-Up Ecosystem (Med/Low)

  • New start-ups nationally have declined 40% since 1978 to 530,000 start-ups per year in 2015

  • Kauffman Foundation ranks Greater Seattle start-up activity 26 out of 40 metro areas in 2016

  • Kauffman Foundation ranks Greater Seattle rate of start-up growth 22 out of 40 metro areas in 2016

  • Boston has 5X the number of VC firms (approximately 80 versus 15) and 4X the annual VC investment compared to Greater Seattle, and is a similar size city

  • Of 8,600 tech companies in Seattle less than 10% have greater than 20 employees, however, high growth companies account for 50% of new jobs

Ranking of Seattle’s Local and Regional Ecosystem (Med)

  • Seattle ranks in the top 5 among U.S. cities for livability, and livability is one indicator of the attractiveness of a city for talent

  • Livability, however, is being negatively impacted by rapid population growth, which is expected to increase by 38% through 2040 when Greater Seattle is expected to become 14th largest metro area

  • Seattle tied for fourth worst city for travel congestion behind LA, SF, and NY

  • Seattle K-12 public schools rank in the bottom quartile especially in STEM

  • Seattle has 3,000 tech jobs that go unfilled every year due to lack of tech labor, and UW only graduates 375 computer science degrees per year

  • 80% of Seattle tech workforce has come from out of state

Ranking of Seattle’s Global Ecosystem (Med)

  • Global Innovation Exchange (GIX) is a partnership between UW, Tsinghua University and China with $25 million in backing by Microsoft to help graduate 3,000 tech workers over time

  • UW is planning an innovation district near UW to house start-ups, satellite offices of mainstream tech companies, and UW students and faculty starting companies

  • WA is evaluating an innovation corridor between Vancouver BC – Seattle – Portland to facilitate the free flow of human and financial capital

  • Gates Foundation is attracting global philanthropic and healthcare talent

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