If an estimated 100,000 people a day commute from Pierce County to King County for their high-paying software development, aerospace, and management jobs, mostly in the technology sector, think of the economic impact that would result if 10 percent could work where they live.
So wonders Lee Reeves, who cofounded Startup253 with Tacoma real estate developer, entrepreneur, angel investor, and CEO and founder of Surge Tacoma Eli Moreno to bring more attention to Tacoma’s still evolving and somewhat fragmented technology scene, seek a more cohesive ecosystem, and help area startups make the financial, business, and other connections to grow locally. Especially those that can scale up with high-paying jobs.
“I think that there just needs to be someone or something to tell the story of the founders that are building these great companies … because they just get lost in the noise of what‘s going on in Seattle,” Reeves said. He wants to create a mechanism to help support early stage companies so when somebody graduates the University of Washington Tacoma with an engineering degree and wants to launch a startup, they don’t look first to Seattle or the Eastside.
Added Reeves, whose interests in Startup253 are separate from his day job as manager at Oracle for Startups: “That’s not a bad thing per-se, but it’s like this is the problem that Tacoma has right now; people just leave” for their jobs in King County.
Reeves, Moreno and Kristine Grace, a strategic adviser to Startup253, seek to strengthen the tech startup network in Tacoma and create more home-grown success stories, in part, through Moreno’s plans to include a technology center as part of his scheduled renovation of Tacoma’s Old City Hall, which is located within the U-shaped boundaries of Commerce Street, Pacific Avenue, and South Seventh Street, and the building has been vacant for 10 years.
Moreno, through his Surge Tacoma coworking business, has a development agreement with the city to refurbish the 1893 building, which includes brick walls with large interior arches, high ceilings, and wood floors awaiting a return to their original luster. Plans include dining and retail on the lower floors; coworking and office space on the third and fourth floors, with the tech center, business-education programming and Startup253 office and networking services part of the third floor; micro apartments on the fifth floor; and restaurant/event space on the sixth floor.
The $15 million project is slated for completion by the end of 2021, when Moreno hopes to ring in 2022, literally, by also rehabbing the building’s iconic clock and bell tower.
Moreno’s vision for Old City Hall is as expansive as the views from the building’s upper floors, where large windows frame dramatic scenes of Commencement Bay and the Port of Tacoma. The top floor restaurant/event space, with its glass atrium, expands the view to include the clock tower, where the gears behind four clock faces will again turn, like the gears of innovation within the minds of Old City Hall’s occupants creating Tacoma’s future technologies, companies, and jobs.
“There’s nothing like this in Tacoma,” Moreno said of the combined educational, entrepreneurial, dining, retail, and residential components under one roof.
The idea is modeled after similar projects that have proved popular in New York, San Francisco, Lisbon, and elsewhere, according to Moreno and Grace, who will lead the tech center’s educational programming. Grace, an oral and facial surgeon, also is working to cultivate Tacoma’s biotech sector through RAIN (Readiness Acceleration and Innovation Network), where she’s director of business development for the nonprofit life science incubator that works to grow local jobs, talent, and companies in biotech. From RAIN, she started Jolt Biotech, a biotech coworking space for companies to grow their biotech startups and companies in Tacoma. An entrepreneur, Grace also started a digital marketing company for healthcare providers that was acquired in 2011, and is an angel investor.
Old City Hall offers a space for companies to grow from needing little space as they launch on the third floor, to, as their business grows, expanding into larger spaces on the fourth floor, where they will have bigger offices and conference rooms.
“We’re seeing this in other cities, this is what the generation of startups want: They want a hundred feet, they want to go to work, they want to go to sleep, and they want to eat within a hundred feet of where they are,” Grace said.
Old City Hall adds to a startup ecosystem for tech companies that also can attract startups from outside Tacoma, she said. Tacoma has a network, mentors — not consultants — willing to help, and an ecosystem of founders who meet regularly to share ideas and comprise strong tech companies that may not get much press, but are very good, she said. Their success stories can entice other companies to Tacoma.
“We actually are really proud of the technology companies that are here and with the University of Washington Tacoma engineering program, we know we are growing this huge workforce of engineers and computer scientists and cybersecurity people and mechanical engineers that are looking to join companies here in town, and they don’t want to move out of Tacoma,” Grace said.
She sees Tacoma, a secondary city to Seattle with its robust network and funding, as having the potential to become what Brooklyn is to New York, or Oakland is to San Francisco.
“We are following in the footsteps here in the technology center with what those areas are doing,” Grace said. “And I think we are trying to model Old City Hall and the programs and footprint of what’s going on here around how those secondary cities have had success, and they’re now thriving.”
Surge Tacoma operates three other coworking and office locations in town, roughly occupied half by startups and half by established businesses, according to Guion Rosenzweig, project manager for Old City Hall, and operations manager for Surge Tacoma and Premier Residential, Moreno’s real estate development company. One of those coworking sites, the Union Club, which Moreno redeveloped at 539 Broadway, can be seen through the windows of Old City Hall and is just a three-minute walk away.
Old City Hall will be Surge Tacoma’s premier site, Moreno said.
“We are trying to create a space where a promising young person can go from having an idea when they are in high school to all of a sudden they graduated, they went to school, they come back, look at all of these resources that are here,” he said. “Not just office space, but the connections, the network, the potential funding sources. So that’s what we’re going to try to create here — kind of an engine of growth and jobs, high-paying jobs, new ideas.”
Old City Hall’s technology center would include Surge Labs as a space to develop and support high-growth startups, and Surge Education, two six-month programs run by the nonprofit Surge Institute to train cohorts in business skills and entrepreneurism, one for Tacoma high-schoolers and one for adults seeking to develop a business. Startup253 will serve as kind of the third step for the startups, Rosenzweig said.
“The Startup253 is really, ‘I have an idea, now I’m ready to start this business,’” she said.
Startup253 also will office in the tech center, serving as a support organization for events, content planning, and facilitating networking and connections to investors, legal experts, and others.
“I do believe that it’s going to be the central hub for all things technology, startup, entrepreneurship in the South Sound,” Reeves said.
Startup253 says it unites entrepreneurial leaders, venture capital, and corporate and local government sectors toward its goal of helping the South Sound become the “best home for innovation and creative new companies.”
Reeves and others don’t want to replicate Seattle, but believe there’s an opportunity to create more tech energy in Tacoma and the living-wage jobs the city wants, while maintaining Tacoma’s identity and improving the quality of life for thousands of today’s commuters.
Said Rosenzweig, “We do want to offer the citizens of Pierce County and Tacoma a way to have this area grow and not just have all of our resources head up north.”
“We are a big believer in the potential of Tacoma,” she said. “We have just so much to offer down here in the South Sound.”
People are already moving to Pierce County for housing, but Surge Tacoma believes the region offers more than just a housing option, Rosenzweig said.
Surge Tacoma is trying to figure out ways to make sure people know what’s available to them in projects, revenues, and resources, she said, “that they have a home down here in the South Sound. We know it’ll take a little bit of work, but luckily the tides are kind of turning with us at the same time. People are seeing Tacoma and the South Sound for the area that it is for a lot of opportunities, a lot of ways to invest, and ways to grow that you might not have in the large ocean that is King County.”
Startup253 also signed a six-month service contract with the City of Tacoma in the fall to introduce venture capital funds to Tacoma companies and prospective companies to Tacoma to see all the city has to offer.
“That service contract is basically for the city to expose itself to other high-tech companies or VC funds that it might not have access to, and that’s really just the network that I’ve built and that Eli has built and some of the others who are helping out,” Reeves said.
Tacoma native Laura Malcolm, who founded Give InKind, a Tacoma-based online platform that helps to support people faced with major life events, believes the Tacoma startup scene for venture-scale tech is about to shift in a more positive direction. While she has some investors from Tacoma, she still does much of her networking in Seattle, where she raised most of a $1.5 million financing round completed in November.
“Nobody wants to make Tacoma Seattle, but what I want to do is I want to create opportunities for the people who are sitting on I-5 to go to Seattle every day to work at companies here in Tacoma and keep their time in Tacoma, and keep their families in Tacoma,” Malcolm said. “That’s where I really see one of our opportunities. … I think that there is a way that we can all work really nicely together and not turn into another Seattle.”
She especially likes the idea of technology development that can help companies and industries in Tacoma operate more efficiently and safely. She cites Seattle-based Convoy, which she said has revolutionized the trucking industry with its software to improve shipping efficiency, as the kind of technology that would be a good fit in Tacoma.
Tech is making inroads in Tacoma’s economy, said Pat Beard, a business development manager at the City who focuses on technology. She rattled off examples of companies, like Give InKind, Humming, and Latchel.
The City works as a “convener” for startups, Beard said, of referring companies to different sources of technical assistance, business planning, marketing, accounting and other services, some of which are free. The city also has its own financing programs, including micro loans for new companies — tech and nontech alike.
Beard also has worked with Startup253 to bring Seattle investors to Tacoma for meetings and tours with companies.
“We’re continuing to try to be part of the regional ecosystem instead of a standalone,” Beard said. “It really seems to me that that’s the only way things are (going to) work.”
Tech isn’t the only focus
While the City looks to expand and improve its tech-startup environment, it offers assistance to startups in all industries, Beard said.
“The City wants to support entrepreneurs and startup companies,” she said. “If there’s any doubt that we might be able to help them, I hope people will contact us.”
Startup resources in Tacoma include the RAIN incubator, VIBE (Veterans Incubator for Better Entrepreneurship), Surge Tacoma coworking spaces, Spaceworks Tacoma for the creative ecosystem, and more.
A City goal is to increase the number of types of living-wage jobs, she said.
“We want people to feel like no matter what their job set, or skill set, or passion is, they can find a way to have a sustainable life here.”
Similar message in Thurston County
Thurston County programs and projects include the Center for Business & Innovation through the Thurston Economic Development Council, Lacey MakerSpace, Southwest Washington Regional Agricultural Business & Innovation Park opening this year in Tenino, and a local investment network, among others.
Michael Cade, Thurston EDC’s executive director, said the area’s higher education institutions play important roles in developing the entrepreneurial ecosystem, citing Saint Martin’s University, The Evergreen State College, and South Puget Sound Community College.
The EDC, through its Center for Business & Innovation, created a scale-up and tune-up program to help companies get to the next phase of their growth through efforts like management programs, cash flow analysis and cash management, and product development, Cade said.
“It’s a really hyper-effective program,” Cade said. “In the last four years, I think we’ve run close to 200 businesses through that program.”
Thurston County has some of the highest concentration, per capita, of technical service providers for entrepreneurs, he said. It’s also focused on quality of place, so entrepreneurs stay, and have access to capital, real estate platforms in which to operate, and access to markets.
Thurston’s economy is becoming more diverse, less propelled by state-driven jobs and opportunities, as more people move in and increasingly fuel private entrepreneurial activity, Cade said. The EDC helps every business type try to obtain the resources it needs, but Thurston is seeing more technology-based interests emerge.
One example is Fourasoft LLC, a company offering integrated business management system software for accounting, budgeting, sales promotions, discounts, leads and quotes, orders and inventory, invoices and more, said cofounder Brian Rawlings, who lives in Tumwater and has two partners in Gig Harbor and Federal Way.
They’re employing skills they honed together in a large firm that included work for the FBI, U.S. Department of State, and large banks that required precision and security. They’re incorporating those standards in a smaller package for Northwest companies in the $1 million to $50 million revenue range that are looking for high-end business-management tools at an affordable price, he said.
As Fourasoft’s revenues grow, it plans an office in Lacey, where it also can meet with and train customers on its product.
Rawlings said the EDC’s services have been immensely helpful.
“Thurston County is a great place to launch a business,” he said. “The EDC is a wealth of information,” and includes connections with the Small Business Development Center, Washington Center for Women in Business, and Washington Procurement Technical Assistance Center for government contracts.
EDC facilitated connections for Fourasoft as it was developing its product and seeking legal, business, or other assistance.
Rawlings isn’t concerned about talent acquisition in Thurston County as Fourasoft grows. The company has met with local colleges and envisions blending a pipeline of young talent with senior workers the partners already know and hope to recruit.
“It’s been my experience that there’s a wealth of talent that lives outside of Seattle,” who might travel there for work and would jump at the chance to work closer to home, he said. There’s also a lot of talent working in South Sound at engineering firms, or supporting Joint Base Lewis-McChord and area hospitals, who choose not to work in Seattle and, he believes, “fly under the radar.”
Startups beyond tech
In Tacoma, Gabster’s Homemade, owned by Kristina Roberts, meets the definition of a startup that hopes to scale up over time. Launched in January 2019, Gabster’s Homemade makes frozen custard that is sugar-free, keto friendly, and lactose-free, but technically not dairy-free since it has trace amounts of dairy. The recipe uses monk fruit for sweetener instead of sugar, and ghee instead of cream.
Roberts, a Washington Air National Guard captain and air battle manager at JBLM, developed the dessert while experimenting with healthy treats for herself and her daughter, and soon found she had a hit with family, including her husband, David, and friends. From there, she widened the sales net to farmers’ markets and online directly to customers, with plans to sell in stores later.
She and David, a voice actor and author who helps manage the business, have found a supportive network in Tacoma, both through the commercial kitchen where they make their frozen custard, and fellow entrepreneurs at farmers’ markets
“It’s been a pleasant surprise and it’s been very encouraging,” Kristina said. “It’s challenging being an entrepreneur and there’s a lot of things you don’t know, and so it’s just nice when you feel like other people are looking out for you or are always encouraging you.”
And they know there are options to seek out more help as they scale up, whether through the chamber of commerce, incubators, or other avenues.
“There are so many wonderful opportunities that it’s almost hard to keep track of it all,” David said. “But we know that that’s there for us when we need it.”
New coworking entrant
Tacoma’s coworking scene gained another entrant this year with the opening in January of TractionSpace, which touts the same office amenities and services typically found at large companies. Its partners include former executives from Microsoft, in Don Morrison, and Boeing, in Richard Fichera. Another partner, Steve Buhaly, held executive positions at companies that included Qorvo and TriQuint Semiconductor.
“This is what you would expect going to work at a Microsoft or a Boeing and you would be happy and proud to take clients here,” Morrison said of TractionSpace, located in the Azure Pool building, 748 Mkarket St., in the Theater District.
Morrison said the partners are among the city’s first Opportunity Zone investors through the project that redesigned and redeveloped the 1927 building, which includes a café to complement the coworking business. They have put more than $2.5 million into the building between its purchase and renovation.
But it’s more than a modern physical space for startups, small businesses, remote workers and freelancers, Morrison said.
The partners, with their extensive contacts, will assign mentors to TractionSpace clients, offer business education on everything from writing business plans to digital marketing, and more for personal and professional development. They like Tacoma’s emerging tech scene and, with their tech backgrounds, want to help nourish that, plus other businesses.
“We help them through some of their challenges, which is very different than most coworking spaces,” he said, noting the services will be offered to established businesses in addition to startups to help improve their odds for success.
Tacoma is the flagship property of what Morrison said will be a half-dozen such TractionSpace facilities on the West Coast.
They sought what Morrison called Tier 2 cities around congested Tier 1 markets.
“Also, the infrastructure and the vibe down here is amazing. This is the biggest 200,000-people city that I know of,” Morrison said, praising Tacoma’s quality architecture, street grid layout, port, mass transit, freeway system and “amazing” UW Tacoma campus. “It’s just a matter of time before Tacoma comes into its own.”
Tacoma’s size is attractive
Evan Brubaker, cofounder and CEO of Accumula, whose software makes retail operations run smarter and more efficiently, said his company was in Seattle near its customers. But as Accumula’s customer base globalized, the South Sound team running the company realized they didn’t need to be there and moved the business to Tacoma. No more long days stuck in traffic or dealing with Seattle’s size and challenges.
“I think for some startup founders, it’s better to be in a smaller community,” where there are fewer distractions from the focus needed to build a business, Brubaker said.
While Tacoma may lack the numbers of investors and networks that Seattle enjoys, he thinks it’s easier to build the business in Tacoma, after which one can build that network when the business is ready for it.
“If you’re completely focused on the network, you might not spend as much energy running the business, (and) the business is what we’re all here to do,” he said.
The biggest challenge in Tacoma is building teams, because people don’t think there’s technology work available, Brubaker said.
“I think really our challenge is establishing kind of the signage and the brands for these companies that are clearly in the South Sound and bringing more awareness just to the workforce in general,” he said.
“People just don’t know that there are cool companies and cool jobs here,” and there aren’t glowing signs on buildings touting those companies’ presence like in Seattle or Bellevue. “Our office space is really segmented and kind of odd and largely in older buildings that don’t have signage and that does play a part in the whole thing.”
He cited Lars Harvey — founder of Tacoma’s IID, which was acquired by Infoblox — who has joked that Tacoma businesses should pool their resources for an I-5 billboard in Tacoma that reads, “If you worked here, you’d be at work by now.”
Surge Tacoma’s Moreno remembers his early days as an angel investor 25 years ago, when San Francisco was the place to seek out startups, not Seattle. People would say, “Seattle? What is up there? Why in the world would you want to do anything up there?
“Today, we are the Seattle of 25 years ago and what’s happening in Seattle, of course you have a very robust ecosystem, but … now we have a roadmap and it’s not that we’re going to try to make Tacoma Seattle, but we believe that there is an opportunity to expand that ecosystem to help entrepreneurs. That’s what it’s all about.”
He, Reeves, and Grace are trying to build that ecosystem in Tacoma where companies can get funded and make their products reality.
Funding is one of the barriers for great startups, Grace said.
“We see it all the time — a really promising company that just can’t get over the Valley of Death,” a term for when there’s a product, but not enough funding to truly scale the company, she said. “We need more of these technology companies that are high growth, that are scalable to have success here in Tacoma … and then we recognize that more investors, angel investors and venture capitalists, are going to take notice and … start coming down and funding these companies.
“As that happens, more of today’s northbound commuters presumably can have high-paying jobs a lot closer to home.”