startups

Why the Cascadia Innovation Corridor is gaining global recognition

Cities have always been America’s centers of power, driving the economy forward through competition. Now, they’re ceasing to lead the country’s innovation.

As jobs and talent have clustered, expertise has spilled over urban boundaries. In locations like the Gulf Coast, Texas Triangle, Great Lakes, and Southern California, metropolitan areas are cooperating across borders to share new ideas. Eleven of these have earned the title of “megaregion” — and they host some of the continent’s cutting-edge centers of technology.

The Cascadia Innovation Corridor — the strip of land down the West Coast from Vancouver, Canada to Portland, Oregon — is perhaps the best example. Home to powerhouses like Microsoft, Amazon, Nike, Lululemon, Boeing, and Intel, the area has seen large investments from companies hoping to encourage further cooperation. Over the past five years, state and provincial governments have signed formal agreements for collaboration, and executive-filled conferences are being held to encourage new partnerships.

Why are businesses and government organizations investing so much into the region? Challenge Seattle CEO and former Washington State Governor Christine Gregoire believe it’s the evolution of a trend that’s been unfolding for decades.

“For many years, a number of international companies from Seattle have been putting Canadian headquarters in Vancouver,” she says. “So without anybody deliberately thinking about how we could work together, it was already actually happening. These organizations have decided to capitalize on [what] was happening from the ground up, and build out a vision, and bring us all together so we can really magnify the success of what’s already happening on the ground.”

Local support

The urban centers along the West Coast are linked by more than shared geography — and, as Gregoire jokes, a love of the NFL’s Seattle Seahawks. The Pacific Northwest is characterized by an open and inclusive culture, heterogeneous populations, and creating technology with a focus on social good. Economically, too, there are similarities. West Coast cities have historically turned to Asian and South Asian markets for trade, as well as looking to each other. Washington State exports more to British Columbia than it does to all other Canadian provinces combined, and if Washington State was a country, it would represent B.C.’s third largest international export market.

For Bill Tam, a member of the Cascadia Innovation Corridor steering committee and former president of BC Tech, Vancouver, Seattle, and Portland each has a different reason to support the megaregion.

“In Vancouver, which has a great startup ecosystem, a lot of those companies and a lot of the research organizations have really bought into this idea of being part of something bigger and more substantive,” he says. “I think on the U.S. side, what was interesting was that we saw the impetus come from larger companies — particularly Microsoft, but they’re not the only ones. Everyone from the Nordstroms to the REIs really see the value in learning and working together to try and build leverage, and to accelerate the things they want to do.”

Tam’s hope for the region’s success comes from its ability to share resources across cities. Vancouver, for instance, is known for its highly-educated workforce: the location’s nature-filled setting and welcoming immigration policies attracts many qualified tech employees. With its industry focused on startups, though, it lacks larger brands and anchor companies that would help propel it onto the global stage.

The Seattle area, however, has the opposite problem. America’s tight immigration regulations make it hard for companies to secure qualified talent, but the influence of tech giants like Microsoft and Amazon mean the city is a hotbed for international investment and innovation. By joining forces — and by integrating Portland, which sits somewhere between both poles — the Cascadia region, Tam believes, can emerge as a powerful global competitor.

“I think the long-term vision for Cascadia is to feel like it is an economic region that is not only the best place to build new innovations, but also a cohesive area that understands the values of collaboration,” he says. “It ties together all the responsible aspects of how we live — whether it’s on the sustainability agenda, the environment agenda, and how we actually treat each other as an open and diverse society.”

Areas of expertise

Aside from giants Amazon and Microsoft’s dominance in ecommerce, software, and cloud-based computing, the area has spawned some niche areas of expertise. President and CEO of the Business Council of British Columbia Greg D’Avignon believes those sectors will help elevate the profile of the Cascadia region.

“There’s a myriad of interesting companies here in British Columbia that are driving innovation,” he says. “In the quantum space, there’s D-Wave Systems1QBit, and others. D-Wave is the first commercial quantum computing company in the world, and it’s driving significant and complex computations on datasets to try to resolve issues that are endemic to challenges we have in terms of climate, personal health, aging, and growing populations. Life sciences is another important sector. There are some very interesting companies in the personalized medicine and health business — we’ve got Zymeworks […] and a myriad of other companies [that] are changing the nature of population-based healthcare.”

The region is also well regarded in the virtual and augmented reality (VR/AR) space. Microsoft developed one of the leading AR headsets — the HoloLens — in the Pacific Northwest, and Vancouver has since been recognized as the world’s second largest VR and AR ecosystem. More than 230 companies are located in the city, drawing on its history of gaming and visual effects to develop everything from surgical training software to AAA-aspiring titles.

As well as individual successes in the consumer blockchain space with viral game Cryptokitties and data aggregation with Hootsuite, Cascadia is known for its technical apparel, with the likes of LululemonREIEddie BauerArc’teryx, and Nike choosing the region as their home. With Amazon’s monopoly on online retail, the West Coast leads North America in merchandizing tech.

“When we talk about some of the foundational pillars in the corridor, we’re talking about the movement of people and goods across the border,” D’Avignon says. “We’re talking about bringing together postsecondary in a way that is important. That’s all rooted deeply in how we look at making this region better. And then as we learn, how do we share that learning and those commercial opportunities with the rest of the world?”

Migration of talent

Another reason for Cascadia Innovation Corridor’s increased international presence is the influx of companies from Silicon Valley. Over the past five years — and particularly the last 12 months — a concentration of Bay Area businesses have chosen the region to set up new headquarters and hire employees.

Those companies range from scrappy startups to household names. Work management software Asana and delivery specialists PostMates — both certified tech unicorns — have set up satellite offices in the area. The $23 billion Lyft, too, is advertising for technical positions across the region. Gmail project management suite Streak, Bluetooth finding-device Tile, HR management platform Zenefits, data collection company Segment, virtual environment creator Parallel Domain, and mobile marketing platform Swrve are just a few of the other Valley businesses now looking for staff in the area.

“As Silicon Valley and other places have seen, there is an enormous challenge of not only recruiting but retaining people within their companies,” says Tam. “They’re finding that there are markets where that equation is far simpler to tackle. In the past, it was the case that if you hired a dev[eloper] in the Valley, you could probably expect to retain them only for somewhere between eight to 15 months. I think you’ve got much better opportunities in the Cascadia region. We produce some of the best talent from universities, …[and] when you do recruit, you’re probably able to retain them for 30 to 50 months.”

There are a number of reasons why Silicon Valley is looking north. While startups in the Bay Area have mopped up employees, qualified talent is readily available in the Cascadia region, and advocates of the Innovation Corridor suggest the area’s diverse population helps companies build for and market products to wide audiences. It’s also a desirable place to live. Gregoire suggests that the Pacific Northwest boasts a strong work-life balance with world-renowned hiking, biking, and winter sports just outside the city limits, which helps encourage employees to stay with organizations for longer.

“Many of these folks, Millennials, will go from one company to the next,” she says. “We have so much to offer in terms of quality of life and the great outdoors that it’s appealing to that workforce. And we are also promoting that. You should see what we call South Lake Union in Seattle right now — it’s just being flooded with Silicon Valley companies, many of which you’re familiar with, and some of which you may not [be]. But they’re coming to the corridor; they’re coming to Vancouver, Seattle, [and] Portland.”

Issues facing Cascadia

The burgeoning influence of the Cascadia region, however, isn’t yet a done deal. Like all major tech hubs, the cities that make up the Cascadia Innovation Corridor are working hard to overcome a number of concerns that threaten to slow growth.

The first is the high expense of living in the region. The mountainous landscapes around Vancouver, Seattle, and Portland — not to mention the booming job market — make each a desirable destination. As a result, Seattle and Portland all rank in the top 25 most pricey US cities, with costs of living at 54 percent and 31 percent respectively above the country’s average. Vancouver, too, is Canada’s second most expensive city to live.

Those numbers stem in part from steep rental and real estate markets. Vancouver counts a rental vacancy rate at less than one percent — a long way off the sustainable target of three percent — and a housing market that, until 2018, had been growing at a rate of up to 30 percent a year. The average detached house in the city now costs just shy of $1 million USD, and Seattle and Portland face similar issues. With tech giants hiring as fast as they can, demand for housing in the area has shot up. Single family homes in Seattle cost $715,000 on average, while Portland offers a slightly more reasonable $415,000.

Despite those bumps in value, tech workers are not wholly priced out of the areas. Salaries in the industry are generous — the average tech employee in Vancouver earns 84 percent more than the average wage, for example — and each government is working on dampening the high costs of housing. Policies to tax speculative foreign buyers, boost rental stock, and increase density have been variously deployed across the region, and have already helped high housing prices to fall, at least marginally, across the Pacific Northwest.

The larger issue for businesses now is securing office space. With tech startups booming in the area, commercial real estate is in short supply. In Seattle, for instance, Amazon occupies a staggering 19 percent of all prime office space. While the organization’s presence has revitalized neighborhoods across the city, it’s also pushed up the price of company leases, branding the city as the most expensive place in the country to set up an office.

Commercial real estate might be much more affordable in Portland, but with a vacancy rate of just under 10 percent, the number of available offices is among the lowest along the West Coast. The trend is mirrored in Vancouver, which is seeing strong demand and limited available space. In order to help the Cascadia project succeed, each city will have to secure quality office locations that meet the demands of its growing workforce — all in a cost-effective way.

Programs to unite the region

Despite those issues, government and industry leaders believe the region is poised to grow. Local support, common expertise, and concentration of talent have encouraged substantial investment in creating links across the Corridor. Eight different committees have been established with specific portfolios to advance Cascadia. Half focus on developing industries — life sciences, transformative technologies, retail innovation, and sustainable agriculture — and half help solve challenges around assets and infrastructure. More than 100 executives are part of the initiative, each hoping to facilitate greater cooperation between the member cities.

The groups have already generated success. Transportation has been a significant focus of investment, and in April 2018, a seaplane service — affectionately dubbed the “nerd bird” — launched to shuttle passengers between Vancouver and Seattle’s downtown cores in less than an hour. Rail, too, has been a focus, with the Province of British Columbia, the Oregon Department of Transportation, the Washington Department of Transportation, and Microsoft financing $1.5 million to determine the feasibility of a high-speed line between the three locations.

The past few years have also seen increased sharing of resources across state and province boundaries. Most notable is the founding of the Cascadia Venture Accelerator Network (CVAN), which was launched in 2017 to nurture entrepreneurship between private, non-profit, and research teams in B.C., Washington, and Oregon. The scheme allows businesses to share mentors, capital, and office space, and work collaboratively to help early-stage companies scale up within Cascadia.

The committees also steer the integration of research and business. The Cascadia Data Discovery Initiative, for instance, brings together organizations such as the University of British Columbia, BC Cancer, and Fred Hutchinson Cancer Research to accelerate cancer treatment proposals. The Cascadia Urban Analytics Cooperative, meanwhile, uses big data to try and better areas such as public policy, urban planning, real estate, and law.

“The more joint research, the more joint programs, and the more familiarity that’s built out, the more job opportunities there will be for people who are graduating,” says Tam. “A lot of the programs are focused on how we can tear down some of the barriers around access, and knowing people across each side. I think there’s really an opportunity to open it up, and for more people to get directly involved in shaping decisions. And then eventually we will be able to virtually erase that border and think of the whole region as one.”

Gregoire agrees. As megaregions continue to grow in importance worldwide, she believes the influence of — and investment into — the Cascadia Innovation Corridor will only continue to build.

“We have more in common with British Columbia than we do with any state in the United States. And that’s true from background, historic economy, culture, our native people — you name it. […] Now, I think it couldn’t be a more exciting time, because we recognize that on a much bigger scale, we’re putting ourselves together. Because as creative and innovative as we are by nature, imagine what we could do both economically and for social good united as one. And so it’s very exciting.”

Originally published by TechCrunch, Nov 7, 2019 
https://techcrunch.com/2019/11/07/corporate-public-investments-spur-interest-in-pacific-northwest-startups/

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