THE BIG PICTURE

Culture Seattle music didn’t begin with Hendrix. The area has always followed its own beat in developing and attracting such luminaries as Jelly Roll Morton, Ray Charles and the Kingsmen.

Communities The political gains of Asian-Americans in Seattle and nationwide have not matched their financial success. Journalist Nick Chiles examines why.

Table Contentsof ISSUE OCT/NOV

3 2013

FeaturedEntrepreneurNailing ItIn software-heavy Seattle, Jane Park saw an opportunity in something very tangible: nail polish. Her startup, Julep, has landed $10 million in funding and the former Starbucks executive is sitting pretty at the head of a brand making its mark in the crowded beauty industry.

Climate Is social entrepreneurship just a trend or the future of business? Stephen Gregory from NPR’s “Marketplace” leads a discussion with three experts.

Components The 1-800 service number is about to become extinct. UC Berkeley’s Arnav Anand explains the innovations that will replace it.

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Legalization Attracts Marijuana Entrepreneurs The feds don’t like it, but recreational marijuana is the new hot industry for Seattle entrepreneurs.

Social EntrepreneursSocial entrepreneurship has taken root in Seattle, but do good intentions always add up to good business?

Building on InnovationSeattle manufacturers find ways to innovate and compete.

Passion a Double-Edged SwordThe same love for gaming that drives video game developers can blind them to business realities.

I Can Haz Success?Cheezburger’s Ben Huh explains how he built an empire on cat photos.

Tech and Music in ConcertTechnology, once viewed as the enemy, is being embraced by Seattle musicians.

Micro EffectThough its entrepreneurial record is spotty, Microsoft still has a tremendous impact on startups in Seattle.

Fewer Firms, but Plenty of DealsThe local VC community is shrinking, but deals are still getting funded.

Coffee CultureCoffee is the fuel of entrepreneurship and Seattle takes its caffeine very, very seriously.

Unlikely BedfellowsAfter years of ignoring each other, City Hall and the startup community are testing whether they can work together.

Retail RulesSix theories on why Seattle dominates retail.

City of the FutureHalf a century after the World’s Fair, Seattle can finally lay claim to the future.

Land of the GiantsMicrosoft, Amazon, Costco, Starbucks -- Why does Seattle have so many dominant companies?

Entrepreneurship Students get to WorkNot all startups come out of existing companies. University of Washington and Seattle University are taking innovative approaches to teaching entrepreneurship.

Art of Attracting the Creative ClassWhat cities should and shouldn’t do to attract the creative class.

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D R I V E R SO C T O B E R / N O V E M B E R 2 0 1 3

SEATTLEsaves

the

By James F. Sweeney

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There is only one aisle in Stockbox Grocery and customer Gordon Goodykoontz, a big man, has to be

careful how he navigates past the trays of produce. But he likes shopping here better than in the convenience stores that dot Seattle’s South Park neighborhood. “I’m really happy to see this open here because before there were really only crappy little stores around. This place has high quality food and good prices,” he said.

Stockbox is not only a grocery in the middle of a former “food desert,” it’s another outpost of social entrepreneurship in a city increasingly crowded with them.

Owners Carrie Ferrence and Jacqueline Gjurgevich are typical of the social entrepreneurs who seem to be everywhere in Seattle, applying business models to social, environmental and cultural problems both local and international. They’re young, energetic and see absolutely no conflict between earning a living while doing good.

“I’m not really interested in making as much money as I can,” said Gjurgevich, who left a corporate job to launch Stockbox. “I would like to live a good life and I have a good life, but to me it’s

beyond just the large numbers you see on your paycheck. At the end of the day a big paycheck doesn’t buy you a sense of satisfaction.”

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Seattle is a hotbed of social entrepreneurship, a movement which has been around for decades, but is growing rapidly. The progressive-minded city is home to a disproportionate number of tech millionaires and billionaires who have dedicated themselves to saving the world. Many, like Microsoft founder Bill Gates, are doing it through charity, but others are turning to social entrepreneurship.

That model appeals to younger idealists convinced that new approaches can solve stubborn problems that have resisted traditional philanthropy. They have seen corporations and businesses change the world in multiple ways and think business is the most powerful force for change in the world.

Many social entrepreneurs embrace the Triple Bottom Line (social, environmental, financial) when judging their return on investment.

A ferry ride away from downtown Seattle on Bainbridge Island is Grow Community, a deep-green housing development of solar-powered town homes, community gardens and shared electric vehicles. Though still under construction, the project is drawing a lot of interest from buyers who want to live as ecologically friendly a life as possible. Marja Preston of developer Asani said Grow Community will show other developers that sustainable development can be profitable.“I hope we’re changing not only the way the building industry thinks about sustainable design, but I hope we’re changing the way people in general think about their lifestyles and how they live in an urban environment,” she said.

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Seattle’s HUB

Impact HUB Seattle, a renovated furniture store in the Pioneer Square neighborhood, looks a lot like any incubator or co-working space: large open rooms full of people hunched over laptops, bikes propped against desks, people constantly coming and going. Opened last

year, it’s the epicenter of the region’s social entrepreneurship movement. In addition to local groups and startups, it houses branches of national and international organizations such as Ashoka and Social Venture Partners.

The HUB is also home to Fledge, a “conscious company” incubator started by serial software entrepreneur Michael “Luni” Libes. He launched Fledge, he said, because social entrepreneurs often lack startup experience and need help channeling their passion into viable businesses. And it filled his own need to give back to the community.

“The old ways (of doing business) just haven’t proven that they can solve these problems,” Libes said. “I look at social enterprise as a way of taking a new method forward, a way of trying capitalism as a solution to, not every problem, but many problems.”

Many social entrepreneurs in Seattle are alumni of Bainbridge Graduate Institute (BGI), a business school based at the HUB. It was founded in 2002 specifically to teach sustainable and socially responsible business practices. Founder and President Gifford Pinchot, a former entrepreneur and consultant, said new business models are the best way to address society’s problems.

“We know the solution has to be in the market economy because that’s the only system which provides enough

“The old ways of doing business just haven’t proven that they can solve these problems”

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feedback and flexibility and innovation to move ahead,” he said. “But we also know that the ethics which are driving the publicly traded firms are not sufficient to deal with the challenges we are facing. People are looking for a new answer and the new answer is around entrepreneurship with a social challenge.”

BGI graduate Kevin Maas wanted to save the dairy farms he grew up near in rural Washington. Small farms were closing or being bought up by large corporations. So he and his brother Daryl started Farm Power, which outfits farms with methane digesters that turn cow manure into fertilizer, bacteria-free animal bedding and, most importantly, electricity, which farmers can sell back to utilities.

The company has five digesters serving 12 farms, but growth has been slowed by the drop in the price of natural gas. Still, like many social entrepreneurs, Maas said he is driven by the social impact, not just profits.

“I don’t want to go broke doing the right thing,” he said. “It’s been a lot of work, but I sleep well at night knowing we’ve done about as much as we could.” Even businesses that are trying to save the world need investors, people like former Microsoft employee David Bangs, a member of the Seattle Impact Investing Group who invests in clean energy companies. He already drives a hybrid and doesn’t trust government to do the right thing so he decided that supporting companies and technology that could potentially accomplish his goals is the most effective thing to do.

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“NGOs (non-governmental organizations) do nice work, but they don’t rely on market forces and market forces are what make transformation,” he said.

A concerned cityWhy has Seattle become a center of

social entrepreneurship?

Partly it’s due to the presence of BGI, the first business school to offer an MBA in Sustainable Business. School founder Pinchot said Seattle is just receptive to social causes.

“Seattle has always been a more concerned city,” he said. “People are polite to each other in Seattle. There’s a cultural norm here. Maybe it’s the large Scandinavian population that sort of set the culture of the town, but Seattle has been a concerned city.”

Seattle also is an educated city with a lot of wealthy residents who’ve made their fortunes at such transformative companies as Microsoft and Amazon. With that background, it’s not surprising that those interested in various causes embrace business as the way to further their goals.

In addition, the Pacific Northwest is one of the greenest areas in the country, a natural draw for social entrepreneurs tackling conservation, climate change and renewable energy.

So heavy is the emphasis on saving the world that Michael Butler, CEO of Cascadia Capital, a mergers and acquisition firm, complained that successful Seattle entrepreneurs spend too much time on social causes and not enough on business.

“You’re not rewarded socially for starting a second or third company; you’re rewarded for going and doing some type of nonprofit activity,” he said. “It definitely kept the very best entrepreneurs on the sidelines.”

BGI’s Pinchot said social entrepreneurs are simply seeking returns that are more than financial.

“Everything about our society is going to have to change to deal with the problems that we have today. We’re going to have to do things very, very differently,” he said. “That requires an enormous amount of innovation and that enormous amount of innovation can only take place if there are entrepreneurs to make it happen.”

“Everything about our society is going to have to change to deal with the

problems that we have today.

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