The transformation of Seattle's South Lake Union district stands as a metaphor for this city's emergence as what some would argue is the West Coast's second most important hub of technology and entrepreneurship.

Many of the glass and steel buildings were built by Paul Allen, the second-richest -- behind Bill Gates -- of the numerous ex-Microsoft employees who have taken the wealth and expertise earned in the personal computer era and applied it to new ventures.

The anchor tenant of the neighborhood is , the Web 1.0 retailer that, unlike most of its brethren from the dot-com era, has evolved into a lasting powerhouse. Electric streetcars hiss past its new headquarters while the lake glistens in the distance.

Among the new kids on the block is , the fast-growing champion of so-called cloud computing. A five-minute walk south is Facebook's new office, double the size of its current rented space, which has jumped from three engineers to 60 in little more than a year.

Zynga, the online gaming company that is poised for a huge public stock offering, recently took up space just south of downtown alongside other start-up companies. Google has two growing centers in Seattle and nearby suburbs, with more than 900 employees.

"It is availability of talent, and relevant talent," said Frank Artale, a partner at venture capital firm Ignition, located just across Lake Washington from Seattle. "That's why we attract people to do things in our state."

Indeed, the troika of Microsoft, the mobile phone empire built by Craig McCaw, and the strong science and engineering programs at the University of Washington has created a foundation for technology entrepreneurship that is the envy of would-be Silicon Valleys around the world.


The signs of the city's transformation from seaport and airplane-manufacturing hub to high-tech wealth generator are everywhere. Pioneer Square, the oldest part of the city, now teems with start-ups, and the hip coffee shops and eateries that cater to them. South Lake Union, the site of Boeing's first factory, is heading in a similar direction.

On the other side of Lake Washington's floating bridges, the eastern suburbs -- Bellevue, Redmond and Kirkland -- are dotted with office parks and upscale sub-divisions, which, unlike in much of the country, are still bustling.

"We have a ton of mobile DNA, a lot of software DNA, a lot of it coming from Microsoft," said Geoff Entress, a venture partner with Voyager Capital and an early-stage tech investor in the Pacific Northwest. "We have all the right ingredients, so it's not surprising to me that we are reaping the rewards of that."

Jason Karas, chief executive of -- which makes an app for sharing discoveries with friends on their phones -- is part of the latest wave of Seattle tech entrepreneurship. He moved his family to Seattle from Cambridge, Massachusetts at the end of last year, to join the five-person development team.

"I was attracted to this environment, a place where I can have a somewhat balanced lifestyle," said 44-year old Karas, who loves skiing in the nearby mountains with his kids.

"I find the networks really helpful here. There's definitely an interest in building social capital, building community, or mojo for the next opportunity," said Karas, sitting in Zeitgeist Coffee, the city's unofficial startup headquarters near Pioneer Square in the oldest part of Seattle. "I meet a lot of people right here."

There are plenty of fellow travelers close by. It's a short walk to startup services firm Foundry Interactive, office-sharing space and Curious Office, an incubator and investor in online and mobile projects. Over in South Lake Union there is the Founders Co-op, where budding entrepreneurs can get advice on starting up and getting funding.

Trover, which launched this summer and already has 100,000 users, has a rich Seattle history, and is an example of companies cascading out of another. It was co-founded by one-time Microsoft star Rich Barton, who created and spun off online travel agent Expedia from the software giant and then went on to form the real estate website Zillow . Trover came out of Travelpost, originally conceived as a rival to hotel review site TripAdvisor.

"There's an awful lot of good stuff here," said Matt McIlwain, managing director at Madrona Venture Group, the other big VC firm in the area, alongside Ignition.

"Real Networks came out of Microsoft. Isilon (a network storage firm) came out of Real Networks. More will come out of that," said McIlwain, who thinks this year will be his firm's biggest in 10 years for new investments, mostly in local companies.


Money from Microsoft co-founders Gates and Allen is evident all around the city, from the University of Washington's computer science department to the new Gates Foundation building opposite Seattle's iconic Space Needle.