Why “boring” Middle Market companies are critical to your startup ecosystem

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tl;dr — Talent is the raw material of any successful startup ecosystem. “Middle market” tech companies are a critical — but easily overlooked — component of a high-performance talent market.

Every major global tech hub is locked in a fierce global competition for the best brains on the planet. The ones that win that battle — attracting and retaining an unfair share of the world’s most gifted founders and digital creatives — are ultimately the ones that will win the war for leadership in the global economy.

Tech bloggers and journalists spend most of their time on the extreme ends of this barbell: established captains of industry (like today’s excellent PandoDaily piece on the limitless ambition of Amazon’s Jeff Bezos); and — since every Goliath needs its David — the scrappy startup founders whose slingshots may someday fell the giants (Jack Dorsey of Twitter + Square fame is the ideal poster child here).

But “Middle Market” tech companies are the unsung heroes of leading innovation ecosystems — the critical glue that allows agile startups to grow into globe-straddling bigcos.

Bigcos and research universities are the diesel locomotives of talent ecosystems — their big brands, huge recruiting budgets and insatiable appetite for fresh brains constantly pull in high performers from around the world + offer them their first look at the opportunities and lifestyle available in their local markets.

Startups are like bike messengers, threading fearlessly through traffic to shake loose the adventure-seeking free radicals who realize — sooner or later — that big company life just isn’t for them. They race around town and make a crowd-pleasing spectacle of themselves but usually don’t offer much in the way of steady employment, and have a nasty habit of crashing into things.

“Middle market” companies are like minivans — the unsexy mass of once-upon-a-time startups who survived their rebellious teenage phase, raised B and C rounds and broke through to the boring respectability of revenues and profits. They don’t yet have the heft and brand recognition of the bigcos, but they also can’t offer the freewheeling spirit and stock-option dreams of the startups.

Without a rich and diverse middle market, budding innovation ecosystems will struggle to cross over to sustainability and growth. 

The majority of the talent market isn’t hungry for the risk and uncertainty of startup life, but also doesn’t like getting stuck in a company town with few options for career advancement. Eventually, the most talented and ambitious workers who move to a city for school or a bigco job will get out of Dodge if their local market doesn’t offer enough good options — at comparable payscales and among equally talented peers. Startups just aren’t a viable option for most of these folks.

In Seattle, while I’m grateful for the legacy of Microsoft’s glory years — and ecstatic about Amazon’s current awe-inspiring growth (smack in the heart of the city!) — I’m even more excited to see a big and diverse cohort of emerging leaders finding their stride.

My mental shortlist includes several local companies that are poised to go public, plus a long list of more recent-vintage startups who have been quietly building real businesses (in classic Northwest fashion) and are only now being recognized by Sand Hill Road and landing big growth raises at great valuations.

Just a few of the middle market leaders who form the core of Seattle’s future tech leadership include (in alphabetical order): Apptio, Avalara, Big Fish Games, Extrahop, Inrix, Redfin, Simply Measured, Smartsheet, Tableau, and Zulily.

There are many more I’ve missed — please share their stories with me so I can help shine a light on them — but even this short list includes enough ambition, growth and diversity of opportunity to keep many amazing people busy for a long time to come.

So thank you to Seattle’s middle market companies for being the unsung heroes of our future success. You’re all amazing, and we should all do more to recognize your contributions to our future leadership as a global innovation hub.