It rains an average of 155 days of the year in Portland, Oregon, which sits near the coast between Silicon Valley and Seattle. That may be what drives some startups and engineers indoors to coffeehouses armed with laptops to hatch ideas such as MyOpenId, Voyager Capital-backed AboutUs, interactive TV company Ensequence, which raised $20 million last year, and ShopIgniter, which just closed a $3 million round from Seattle's Madrona. Quite a list. They make up part of what some call “Silicon Forest,” and the city clearly sees its future: In February Mayor Sam Adams announced a $500,000 seed fund aimed at startups and small businesses.
However, it's still early in the formation of a full-blown ecosystem, and the city lacks many second-generation entrepreneurs to provide mentorship and angel investing. Thanks to its affordable cost of living, however, there is a myriad of smaller-scale startups and the talent to go with it.
And Portland is also drawing startups from beyond its borders. In 2004, Jive Software, which makes social marketing tools, decided to move from pricier New York City to this laid back west coast city. Five years later, it posted annual revenue of $30 million.
David Hersh, chairman of the board of Jive, talked about what makes Portland a great place for startups and why he decided to move his own company there.
So what is it about Portland that makes it a good place to get a business going?
Portland certainly has an aggressively independent vibe. There's a very DIY culture here. It prides itself on being non-conformist so there's certainly a lot of that element of going out on your own and doing whatever it takes to start companies. In terms of the startup phase, I mean there's so much energy around that--around the ideas and going off on your own and there's so much support for doing that that I think it's one of the great things about the city. It's just the overall psyche of the city around its kind of aggressive independence that makes for a very vibrant startup culture.
I think the downside is getting beyond the startup into massive expansion mode. [That's] where it may be more difficult.
Why did you choose Portland when shopping for a new city for Jive?
Well, we moved from New York City to Portland in 2004 in order to grow the company. We were very successful at being able to pull together a large number of software engineers and build out a very talented team and build out a great product and the company continued to expand pretty aggressively. So much so that we kind of grew too big for a lot of the resources that Portland has and expanded beyond Portland's borders, but we still have our headquarters in Portland.
We looked at a number of places, I knew the Bay Area fairly well and we looked at Boulder, Colorado, and Seattle and Portland. Portland was just an interesting mix where I think it's a town that is very appealing to engineers and what I mean by that is it's a town that engineers seem to gravitate to because it's very easy to navigate, really easy to get around. You can have a nice house and a nice lifestyle, but still be in a downtown area. You've got nice access to tons of green areas but you can be skiing in an hour, you can be at the beach in an hour.
So it's like a small version of the Bay Area, a much more manageable version of the Bay area, and so it worked out really well for us because you've got access to talent in the form of these great engineers and they cost a lot less than in other markets. They're a lot more loyal. They have shorter commute times and, ultimately, it just seemed like a much more resource-rich area for us to scale in the way that we needed to scale at the time.
Couple that with the fact that we actually felt wanted. My first time visiting out there, I had a meeting with the mayor and the mayor was very curious about our situation because we represented the creative class. We are a company that was attracted to Portland and we were the creative class and that's how you build a vibrant community.
When you have a meeting with the mayor the first time you're out there, you realize you can actually get things done in the city and yet it's still a city of enough size and scale that there should be a lot of resources to pull from.
Are there particular types of startups that you think do better in Portland than in other places?
From an industry standpoint, Portland has some natural clusters that have developed. Certainly, one of the biggest has been athletic apparel with Nike being there and then Adidas and Columbia, they've had this epicenter of the athletic apparel industry and so that's been a cluster that developed and there's a lot of talent there. There's certainly been an upsurge in smart energy where I've seen a lot of companies either have their U.S. operations there or some startups that are doing very unique things in smart energy.
Software, of which we're a part, has been a relatively strong cluster. A lot of what I'm talking about is Portland-proper focused because we are downtown, and Portland is definitely one of those cities where there is Portland and then there is not Portland, right?
Once you get outside Portland you may see things like Boeing contracts and military things, CAD design and hardware companies. I'm not as familiar with them, I'm in the more kind of like, cool, hip, downtown. Like what's happening in the startup culture around that area.
How is Portland better or different for entrepreneurs than other cities?
I think because it's a smaller city there's a little bit of the aggressive cohesiveness that comes with being a smaller city and wanting to kind of prove yourself to the world and that translates into a very tight-knit entrepreneurial community. So your ability to navigate the waters of Portland to connect with other people who can help you is so easy. I mean you can get to anybody you want to in minutes. And they're all very supportive of other Portland companies and they all want to see Portland do well. I think the other thing is that there is a lot of great talent out there for the startup phase, so your ability to pull people in to help you out along the way is great.
What kind of talent are you referring to?
Engineers and inside sales people--people who have worked at other startups who've kind of seen how it works and what you need to do. People who are willing to live in a startup world, and also, this is the most affordable city on the West Coast, so this is a city where the artist can still afford to live in the downtown area and by extension, people that work for startups can afford to live in a downtown area, so your lifestyle isn't too impinged by working in a startup.
What's the drawback to being in Portland?
I think Portland is great for companies in startup phase, but it has a hard time operating at scale because there are fewer people out here who have been through it before. There's going to be plenty of executives out there, but for technology spaces that are more unique, they're just not there.
We have been very successful in Portland and we're still based and headquartered here. I talked to The Oregonian recently about it and described it as kind of like the four-minute mile. It took a long time for the first person to break the four-minute mile, but once you did, then a bunch of people did. There was a psychological barrier that you had to get across, so I think even in the five years that we've been based out there, I've seen the types of startups improve dramatically.
So the nature of the companies that are getting started out there and the promise that they have and how they're getting funded--I've seen that improve and I feel like eventually, there's going to be a company in technology that breaks the four-minute mile. When that's done, suddenly then you've got more talent, more money flowing in and more companies who can see how you get there.
For more from this series:
- Why you Should Start a Company in...Austin 
- Why you Should Start a Company in...New York 
Why you Should Start a Company in...Los Angeles 
- Why you Should Start a Company in...Chicago 
- Why you Should Start a Company in...Boston 
Laura Rich is a freelance writer and co-founder of Recessionwire .