Titans of Tomorrow: Overview


Mention Seattle around the world and people most likely think of Microsoft. Or Starbucks. Or Amazon. On further reflection, they might come up with Nordstrom or Costco. Who else is there? The list is surprisingly scant. There’s Paccar, the truck maker that most consumers haven’t heard of, but whose Kenworth and Peterbilt brands are known globally. There’s Weyerhaeuser, the timber company. And Boeing? Well, it’s certainly an enormous presence here, but the corporate headquarters is in Chicago.

Despite its prominent technology sector and overall entrepreneurial energy, Washington remains underrepresented in the country’s list of large-cap companies for its population. Only eight firms from Washington occupy the S&P 500 (compared with 19 from Minnesota and 15 from Georgia), and only three make the Fortune 100 list. Clearly, there’s room for more.

No one can predict what scrappy startup will rocket to spectacular success, although in the accompanying story (page 34) we offer a few such “gazelles” with the potential to make it big. There also are some big players whose profiles make their chances of surviving in the long term as independent companies more questionable. That group contains companies like Clearwire, which carries debt and will likely be swallowed up by another carrier, and Seattle Genetics, whose success depends on uncertain clinical trials, and Intellectual Ventures, whose business model is not yet proven. We also left many state banks off the list because, while some have seen incredibly healthy growth recently, few seem likely to emerge beyond a regional presence in the coming years.

We identified 10 companies in our state that seem positioned to break out and eventually become tomorrow’s titans. Old-fashioned fundamentals guided our choices. We selected mid-cap companies with valuations around $2 billion. These firms have been around awhile—thus ruling out some glamorous technology companies—and have demonstrated strong, stable management that can adjust to change. In addition, each appears strongly positioned to benefit from shifting currents in its sector, and to grow someday beyond the $10 billion large-cap threshold. Most have a strong national or international presence already. Collectively, they show what it takes to succeed.

Some of the companies such, as Expedia, the travel site, and Expeditors International, the global logistics company, are well on their way to greatness. Others, including Alaska Air Group, the airline company, Concur Technologies, the travel expense software provider, and Saltchuk Resources, the air, land and sea freight services company, we’ve covered recently in these pages. In this case, we’ve chosen to profile five companies that may be lesser known, yet, through steady growth and strong management, have shown the potential to emerge as new anchors for our state’s economy:

F5 Networks: Expanding into New Growth Markets

Symetra: Keeping the Long View

Esterline Technologies: Customer-driven Growth

Coinstar: Innovating a New Sector

Itron: Rising with the Water Line

Emerging Titans: Apptio, Inrix, Tableau Software, Zulily, Valve Corporation


    Paying the Price for $15 an Hour

    Paying the Price for $15 an Hour

    With the economy soaring, it’s hard to gauge the effectiveness of Seattle’s minimum-wage hike. Some small-business owners remain dubious.
    When the Seattle City Council passed the $15 minimum- wage ordinance in June 2014, David Lee, founder and CEO of the Field Roast Grain Meat Company, was not happy.
    “The minimum wage hurts businesses like ours that compete on a national level,” says Lee, who believes it makes employers feel “cheap” and weakens “the goodwill that bound employers to employees.”
    Even so, reflecting the mixed feelings of many Seattle businesses that want to do the right thing even as they struggle to survive, Lee decided to raise the minimum pay of his workers more than 20 percent — to $15 an hour — this fall, years before he was required to do so under the law.
    “I wanted to get it behind me,” he explains.
    Under a complex, multitiered system, Seattle companies with more than 500 employees must begin paying a $15-per-hour minimum wage starting in January. Companies with fewer than 501 employees  have until 2019, unless, like Lee, they provide health care or other benefits, in which case the $15 minimum wage rule applies to them beginning in 2021. Lee says his decision will cost Field Roast $300,000, about a quarter of its total earnings in 2015.
    Ivar’s Seafood increased prices by 21 percent in 2015 to cover an increase in employees’ minimum wages to $15. The company didn’t have to start paying $15 an hour until next year, but Ivar’s President Bob Donegan believed it was the right thing to do. The decision helped resolve long-standing tension between lower-paid workers in the kitchen and wait staff who received much higher wages thanks to tips. Donegan says most patrons continue to tip even when they are told gratuities are now included in their bills.

    A CASE OF COMPRESSION: Lynn Stacy unwraps grain meat for sausage products at Field Roast,
    which has a flatter pay structure because of its higher minimum wage.

    Some companies, however, remain concerned that the higher minimum wage could still hurt them. BrightStar Care, which offers home care and medical staffing in most states, is operating at a disadvantage because of the minimum wage, says CEO Shelly Sun. “Our Seattle franchise has only about 50 employees,” Sun notes, “but it’s being treated like a big business.”
    Because Seattle treats the franchised operation of a national chain as if it were a large business, BrightStar will have to pay $15 an hour as of January, whereas some of its competitors with similar employee numbers in Seattle may not have to pay that much until 2019. Sun says a consequence may be reducing the size of the Seattle franchisee’s staff, which could have implications for clients.
    Meanwhile, the national restaurant chain Buffalo Wild Wings says it is hesitant to expand in Seattle because the high minimum wage makes it economically inefficient to hire and train inexperienced workers. Still, what was once considered a movement isolated to “liberal” western cities like Seattle and San Francisco has gained sufficient momentum nationwide to be included in the national platform of the Democratic Party this election season. 
    Thanks to Seattle’s strong labor market — the unemployment rate in the Seattle metropolitan area was 4.4 percent in July (compared to 5.8 percent statewide) — the higher wages have had little negative effect on the economy.
    A report released in July by the University of Washington’s Evans School of Public Policy and Governance concluded that the new minimum wage law hasn’t had a lot of upside, either. Since a strong labor market would have increased wages in any case, the study concluded, only a quarter of the recent gains could actually be attributed to the minimum-wage law — a little more than a few dollars a week. 

    Revisiting the minimum-wage story | Seattle Business magazine examined the minimum-wage issue in its May 2014 issue, just as the Seattle City Council was considering an ordinance raising the minimum hourly rate to $15 in a gradual process over several years, depending on a company’s size. This is the magazine’s first follow-up since passage of the minimum-wage law.