Microsoft cutbacks generate only a trickle of Seattle tech startups |
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Former Microsoft product manager Ivan Joseph (right) meets with business partners Cherian “Zach” Zachariah (center) and Shema Joseph. Their company, Miajo LLC, is preparing to launch a new local online commerce site. Marcus Donner/PSBJ
After six years at Microsoft, Ivan Joseph was invited to seek other jobs inside the company when his position was cut last year. He left instead, and the Internet venture he founded is now poised to launch -- a perfect example of the startup activity once expected to emerge from the company’s cutbacks.
Except that he’s turning out to be an exception.
Fifteen months after Microsoft announced the largest job reductions in its history, the silver lining is looking pretty thin. Despite the examples of Joseph and a few others, startup gurus and investors have mostly given up on the theory that the thousands of people leaving the company would contribute to a significant wave of entrepreneurial activity in the Seattle region.
“I know this has been a popular idea — that when a whole bunch of smart people get laid off they go out and start businesses,” said economist Dick Conway, co-publisher of the Puget Sound Economic Forecaster. “Some of that does happen, but I have yet to be convinced that it’s a natural result of being laid off.”
Established entrepreneurs who offered assistance to laid-off Microsoft employees say the response has been tepid, at best. And venture capitalists say they haven’t been seeing business proposals from workers who were let go.
To be sure, many former Microsoft employees and executives continue to launch startups, maintaining a longstanding tradition in the technology community.
But many of the most successful tend to leave on their own.
And in that way, one lesson to be drawn from Microsoft’s first big layoffs is that it’s tough to manufacture the entrepreneurial spirit.
For example, Grant BlahaErath already had that spirit when he lost his job as a technical evangelist at Microsoft in January 2009. He had been thinking about starting his own company, and shortly after leaving, he and six other former Microsoft workers started Spry Hive Industries.
This week, they unveiled a new Internet browser called Fizzik.
“It is kind of a boost when they kick you out the door,” said BlahaErath, 43, who worked at Microsoft from 2004 to 2009.
Funds are running low for BlahaErath, who has nearly burned through his savings building the new startup and will probably look for a new job to pay the bills while he continues to run Spry Hive. But he’s clearly enjoying himself.
“It is the most fun I’ve ever had in my life,” he said.
Why aren’t more of his former colleagues enjoying the startup life? Microsoft helped laid-off workers find new jobs, but local startup advocates may need to make a more coordinated effort if they want new companies to emerge the next time the Seattle tech community is hit with large-scale layoffs.
In addition, Seattle economist Conway noted that some of the affected jobs were administrative or clerical in nature, not necessarily the types of positions that would be held by people with entrepreneurial aspirations.
Geography also may have played a role in reducing the effect on the Seattle startup scene. Microsoft laid off more than 5,000 people last year, but many of those cuts came outside the Seattle region. For example, of the first 1,400 job cuts, announced in January 2009, about 870 were in Washington state, and the rest in other parts of the world. In addition, Microsoft continued hiring in some areas, giving some employees a chance to rejoin the company.
Even so, some people in the Seattle startup community initially had big entrepreneurial aspirations for many of the laid-off Microsoft employees.
High-tech incubator StartPad.org, for example, jumped at the opportunity by offering 30 days of free office space, free Internet access and other benefits to laid-off Microsoft employees interested in launching their own companies.
“I think I had one person come in for a couple days,” recalled StartPad’s Mike Koss, himself a longtime Microsoft development manager who left the company in 2002 to pursue his own entrepreneurial ventures.
Koss has a number of theories, citing factors including the difference in mindset between entrepreneurs and employees. Many of the people who were let go simply don’t appear to have been interested in becoming entrepreneurs.
That wasn’t the case for Joseph, 43, a native of Kerala, India, who worked most recently as product manager for Microsoft’s search business in Canada and Latin America before his position was eliminated last fall. He’s now working with his partners on Miajo LLC, a Redmond-based company preparing to take the wraps off a new local online commerce venture in the coming weeks.
He said he understands why many of his former colleagues didn’t make the same choice. Startups are extremely risky -- particularly in the depths of the economic recession -- and many people would have been more comfortable seeking new jobs inside Microsoft or other large companies.
But he’s confident that he made the right decision.
“You have to ask yourself the question about what sort of impact you can make,” Joseph said this week. “For me, it was very clear that the biggest impact you can make is through entrepreneurship. Absolutely no doubt about that.”
John Cook contributed to this post. ... TechFlash will have more on Joseph's venture when the site launches in the coming weeks.
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