In the 1990s and early 2000s [it was] common knowledge that most Seattle-based startups had only two viable exit strategies: go public, or get acquired by Microsoft.

This led to a lopsided startup ecosystem, with a very small number of tech titans, and a large number of relatively tiny startups, with very little in between. …

The last 10 years have seen a sea-change in this dynamic in Seattle, caused by two forces.

The first part of the change has been the rise of a new breed of large Seattle-based tech companies – companies that are still smaller than the two local titans, Microsoft and Amazon, yet large enough to fill out the middle tier of the tech ecosystem.

This group includes public companies such as Expedia, Zillow, Tableau, and Zulily, as well as very large acquisitions such as PopCap Games, Isilon, Big Fish Games or Bluekai. Along with older companies such as Adobe and Real, the home-grown tech industry in Seattle now has a sizeable number of companies not only at the $100 billion valuation, but throughout the $10 billion, $1 billion, or $100 million valuation ranges. …

The second force has been the increasing appearance of Silicon Valley engineering offices in the Seattle metro area. Google was one of the first major Silicon Valley offices to open an engineering office in Seattle, and in fact Google now has two engineering offices – one downtown in Seattle, and one in the suburb of Kirkland, WA. …

A decade after Google set up shop in this city, Seattle has seen an explosion of Silicon Valley companies setting up their second engineering office. Seattle is now home to engineering offices for Google, Facebook, Apple, Twitter, Salesforce, eBay, Dropbox, Uber, SpaceX, Taser, Palantir, Groupon, Hulo, Electronic Arts, Yahoo!, Pivotal Labs and many others …

Seattle’s secret weapon: relatively cheap housing

That’s a striking list. Virtually all Silicon Valley tech giants have a Seattle wing. But at some point, the dynamic may change from Expedia and Zillow co-founder Rich Barton’s characterization of Seattle as the “blond, scruffy-haired little brother of the star quarterback (Silicon Valley).”

That’s because the Seattle area has a huge advantage: housing is relatively affordable. Finding affordable housing in California isn’t just a problem for poor people. Many well-paid professionals are unable to afford to buy their own homes and start families.

According to bizjournals.com, in 2013, the San Francisco Bay Area/Silicon Valley had the highest average salary ($111,885) for software engineers of any U.S. city. The Seattle area was second at $103,196 per year.

In San Francisco and Silicon Valley, that much money doesn’t get you much in the way of housing. The National Association of Realtors says the median cost of a home in San Jose/Santa Clara/Sunnyvale was $855,000 in the fourth quarter of 2014. In San Francisco/Oakland/Fremont, it was $742,900.

The housing outlook is grim for renters as well. A new Forbes magazine survey finds that the Bay Area and Silicon Valley have arguably the nation’s worst housing shortage, allowing landlords to constantly push up rents. The average monthly rent in the greater San Francisco area is now $2,802.

CA pols stick with same affordable-housing approach

A $100,000 salary buys a lot more creature comforts in the Seattle area.  The median cost of a single-family home in Seattle-Tacoma-Bellvue was $352,000 over the last three months of 2014. The average apartment rent in March was $1,615 in all locations within 10 miles of Seattle city limits.

In New York City, housing costs are also sky-high, and Mayor Bill de Blasio is heeding economists who say the best way to make homes and apartments more affordable is to increase housing stock. De Blasio wants to add 240,000 housing units.

In California, however, the politician who has focused most on the affordable-housing issue — Assembly Speaker Toni Atkins, D-San Diego — instead wants to ramp up the traditional California affordable-housing policy of having the government subsidize some homes. Atkins’ proposals haven’t focused on the regulatory reforms that developers say are the easiest way to spur more housing construction in the Golden State.

Corporations have been known to up and leave California for many reasons. Being able to retain your engineers and coders by guaranteeing them they will live in an area where they can afford the American dream of a single-family home would appear to be a powerful incentive for a company to move to Seattle, especially now that there is such a huge concentration of tech firms in the Seattle region.

Seattle’s new $15 minimum wage starts to be phased in on April 1. That’s up from the $9.32 state minimum wage, which already is the highest (for a state) in the nation.

Seattle Magazine reported, “Small employers have seven years to pay all employees at least $15 hourly; large employers (with 500 or more employees) have three.”

The reason for the higher wage was explained on Mayor Ed Murray’s website:

A growing number of cities, including Seattle, are examining the costs and benefits of implementing citywide minimum wage laws. Citywide minimum wage laws offer local governments a powerful tool for helping low-income workers and families in their communities. Such measures also have significant impact on businesses and how they operate.

According to a Seattle publication, SHIFT:

Restaurants across the city are making the financial decision to close shop. The Washington Policy Center writes that “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”

Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36 percent of restaurant earnings go to paying labor costs.”

Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”

San Francisco and Oakland

Last November, San Francisco voters passed a similar minimum-wage hike. CNN Money reported:

Under the new law, wages will rise to $11.05 on Jan. 1, then $12.25 in May before increasing every year until they reach $15 in 2018. After that, increases will be tied to inflation in the Bay Area.

At the same time, 82 percent of Oakland voters backed increasing the city minimum wage to $12.25 per hour.

The results so far have not been as dramatic as in Seattle. But the San Francisco Chronicle reported:

The 36 percent uptick that lifted Oakland’s minimum wage to $12.25 an hour this week is already transforming the city’s booming restaurant scene — but not in the way that politicians, activists and restaurateurs anticipated.

The wage increase puts more money in the pockets of most restaurant workers, but to keep pace with higher costs, some restaurants have upped menu prices by as much as 20 percent. Others have tacked on a mandatory service charge to the bill and eliminated tips for servers, potentially reducing the amount they earn.

Some wonder whether the higher prices and surcharges will turn off customers and blunt Oakland’s growing reputation as a foodie haven where 300 bars, cafes and restaurants opened last year.

Meanwhile, for the state as a whole, California’s minimum wage was raised to $9 from $8 last year, and will jump again to $10 on July 1, 2016.