The greater Seattle region has become a hotbed for technology companies, but it has also turned into an area that attracts companies built on innovation. The area hosts Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Starbucks (NASDAQ:SBUX), and T-Mobile (NASDAQ:TMUS) -- all innovators in their own way.
These companies benefit from a highly educated workforce, generally mild (albeit rainy) weather, and a variety of office location options. Microsoft, for example, has its main campus in Redmond, a nearby Seattle suburb, but also has a significant presence in the city itself and in nearby Bellevue.
Seattle also has at least a slight edge over the San Francisco/Silicon Valley area when it comes to cost of living. It's by no means a cheap place to live, but it only takes $5,800 a month to live the same standard of living in Seattle that would cost $7,762 in San Francisco or Silicon Valley, according to Numbeo's cost of living calculator.
All four of these companies are succeeding in different ways, but each benefits from their home market. Seattle has become a haven of innovation, a top market not just for start-ups, but also for thoughts and ideas.
A whole new Microsoft
Back in 2013, Microsoft seemed like a company on the decline. CEO Steve Ballmer hadn't embraced the smartphone and tablet market fast enough and the company saw market share erode for its once near-monopoly Windows operating system. Windows 8, though innovative and ahead of its time, failed to bring in new users while also alienating longtime fans.
It was a fairly bleak situation and it looked like the company would cease to be a market leader. We know today that it wasn't going anywhere, but the Microsoft of 2013 looked like a brand whose glory had past.
Enter Satya Nadella in February 2014. The new CEO not only changed Microsoft's culture, he did so quickly. The company admitted its failures moving away from phones and symbolically jumped to Windows 10. It also accepted that it could no longer be a bully because people did not need Windows, Office, Skype, or any of its other products.
Instead, Microsoft moved its software to a subscription model and made it available to anyone who wanted it. That meant offering free iOS and Android apps, gaining some traction with younger customers who might otherwise have used free alternatives. These efforts also included a return to innovation, embracing the cloud, planning for the emergence of the Internet of Things (IoT), exploring virtual and augmented reality with HoloLens, and pushing its partners by pioneering the hybrid with the Surface.
In 2018, Microsoft no longer looks like a legacy company. Revenue in its second quarter was up 12% to $28.9 billion, driven by a 55% gain in commercial cloud revenue, a 10% jump in commercial Office products revenue, and an 11% increase in consumer products and cloud services.
Starbucks is more than a coffee company
It's reasonable to think of Starbucks as both a coffee company and a technology leader. The chain has led the way when it comes to driving sales through its app. It was also a pioneer of app-based payment and mobile order and pay.
As of the close of the first quarter of 2018 Starbucks had 142 million active members in its Rewards program in the U.S., a gain of 1.4 million over the same period a year ago. In addition, mobile payment accounts for 30% of the total in the company's home market.
"Through our Rewards program, we continue to drive increases in per-member spend by leveraging personalized offerings and suggested selling to our customers," said CEO Kevin Johnson during the Q1 earnings call. The CEO also noted that the company expects mobile payment to increase and that the company would explore cash-free stores in its home market.
Technology is not the only growth driver for the chain. Starbucks is opening roughly a store a day in China and it has plans to launch a global brand built around its Reserve stores, bars, and Roastery locations. The chain plans roughly 1,000 higher-end Reserve stores and to add Reserve bars in about 20% of its existing portfolio.
The Reserve bars specifically should drive increased comparable-store sales in existing locations. On top of that, the company plans to add to its original Roastery in Seattle with locations in Shanghai, New York, Tokyo, Milan, and Chicago.
Amazon is a giant
While all four companies on this list are impressive, Amazon has literally changed how an entire industry operates. The online giant has altered retail in ways that have impacted nearly all of its competitors. Chains have gone bankrupt because Amazon has changed how people shop, keeping them in their homes and giving them less reason to venture to malls or shopping centers.
By offering free two-day shipping to Prime members, the online leader has set a standard. You can order nearly anything from the company and often pay less for it than you would at a traditional store. Amazon has raised the bar for what people expect when they do venture out to a brick-and-mortar chain.
Arguably, you can credit Amazon with causing the retail apocalypse, forcing rivals to either adapt or go out of business. That's likely to continue and move into other areas as the company moves more fully into grocery and same-day delivery.
Amazon has been a leader in nearly everything it does, from retail to its cloud services division and its array of Alexa-powered devices. The company should continue to grow its influence as it moves into launching its own shipping service and fully implementing its vision for Whole Foods.
T-Mobile is a maverick
Led by maverick CEO John Legere, T-Mobile has built its business on the idea of totally disrupting its industry. The company has branded itself as the "Un-carrier" and has worked to remove consumer pain points. This has included everything from getting rid of overages, to dropping contracts, moving to only selling unlimited plans, and even including all taxes and fees in its advertised prices.
It has clearly worked. T-Mobile added more than 39 million customers in the past five years, doubling its size. Legere has served as lead cheerleader and spokesman for the company, never passing up an opportunity to celebrate his success.
"Wow-what a way to cap off 2017! Record financial results across the board and over 5 million customers added for the fourth year in a row," he said in the Q4 earnings release. "We made incredible progress in 2017 building out our network and retail footprint to set ourselves up for future growth. Our business is clearly firing on all cylinders and our strong guidance for 2018 shows that we have no plans of letting up!"
Legere's style is exclamation point heavy, in words and in real life. His leadership, however, has helped his company force real change in the industry while also producing strong results.
Seattle is a driver
While they may have different products, all four of these companies are in a lot of ways driven by technology. That makes Seattle a perfect home market for these varying brands which can draw upon the area's workforce as well as its highly educated customer base. And while Microsoft may not have been a maverick company a few years ago, you can call it one now, making all four of these brands that are actively changing the status quo.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Daniel B. Kline owns shares of Microsoft. The Motley Fool owns shares of and recommends Amazon and Starbucks. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.