Week in Review: Seattle Tech Boom From Amazon to Zestimate

Xconomy Seattle — 

With the Memorial Day Weekend weather forecast as nice as it has ever been or will ever be again, it’s time to grab some lab-grown “meat” and fire up the grill. First, let’s recap some of the headlines from booming Seattle’s tech industry this week, including our nation-leading population growth; several large venture capital investments in local companies; a contest launched by Zillow to crowd-source improvement of its home value estimator; and more:

—If you’re looking for a picnic spot this weekend, prepare to share with some of your more than 21,000 new Seattle neighbors. The city grew by 3.1 percent between July 1, 2015, and July 1, 2016 to a population of 704,352, according to U.S. Census Bureau numbers crunched by The Seattle Times’ Gene Balk. That’s the fastest growth rate of any of America’s 50 largest cities. As Balk notes, only one other city has seen a growth rate of more than 3 percent this decade. That was Austin, TX in 2012.

For perspective on Seattle’s boom, Balk notes that average annual population growth so far this decade—15,658 people a year—is just a bit more than the average number of people who moved here each year after the Gold Rush, in the first decade of the 20th century.

The AmaonFresh Pickup location in Ballard earlier this year. Photo by Benjamin Romano / Xconomy

—Many of the newcomers are working at Amazon (NASDAQ: AMZN), which this week opened its AmazonFresh Pickup location to those Seattleites who aren’t already working for the retail and technology giant. Free grocery pickup is available to the company’s Prime members. The company had been beta testing its pickup locations—in the Ballard neighborhood, pictured—and Sodo with employees. The service allows people to order groceries from Amazon online, drive to the pickup location at set pickup time, and have their order loaded into their car.

—Many of the newcomers are shopping for homes, perhaps starting with a look at the Zestimate—Seattle-based Zillow’s algorithmically derived home value estimate. The company is trying to improve the Zestimate through a $1 million contest, inviting data scientists and machine learning experts to try their hands at lowering its error rate.

Zillow (NASDAQ: Z)says that nationally, half of all Zestimates are accurate to within 5 percent of a home’s eventual sales price—down from 14 percent when the Zestimate was introduced in 2006. The other half are off by more than 5 percent.

Stan Humphries, the Zillow executive who led the creation of the Zestimate algorithm 11 years ago, says he’s dreamed of running such a contest. The company chose to invest its efforts in improving the algorithm internally until now.

Zillow’s Stan Humphries spoke at an Xconomy Seattle event in 2013. Photo by Tyler Sipe for Xconomy

“We’ve come to believe that our strength in this area now allows us to be more open with respect to innovation because we are better positioned to take advantage of such innovation than anyone else,” Humphries writes in a blog post announcing the Zillow Prize. He adds, “Since our internal team has already built the most accurate home value estimate available, Zillow can rapidly incorporate and leverage new ideas coming in from external teams.”

As of Friday afternoon, 222 teams were listed on the Zillow Prize competition page, hosted by Kaggle, an online data science community and competition platform (backed by investors including Seattle-based Voyager Capital) that Google Cloud acquired earlier this year.

Humphries says Zillow’s first mover advantage and ability to incorporate ideas from outside its own data science team stems from its enormous database of homes, “which allows us to better leverage many types of algorithmic improvements. We’re particularly excited about the exploration of more hyperlocal data and algorithms, a task well-suited to highly distributed, crowd-sourced efforts. Moreover, we are eager to tap into ideas from other industries utilizing machine-learning solutions that may translate well into the real estate domain—ideas from biotechnology, computer vision, driverless cars and financial markets, to name a few.”

—Some of the newcomers are no doubt working at one of the fast-growing startups that announced significant funding rounds this week. Smartsheet, Outreach, Echodyne, Bulletproof 360, and Discuss.io announced a cumulative $135.1 million in new funding—accounting for 27 percent of the venture capital invested locally so far this year, according to data from Seattle-based PitchBook.

Smartsheet’s $52.1 million Series F gives it a post-money valuation of $852 million—the fourth highest valuation for a private tech company in the Seattle area since at least 2012, according to PitchBook, the investment data provider.

Source: PitchBook

The cluster of eight-figure financings this week pushed second quarter investment in Seattle area companies to $257 million. That’s slightly behind the $279 million recorded in the full second quarter of 2016, but there’s still another month to go in the current quarter.

Venture investors have closed 64 deals with Seattle-area companies this year through May 24, compared to the 75 deals closed during the first two quarters of 2016.

—A battery materials technology company, Membrion, cleaned up at the University of Washington’s flagship Business Plan Competition, taking the top $25,000 Herbert B. Jones Foundation Grand Prize and a $2,500 “Best Idea for the Future” prize from Xinova. We caught up with Membrion founder and CEO Greg Newbloom at the UW’s Alaska Airlines Environmental Innovation Challenge in March, where his company won $6,000.

Other winners in the Business Plan Competition:

  • Discovery Health won the $10,000 Fran’s Chocolates Second Place Prize.
  • LC-Tourniquet won the $7,500 “Friends of the BPC” Third Place Prize.
  • EpiForAll, the winner of the Hollomon Health Innovation Challenge earlier this spring, won the $5,000 Fenwick & West Fourth Place Prize, and the DLA Piper $2,500 “Best Idea with Global Reach” Prize.

A full list of winners is available here.

—Finally, maybe some of the newcomers will take up a popular Seattle pastime, organic gardening. If so, they’ll want to check out the “frass” fertilizer from Seattle insect farming startup Beta Hatch, which we profiled last year. The company is raising meal worms at scale for use as animal feed. The meal worm manure—known as frass—is now available in PCC Natural Markets, Beta Hatch announced this week.