Seattle’s newest billionaire says tax talk will drive business away, claims Seattle freeze is ‘garbage’

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Tanium CEO Orion Hindawi recently moved the company’s headquarters to Kirkland. (Tanium Photo)

Tanium co-founder and CEO Orion Hindawi may not be as well known as Jeff Bezos, Steve Ballmer, Bill Gates or other Seattle area billionaires.

After all, it was just a few months ago that Hindawi and his family left the San Francisco Bay Area for Seattle’s Laurelhurst neighborhood, bringing his $9 billion cybersecurity company to the region along with him.

So far, Hindawi seems to be fitting in pretty well, even though he admits it’s a strange time to get to know a new city. He’s not yet encountered Seattle’s notorious “freeze” — calling it “complete garbage.” And he’s even picked up some new recreational interests.

“Wake surfing was not in my lexicon before,” said Hindawi.

His affinity for Seattle-style activities aside, Hindawi didn’t hold back at a Washington Technology Industry Association event Thursday when asked about public policy in his new home state.

The underlying message from Hindawi: Washington needs to be careful not to follow the anti-business policies he left in California.

And even though Hindawi said that taxes are not a big driving force for him, the 40-year-old tech executive had plenty to say on the matter. When Madrona Venture Group’s Matt McIlwain asked him what challenges Washington state faces, Hindawi turned to taxes.

“The state of Washington has a very attractive tax regime today, and the governor continues to say he wants to change it,” said Hindawi.

That philosophy is not helping the state attract new businesses, he said, at a time when many companies are considering relocation.

“Cause and effect is, if you keep on telling people you’re going to raise taxes, people keep on not coming,” he said.

Gov. Jay Inslee’s call for a capital gains tax is especially damaging to recruitment efforts, he said.

“The governor needs to understand that every time he says ‘capital gains tax,’ he loses 10 companies,” said Hindawi, who co-founded Tanium with his father in Berkeley, Calif. in 2007 and last week raised another $150 million in funding. “When he wakes up and says it into his pillow, five companies don’t move. This is becoming a huge PR issue for Washington state.”

Another big issue: The recently proposed wealth tax.

A wealth tax will not change where Hindawi wants to live — noting that Seattle’s quality of life was the big driver in his relocation. But he added that his peers in San Francisco and elsewhere who are looking to relocate will view it as “vilification.”

Washington is one of nine states — along with Texas, Florida and Tennessee — that do not impose a state income tax. Lawmakers, economists and some tech leaders have long called the state’s tax system the most “regressive” in the nation, while others argue the lack of a state income tax serves as an enticement for companies like Tanium.

The wealthiest households in the state pay about 3% of their income in taxes, while the poorest people pay 17.8%. It’s the largest differential in the U.S.

Seattle economist Dick Conway has called Washington’s tax system “shameful,” while venture capitalist Nick Hanauer told GeekWire last month that the wealthy need to contribute more in taxes, especially at this great time of need.

And now that debate is starting to rage again with the proposed “wealth tax” on billionaires in the state.

“We have a tax code that asks low-income people to pay six times more than the wealthiest, in terms of how much tax they’re paying as a share of their income,” said Rep. Noel Frame (D-Seattle), who introduced house bill 1406 last month. “As a state that considers ourselves a social and economic leader, I just don’t think it’s acceptable. It’s completely out of line with our values.”

Hindawi, who could be one a handful of people subject to the tax, said it seems as if Washington state doesn’t want to maintain an attractive tax system that allows Seattle to compete with Austin, Denver and Nashville. And he thinks that’s misguided.

“People can argue that it’s right or it’s wrong, but it’s somewhat irrelevant,” he said. “The question is actually do you want these people moving to your state or not?”

That’s indeed a great question. And the answer is actually complex.

Historically, Seattleites cast a wary eye toward outsiders —especially Californians. In the 1980s, former Seattle Times columnist and full-time crank Emmett Watson led an antigrowth movement called Lesser Seattle to drive outsiders away, writing that “we are alarmed by the whole blinkin` bloody, over-bloated state of California.”

Welcome to Seattle — Now Go Home: California Emigres Meet New Hostility in Idyllic Northwest was the headline in The Los Angeles Times on August 24, 1989.

That headline could still play today — just replace “California Emigres” with the words “Tech Workers.”

Watson passed away in 2001, but his spirit lives on and some could even say is rising.

As newcomers arrived in droves to Seattle over the past decade and the city laid claim to more construction cranes than any other city in the U.S., tensions mounted. A homelessness crisis got worse. The booming tech economy was blamed, and still is to this day.

Just the other day, a frustrated friend lamented getting outbid on a Seattle home by more than $300,000, noting that the winning offer likely went to “some tech-bro.”

The concern: Seattle is becoming San Francisco.

Interestingly, that’s a worry of nearly everyone. Pro-business folks like Hindawi don’t want to operate in an environment where entrepreneurs feel punished and vilified, and those who’ve been left behind by the booming economy feel it’s harder to keep up. Bidding wars occurred in 65% of all home offers in Seattle in December — the fourth highest rate in the nation, according to Redfin.

Seattleites more passive wary eye toward transplants has hardened in recent years. It’s now almost a bitter disdain, worsened by housing and transportation issues. The disappearance of iconic institutions — Goodbye, Sunset Bowl — only add more anger. Centrist politicians such as Seattle Mayor Jenny Durkan have found it challenging to govern, deciding recently not to seek re-election.

Amid this changing dynamic, the pandemic is dramatically shifting work styles. There’s more fluidity to the labor market, especially among tech workers who can plug in from anywhere, as long as there’s solid broadband.

That fluidity is what led Tanium to shift to a work-from-anywhere policy last year, and why Hindawi moved to Washington state. As a result of that policy, more than half of the company’s 500 Bay Area employees left. Hindawi said it “was like we opened the jail doors.”

In fact, Hindawi said it’s just the “second inning” of this transformation, and based on his conversations with CEOs many companies are about to move. As he sees it, “the governance in California is terrible,” and the state is doing very little to stop the exodus.

And that’s where Hindawi sees warning signs for Seattle.

“The reality of the situation is that people who are in Washington state have flexibility they did not have a year ago, and that is persistent flexibility,” he said. “I think people need to be fully aware that there are people who call themselves Seattle residents or Washington residents who don’t have to be tomorrow. They are basically nation states in their own right. They can move wherever they want, and it’s trivial.”

You can watch the entire interview with Hindawi above, with his remarks about leaving the San Francisco Bay Area and the relocation to Seattle starting in minute 20.

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