Titans of Tomorrow: F5 Networks


F5 nearly collapsed during the dot-com bust when the biggest customers for its software started going bankrupt, one after the other. The company reinvented itself and now has more than 3,000 employees and over $1 billion in sales. It builds software and hardware which, when placed in a client company’s computer network, helps  data to be processed more efficiently and applications to work more effectively. Customers such as Facebook use hundreds of thousands of dollars worth of F5 equipment. The company now has a 60 percent share of the application delivery controller market. Rival Cisco acknowledged F5’s dominance when it pulled out of the market last September. F5, as the market leader, should win over a big share of those Cisco customers as they turn to new suppliers, and F5 has bolstered its sales team to make sure that happens.
The company could benefit greatly from several technology trends. “We are in the sweet spot of lots of global developments in technology, from virtualization and cloud computing to mobile,” says John McAdam, CEO.

F5 expanded into the mobile space with the acquisition early last year of Israel-based Traffix Systems, a strong player in supplying technology that helps mobile systems communicate over fourth-generation mobile networks. Consequently, F5’s software now plays a key role in helping the world’s mobile service providers better handle the growing load of data traffic passing through their systems.

But those markets are only worth a few billion dollars. What makes F5’s future really promising is its move into the $15 billion market for providing network security.  Because of F5’s deep knowledge of how its customers’ networks operate, it can add security features more efficiently and without slowing down the transfer of data. At least one city police department uses F5 software to encrypt data traffic. And many enterprises want to offer employees and customers the opportunity to tap into their corporate computer systems without compromising security.

Paying the Price for $15 an Hour

Paying the Price for $15 an Hour

With the economy soaring, it’s hard to gauge the effectiveness of Seattle’s minimum-wage hike. Some small-business owners remain dubious.
When the Seattle City Council passed the $15 minimum- wage ordinance in June 2014, David Lee, founder and CEO of the Field Roast Grain Meat Company, was not happy.
“The minimum wage hurts businesses like ours that compete on a national level,” says Lee, who believes it makes employers feel “cheap” and weakens “the goodwill that bound employers to employees.”
Even so, reflecting the mixed feelings of many Seattle businesses that want to do the right thing even as they struggle to survive, Lee decided to raise the minimum pay of his workers more than 20 percent — to $15 an hour — this fall, years before he was required to do so under the law.
“I wanted to get it behind me,” he explains.
Under a complex, multitiered system, Seattle companies with more than 500 employees must begin paying a $15-per-hour minimum wage starting in January. Companies with fewer than 501 employees  have until 2019, unless, like Lee, they provide health care or other benefits, in which case the $15 minimum wage rule applies to them beginning in 2021. Lee says his decision will cost Field Roast $300,000, about a quarter of its total earnings in 2015.
Ivar’s Seafood increased prices by 21 percent in 2015 to cover an increase in employees’ minimum wages to $15. The company didn’t have to start paying $15 an hour until next year, but Ivar’s President Bob Donegan believed it was the right thing to do. The decision helped resolve long-standing tension between lower-paid workers in the kitchen and wait staff who received much higher wages thanks to tips. Donegan says most patrons continue to tip even when they are told gratuities are now included in their bills.

A CASE OF COMPRESSION: Lynn Stacy unwraps grain meat for sausage products at Field Roast,
which has a flatter pay structure because of its higher minimum wage.

Some companies, however, remain concerned that the higher minimum wage could still hurt them. BrightStar Care, which offers home care and medical staffing in most states, is operating at a disadvantage because of the minimum wage, says CEO Shelly Sun. “Our Seattle franchise has only about 50 employees,” Sun notes, “but it’s being treated like a big business.”
Because Seattle treats the franchised operation of a national chain as if it were a large business, BrightStar will have to pay $15 an hour as of January, whereas some of its competitors with similar employee numbers in Seattle may not have to pay that much until 2019. Sun says a consequence may be reducing the size of the Seattle franchisee’s staff, which could have implications for clients.
Meanwhile, the national restaurant chain Buffalo Wild Wings says it is hesitant to expand in Seattle because the high minimum wage makes it economically inefficient to hire and train inexperienced workers. Still, what was once considered a movement isolated to “liberal” western cities like Seattle and San Francisco has gained sufficient momentum nationwide to be included in the national platform of the Democratic Party this election season. 
Thanks to Seattle’s strong labor market — the unemployment rate in the Seattle metropolitan area was 4.4 percent in July (compared to 5.8 percent statewide) — the higher wages have had little negative effect on the economy.
A report released in July by the University of Washington’s Evans School of Public Policy and Governance concluded that the new minimum wage law hasn’t had a lot of upside, either. Since a strong labor market would have increased wages in any case, the study concluded, only a quarter of the recent gains could actually be attributed to the minimum-wage law — a little more than a few dollars a week. 

Revisiting the minimum-wage story | Seattle Business magazine examined the minimum-wage issue in its May 2014 issue, just as the Seattle City Council was considering an ordinance raising the minimum hourly rate to $15 in a gradual process over several years, depending on a company’s size. This is the magazine’s first follow-up since passage of the minimum-wage law.