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Spokane-area startups surviving coronavirus pandemic by pivoting operations, adding new product lines

Chip Overstreet is the CEO of Spokane-based Spiceology, whose food service line has been affected by coronavirus- related restaurant closures, but consumer line sales have grown. (Dan Pelle / The Spokesman-Review)

As hundreds of startups nationwide have been forced to cut costs and lay off employees because of coronavirus-related financial struggles, some local companies are thriving by pivoting their operations and marketing to new audiences.

Such moves may put them in the rare company of a small group of startups nationwide that a San Francisco-based research firm survey found is doing much more than just surviving the pandemic.

Spokane-based spice and rub company Spiceology is creating more recipes and how-to videos that appeal to customers during Gov. Jay Inslee’s “Stay Home, Stay Healthy” order, Spiceology CEO Chip Overstreet said.

“They are looking for fun things they can do with their family, and cooking is a shared exercise,” Overstreet said. “We still have chefs that are buying from us, and we are continuing to focus on the chef community. Our food service business has seen a softening, but our consumer business has been very robust and is growing quite nicely. That’s largely a reflection of people eating at home instead of restaurants.”

Spiceology is launching new products, including three spice blends it released last week that were made in collaboration with Christie Vanover, a competitive barbecue pitmaster and publisher of Girls Can Grill online magazine, Overstreet said.

“We’ll partner and collaborate with (barbecue influencers) to come up with flavor profiles,” Overstreet said. “It’s a great way for them to be able to share (the products) directly with their followers that they dearly love and a great way for us to continue to expand products we are offering and reach a new audience.”

A recent survey by Startup Genome, a San Francisco research firm, indicated a small concentration of startup companies worldwide are experiencing growth during the coronavirus pandemic with 12% of startups reporting a 10% increase in revenue since the onset of COVID-19.

Business-to-consumer startups are three times more likely to be in industries experiencing growth, according to the survey.

Several area startups are manufacturing products likely to be in demand during the coronavirus pandemic, said Tom Simpson, CEO of Ignite Northwest, president of the Spokane Angel Alliance and managing member of Kick-Start angel investment funds.

Spokane-based GenPrime’s test reader technology is capable of interpreting and sending results of COVID-19 rapid tests, and Spokane Valley-based S2 Media is making the media for vials in COVID-19 test kits, Simpson said.

Meanwhile, other local startups have altered their product mix.

Spokane-based GoToTags, which creates software and data tags that can be digitally linked to smartphones and other devices, added face masks to its offerings to help fill a nationwide shortage of personal protective equipment, CEO Craig Tadlock said.

The company was able to provide more than 500,000 face masks to first responders and medical professional through its longstanding partnerships with China-based manufacturers for products using radio-requency identification (RFID).

In addition to supplying face masks, GoToTags has experienced significant growth in its core product lines during the coronavirus pandemic, Tadlock said.

Most of that growth is driven by sales of RFID tags used to verify product authenticity, some of which include hand-sanitizing and commercial-grade disinfection stations, as well as tags used by security companies nationwide, Tadlock said.

Prior to the pandemic, the company sold about 50,000 data tags a quarter. Now it’s selling more than 100,000 tags a week, Tadlock said.

Many venture capital and angel investors are in “triage mode” during the coronavirus pandemic, Simpson said, and are shifting focus to their existing companies rather than investing funds on new startups.

Simpson said he believes startups in the Spokane region are perhaps better positioned to weather the COVID-19 storm than larger venture capital-backed companies in part because they are typically more fiscally conservative.

“Heavily-backed venture capital companies in the Bay Area may be just more aggressive with spending and run cash accounts low to fuel growth, whereas companies in our region are a bit more conservative and not stretching the edges of the envelope as much,” he said.

More than 300 startups nationwide have slashed 29,900 jobs since March, according to, a San Francisco-based project that tracks job losses.

Startup Genome’s survey indicated 41% of startups worldwide are in the “red zone,” meaning they have three months remaining of cash runway, which refers to the length of time a company will remain solvent.

But startups in the Spokane region have longer cash runways, Simpson said.

Simpson is confident that companies in which he’s invested will survive during the pandemic because of how they’ve cut costs, deferred rent, reduced salaries and taken advantage of CARES Act funding.

GoToTags, which is deemed an essential business under the stay-home order, has been able to retain its employees during the COVID-19 pandemic, Tadlock said.

While the consumer side of Spiceology’s business is faring well, the company’s food service line of business has been affected by restaurant closures as a result of COVID-19. The company was forced to lay off 25% of its 40-employee workforce in March, Overstreet said.

Spiceology was one of several local businesses that received relief funds from the Paycheck Protection Program. The company plans to use the money to rehire its laid-off employees at a future date.

“The folks impacted – many of them – we hope to bring back when we see the other side of this pandemic. … We are confident we’ll bounce back,” Overstreet said.