CHICAGO | Economic & Business Development

[marothisu]

Originally Posted by IrishIllini

Not to talk about Amazon again, but I've seen a few articles in the past day or so about a decision being "imminent". DC seems to be the hive's favorite for unclear reasons. Any last minute wagers to be made ? Obviously pulling for the beloved, but I'm still hoping Amazon gets shattered in the near term .

I think Chicago, DC, Dallas ..and maybe Philadelphia have the best shots. I thought about it more too, and don't be surprised if Toronto wins. There's a shortage of these jobs in America and due to the latest immigration stuff in the US and companies scaling back on h1b, don't be surprised.

[Natoma]

https://chicago.suntimes.com/news/rahm-emanuels-primary-reason-family/

Emotionally wracked by the “empty nester” syndrome when his youngest child was dropped off at college just before his announcement...

I don't know if all of his kids are still in college, but if they are 216k could just barely cover the cost for all three. Total annual costs for a lot of schools now are 70-75k.

[the urban politician]

For Chicago's tech scene, the mission is most definitely not accomplished

https://www.chicagobusiness.com/opinion/...mission-most-definitely-not-accomplished

So glad that somebody finally wrote this harsh article. Chicago's boosters need it. We've gone nowhere in "tech", and it gets tiresome hearing people celebrate all of the nothing that's happening for Chicago in the VC world when compared to cities elsewhere.

[Vlajos]

I'm sure Rahm has 529s that he has been funding for his kids and other sources. I doubt he needs to come out of pocket for full college costs yearly.

[moorhosj]

Originally Posted by the urban politician

For Chicago's tech scene, the mission is most definitely not accomplished

https://www.chicagobusiness.com/opinion/...mission-most-definitely-not-accomplished

So glad that somebody finally wrote this harsh article. Chicago's boosters need it. We've gone nowhere in "tech", and it gets tiresome hearing people celebrate all of the nothing that's happening for Chicago in the VC world when compared to cities elsewhere.

Looks like this guy has something to sell:

My organization, Invent2026, is here to help. Our organization and our partners will continue to stretch our hands out to Chicago’s institutions in friendship. Let’s not talk past one another or talk in hushed tones, and let’s start with a basic set of facts.

There is more to being a "tech" community than simply tracking VC money. If Google, Facebook and Salesforce decide on large office expansions in your city over a 6-month span, you are going somewhere in "tech". Backwards looking measures of VC funding don't capture that reality. This article falls into the same trap as those it criticizes.

How does tech employment growth compare to other cities? How many tech companies opened new HQs or offices in Chicago compared to other cities? How many open tech positions compared to other cities?

[marothisu]

Originally Posted by the urban politician

For Chicago's tech scene, the mission is most definitely not accomplished

https://www.chicagobusiness.com/opinion/...mission-most-definitely-not-accomplished

So glad that somebody finally wrote this harsh article. Chicago's boosters need it. We've gone nowhere in "tech", and it gets tiresome hearing people celebrate all of the nothing that's happening for Chicago in the VC world when compared to cities elsewhere.

Lol who would ever think mission accomplished? That just sounds like a straw man. Or whoever thinks that is an idiot. However, there's no mistaking the things are better now than 5 or 6 years ago. But I'm sure the fact that Chicago has the highest return on investment for tech funding of any city in the US for exits (not the case 5 years ago), and companies like Google, Facebook, Amazon (not talking about fulfillment centers), Yelp, etc all making huge expansions while very successful vc firms from the bay area opening new offices in the city mean nothing.

Long way to go, but definitely better than even 5 years ago.

[IrishIllini]

Originally Posted by the urban politician

For Chicago's tech scene, the mission is most definitely not accomplished

https://www.chicagobusiness.com/opinion/...mission-most-definitely-not-accomplished

So glad that somebody finally wrote this harsh article. Chicago's boosters need it. We've gone nowhere in "tech", and it gets tiresome hearing people celebrate all of the nothing that's happening for Chicago in the VC world when compared to cities elsewhere.

JB told me that he personally made Chicago a tech leader. He also has the best dad jokes. THE BEST, I TELL YOU!

There have been some real strides in Chicago's tech scene though. It should definitely be better than it is given the Universities that surround us. I'm not sure the Facebook or Salesforce offices are indicative of anything. I think FB is past its peak and I'm assuming the Salesforce jobs will be sales/account rep jobs. I could be (and hope I am) wrong.

[marothisu]

Originally Posted by IrishIllini

JB told me that he personally made Chicago a tech leader. He also has the best dad jokes. THE BEST, I TELL YOU!

There have been some real strides in Chicago's tech scene though. It should definitely be better than it is given the Universities that surround us. I'm not sure the Facebook or Salesforce offices are indicative of anything. I think FB is past its peak and I'm assuming the Salesforce jobs will be sales/account rep jobs. I could be (and hope I am) wrong.

They are absolutely indicative, at least some. Facebook is looking to hire mostly engineers. Sorry but this doesn't happen if you don't have a talent pool to begin with. 5 or 10 years ago, Google in Chicago was mostly sales. They have hired a bit more engineering talent in the last handful of years to actually have legitimate engineering teams now.

There's a bit of talent in Chicago, more than meets the eye. Talent extends beyond the normal companies that Joe Schmo talks about. There's a bit more talent hiding in Chicago at financial firms, consulting firms, etc than most people realize.

Chicago has a long way to go..most places do. But to think that it has not made some really good strides in the last decade shows how out of touch some people are with the reality.

[the urban politician]

Having employees for giant tech companies based elsewhere is one thing, but this article is really talking about entrepreneurship and startup activity. In the end, the greatest benefit comes to a city that founds and nourishes the next Google or Facebook.

As long as we are satisfied with having Google’s 1500 person sales and engineering office, we are kind of missing the point.

[marothisu]

Originally Posted by the urban politician

Having employees for giant tech companies based elsewhere is one thing, but this article is really talking about entrepreneurship and startup activity. In the end, the greatest benefit comes to a city that founds and nourishes the next Google or Facebook.

As long as we are satisfied with having Google’s 1500 person sales and engineering office, we are kind of missing the point.

Chicago has multiple home grown tech unicorn companies, many weren't even around in 2010. Some were (SMS Assist). They aren't Google..most companies aren't. What's your point? Avant was founded in 2012. Tempus was founded in.2015. Uptake was founded in 2014. Are we really trying to say Chicago has not improved in the last handful of years? If we think that the measure of success is only by having a homegrown Fortune 100 company in tech as opposed to something else, then we are also missing that point. I'd rather have 500 solid companies than 1 Google and not much else in a city. Of course, a Google and 499 other solid companies is way better

[Chisouthside]

I would definitely also say that in the Bay Area alot of startups are begun by people that gained experience and technical know-how in the big tech companies.

[the urban politician]

Originally Posted by marothisu

Chicago has multiple home grown tech unicorn companies, many weren't even around in 2010. Some were (SMS Assist). They aren't Google..most companies aren't. What's your point? Avant was founded in 2012. Tempus was founded in.2015. Uptake was founded in 2014. Are we really trying to say Chicago has not improved in the last handful of years? If we think that the measure of success is only by having a homegrown Fortune 100 company in tech as opposed to something else, then we are also missing that point. I'd rather have 500 solid companies than 1 Google and not much else in a city. Of course, a Google and 499 other solid companies is way better

It seems like you didn't even read the article I posted. It specifically counters the anecdotal type response that you just put forth

[marothisu]

Originally Posted by the urban politician

It seems like you didn't even read the article I posted. It specifically counters the anecdotal type response that you just put forth

Yes, I did read it. None of which are points I was talking about. The author brings up already "certified" tech centers (in 2018) such as the Bay Area, Boston, Los Angeles, and NYC. When you say you're emerging, you do not compare yourself to the top of the game. That's like giving Kazakhstan crap after someone points out it's emerging because it doesn't compete in certain aspects with the likes of the US, China, France, Germany, and Japan. It's missing the point. Most people do not claim that Chicago is near the top unless you're talking about things like return on investment on exits (which it is actually the top, at least as of right now) - it's basically a second tier tech scene at this point. Which is a lot better than the probably third tier I would have put it at when I had first moved to the city and most of the tech talent was in financial firms, consulting firms, and not nearly as many startups. The point that I, and others, have raised is that it's getting better and has gotten better from even a decade ago. Nobody in their right mind would compare most metrics to the Bay Area, NYC, LA, or Boston. It's just idiotic. But when you say you're emerging - it's a different ball game. Of course the entire world is growing - we're in 2018 and it's not tied to a few centers. Anybody who has been in the tech industry in Chicago say even 2010 compared to just a few years ago or now would agree with this. I'm sorry, but you just do not build out larger engineering teams in locations that don't have the talent. There's a reason why Google was not big on engineering in Chicago until semi recently. The talent wasn't as readily available versus today.

Also, how is talking about actual startups which have hired collectively thousands of people and are valued in the billions of dollars anecdotal? Sorry, you may not like it, but as a manager in tech, I'll glady take my own experiences in multiple areas of the country at multiple companies including hiring and building out teams anyday over someone else's opinion who doesn't work in the industry who thinks they're an expert because they read a few articles online about it. There's a lot more to the story (i.e. actual average level of talent in some area) than what you read in articles, and it's more complicated than meets the eye.

[the urban politician]

^ Whoa, chill. The author of the article is who you should focus your ire on, not me.

The question he brings up is whether Chicago's tech scene is even catching up to anybody else's. He makes a legitimate point that, despite the growth, we aren't gaining any ground.

[marothisu]

Originally Posted by the urban politician

^ Whoa, chill. The author of the article is who you should focus your ire on, not me.

The question he brings up is whether Chicago's tech scene is even catching up to anybody else's. He makes a legitimate point that, despite the growth, we aren't gaining any ground.

I think that anybody who reads an article should not blindly accept what someone is saying especially if it's in an industry that the reader doesn't have intimate knowledge of. It's natural inclination, but you know. Peter Thiel also said that the only places where there is to go with anybody with talent in tech is the Bay Area and NYC. Anybody with experience who knows what they're talking about would tell you he's full of s*it (even many of my coworkers here in NYC who have been in this industry for 20 years laughed their asses off when they heard him say this - even though it looks really good on NYC). A lot of people will just blindly buy it who don't work in the industry because they don't know any better.

The issue is that the author is writing in terms of startups and VC as if it's the only way to measure activity. Facebook looking to hire 1000 engineers won't even register on the author's radar. Not even Microsoft hiring 5000 engineers would because they're focused on VC money. They even mention innovation in regards and the number of SIBR grants to this as if the only way to measure innovation is through a startup. It's complete nonsense. This is not how innovation in tech solely is. This guy's article basically reads like innovation doesn't really happen outside of startups

Now, don't get me wrong - VC money is obviously important for many companies, but not every company needs VC money or has even taken a lot of it (we've had discussion on this so I know you know what I'm talking about). There are companies in numerous cities that this falls into - yet again, this wouldn't register with the author at all because their understanding of how to measure this has a little bit missing.

Interestingly even with this being said, the author doesn't even point out the fact that firms like NEA (based in the Bay Area) - investors in Uber, Salesforce, Snapchat, Tableau, MongoDB, Jet, Groupon, etc set up an office in Chicago a few years ago. The only other places they are in the US are Boston, NYC, and DC. They aren't in Atlanta. They aren't in Philadelphia. They aren't anywhere in Texas. They aren't even in Seattle. Yet they're in Chicago - one of the most prolific VC funds on the planet. Not to say this is just groundbreaking, but it's just a little bit telling that perhaps things are actually going up a little bit.

Again, Chicago has a long ways to go and I agree that it's 2nd tier - but it's a hell of a lot better than the 3rd (some might argue 4th tier) it was less than a decade ago. But any article that primarily measures "tech industry" success on the amount of VC funding while paying attention to nearly nothing else should be taken with a grain of salt. I think there are other places that are doing well outside of the big 4 or 5, such as Dallas, DC, and Atlanta, but in my opinion Chicago is in the game with them and it could be a lot worse. It could be a lot worse than having over $1B in VC funding, and companies like Facebook, Google, Yelp, Salesforce, Amazon (not talking about HQ2 or fulfillment - talking about their already existing downtown office), etc looking to hire thousands of engineers collectively recently. It's not going to register with this author though because it's not VC money nor a SIBR grant.

By the way, the author talks about how Chicago is 2% of all VC funding. You know who else was 2%? Seattle. Not sure that anybody is giving Seattle a bunch of crap for their startup game (of course, they have the likes of Microsoft, Nintendo, and Amazon so that part is a little different). In 2016, the Bay Area alone made up nearly 44% of all VC deals money wise. Add in NYC and Boston to that and it's just under 65% in just those 3 areas. The only area that is in position to gain ground on the likes of Boston or NYC is the LA area. Seattle isn't. San Diego isn't. Chicago isn't. DC isn't. Austin isn't. Chicago still had more funding than our beloved Austin, but then again people aren't going to give Austin crap because they have offices of numerous established tech firms that don't need VC money anymore. But to bring up the 2% part is a little misleading considering the majority of VC deals in America are by percentage based in those 3 areas (4 if you add in LA which you really should). They should have brought up the fact that Chicago basically had the amount of VC deals that Atlanta and Dallas combined did.

[the urban politician]

^ Oh, I agree, I've stated before that I find VC to be a lousy yardstick of tech or even entrepreneurial activity. It's very "fad" and bodes well in fad-obsessed places like some coastal cities.

But the author does still make some good points. Perhaps our weakness here isn't in talent, but just in failing to build a VC ecosystem appropriate for a metro of our size and stature. We've had the time, there must just be something culturally different about Chicago.

Hell, maybe it doesn't even matter? We seem to always do well on those Inc 5000 and Fast Company lists, so... who knows?

[marothisu]

Originally Posted by the urban politician

^ Oh, I agree, I've stated before that I find VC to be a lousy yardstick of tech or even entrepreneurial activity. It's very "fad" and bodes well in fad-obsessed places like some coastal cities.

But the author does still make some good points. Perhaps our weakness here isn't in talent, but just in failing to build a VC ecosystem appropriate for a metro of our size and stature. We've had the time, there must just be something culturally different about Chicago.

Hell, maybe it doesn't even matter? We seem to always do well on those Inc 5000 and Fast Company lists, so... who knows?

I posted an article the other day from the Tribune about this. They have quotes from people like Steve Case (AOL co-founder) and NEA on why they choose to invest in Chicago companies. You should read it, at least the quotes that I quoted.

Chicago's VC system is a more closed network than places like San Francisco based on some studies. Some VC firms on the coasts are beginning to realize this and they're starting to come more into the "Chicago market" because they realize there's actually now a number of quality startups in Chicago. One of the partners at NEA mentions in the article that they're just as likely to find a really good company in Chicago than the Bay Area - there's a reason why they set up an office in Chicago.

As long as Chicago continues to produce solid startups, I would bet money on the fact that you'll see more and more coastal VC money pouring in the coming years into the ecosystem than before. That $55M investment in G2 Crowd the other day? It was done by 3 VC firms based in Silicon Valley - IVP, Accel, and Emergence Capital. Tempus raising $110M? Done by NEA (office in Chicago but centered in Silicon Valley), Revolution Growth (DC), Baillie Gifford (Edinborough, Scotland), etc. Project44 raising $45M? Done by Insight Venture Partners from NYC, 8VC from San Francisco, Omidyar Technology Ventures from Silicon Valley, etc.

There is a lot of investment from Chicago funds themselves, but if you pay attention to this, I think you'll notice a little uptick in funding coming from the Bay Area and the East Coast. At the end of the day, there's more to a tech ecosystem than VC money (even though VC money is one indicator and a decent one, but not the end all be all). Not even Chicago landing HQ2 would show up in the author's statistics they used in the article. That is pretty telling that the author is focusing too narrow when they talk about a pretty broad subject like "tech industry."


BTW here are the quotes from those people on why they're now coming into Chicago. I think the first two should tell anybody what they need to know. Some firms on the coasts are finding out that there are actually really great companies in Chicago, but their access to capital in Chicago itself can be a little limited. They've finally realized this and understand that it's a good place to invest. News like Chicago being #1 in MOIC for 2 years in row helps bring more of this.

New Enterprise Associates: “We’re always looking for outstanding companies with amazing products and technology. That’s one of the reasons we’re in Chicago in the first place,” he said. “Those companies are equally likely to pop up in Chicago as they are in the coasts.”

J.D. Vance (Author of New York Times bestseller ‘Hillbilly Elegy’): “As advanced as Chicago is, we still think that the quality of the entrepreneur outweighs the access to capital, so there’s a real opportunity for investors like us to come here, spend time here and meet some good companies here,”


Steve Case (AOL co-founder): “In the Midwest, there’s a perspective or the tendency to take a little bit longer-term view. There’s a tendency to be more humble — sometimes to a fault,” Case said. “There’s a tendency to try to forge partnerships that could be win-win.”

[marothisu]

By the way, you mentioned the INC 5000. I thought it would be interesting to take a look but only of more tech related industries.

That is companies that fall under Software, Computer Hardware, IT Management, IT System Development, and IT Services.

Total (all the above put together) by MSA, 2018

1. NYC: 75 companies
2. Washington DC: 74 companies
3. Chicago: 50 companies
4. San Francisco: 48 companies
5. Atlanta: 45 companies
6. Los Angeles: 44 companies
7. Dallas: 27 companies
8. Boston: 25 companies
9T. Denver: 21 companies
9T. Philadelphia: 21 companies
11. San Jose: 20 companies
12. Minneapolis: 19 companies
13. Austin: 18 companies
14. Phoenix: 16 companies
15. Baltimore: 15 companies

Not as many as NYC and DC, but still more than San Francisco, Atlanta, Los Angeles, etc.

Software companies by MSA, 2018
1. NYC: 45 companies
2. San Francisco: 36 companies
3. Los Angeles: 29 companies
4. Chicago: 22 companies
5. Washington DC: 21 companies
6. Atlanta: 20 companies
7. Dallas: 15 companies
8. Austin: 13 companies
9T. Boston: 12 companies
9T. San Jose: 12 companies
11T. Denver: 11 companies
11T. Minneapolis: 11 companies
13T. Philadelphia: 10 companies
13T. Seattle: 10 companies
15T. Baltimore: 9 companies
15T. Phoenix: 9 companies

NYC and Bay Area far ahead with LA next, but Chicago and DC not far behind LA.

IT Management companies by MSA, 2018
1. Washington DC: 25 companies
2T. Chicago: 17 companies
2T. NYC: 17 companies
4. Atlanta: 14 companies
5. Boston: 12 companies
6. Los Angeles: 11 companies
7. Philadelphia: 8 companies
8T. Dallas: 7 companies
8T. Denver: 7 companies
10T. Minneapolis: 6 companies
10T. San Francisco: 6 companies
12. Phoenix: 5 companies
13T. With 4 companies each ==> Baltimore, San Diego, Miami, Houston, and Nashville

Chicago tied with NYC. Ahead of the Bay Area, Los Angeles, etc.

IT System Development companies by MSA, 2018
1. Washington DC: 28 companies
2. NYC: 13 companies
3. Chicago: 11 companies
4. Atlanta: 10 companies
5. San Francisco: 6 companies
6T. Dallas: 5 companies
6T. San Jose: 5 companies
6T. Detroit: 5 companies
9. Los Angeles: 4 companies
10T. Philadelphia: 3 companies
10T. Denver: 3 companies
10T. Houston: 3 companies
10T. Charlotte: 3 companies
10T. Portland: 3 companies
15T. With 2 companies each: Austin, Baltimore, Seattle, Phoenix, Minneapolis


The number of companies in Computer Hardware and IT Services were pretty low individually. Chicago is tied 3rd for Computer Hardware.

[the urban politician]

^ Ok, I'll admit I got you riled up on purpose so that you would post data like this...

Yep, clearly something is wrong with the VC "yardstick"

[marothisu]

Originally Posted by the urban politician

^ Ok, I'll admit I got you riled up on purpose so that you would post data like this...

Yep, clearly something is wrong with the VC "yardstick"

LOL uh huh.

When talking about a city's entire tech "scene", VC is only one (sizable, but not huge) part of the yardstick. Anybody who thinks it is the entire yardstick or most of it either has something to sell or is really that ignorant and has really no idea what they're talking about. VC money is really a bet by investors on a company and it matters, but again - not even close to the entire picture. At the end of the day, it's the business that matters and ultimately has to produce (eventually, investors may stop throwing money at a company if they don't see a point). A company that gets $5M in revenue isn't guaranteed to have less revenue after a few years than a company that just scored a $25M round. Just like how neither are even guaranteed to be in business at all in a few years time.

In 2016, Austin, TX had $977M in VC funding deals which was less than Chicago's $1.245B (note: Chicago had $1.7B in 2017). Nobody who knows the tech industry in their right mind would rate Chicago above Austin, TX when considering the entire tech ecosystem though just because Chicago had nearly $300M more in VC funding than Austin.

Just take a look at some of the tech offices Austin has and the number of employees (https://www.builtinaustin.com/2017/10/31/austin-top-100-tech-companies-2017)

* Dell: 13,000 employees
* Apple: 6000 employees
* IBM: 5416 employees
* National Instruments: 2838 employees
* Oracle: 2000 employees
* Amazon: 900 employees
* Electronic Arts: 700 employees
* Facebook: 700 employees
* Blizzard: 700 employees
* eBay: 675 employees
* vmware: 634 employees
* Google: 450 employees
* Rackspace: 405 employees
* Atlassian: 369 employees
* PayPal: 325 employees
* Tableau: 250 employees
* Uber: 202 employees
* Box: 190 employees
* Experian: 145 employees
* Salesforce: 132 employees
* Dropbox: 110 employees
* CA Technologies: 109 employees

Those 22 companies above employ 36,250 people all together. There's 78 other companies listed on that page and I'm sure many others outside of this. A good amount of heavy hitters right there - this doesn't and shouldn't affect their total standing in tech just because their VC funding is less than the likes of Chicago and Miami.