CHICAGO | Economic & Business Development

[VivaLFuego]

Originally Posted by LouisVanDerWright

What are you talking about being "woke"? Wework is a pyramid scheme, Airbnb is not, Amazon is not, Facebook is not. Not all VC funded tech companies are a scam defrauding a whole generation or whatever you called it.

True - although the sustainably profitable ones mostly thrive on some mix of rent-seeking and regulatory capture. The wasting of a generation's talent that I mentioned is a reference to the many brilliant and highly educated folks from my cohort who have taken $200-300k+ jobs at these companies in SF, NY, Seattle, etc. to produce nothing of value other than 1) shareholder profit driven by the aforementioned rent-seeking and regulatory capture 2) game-theory driven hoovering of talent to keep it away from competitors.

Apple, Amazon, and Microsoft may be the least evil of the bunch, if only by a little bit, since they actually produce some value-added goods and services.

Very large companies producing 30%+ profit margins year over year when the economy is growing in the 1-4% range are succeeding by some form of protected anti-competitive behavior and/or labor exploitation. Amazon's low profit margin is a partial sign of it's relative non-evilness, but even reaching its current state depended on quite a bit of regulatory capture and predatory anti-competitive loss-making, which is a common binding theme with the anti-profitable shitshows like WeWork and Uber.

I find that most political "opinions" of our generation are not genuine, but rather driven by crushing white guilt and/or obsessive virtue signaling. It's not about actually saving the environment or helping the poor, it's about quick bullshit you can slap up on social media to make it look like you give a shit. The plastic straws thing is a perfect example of this. My brother in law lost it on me when I said I recycle them anyhow and he's like "they clog the recycling machines man" and then like 8 hours later he's asking me whether I can help him replace the front door to his house with a $800 new one with a bigger window...

I'm like dude, you realize the amount of foam insulation in the perfectly serviceable 10 year old door you want to replace for no good reason is like the equivalent of 100,000 straws right?

100% agreement on all of this

Actions reveal a much different picture than words.

[Vlajos]

So WeWork is not evil at all. In fact, they are do gooders due to massive losses according to the above silliness.

[marothisu]

Originally Posted by Vlajos

So WeWork is not evil at all. In fact, they are do gooders due to massive losses according to the above silliness.

Three CEO is also a good guy.... buying up property in NYC and then getting his own company to lease out space in his personal buildings which funnels corporate money directly into his pockets. I'm sure shareholders will love that.

[LouisVanDerWright]

Originally Posted by VivaLFuego

True - although the sustainably profitable ones mostly thrive on some mix of rent-seeking and regulatory capture. The wasting of a generation's talent that I mentioned is a reference to the many brilliant and highly educated folks from my cohort who have taken $200-300k+ jobs at these companies in SF, NY, Seattle, etc. to produce nothing of value other than 1) shareholder profit driven by the aforementioned rent-seeking and regulatory capture 2) game-theory driven hoovering of talent to keep it away from competitors.

Apple, Amazon, and Microsoft may be the least evil of the bunch, if only by a little bit, since they actually produce some value-added goods and services.

Very large companies producing 30%+ profit margins year over year when the economy is growing in the 1-4% range are succeeding by some form of protected anti-competitive behavior and/or labor exploitation. Amazon's low profit margin is a partial sign of it's relative non-evilness, but even reaching its current state depended on quite a bit of regulatory capture and predatory anti-competitive loss-making, which is a common binding theme with the anti-profitable shitshows like WeWork and Uber.

I don't think what you are saying makes sense. First you are comparing the growth rate of "30%" with Amazon's profit margins which are entirely different things. Amazon's growth rate is actually double digits and has been for some time. Their margins are low because of the industry they are in and are very comparable with say Target or Walmart. You have to move a large volume of goods to compete in retail.

Also growth rate for a company is not at all comparable to the rate of growth in the general economy. First of all, some of Amazon's growth comes at the expense of existing companies like Kmart and Sears which have been dismantled and put out of business by Amazon. So the net effect of their blistering growth on GDP growth in general is muted by the fact that their industry isn't actually growing that fast because some companies are failing and others are growing.

As for the growth rate of tech companies in general, of course it is going to be blistering when you have entire industries being created. Eventually the market is saturated and growth tails off. This is all in line with the lifecycle of businesses in general over the history of modern business. A company like Sears was growing similarly to Amazon in the 1800s and massively outpacing general economic growth. Then they entered the cash cow phase of business where they had saturated markets and just kept churning a profit for investors but not growing very fast, now they are ending the decline phase and haven't adapted and thus have been eliminated. Apple is actually a perfect example of a company just entering the cash cow stage. Their premier products have literally saturated the globe (us smartphone penetration is like 95% of consumers or something absurd like that) and now they are sitting back and collecting gobs of cash. They need to plow that cash back into new products and services or they will go the route of Sears.

It's all much more complex than "how are those asshole growing faster than the general economy". Just as in 2000, the game is going to be sussing out who is a fraud with an unsustainable business model that adds no real value (pets.com) and who is an Earth shattering revolution that will become a new verb in the English language (Google).

[VivaLFuego]

Originally Posted by LouisVanDerWright

I don't think what you are saying makes sense. First you are comparing the growth rate of "30%" with Amazon's profit margins which are entirely different things. Amazon's growth rate is actually double digits and has been for some time. Their margins are low because of the industry they are in and are very comparable with say Target or Walmart. You have to move a large volume of goods to compete in retail.

Also growth rate for a company is not at all comparable to the rate of growth in the general economy. First of all, some of Amazon's growth comes at the expense of existing companies like Kmart and Sears which have been dismantled and put out of business by Amazon. So the net effect of their blistering growth on GDP growth in general is muted by the fact that their industry isn't actually growing that fast because some companies are failing and others are growing.

I specifically identified Amazon as a low margin business. Google's and Facebook's profit margins, for example, have been consistently above 20% for multiple years running by most measures of margin. That's unlikely in a remotely competitive industry.

Historically, profit margins of 5-15% have been considered expected and reasonable in regulated industries (utilities) and in government procurement of non-competitive contracts, with the exact rate depending on industry risk, capital outlays, etc.. Of course, macroeconomics are complicated (especially, things like Central Bank and Treasury policy will have an impact on how many and how quickly dollars are flowing through the economy), but

I think it's actually unnecessarily overcomplicating things to say that a giant company producing 30%+ operating margins year over year hasn't somehow staked out a rent-seeking anti-competitive position that the government is either actively protecting, or passively allowing by not regulating. That margin has to come from somewhere, whether its new money being printed or other economic activity being siphoned from.

[the urban politician]

Jeez, how about taking this discussion elsewhere?

[aaron38]

Kind of a dumb question, but hey, it's been a long day. Excepting the Michigan Ave location, Michael Jordan's restaurant only has one other location. In Oak Brook. Why Oak Brook? The zip code in Oak Brook is 60523. Coincidence?

[Handro]

Originally Posted by aaron38

Kind of a dumb question, but hey, it's been a long day. Excepting the Michigan Ave location, Michael Jordan's restaurant only has one other location. In Oak Brook. Why Oak Brook? The zip code in Oak Brook is 60523. Coincidence?

I think coincidence. Oak Brook was/is the corporate king of the suburbs with McDonalds former HQ at the top of the heap, and there are still lots of big companies headquartered there. There are a seemingly random (for how sprawly it is) amount of hotels and higher-end chains in that area.

[aaron38]

Team Pritzker inching closer to Thompson Center sale

"The Thompson Center is an inefficient work environment for the current demands of state business," the governor said in a statement announcing the state is moving toward unloading it.

https://www.chicagobusiness.com/gove...on-center-sale

[sixo1]

A nice article on Why Uber, Salesforce, And Other Tech Powerhouses Love Chicago

https://www.forbes.com/sites/peteran.../#69864b97cdeb

Amazon was not mentioned. Maybe they don't have much of a presence in Chicago. I wonder why...

[marothisu]

^ Amazon probably wasn't mentioned because they only have a few hundred people in Chicago. it's funny that companies like IBM were mentioned considering they've been in Chicago for *years*. Even the tech consulting practice I used to work for has been in Chicago for probably around 20 years. Of course, the IBM Building was built in the early 1970s in Chicago.


Now for some other news:

SpotHero Raises $50M to Accelerate Growth, Make 50 Engineering Hires

https://www.builtinchicago.org/2019/...s-50m-series-d

In Chicago, like many places, finding parking can sometimes be a nightmare. So SpotHero provides a platform where you can buy or sell parking spots.

And now its business is accelerating. On Thursday, SpotHero announced that it raised a $50 million Series D funding round. That brings the company’s total funding to $118 million.

..

Lawrence told Built In that the new funding will go towards strengthening SpotHero’s partnerships, as well as signing new ones. The company also wants to put the funding toward scaling its digital parking marketplace and hiring swaths of people — including 50 engineers.

--

Not big news, but still good

VC-Backed Photo App VSCO to Open Chicago Office

https://www.americaninno.com/chicago...hicago-office/

VSCO, a popular photo editing app that’s reportedly valued at $550 million, is opening an office in Chicago.

The startup announced this week that it plans to open a Chicago outpost this fall at the Working From, a co-working space inside The Hoxton hotel in the West Loop. The Chicago office will start with a handful of employees and plans to grow to 20 over the next 12 months.

The Windy City space will be VSCO’s second office outside of its headquarters in Oakland, where it currently employs 150 people.

..

“With a strong talent pool, a city-wide appreciation for the arts, and a diverse mix of cultures and points of view, Chicago was an easy choice,” VSCO’s VP of People Katy Shields wrote in a company blog post.

..

The company said it will be hiring in Chicago across “all disciplines,” and its current local job openings include director of engineering, senior product manager and technical recruiter.

---


Kin Raises $47M to Launch Own Insurance Carrier in Florida

https://www.americaninno.com/chicago...er-in-florida/

Chicago-based Kin, an insuretech startup that’s created an easier way to buy home insurance, raised a new round of funding to launch its own insurance carrier in Florida.

The startup announced Tuesday that it raised $47 million in a round led by August Capital. Hudson Structured Capital Management (HSCM Bermuda), Avanta, the UChicago Startup Investment Program and existing investors also participated.

The new round brings Kin’s total funding to more than $60 million. Kin, founded in 2016, last raised $12 million in 2018 to continue growing its insurance platform that allows it to make underwriting decisions quickly based on data from satellite images, public records and other sources.

The new financing will be mainly used to support the creation of its Kin Interinsurance Network, a new insurance entity that allows the startup to independently offer its services in Florida. Up until now, Kin has been operating as a managing general agent, a model that’s allowed Kin to use its tech to insure policyholders but required them to use another insurance company’s license to do it, said CEO Sean Harper.

He said by launching the Kin Interinsurance Network, the startup can control the entire insurance process for its policyholders, which also brings down the cost.

[marothisu]

Healthcare Startup VillageMD Raises $100M

VillageMD landed $100 million in new funding as the fast-growing Chicago startup looks to brings its healthcare technology platform to more doctors.

The Series B round was led by a $75 million investment from Kinnevik, a Swedish investment firm. Other backers in the round include Oak HC/FT, Town Hall Ventures and Adams Street Partners.

VillageMD has now raised more than $215 million to date. It last raised a $80 million round in 2018.

VillageMD partners with primary care providers to help them cut costs and deliver better patient outcomes. The startup provides doctors with data analytics, staffing support and other resources to improve the quality of care.

The company, founded in 2013 by healthcare veterans Tim Barry and Clive Fields, says it has worked with more than 2,500 physicians in eight markets. VillageMD says it will use the new funding to expand to more cities and improve its docOS tech platform.

..

---

Chicago Upstart Lands $16M to Help Cannabis Brands With Advertising

https://www.americaninno.com/chicago...h-advertising/

A young Chicago startup just raised $16 million in its first-ever round of funding to help cannabis companies deliver industry-compliant ad campaigns.

Fyllo announced Wednesday that its $16 million seed round was led by New York-based JW Asset Management and Canada-based K2 & Associates, two investments firms known for backing cannabis-related businesses.

Founded just this past April, Fyllo has created a marketing tech platform for the cannabis industry that helps brands execute and create ad campaigns that comply with state and federal regulations. Marijuana and CBD companies can be fined if one of their digital ads runs in a state where their product is not allowed, or if it’s seen by someone underage. Fyllo says it helps cannabis companies meet compliance requirements at scale, giving brands piece of mind that they’re only advertising to their intended, legal audience.

..

Fyllo currently has around 20 employees, and it expects to reach 40 by October, Bronstein said. Along with its headquarters in Chicago, it also has offices in Los Angeles, Denver, New York, Toronto and Tel Aviv.

--

Conagra Opening Chicago Innovation Center to Cook Up Its Next Snack Brand

https://www.americaninno.com/chicago...t-snack-brand/

Chicago-based food giant Conagra Brands is building an innovation center in Chicago to create new snacks that appeal to consumers’ ever-changing diet demands.

The 40,000-square-foot space will be home to 50 Conagra employees tasked with creating new snack brands, working on everything from recipes to packaging design.

The new innovation center, which is slated to open in the first quarter of 2020, will feature an expansive kitchen and tasting area, where Conagra can interact with customers to get their feedback on new recipes.

[SIGSEGV]

For some actual development news:

https://www.chicagobusiness.com/rest...s-opening-date

This is the perfect thing for N Michigan Ave, I think.

[the urban politician]

How the Windy City became Cyber City

https://www.inc.com/howard-tullman/h...cybe-city.html

Good read on how Chicago is becoming a cyber security hub

[the urban politician]

OurCrowd, Israel’s leading VC investor, opening its 3rd US office in Chicago:

https://www.streetinsider.com/dr/new...15886227&gfv=1

[SIGSEGV]

I wonder if the timing of this had anything to do with hurricane season:

UChicago invests $500,000 in startup helping insure disaster-ridden regions

https://news.uchicago.edu/story/uchi...-prone-regions

(note that Kin is hq'd in Chicago, despite appearing to primarily serve TX and FL).

[the urban politician]

Chicago now has rentals that have breached the $4/sf barrier:

https://www.chicagobusiness.com/comm...each-4-barrier

[marothisu]

Originally Posted by the urban politician

Chicago now has rentals that have breached the $4/sf barrier:

https://www.chicagobusiness.com/comm...each-4-barrier

How long did it take between say about $3 or $3.25 per sq ft and $4 per sq ft?

My place in LIC is $5/sq ft.

[SIGSEGV]

The US news best college rankings, although largely bunk, have UChicago at tied for 6th (a notch down from tied from third last year) and Northwestern at 9th (up from 10th) this year.

Even though there is no practical difference between tied for 3rd and tied for 6th, UChicago had a much higher than average admission yield (77%!) last year, presumably many high school kids/parents are unnecessarily fixated on this ranking.

Needless to say the only other metro with 2 top-ten schools is Boston (unless you count Princeton and New Haven as part of the NY metro...).

[marothisu]

Originally Posted by SIGSEGV

The US news best college rankings, although largely bunk, have UChicago at tied for 6th (a notch down from tied from third last year) and Northwestern at 9th (up from 10th) this year.

Even though there is no practical difference between tied for 3rd and tied for 6th, UChicago had a much higher than average admission yield (77%!) last year, presumably many high school kids/parents are unnecessarily fixated on this ranking.

Needless to say the only other metro with 2 top-ten schools is Boston (unless you count Princeton and New Haven as part of the NY metro...).

Princeton is 100% part of the NYC metro area. New Haven is not, although it is part of the NYC CSA.