The Tech Scene in Chicago is Blooming
- Posted by Jeff Carter
- on November 10th, 2012
My whole life, I have been trained to be a skeptic. My first job out of college was in sales. When you sell, you need to look for clues as to why people aren’t buying. The people that are buying you just service and keep happy-and listen to their complaints. It’s the people that aren’t buying you try to change.
Leaving sales wasn’t too hard for me because my whole life I had wanted to be a trader. I used to wake up early and watch Orion Samuelson before the Ray Rayner Show on WGN. He talked about wheat, corn, beans, and pork bellies. What the heck was a pork belly?
The first time I walked on the trading floor, it was exciting. You could smell it in the air. Activity hummed, randomness, fights, screaming, competition, the smell of sweat. I traded my own money and never had customers. I wanted to get up every morning to go to work and I loved it. The people, the jokes, the randomness, the fun, and the money were great. I have the hearing loss to prove that I was in the center of it. However, when you are a trader, it really pays to be a skeptic.
For the last seven years now, I have been engaged in the Chicago tech scene. In 2005, I made my first angel investment, Tallgrassbeef, and in 2007, I co-founded one of the city’s leading angel organizations. Over the years, things developed. I watched, listened, compared and thought about them. As a person with that trader mentality, I don’t get too excited in success or too down with failure.
Other people I know have touted the Chicago start up scene. Some have just been cheerleaders, but many have put their money and a lot of sweat into building it. I was very supportive of their efforts. Sometimes I cheered along with them, but at other times I pointed out some deficiencies we have. A minute few have leeched off of local start ups instead of adding back to the community. We have our grinfuckers here! I was careful not to get too excited or emotional about it.
Remember, I got involved in 2005. There was not too much going on here then! “Start up” to many was a push button on a car. Even in 2007, there wasn’t a whole lot. The financial melt down didn’t help either. Educating people on what a start up even was, or how to support a start up is a process that takes time. So, as the scene has begun to develop, I try to look for valleys, not the mountains that have been built. Many people continued to tell me I was crazy. It was flyover country.
When I would go to conventions, read the news, talk to people, read blogs, I would think about Chicago as it related to the rest of the start up world. I drove around the country to different places. I was in Omaha, Nebraska and saw the Mastercraft building. It’s cool, but it is not 1871. But, it’s a great sign of momentum. The midwest is bubbling with activity from Ohio to Nebraska and Minnesota to Missouri. Everyone can tout something going on in their town.
Because something was going on everywhere, I took a step back and thought about Chicago. Is it what we think it is? Is it what we say it is?
My week this past week gave me my answer. Finally, I can say there is a thriving tech scene in Chicago and if you aren’t here you are missing out. Run, don’t walk. It’s time to move here. It is the best place to build your company and here is why. If you need some virtual evidence before you take the plunge, check out Built In Chicago.
First, the city is great. It’s cheap to live here compared to a lot of other places and you have all the culture, pro sports, great restaurants and diversity you expect from a big city. That existed before the tech scene. It’s why Fortune 500 headquarters are here-but that’s why a start up should be here. Those Fortune 500 companies are likely to buy you. Wouldn’t it be nice to rub elbows with them in real time, in person?
All of a sudden, companies are finding it more efficient to raise a seed round. Just yesterday, a company I had office hours when they were being formed, MarkITX, raised a million in seed funding. Congrats to Frank and his team. I know how hard you worked on this.
There are cheap, vibrant places to work. 1871, TechNexus, Catapult and The Coop. Many digital design firms are carving out co-working space. Desktime is great software developed in Chicago to manage your co-working space no matter what size it is. Power2Switch has some great space in the west loop, Smarteys co-works there. The start up community supports itself. They talk to each other, lean on each other.
We have four strong angel groups (HPA, Wildcat, Irish, and Cornerstone) in the city now. I was at the first Irish Angels meeting, and they are excited. I am excited for them. Each of them communicate with one another and have a common way to share deal flow through MCOIN. Not only that, but angel groups all over the midwest belong to MCOIN, and we have a mechanism to share deals with each other. If you have a signed term sheet with one group, they can pass it to another group and that group can elect to co-invest on the deal. The great news for an entrepreneur-no fees. And they get to pitch to a bunch of angel groups at once. There is still the time it takes to talk to each individual group, but at least we are trying to smooth the process.
There are great educational institutions in the area. MRUN will give you a list. But there are great resources at local academic institutions for entrepreneurs. The Polsky Center, The Knapp Center, The Coleman Center and The Levy Institute are at your fingertips. All are an L ride away.
It’s easy to meet people in Chicago through events sponsored by Technori. I was at an event last night for a little bit with my wife. Sometimes they are in hipster spots, and sometimes just in bars. But it gives you a chance to take a break, meet people in the same situation as you and have a little fun. One of my start ups, Kapow Events got a lot of value from Technori. What’s life without some fun?
Much to my chagrin, the Chicago tech team behind Obama kicked Romney’s ass. They were lead by a Chicagoan, Harper Reed, and he recruited a lot of Chicago people to work for him. Many others came from all over, and now that you are here I hope you stay. If they do, they will build something. Move here, and you can work with them.
There are support groups for you here. It’s now possible to have a failed start up and find another one to work for. Raman Chadha is starting up an innovative new program that isn’t being done anywhere else in the US in this way.
Here is more evidence. Yesterday, I spoke to a group of students at Harold Washington Community College. There is no way a community college wants a guy like me talking to students unless something is happening. I went from there to the west loop. Had lunch with two guys that are going to start a company. Helped another new start up company connect with a potential employee. Saw another new start up in the restaurant and talked to him. Walked out on the street and saw Cookitforus CEO Moshe Tamssot, and we walked around talking about how he is doing. Then, I went to meet a founder who I met virtually on a blog. He was trying to decide between here an NYC for his start up. When we were talking in walked another start up, Vlinksmedia, and we talked about his business. I left there went to Macello. It was crowded so we sat at the bar and a young guy sat down next to us. I looked at him and said, “Are you with a start up?”. He said he was, but brand new here, and we talked about how he could plug into the community. On our walk home, I ran into one of our HPA associates and talked with his wife and him for a while. And by the way, I walked everywhere.
Next week, I am going to Madison, Wisconsin to talk start ups. On Thursday night, I am going to Notre Dame and meeting a bunch of students, then talking to a couple of classes on Friday. By the way, after the thing on Thursday let’s hang in Legends. Some day I will go back to my alma mater, Illinois, and do the same thing-I know others already have. Purdue, Wisconsin, Michigan, and Minnesota are all getting ramped up. Did you know the inventor of Siri is an Indiana grad? So is Mark Cuban.
This is not Silicon Valley. We aren’t Silicon anything. It’s different here. Much of the midwestern friendliness and work ethic transcends our start up community. People are accessible here. Want to meet them? Just go where they hang out. Chicago isn’t perfect yet. No place is. We have some holes, but I am working on solving them. The important thing to note is that we aren’t competing with anyone. We are building something unique that will work with other ecosystems in the world.
I know this sort of thing happens in the Valley every day, or to Fred Wilson in NYC every day, or Brad Feld in Boulder every day. Two years ago, it wasn’t like that here. But now, it’s a normal occurrence in Chicago. It can happen to you too. Just like when I sniffed the air the first time I walked onto the trading floor and new something was different-something is different in Chicago.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)
Ben Horowitz Blog
Betting the Business
Black Line Review
Blue Sky Innovation
Both Sides of the Table
Chicago Booth Graduate School of Business
Cooler By The Lake
Daily Economic Release Calendar
Doug Ross @ Journal
Economics of a POW Camp
Foundation for Families
Garden and Gun
George Stigler Institute
Good Beer Hunting
Great Food In Chicago-Steve Dolinsky
Hyde Park Angels
Illinois College of Business
John Taylor's Blog
Legal Issues in Angel Funding
Macroblog-Federal Reserve Bank of Atlanta
Microbrews in Chicago
Mike And G
Milton Friedman Institute
National World War Two Museum
Notes From Underground
Ronald Coase Institute
Selling The Why-Simon Sinek
Senate Banking Committee
The Alpha Pages
The Big Picture
The Clubber Fund
The Daily Crux
The Grumpy Economist
The Jack B Show
The Last Lecture
The Minimalist Trader
The Musings of The Big Red Car
The Polsky Center
The Streetwise Professor
Tough Love Marketing
US Federal Reserve Bank
US House Financial Services Committee
World War Two Blog