One of the things that is hard to pin down is how entrepreneurial Chicago is. It’s really an entrepreneurial Mecca. But, it doesn’t seem like it because the kind of entrepreneurship that has existed here doesn’t resemble anything on the coasts. It might look more like NYC because it certainly doesn’t resemble Silicon Valley.
Many of the entrepreneurs in Chicago hung out on the trading floors throughout the city. There were five of them, but three were really large. The CBOE, CBOT and CME each had thousands of people on them. They were some of the most innovative places ever. Financial futures and options were created on those floors. Plenty of business ideas were created, and funded on those floors. Heck, most of the syndicate that bought the Chicago White Sox and Bulls was from those trading floors.
Huge HFT businesses were created off those floors. But, so were other businesses. Trading Technologies came out of the ten year note pit. In the CBOE SPX pit, four businesses were created that collectively are worth over $3B. Think or Swim, Liquid Point, Options Monster and OptionsExpress. I have invested in a guy that once worked at OptionsExpress. There are plenty of others.
People think that it was just gamblers in colorful coats. But, there was a lot more going on.
The funny thing is for each of those businesses, it was really hard to raise venture money. The entrepreneur would go to California and come back empty handed. The California VCs just didn’t get that business. That still persists. I have spoken with entrepreneur after entrepreneur that has gone to the coast and come back empty. The VCs metrics and framing of how businesses startup and operate are different. There isn’t a thing wrong with it-it’s just a very different model.
Chicago businesses core competency is plumbing. It’s not flashy on your phone stuff. It’s not ad revenue. It’s solving a problem, and getting paid for it. It’s revolutionizing something that not a lot of people know about.
Like I said, I don’t think this is “good or bad”. It just is. But, I think you need to recognize the differences because it creates different framing and metrics.