Is Chicago's tech community in search of an identity?

Matt Moog

Blogs

Last night I read through Adrian Holovaty's recap of a talk he recently gave about Chicago's startup community.  He made a compelling argument that Chicago should embrace and own the identity of the "bootstrapper" city.  After reading it I jumped over to Twitter and saw that the talk was generating some positive feedback from people who agreed with Adrian's core premise that we should stop trying to compete on the basis of how much money we have raised vs other regions and instead focus on being a city that is known for a bootstrapping ethos.   As Adrian defined it, boostrappers are "small companies with a couple of people, likely developers, who take no outside investment money. They build products because they love the work, the craftsmanship, the pride in building and creating. 

I agree with Adrian's core premise that we need not define ourselves in comparison to any other city. Period. I also agree with Adrian's premise that small teams building great products is something fantastic to be known for.  I admire and respect developers and designers that can create, make and build.  I grew up around musicians and inventors and have always loved the creative energy and independent thinking that drives these vibrant communities.  As Adrian demonstrated in his post, Chicago has a growing community of makers who have the vision, the moxie and the grit to make something from nothing. And we celebrate them.    

But I would also say that Chicago is too big and too diverse to be just one thing. Yes we have bootstrappers, and I hope we attract many more and become known as the greatest place on earth to bootstrap a company.  But we also have startups raising seed money.  And we have growth stage companies raising giant rounds of capital.   And we have companies getting acquired for nearly a billion dollars and we have four year old companies going public with multi billion valuations.  In other words, we have it all.  Who cares if we have more of it than other cities?  The important thing is that if you want to start and scale a company in Chicago, there are hundreds if not thousands of examples that serve as proof points that you can do it your way.  Boostrapper, seed funded, venture funded, private equity backed or publicly traded. 

There are 561 startups founded in the last two years in the Built in Chicago company database.  Of these 519 have reported raising less than $100k.  For companies founded in the last two years, 21 of them have raised more than $1 million.   

So yes, Chicago is a city of bootrstrappers. And Chicago is a city of funded start ups that have raised a billion dollars in the last year. And we love every last one of them.  Because what we are is a city to that prides itself on building, making and creating.  Some of us do it in small teams, some of us do it with venture capital, but we all do it because we love creating great products, improving the lives of people and building successful and sustainable businesses.  

Case in point.... less than two years ago the Chicago Tribune wrote a story about WyzAnt as an example of how two entrepreneurs bootstrapped their company. Fast forward to today and WyzAnt just announced they raised $21 million.   Or talk to Shawn Riegsecker the founder of Centro and he will tell you why he slept in his car rather than accept venture money.  But he too later raised $21 million to fund the growth of his company.  Or how the founders of Norvax bootstrapped their company but later raised $50 million

So for everyone out there who is thinking about starting something, Chicago is your kind of town.  We bootstrap, we raise funds, we build talented teams, we build great products and we we build successful companies. We are known for many things.  Great architecture, amazing restaurants, a large and diverse business community, civicly engaged business leaders, home of our President, world class universities, great craft beer, pizza, passionate sports fans, imrpov comedy and just about every other aspect of a vibrant urban culture. 

So the real question is, what will you make Chicago known for?

 

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Comments

J. A.  Ginsburg

My comment grew into a separate post... "Mulling Snow, Climate, Pain Points, Bootstrapping and Chicago's Advantage" http://www.builtinchicago.org/blog/snow-climate-pain-points-and-chicagos...

Suzanne Muchin

Let's start with the big point emerging from this dialogue which is that Chicago's tech/start up community needs to claim a distinctive identify (let's stay away from "brand" for a moment as that will cause too steep an altitude drop). The fact that we can even have this conversation is a sign of how far Chicago has come in the last few years. Reading the comments below, I'll respond with a few thoughts.

First, we are definitely in need of this identity, as getting our message out with a compelling and singular voice will only do good things for everyone involved in our tech/start up scene. It's an "all ships rise" approach, and it will have implications for talent, investors, etc. So to Paul's beer-infused white board sessions-- yes. Good idea.

It's also true that while we don't need to go on the offensive (never a good idea as the basis for identity work), we do need to claim something truly unique that answers the question "Why build your business HERE?" I believe we have the answer to that, and it doesn't have to do with bootstrapping specifically (which feels to me more of a tactic than a strategy-- or more of a "how" than a "why"). So the conversation starts with "why", and lives at that altitude before we drop into the specific verticals that might speak to the various ways in which that "why" helps any number of "hows" (and to Matt's point-- allows for diversity to be an identity attribute rather than a "watering down" liability).

Without positing a full answer to that "why" here, I'll leave you with this thought:
There is definitely something special about what's happening here in Chicago, and it's something that we can point to, quantify and claim as uniquely ours. It has to do with the way people/institutions from both the public and private sectors are actively creating the conditions in which entrepreneurship (and entrepreneurs) can thrive here in our city. It's about the generosity of spirit-- where seasoned business leaders reach out/back for the next generation and really want to see them succeed. It's about putting a premium on building companies-- not just launching them. And it's about our consciousness that what is good for entrepreneurs is good for overall economic development and families. This goes all the way back to the days of the Chamber, where measurement of success wasn't just about dollars raised or revenue generated but jobs created for regular people.

We're at a great moment to have this conversation.

Alex Fedotov

"I hope we attract many more and become known as the greatest place on earth to bootstrap a company."
... I have no words.

Martin O'Shield

Hi guys,

The Chicago Micro-Incubator seen isn't inclusive, and the " Technology "
coming out is in fact laughable.

Ask the East Coast / West Coast Micro Incubators.

What confuses me is what are you guys basing your thoughts on?

What tech are you celebrating as significant ?

We can do so much better if we become Intellectually Honest not only to people who wants EVERYONE to believe they are " Tech Leaders ",

We don't, hence why they Chicago Unemployment market is exploding.

Jon Morris

Martin, please do not take this the wrong way, but I do not think that comments such as the "Technology" coming out is in fact laughable" is productive. I have read your posts and I believe you have a very strong point. That we need to be intellectually honest, define what is considered exceptional technology and push us to the limits.

I think though we can communicate this message in a more constructive way that motivates people to push the bar to a higher level.

I also think that your definition of a Chicago tech leader is very different than my definition. I believe that the Chicago tech leaders are the people such as Matt Moog who are trying to create a better environment and perception of Chicago technology. They are not necessarily technologists.

I would love to hear your ideas on what the Chicago Micro-Incubators could do to improve our technology. Is it the ideas themselves? The coding?

I would also love to hear suggestions on how we can keep ourselves intellectually honest. Is there a way to benchmark the technology that is being produced? What would you recommend as the first step?

Jon Morris

Mark Roth - My suggestion is not that our identity should be based on how easy it is to raise money, but rather how easy it is all around for an entrepreneur. I still contend that Chicago is one of the best places to launch a business based on the central location and access to capital, top universities, and Fortune 500 companies. If we can make every aspect of starting a business easier for the entrepreneur it would be a very powerful differentiator.

Jon Morris

Martin - Although I also consider myself on the sidelines of the Chicago tech scene, I have a very different point of view. I believe that the leaders who have invested greatly to improve the Chicago tech scene have made tremendous strides. The infrastructure today is substantially better than it has ever been. That does not mean that we have created the most disruptive technology yet, but we are laying the foundation for greatness. I believe that there are more entrepreneurs, investors and technologists choosing to stay or migrate to Chicago than ever before.

That does not mean that everything is perfect. The Chicago tech leaders need to continually create a more inclusive environment that is open to mentoring and helping other technologists succeed.

Chris Ruder

Adrian and Matt-- I'd love your response on this: The word that never seems to be mentioned in the tech/startup circle is Profit. Isn't this the ultimate goal of any business, mature or not? Yes, there are some outliers like Instagram and others that sell for large amounts and don't have any revenue, but those are the exception to the rule. I understand that most companies won't disclose detail on profit but there needs to be some sort of measure to how many businesses in the Chicago tech community are profitable. It seems that the champagne corks fly and headlines are generated when funds are raised. Shouldn't that be saved for the day the business starts generating funds and stops consuming them? "X% of Chicago's tech/startups are profitable". Or, "Chicago's Tech/Startup Community has generated $X in profit". Now that would be a differentiator.

Mark Roth

Our identity as a community should not be reflected by the ways in which companies finance themselves... that only perpetuates the false idea that methods of raising capital are the defining goals. I much prefer the POV that is starting to evolve that we have a style or way of doing things that is uniquely Midwestern & Chicago... More pragmatic ideas and companies grounded in customer traction and growth.

Nestor Ledon

I feel this only reinforces what @Jon Morris said even more. If start-ups don't have to worry about the money, then funding just won't make it on the list of goals. If we could create this atmosphere and alleviate that oh-so-heavy burden, I think it'll be a winner.

Jon Morris

My recommendation is that our identity should be focusing on "Making it easy for the entrepreneur" regardless of the stage of the company. If we continually make improvements towards access to capital, mentorship, talent, infrastructure, etc. we will get more entrepreneurs to flock to Chicago.

Nestor Ledon

Absolutely agree with this. Funding is such a tasking and complicated endeavor for any company, especially start-ups.

"Don't worry about the money, when we're done with you, you'll have it.",
If Chicago's atmosphere was defined by a phrase like this, I think it would definitely attract more and more entrepreneurs.

Paul Rand

As one of the "branding" voices Matt asked to comment on this post, I'd like to add the following thoughts:

There is nothing more important for Chicago on this topic than how we are talked about and recommended by current entrepreneurs and business leaders. So, in order to formalize our "brand," we'll need to agree on how we want our target audiences to recommend Chicago.

If we label ourselves as a city of "boostrappers" than we get looked at as a great place to start --but not necessarily grow -- a business.

To Matt's point, we have a much larger story to tell. Wherever we end up, I'd hate us to be defined in such a way that makes it a necessity for companies to leave Chicago to be taken seriously.

I'd suggest we find a broader and more inclusive platform for Chicago to own.

Anyone for a beer-fueled white board session?

Scott McMillin

"But I would also say that Chicago is too big and too diverse to be just one thing."

I think you've misunderstood the thrust of what Adrian is saying, Matt. Of course Chicago is and will always be many things. Yes, it has an incredible amount of diversity. But Adrian is talking about "reputation." He's talking about creating an identity--a brand--for Chicago that's unique within the industry. An identity that leverages our existing strengths as a city and isn't defined by other benchmarks (VC Investment and Deal Volume, etc). The case Adrian makes for bootstrapping combines not only rich Chicago history, but many current success stories. It's appealing to people wanting to start a business, and I dare say appealing to those who are looking for companies in which to invest.

The important point is that it must be ONE THING. It need to be unique, memorable, and exciting. When trying to carve out an brand identity "everything" is the equivalent of "nothing."

Lisa Henderson

Scott, I completely agree with you. The "Chicago Start-up" scene is in essence a business: investors/talent are our "customers", start-ups are our "products". Every good business needs a unique point of view/brand in order to mean something to the customers and end- users involved.

Matt Moog

Scott - thanks for chiming in. I hear where you are coming from. I think we agree that a brand identity needs to be distinct. I guess I just would like to better represent the entire community while still finding a way to be distinctive. I am going to ask a few branding experts to see if they can chime in. I would be really interested to hear what they have to say.

Adrian Holovaty

Thanks for the response. Great to see this getting some real attention in our city.

I've gotta say, when I see a statement like this...

"So for everyone out there who is thinking about starting something, Chicago is your kind of town. We bootstrap, we raise funds, we build talented teams, we build great products and we we build successful companies. We are known for many things."

...I think, wow, that's watered down to the point of having no meaning. Our identity cannot be "Chicago: We do lots of stuff!" I mentioned this problem in my talk, and Evan Miller wrote more about it here: http://www.evanmiller.org/marketing-startup-hubs.html

I realize that as the founder of Built In Chicago you *have* to say that, because you're not in a position to play favorites in the community. But if we define ourselves as being great for anything and everything, not only is it intellectually dishonest, it's a sure path to being boring and forgettable.

Matt Moog

Adrian - great dialogue. I hope we can get more people to jump in with their thoughts.

Positioning of anything, including a city is a tricky business. And I agree with you that generally speaking, the more focused the better. But I often view the effort to build a brand identity like a restaurant. Do you want to be known for your celebrity chef, for your beautiful decor, for the freshness of your food, for one specific signature dish, for the service etc? Or is the restaurant ultimately known for the totality of the experience?

I would posit that the first "headline" about the Chicago tech community needs to be that we are vibrant, growing, and diverse. And we have the data to back that up. The second headline is that we build sustainable companies that stand the test of time. Chicago produces businesses that focus on revenue and profit from the get go. Not exclusively but predominantly. And the third headline is that we tend to build business that drive commerce. New York is media. LA is entertainment. Chicago is commerce. Think about the commonality of Groupon, Grub Hub, Belly, Total Attorney, Vibes, Trunk Club, Orbitz, Braintree, Peapod, Shoplocal, Apartments.com, Cars.com, Vivid Seats, Brads Deals and many many others. They all drive commerce.

Now yes, we also have great companies like 37 Signals, Sprout Social, Cleversafe, KCura, Big Machines, and others who are more pure tech driven. And we also have media companies like Centro, Dotomi and many large agencies such as Digitas and Starcom and DraftFCB.

And as you have shown we have a great bootstrapping community. And as the Built In Chicago data has shown, we have companies raising a billion dollars.

So I would argue that if the brand identify that we earn is "There is a lot going on in the Chicago tech community" that is an important step forward in terms of our image. In marketing terms, we have created awareness and entered into the "consideration set." Then we can reinforce the vital role that the bootstrapper plays in that success. And the predominance of revenue producing companies focused on driving commerce.

Besides, with interesting and provocative characters like Harper Reed, Jason Friend, Adrian Holovaty, and Howard Tullman how could anyone possibly say we are boring and unforgettable? ">)

J. A.  Ginsburg

I saw Adrian's presentation and cheered the entire way, though I would broaden the definition of bootstrappers to include the developers of physical products as well. Next month, Chicago's first co-working space for product designers, Catalyze Chicago (http://www.catalyzechicago.org), will open in the West Loop. Notably, several software developers have been involved in its development (http://www.catalyzechicago.org/team).

The more cross-disciplinary mix of talents and ideas the better. That itself can serve as an incredibly powerful draw, igniting the most lovely of "virtuous" circles. It's how Brooklyn got to be Brooklyn! in the last five years and, of course, the source of endless brilliance out of MIT's Media Lab. It is easier to meet people with complementary skills and spark serendiptious collaboration. It's energizing and exciting.

In the 2010s, it can be argued that every business to some extent is a tech or a tech-enabled business, so the focus shifts back to sector. As others have mentioned, Boston nailed biotech (and is aggressively going after water, a $600 billion global market: http://www.bostonglobe.com/business/2013/11/17/can-mass-find-new-tech-se...). Elon Musk is in the car and energy businesses (the combined market cap of Tesla and SolarCity is a half billion dollars more than that of PG&E, which just floors me). And now Google's in thermostats... Tech plays a key role in all, but like "bricks versus clicks" retail, we have entered the era of blended.

So...Chicago's defining strengths have traditionally run the arc of architecture, engineering, design and manufacturing. There is still a lot of room for more mixing with the tech community—a lot of opportunity and low-hanging entrepreneurial fruit just waiting to be picked. I suspect that one of the most effective ways to start better connecting those dots is through boostrappers...

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