Is Tech Dead In Chicago?

It was back before the Internet boom in the late '90s. I was riding in a Lincoln Town car heading downtown from a South Side school interviewing Microsoft co-founder Bill Gates for the Chicago Sun-Times.

I asked him what he knew about the Silicon Prairie. Gates is a well-informed guy on matters tech. But his face went blank. He seemed a bit puzzled, as he searched his mental database. Silicon Prairie. Silicon Prairie? Does not compute. Does not compute.

Finally, the lights went on, he asked, "Is that like the Silicon Forest?" The Silicon Forest was Seattle 's attempt to build on the presence of Gates' Microsoft and other tech companies to create a Silicon Valley-type image.

(Back then, Silicon Prairie was a popular concept. It turns out that Iowa, Wyoming and Dallas laid claim to having Silicon Prairies as well. In fact, the sili-ness was popular on all fronts: New York's Silicon Alley along with the Silicon Swamps, Silicon Beaches, Silicon Mountains, Silicon Hills, Silicon Tundra, on and on.)

Gates also seemed unaware our local 800-pound gorilla (and guerilla) Andrew J. "Flip" Filipowski and his Platinum Technology. Soon afterward in 1999, Platinum would sell to Computer Associates for $3.5 billion, the record for a software company up to that time.

I also asked Oracle founder Larry Ellison, a graduate of South Shore High School, who has the distinction of dropping out from both the University of Illinois and the University of Chicago, (Gates only could brag of dropping out of Harvard), if he'd heard of the Silicon Prairie. But Ellison too looked puzzled. He was more of a Silicon Valley than a Silicon Prairie kind of guy.

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It became a running joke for me. When I went out on assignment, I told my editor I was searching for the Silicon Prairie. And in those days, we had more of a claim toward some sort of tech sector here, as dozens and dozens of Web-based start-ups emerged and Filipowski's Divine InterVentures, an Internet Zaibatsu (look it up at http://en.wikipedia.org/wiki/Zaibatsu), loomed large, attracting largess and reputation from the likes of chewing gum king Bill Wrigley and hoopster airness king Michael Jordan.

Then came the bust. Divine disappeared and $1 billion of other people's money evaporated with him. Filipowski, who had told old-line enterprises like Sears to move over or die, went into exile in North Carolina, though still holding a stake in the White Sox Winston-Salem Warthogs minor league team. (Any talk of Flip going after the Cubs?) And the late Bob Bernard's high-flying MarchFirst consultancy, private jets and all, crash-landed, along with most of the rest of the Web companies.

We still had Motorola, the inventor of the cell phone. During the boom, Motorola, which pioneered car radios (it was pretty tough tech to overcome to avoid burning up cars with in-dash radio back the late 1920s) and walkie-talkies, grew to 150,000 employees during the Internet and telecom booms. And Motorola had some exciting moments, with the RAZR, the slim phone that became the best-selling phone in history. Now, Moto is selling off its cell phone division, and is becoming as thin as the RAZR, as the Apple iPhone seems to gain girth in North America anyway.

The rest of the telecom sector was gutted here, too. Tens of thousands of jobs disappeared at Lucent, Tellabs and elsewhere. It reminds me of when I covered the space program for Florida Today, as its known now, in the 1970s, when after launches they'd have pink slip parties as people were laid off, and engineers opened poodle grooming parlors and delis. (Are our laid-off Silicon Prairie telecom engineers at least opening sandwich shops and poodle parlors?)

Daniel Burnham, the Chicago architect, who in the 1880s pioneered the revolutionary skyscraper tech and who urged Chicago to "think big". These days, thinking big is about thinking small--with nanotechnology and the nano gods at Northwestern University, also known as Nano U, and some emerging nano start-ups.

But where else is the action here? Brad, you ignorant slut (just kidding), seems like the Silicon Prairie is in hibernation at best.

These are sad days in Chicago tech. Is the Silicon Prairie dead? Did ever exist to begin with?

My dear friend Howard,

It's funny that two guys with a combined 30+ years of experience with the Sun-Times are using a term made popular by the Tribsters to label all that is local tech in Chicago. I realize that saying the two of us combined for 30 years at the paper is akin to having Michael Jordan and Stacy King combine (http://www.youtube.com/watch?v=v6BoEG4qf14) for 70 points against the Cavaliers in 1990 (Jordan had 69), but I digress.

Having covered and worked in the Internet and technology industries in Chicago for nearly a decade, I can confidently say that the sector is as strong as it has been in that period. Referencing Bill Gates and Larry Ellison is beside the point. Chicago will never and should never try to compare itself to Silicon Valley, Seattle or any of the other alleged "tech centers" throughout North America. The city's diversified economy is comprised of a completely different kind of DNA.

In Chicago, the Internet and information technology in general have always been more enablers to doing business than business verticals unto themselves. Of course there are always exceptions that you described like Motorola, but the true undercurrent of technological development in Chicago comes when generations-old industries discover more innovative ways to do business.

Take financial services, for instance. When the Chicago Board of Trade was established in 1848, it was the world's only futures and options exchange. While open outcry and funny looking hand language was the medium of choice for several generations, the past decade has seen a swift and permanent transition to electronic transactions.

Today, Chicago-conceived "fin-tech" companies like Archipelago, ThinkorSwim and OptionsXpress are redefining how business is done in that industry. To boot, they established 9 and 10-figure valuations within their first decade of operations. Looking ahead, traders and financial-oriented engineers that cashed out on the CBOT/CME merger http://www.bloomberg.com/apps/news?pid=20601087&sid=alh6YXRVDmVo&refer=homeare putting their spoils back in play funding new startups just out of the gate.

Most people who read blogs like the Huffington Post are familiar with FeedBurner. While the company's $100 million sale to Google is not an earth-shattering amount of money, its feed management technology is now a significant unit within the fastest growing media/Internet company on the planet. Google's presence in Chicago, by the way, is at approximately 500-employees and growing now that the Doubleclick merger has gone through. Chicago hosts one of the company's largest satellite offices, with a sales staff calling on scores of local interactive agencies that manage ad budgets for some of the largest brands in the world.

Headquartered at the old Montgomery Ward factory on 600 W. Chicago Avenue are a trio of companies "dis-intermediating" the commercial printing, transportation logistics and media procurement industries respectively. InnerWorkings, Echo Global Logistics and MediaBank - all founded in the last eight years - have generated hundreds of millions of dollars in revenue bringing old industries up to speed on the web. The company's combined have raised nearly $150 million in venture capital from New Enterprise Associates, one of the most established venture firms in the country.

So, while Chicago may never generate a Grand Slam technology company like Google or Microsoft, the town's technology pros are doing just fine moving runners along the base paths. The most refreshing thing about the "Chicago tech community" over the last couple years is that there is less of that Second City mentality and fewer people lamenting that we can't be more like the Valley. Those who aren't happy move. Others who stay, in a uniquely Chicagoan way, just roll up their sleeves and make hay.

Comments

[cormick]

Tech is dead in Chicago.

Technology is about merit. Honda is doing better than Ford not because it has better ads or good marketing, but because the measurable performance of their products is better (mpg, safety ranking, etc). In Chicago the mentality is that you can become rich if you are born rich. Take as an example Chicago politics and you will see the sense of entitlement based on your family that exists in the city. In a such an atmosphere world-class technology cannot be developed.

There are companies that succeed in Chicago. What kind of companies are those? The companies that need access to corrupt government and good lawyers (who can sleep at night). Therefore, you have retailers (labor laws), McDonalds (health), insurance (laws about coverage), pharma (labor+pricing), energy (environmental laws), etc. Because of these companies there will always be small tech companies to provide services. However, no Google, Microsoft, Toyota or any kind of company that has to build something useful and better than others.

I assume that the person above implies that Chicago does not need tech companies. It is doing fine without them. A look at some numbers may not be as generous. From wikipedia:
http://en.wikipedia.org/wiki/Metropolitan_statistical_areas_of_the_United_States_by_income
the Silicon Valley area has the highest median household income out of all US metropolitan areas. The Chicago metropolitan area is 11th. The comparison using per capita income (2nd - 19th) is also sad.

[TheJibreelaMonsters]

you really hit the nail on the head with that one... too bad its the hard hitting truth

[ddonzal]

Chicago is a strange town for tech, but I love Chicago for what it is and can be. We are home to certification organizations, publications, 235% more programmers than Silicon Valley, countless companies... But is our poor image because Chicago is blue collar and more a user of technology than an innovator? Do we not invest enough in startups? Education?

The fact is Chicago isn't viewed as a hotspot for tech and for good reason. Example: We used to be THE place for shows like Comdex and others. Why are they gone? Cost and hassles due to unions, better weather destinations like Vegas and Orlando, lack of support from the tech communities? How about all of the above and more.

Maybe we can treat this as a call to action.

I'm trying to do my part with a free, online magazine for security professionals, The Ethical Hacker Network, and a premier security event with the Windy City in its name, ChicagoCon. I could have named it anything. My name is Don. I could have named it DonCon. But we need to bring the Chicagoland area to the attention of the world in a grassroots-type of effort. Therefore, ChicagoCon was the name I chose.

I'm not trying to be the savior of the Chicago tech image. Far from it, and I don't have anywhere near that kind of power. But every little bit helps.

So the question remains... What are you doing to help the tech image of Chicago?

[KillTheMessenger]

A little addition to the household income side of things: highest household income does not mean highest standards of living. If the area you live in is very expensive, the income does not translate into actual living conditions. I remember reading a technology trade journal where they analyzed the correlation between income and cost of living and found Silicon Valley to range far below on the list of economically advantageous places for engineers to live. I think it was beaten by far by some places in Texas and on the East Coast.

[cormick]

I agree that the cost of living should be taken into account. However, lower cost of living does not necessarily translate to higher standard of living. As an extreme example, think that you are offered a job with base 36K in some place in Africa where the cost of living is 4K per year. I wouldn't expect a high living standard.

Silicon Valley is more expensive than Chicago. The main reason is housing. However, you get what you pay for. The valley has a high concentration of educated families and, therefore, a higher concentration of good schools. On average, the kids in those school speak at least one language other than English (their parents are foreign), have somebody with a PhD at home to help them with math and science, and are accustomed to foreign cultures. Chicago has good schools, but not such areas with high concentration of very educated people.

To the standard of living of an engineer I think we should take into account how interesting his/her job is. It is different working for Google and working for Motorola. Moreover, you can deal with promotions/hardships differently when there are more opportunities around.

In general I think there is a good reason why the median price of a house in the Silicon Valley is much higher than that of Chicago: the standard of living is higher for some people (engineers) and that increases demand.