At SXSW, two sides of Chicago's tech industry

March 13, 2012

Listen to Andrew Gill on SXSW and Wendy Turner on the Integrated Media Association panel on Afternoon Shift

Monday at SXSW Interactive, Chicago's tech industry tried to make the case that the next wave of internet stars are already working in the Windy City. At an afternoon panel the Chicago Tribune's Melissa Harris led a discussion between Grubhub co-founder Matt Maloney, Threadless CEO Tom Ryan, gtrot co-founder Zachary Smith and Lightbank venture capitalist Paul Lee about running startups in Chicago.

All the panelists were transplants to Chicago, which seemed to allow for an even-handed assessment of the city without the boosterism and hot air that inspired our city's nickname. The crowd was mostly Chicagoans, so perhaps they didn't need to be convinced of the city's merits anyway.

The panel universally rejected the "Silicon Prairie" label that some have tried to apply to Midwestern tech. Matt Maloney pointed out that Chicago startup companies tend to address real world problems, rather than exploring the cool things that technology can do. Paul Lee claimed that Groupon wouldn't have worked in Silicon Valley, and likewise Twitter wouldn't have worked as a startup in Chicago.

Midwestern practicallity seems to be a double-edged sword for Chicago's chances in the startup world. On the one hand, Lee says that CEOs in Chicago tend to focus closely on their business plan (unlike Silicon Valley CEOs, who tend to focus on honing their product and user experience). Later panelists griped about the difficulty of wooing talented Chicagoans away from corporate jobs.

The high failure rate of startups can be hard to adjust to outside Silicon Valley. Tom Ryan cited his own experience at a New York-based startup during the dot-com bubble of the late '90s. He said immediately following the bubble's burst the attitude in the New York business world was to call the whole thing a waste, but in Silicon Valley failure is commonly seen as a cyclical phenomenon.

Ryan chalks that up to time and experience, something cities with newer startup cultures need to adapt to in order to thrive.

The panel was universally excited about the influx of cash and creativity that they expect once Groupon staff are able to sell their shares in the company. Restrictions on Groupon staff stock sales will lift this summer and could spawn a new crop of experienced entrepreneuers looking to invest in new ideas.

Later Monday night I attended the Techweek Innovation+Chicago Party, which was a bit heavier on the Chicago boosterism. There wasn't much of an official program, other than an iPad giveaway and brief spiels about New World Ventures, Built in Chicago and 1871. Perhaps hearing or seeing more from the sponsoring companies and less from the venture capital people would have made a more convincing case for Chicago's tech accendancy, but hearing money guys claim "this is our time" probably didn't do much for non-Chicagoans.

The surprise special guest, JC Brooks and the Uptown Sound, was actually a little predictable and didn't seem to interest the crowd very much. This is no comment on their musical ability or merit, but since performing at Mayor Emanuel's inauguration JCBUS seem to be the house band of upwardly mobile Chicago.

I saw plenty of good conversations happening, so perhaps the event was valuable for networking purposes. But it wasn't the coming out party organizers seemed to hope it would be.

To read our complete coverage of SXSW go to wbez.org/sxsw.

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