A haven for start-ups, or a no man's land? Chicago techies answer

May 11, 2012

Caroline O'Donovan and Kate Dries

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Trevor Gilbert is only 19 years old, but that didn’t stop him from causing a stir in Chicago’s tech scene back in March, when he published an article titled “The Midwest Mentality” for the popular tech blog Pando Daily. Gilbert wrote the piece after a trip to Chicago, during which he observed the unique character of Midwesterners trying to make their way in the tech startup world.

Taking fewer risks and making stable growth the goal, a hallmark of the Midwest according to Gilbert, “does allow people to have lives...[w]hich is another thing that Chicagoans and Midwesterners are rather enthusiastic about.” Funny, that.

Gilbert caught flak for saying that Chicagoans marry too young to achieve the sky-rocketing profits that are sought after on the West Coast, but he did make a few points that actual Midwest tech entrepreneurs agree with: Ignoring the hype machine, pursuing modest goals and a steady work ethic allows the Midwest to create a crop of midgrade, dependable companies.

Justin DeLay, co-founder of the cloud-based data gathering site TempoDB, says those are the reasons he returned to Chicago after spending time in a tech incubator in San Antonio, Tex. He defines that Midwestern qualiy Gilbert tries to understand as a type of modesty. In the Midwest, DeLay says, “We’re not going to shout that we’ve raised a bunch of money. Until we’ve built a sustainable business that can provide jobs and growth, there’s nothing to say.”

DeLay sees Silicon Valley as an echo chamber, where major dollar signs fuel the media and there are all-out wars over talented young engineers. Why battle Google, Facebook and Apple for the cream of the engineering crop, DeLay says, when schools like the University of Michigan (of which he is a graduate), the University of Illinois and Ohio all have top tier programs?

Sue Khim, a graduate of the University of Chicago, considered things differently when it was time to think about relocating her start-up, Alltuition. Khim got her start as the CEO of Edulender (which later became Alltuition), a website that helps students understand their student loans. It found a home in the Excelerate Labs incubator, an organization that has since moved to Chicago’s new tech hub, 1871.

Housed in Merchandise Mart, 1871 is a collaborative operation of dozens of very young start-ups organized by the Chicagoland Entrepreneurial Center. While many, including Justin DeLay, are excited by the new space and its capacity to create spontaneous creative collaboration, it wasn’t enough to keep Khim in Chicago. Looking to work side by side with companies that had found success in California, she moved Alltuition to San Francisco. Chicago has made huge progress, Khim says, but California has the connections, infrastructure and experience that made 25-year-old Khim feel more sure of herself.  

Friday morning on Eight Forty-Eight, we put these two young entrepreneurs in conversation with Kevin Willer of the Chicagoland Entrepreneurial Center. Willer has a great deal of experience on the scene here; he opened Chicago's Google office in 2000. He credits companies like Groupon for putting "Chicago on the map" -- whether or not they end up being successful. And, he says the city has something its often not given credit for: the managerial experience that comes from traditional industries.

According to Willer though, going forward, Chicago needs more acquisitions and more IPOs to be a sustainable tech-oriented city. Otherwise, it might just become a stomping ground for companies that are just starting out -- who then leave us for the bright, big lights of the coastal cities.