19 Apr 2017
Chicago Becomes a Hub of Startup Action
An entrepreneurial ecosystem takes root in the Windy CityRe: Lakshmi Shenoy (MBA 2010)by Julia HannaTopics:
Silicon Valley’s name is dominant in the history of entrepreneurship. So where does that leave other cities that want to get in on the action?
On April 13 in Spangler Auditorium, Chicago Mayor Rahm Emanuel and a panel of area business leaders discussed what differentiates their city as a swiftly developing “ecosystem” for starting new ventures. HBS professor Lynda Applegate moderated the event, which was inspired by a case she coauthored with Alexander Meyer (MBA 2005), SAP vice president of global business development. “Rising From the Ashes: The Emergence of Chicago’s Entrepreneurial Ecosystem” details the city’s evolution as a growing hub for startup activity.
“Chicago has been called the most American of American cities,” Emanuel commented. “It’s a very big city but a small town.” He cited its diverse economy (no single sector represents more than 13 percent of employment), its position as “capital of the heartland” (making it a magnet for graduates of the Midwest’s top universities), its relatively low cost of living (number 10 in the nation), and its position as a central aviation hub as just a few of the qualities that make the city an ideal site for entrepreneurship—not as a clone of Silicon Valley, but as a unique, networked support system with its own identity.
Positioning Chicago as a city conducive to entrepreneurship required ongoing, deliberate efforts on the part of Emanuel (who was sworn in as mayor in 2011) and the other panelists, each of whom brought their own perspective on the city’s evolution as an entrepreneurial ecosystem. Emanuel, for example, cited an historic event that fostered the city’s resilient, civic-minded culture: the Great Chicago Fire of 1871. Having the can-do attitude required to pick up the pieces after surviving a disaster that destroyed several square miles of the city feeds directly into the energy and vision required to start a new business, he said. (A hub for early-stage ventures located in the city’s Merchandise Mart is named 1871 for just that reason.)
“We try to link universities, entrepreneurs, and innovation space,” Emanuel said. An effort to make Chicago the capital of cybersecurity that involved a city-funded training program, for example, ultimately led to KPMG making Chicago its cybersecurity headquarters—a move that has created 500 new jobs, with 500 more to come by 2020.
“That’s platform thinking,” Applegate said.
Steve Collens, CEO of MATTER, a health care startup incubator, and Kevin Willer, a partner at Chicago Ventures, agreed that entrepreneurial activity in Chicago really started to take off in 2010 and 2011, when a critical mass of companies that had made successful exits began looking for ways to reinvest in the area.
“The announcement of 1871 made me start to think about moving back to Chicago from New York,” said Lakshmi Shenoy (MBA 2010), who last year became the organization’s vice president of strategy and business development. “Entrepreneurs need a sense of network that’s intimate and immediate,” she said, noting that 1871 is home to 500 early-stage tech startups.
“We’re a place to bring together all of the stakeholders—venture capital, universities, and corporate partners,” she said.
Mark Tebbe, who founded the technology consulting firm Lante Corporation in 1984, noted that entrepreneurship has been happening in Chicago for a while, “but we were missing an opportunity where we could talk.” As chairman of ChicagoNEXT, a group of business leaders working with city government and other stakeholders to shape the city’s economic agenda and raise its profile in technology, Tebbe is a chief organizer of the third annual Chicago Venture Summit this September. “We have capital returning from both coasts,” he said.
Efforts are in place to ensure job growth and economic activity are available to all, Emanuel added, citing entrepreneurship courses offered on the city’s South Side through 1871, BLUE1647 (a technology skills center), and a $30 million startup fund for neighborhood businesses, among other efforts.
“I have one goal,” he said. “If a child walking out of his house looks at the city skyline and thinks, ‘This is my home,’ nothing can stop us. If we can do that—game on.”
“Chicago is a relevant story because it came from a point of relatively little entrepreneurial activity after the fallout from the dot-com crash and managed to develop a vibrant ecosystem,” Meyer said in a post-event interview. “I think there’s a momentum here right now that can be self-sustaining. In that sense, I hope the case will be useful to leaders in other regions working to develop an ecosystem for entrepreneurship.”
Class of MBA 2005, Section C