Why The Silicon Prairie Will Be The Hub For The Next Generation of Innovation
What do Yelp, Groupon and PayPal all have in common? Besides being innovative start-ups focused on consumers, they all got their start in the Windy City. There are many other examples of innovative tech companies that had their beginning in my home town, but Chicago often doesn’t make the short list when entrepreneurs, investors or the media think of hubs for innovation. Cities like Seattle, Portland or Austin come to mind when thinking outside of Silicon Valley, but at ThoughtMatrix, we think that is about to change in a big way. So, we have decided it’s time to aggressively expand in the Midwest market and be apart of this exciting time as the Silicon Prairie makes its mark on the digital economy.
You may be wondering what Chicago has to offer that some of the more established, or recognized, hub cities don’t that makes it so appealing to us. In a word…or perhaps in an acronym, CPG. With companies like Kraft Foods, McDonalds, Sara Lee, and Pepsi-Co’s Quaker Oats and Gatorade, Chicago has been the hub of the Consumer Packaged Goods (CPG) economy for a long time. There is a thriving ecosystem of manufacturers, product developers, market researchers and ad agencies who are all focused on the increasingly elusive consumer. They drive the everyday commerce that puts products on store shelves and eventually in our homes. CPG companies have a strong understanding of market dynamics, advertising reach and consumer acquisition. This deep and disciplined knowledge in consumer preferences and habits is going to give Chicago a unique advantage as Midwest start-ups develop new consumer-focused innovations.
While Silicon Valley and other tech hubs are focused on the next transformative technology, we believe Chicago will take the lead by having a sharp focus on consumers and offer products and services that will enhance connections between online and offline experiences. That approach, coupled with a diverse workforce, will enable Chicago to succeed without the pools of engineers that start-ups in cities like San Francisco, Seattle and Austin require. Put simply, Chicago will succeed by tapping into the stream of consumers’ desires to develop new products and services, rather than develop new technologies to drive innovation. Groupon, okCupid and 37Signals are great examples of this. None of these companies provides a new technology like Twitter or invented a new category like Facebook, but all of these start-ups have become success stories by merging innovation with a mature approach to business focused on delivery, sales, marketing and distribution.
Despite Chicago being well positioned to take the lead, it has many challenges both in its culture and workforce that could derail dreams of the Silicon Prairie. Chicago and the Midwest have some of the best colleges and universities that are feeding the never ending demand for engineers and technologists, but many of those highly skilled workers are leaving the Midwest with the lure of fame and fortune in the next wave of the Internet gold rush. Chicago needs to do a better job of encouraging these talented people to stay and innovate in their own backyard. Part of that change requires building a start-up culture that encourages risk taking. Some of this is already happening with events such as the midVenturesLAUNCH conference and Excelerate, a TechStars-like incubator, that is helping get start-ups off the ground. But as a whole, the Midwest business culture needs to evolve so that college grads can look to the Silicon Prairie as a great place to advance their careers.
While Chicago has its hurdles to become a technology hub, we still think the Midwest is ready to embrace the notion of the Silicon Prairie. We are excited to be expanding in Chicago at a time when we feel the city is well positioned to lead. But tell us what you think? Do you disagree with this vision, like Matt Crowe does, or do you see Chicago having a different set of advantages? Either way, as the Internet has spawned a whole new economy and as innovation has moved well beyond Silicon Valley, we think Chicago is primed to become a leader in the digital economy.