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Chicago: Start Up Business Haven?

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It was not too long ago when Chicago was considered a stagnant business community. Of course, while the presence of the Mercantile Exchange and Board of Trade spawned off tons of start-up financial trading firms to make Chicago a hub in that industry comparable to New York and London, the tech start-up scene in Chicago was lacking. What makes a truly successful tech start-up environment? I asked this question in order to find the early disconnect in Chicago's fragmented start-up past.

One major change that Chicago adopted in the early 2000's was fully developing the entrepreneurial curriculum in most of the major Colleges and University within Chicago proper. Massachusetts and California have MIT and Stanford while the second largest start-up community, Seattle, has the University of Washington. All of these Universities have been providing top notch start-up and tech education programs soon after the internet was born, other major US cities have grown at their own pace. Northwestern, DePaul and UIC have all added similar programs; the change late in the game has shown results.
 
The building I work in was originally built out to specifically house the best Internet and tech start-ups in the Midwest, and then the bubble burst. Today the space is littered with many early stage businesses but also has some household name such as Dyson, Kraft and Wrigley/Mars. One of the main reasons why having a start-up ecosystem in place for a growing city is, it's truly an iceberg. What I mean by that is when you create a successful new business that addresses a key need or provides true value in a market, you better be ready for the wave of new ones to create competition, which only creates value for the consumer.

Case in point, I am a Business Development Director for M|Buy, we are a new company that provides outsourced media planning and buying services for local businesses. One of the main reasons we were created resides in our parent company MediaBank, which is a SaaS business model and provides media buying software to some of the largest Advertising Agencies in the world. We have 40B of US ad spend data running through our systems annually and M|Buy gathers market research from that software to see what the high, low and average cost of media placements for most every vendor in the US allowing us to have fact based negotiations with media properties. This is a Perfect example of building a new business off a value point from your current business.
 
The founders of my company are two of the most successful businessmen in the Country, Eric Lefkofsky and Brad Keywell are two of the initial backers of Groupon.com, the most successful Internet start-up in history (Groupon.com) and it was recently evaluated at over a billion dollars in just over two years of operation. The founder of Groupon.com, Andrew Mason, is a Northwestern Graduate and accomplished software developer that took part in tech entrepreneurial programs during his time there.  I had the privilege of watching Groupon.com grow from six people using our space to now being in well over 100 markets in the US and operating on half of a floor in one of the largest buildings in Chicago.

The Chicago University scene has done their part to create this new Chicago but we all know that education can't create a sticky business model alone. You need money to start a real business. Chicago has not only attracted some of the best veteran business minds but we now have these small group venture capitalist groups to fund these ideas into real profit. The Co-Founder of the AverageChicagoan.com and my good friend Jon Pirc works for one of these firms, Sandbox Industries. Led by the former CEO of the Nutrasweet (Nick Rosa), Jon works on a variety of business ideas, all having to do with up and coming new business ideas.  If the business seems sticky and can generate revenue with little overhead, Sandbox will either acquire or manage the business into adulthood. Jon is now working on Lab42, which gathers market research through social networking sites to get better insight into a potential customers needs, wants and buying habits--a data-driven new approach to an age-old marketing technique.

These VC groups are of critical value to new businesses--so many business ideas never mature due to lack of funds or poor management but the central idea behind the business did not fail; wasted ingenuity in my mind. The newest venture from my bosses is LightBank, and their home page messaging says it all-- 'You've got the idea, the motivation, and the vision. We've got the cash, the resources, and the experience to take what's in your head and help you build a thriving enterprise."  This mantra speaks directly to my point above about the wave of new businesses that come after the first successful one. Some of the businesses LightBank has funded are WhereIveBeen.com and SproutSocial.com. Chicago now has the educational and monetary infrastructure to compete with the Silicon Valley's of the world.

So the only question now is, what's your idea?

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1 Comment

MLopezmvl said:

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We're finding this conversation fascinating which is why we started the mvLaunch. We're asking the question - If Chicago were the new center of the technology world, what would it look like? http://chicagotechhub.posterous.com/the-question

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