Groupon is not the only Chicago tech story of 2010 and beyond
BY BRAD SPIRRISON January 4, 2011 12:06PM
Updated: January 5, 2011 12:42AM
While Groupon is the undisputed tech story of the year in Chicago (if not the world), the immensely profitable, Google-spurning, hundreds of millions of dollars raising deal-of-the-day site is not the only game in town.
“There are very positive signs that point to a larger trend,” said Matt Moog, CEO of River North-based consumer advice site Viewpoints.com and founder of the BuiltInChicago.org social network.
Moog cited the $11 million round Lincoln Park-based GrubHub.com raised from top-tier venture capital firm Benchmark as well as the nine-digit sales of Glenview-based SurePayroll.com and Itasca-based Accertify as other examples of “vibrancy” in the local startup scene. He also noted that Northern Calif.-based Twitter and Zynga — “two of the hottest companies in the world” — are now run by former Chicagoans (Dick Costolo and Mark Pincus respectively).
Michael Krauss, president of the Market Strategy group and former Tech Matters columnist, added that IBM’s acquisition of local software companies SPSS and Initiate systems “proved Chicago is a great place to start-up and incubate a technology company and have a successful exit.”
Entering the venture game is still a different story.
Raising venture capital for most local companies is still a challenge says Irv Shapiro, CEO of Skokie-based IfByPhone, which bucked the trend by recently raising another $8 million round. A lack of local media attention, Shapiro says, is holding things back.
“Ifbyphone gets more tech coverage on the coasts than we get in Chicago,” he said.
Expanding beyond our borders
Jen Brady, president of the Chicago Interactive Marketing Association, is witnessing the growth of many niche media and technology companies in the region that will, as Groupon did, need to figure out a way to scale “in order to expand outside of Chicago and be a national, if not international, force.”
Showcasing local tech talent to customers and investors on the coasts is the key to sustainable success, says Sam Yagan, executive director of the Chicago-based tech incubator and “bootcamp” Excelerate Labs.
“I’d look for more startups to be funded by guys on the coasts and more tech talent moving to town,” he said.
Retaining talent and funding is just as important as attracting it. The success of Groupon combined with more economic incentives to promote creative economic thinking are critical, says Eric Benderoff, a technology commentator and communication specialist with Burston-Marsteller.
So is pride.
“We want people to succeed here,” he said. “It’s good for our collective egos.”
It all starts in the classroom, says Chicago City Treasurer Stephanie Neely, who advocates supporting “institutions where innovation germinates, and then creates an environment that keeps grad talent in the Chicago area.”
No more Second City complex
Chicago will never be like Silicon Valley, but that doesn’t mean we can’t be a major tech hub, says Geoff Domoracki of MidVentures.
“Instead of thinking how we can copy another city or another company, lets think about how we can partner with them for mutual benefit,” he said.
There is no need to look outward anymore, says Luke Tannen, executive director of the Chicago Innovation Awards. Groupon is showing that there is no ceiling to local success. It’s time to build on this.
“If we idolize them the way we look up to rock stars and movie stars,” he said, “they’ll take on an allure all their own that will inspire Chicago’s next generation of innovators.”
This window will not stay open forever. Now is the the time to win it all.
“Chicago is making a lot of strides, but our tech ranking feels like the Bears’ record,” said Bob Okabe, angel investor and managing director of the RPXGroup. “Surprisingly good but it’s unclear if this is a one-year uptick or the beginning of a multi-year trend.”
In any event, we’ve advanced onto the postseason. Time will tell if we are in store for a real dynasty.