No longer just a few good stories
Momentum that supports tech startups gathers steam in region
A few years ago, when the rest of the high-tech bubble was starting to burst, three Chicago futures and options traders -- James Gray, David Kalt and Ned Bennett -- figured out a way to bring options trading to the public through the Internet.
The firm they established, optionsXpress, took off like a rocket and went public in 2004.
At one time, the story of a successful high-tech startup in the Chicago region was an oddity, a nice anecdote but a dim light when cast against the brilliance of Silicon Valley. But something much different is happening here that could well see the optionsXpress story as just one chapter in an unfolding tale of successful high-tech startups in the upper Midwest.
Archipelago, the electronic stock trading network founded in Chicago in 1997 by entrepreneur Gerald Putnam, was purchased by the New York Stock Exchange in 2005 to form the NYSE Group. Archipelago has done nothing less than transform the way stocks are traded throughout the world.
Michael Ferro founded Click Commerce in 1996 and uncovered a strong market for his business-application software. He found the resources in this region to grow, ultimately selling to ITW for more than $290 million.
The momentum that supports technology startups is gathering force in this region. Much of it is still happening under the radar, but those involved see an important trend getting under way. An important part of the story is entrepreneurs helping others with their innovations.
optionsXpress co-founder Gray, for example, is on the board of the Chicagoland Entrepreneurial Center. He is one of five entrepreneurs on the board, passing on the lessons they have learned to those who are getting new businesses under way. Another is Click Commerce's Ferro, who is co-chairman of the center.
The center's president, David Weinstein, notes that in addition to giving their time, Gray and Ferro are investors -- along with a blue chip list of Chicago-based business people, including venture capitalist J.B. Pritzker -- in the just-launched Innovation Accelerator Fund, which provides early stage funding for promising startups.
This is important work that is being done at just the right time. The University of Illinois at Chicago's College of Business Administration recently studied local technology entrepreneurs to learn what factors help their enterprises advance or hold them back. The findings included ample warning that the region needs a lot of support services to encourage our homegrown innovators to build their new businesses here.
As recently as five years ago, the energy of these startup firms was not attracting much attention at all. That was when the Chicago Sun-Times and my own firm, Kuczmarski & Associates, established the Chicago Innovation Awards, designed to shine a spotlight on the creative spirit of the upper Midwest.
We received more than 240 nominations for the 2007 awards. In addition, the Chicagoland Chamber of Commerce, with the backing of Microsoft and the Illinois Department of Commerce and Economic Opportunity, is adding a daylong "Innovate Now!" forum, which is all packaged as Innovation Week in Chicago, beginning Oct. 22, the day when 10 innovators will receive their Chicago Innovation Awards at the Goodman Theatre.
Will the Chicago region emerge as a thriving center for technology startups and the larger firms that emerge from them? It is not a sure thing. But key elements -- the creative people, the money, research facilities, the communications links -- are all here. Newer on the scene is the infrastructure to help glue the pieces together and encourage them to grow.
If I were a Chicago entrepreneur with a good idea, I'd be inclined to stick around.
Thomas Kuczmarski is name partner at new-product consultancy Kuczmarski & Associates, and a co-founder, with the Chicago Sun-Times, of the Chicago Innovation Awards program. He can be reached at tkuczmarskiu@kuczmarski.com