'The Midwest Mentality': Why Chicago's Supposed Weakness May Be Its Greatest Strength

You know, Chicago, maybe you had it right all along.

ecosystem_615.jpg

A graphic representation of Chicago's tech ecosystem by Chicago Magazine, October 2012

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On a trip like ours, you're always an outsider when you show up in a new town. Perhaps rightly, locals tend to be wary that you're just going to make a few Big 10 jokes and write the whole place off. So, I was thrilled to learn that David Lepeska had just penned a feature on the local tech scene for Chicago Magazine, a local and well-made glossy. This is an insider's account of his own city. It's not online, but I got my hands on a copy.

At the end of a very thorough examination of the corporate, governmental, and cultural factors that have combined to give Chicago a shot at becoming a start-up powerhouse, Lepeska concludes with a passage on the "Midwest mentality," a supposed weakness in the area:

More vexing than the talent shortage may be what critics call the Midwest mentality: an alleged predilection among local tech entrepreneurs and investors to play it safe. Even Chicago veterans concede there's some truth to it. "There are, in general, less risks taken on speculation about mass-market consumer products here," admits [OK Cupid co-founder Sam] Yagan, who has worked in New York, Boston, and Palo Alto. "What is our Google or Facebook or Twitter? I can't think of any."

Those three companies were revolutionary; the typical Chicago tech startup isn't. Instead, it uses technology to enable more practical nuts-and-bolts services, like delivering food (GrubHub), finding jobs (CareerBuilder), or booking travel (Orbitz).

But I'd like to suggest, as the Web 2.0 fad fades, that perhaps Chicago has had the right idea all along. Google, after all, wasn't really a business-to-consumer play, though it looks like one; their customers have always been businesses who wanted to market things to customers with purchase intent. They're a corporate middle man, a nuts-and-bolts provider of more efficient advertising.

Chicago's focus on businesses that aren't sexy may be exactly what investors are looking for after seeing hundreds of social networks and social media marketing companies fizzle. From an outsider to an insider, I'd just say: Maybe it's smart *not* to speculate about "mass-market consumer products." After all, as Chicago's TechNexus's Terry Howerton noted to me, corporations have record amounts of capital on their balance sheets and are desperate for innovation. Meanwhile, you may have heard that your median consumer hasn't had his or her income rise for quite a while now. If you follow the money, it leads to profitable businesses not to teenagers looking for the next cool thing after Tumblr and Facebook. 

(Editor's note: More on the rise of startup-corporate partnerships and Howerton coming soon.)

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