1871 CEO talks about the future of Chicago’s tech industry
23 June 2015
While speaking at a City Club of Chicago event on Monday, 1871 CEO Howard Tullman talked about the obstacles Chicago’s growing technology industry faces moving forward.
Tullman began his presentation by citing a Crain’s Chicago Business article stating Chicago ranked third among its peer cities for technology industry growth following the recession. He also noted Illinois ranked second in the nation for new business growth in the fourth quarter of 2014, according to numbers from the U.S. Bureau of Labor Statistics released last week.
1871’s CEO noted that his organization is at the forefront of job growth in Chicago. Since its inception, Tullman said 1871 has used approximately $5 million in state funding to create more than 2,400 jobs in the Merchandise Mart. In total, the mart now has 1 million square feet of space used by technology businesses and over 11,000 technology-based jobs.
“Startups are really the only thing that’s driving the recovery,” Tullman argued, explaining new businesses are driving job growth.
Chicago is not only benefitting from start-up growth. The strength of the city’s technology industry has attracted the attention of larger, established technology businesses.
One example is Amazon, which is building a 50,000-square-foot facility on Goose Island. The facility is part of the online retail giant’s “anticipatory shipping” initiative. Under the program, Amazon plans to use customers’ previous orders and wish lists to send them coupons for next-day delivery of items that customers want.
Amazon’s program is an example of how technology companies are responding to the growing impatience and emphasis on time among contemporary consumers.
“Time is the scarcest resource,” Tullman told the City Club audience. He added companies dedicated to saving consumers time are “exploding. In every area, in every service you can imagine, we’re going to see more and more time-based businesses.”
Tullman noted competition for consumers’ attention is higher than ever before and continues to increase. With increasing things competing for consumers’ “mindshare,” he said advertisers are “dealing with people who have the attention span of a flea.”
Shifting attitudes among young people toward ownership is another challenge tech companies are currently dealing with. Tullman explained that young people, particularly those under the age of 30, are not interested in ownership of items like cars and houses as much as older generations. A similar trend has been seen among leading technology companies, many of whom also have shown a lack of interest in ownership of tangible goods.
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider, owns no real estate,” Tullman pointed out.
The 1871 CEO also noted that technology companies will need to adapt to a shift in the make-up of the U.S. workforce. According to Tullman, more than 40 percent of U.S. workers will be freelance employees by the year 2020. If handled correctly, he argued the shift could create a more efficient workforce.
“We commute – we waste time. We have all these opportunities where we could be productive, and now we can recover those scraps of time,” Tullman said. “When you aggregate those, they are major game changers for businesses.”