Friday, May 06, 2016

Loop North News: Making River North A Hub of the Tech Economy

Photo by Gregory Rothstein
(Above) 1871 CEO Howard Tullman explains the technology behind a mobile phone app that recognizes logos. Photo by Gregory Rothstein. (Click on images to view larger versions.)

How Howard Tullman is making River North a hub of the tech economy
Team led by Tullman is on leading edge of digital innovation, and influencing updates to the 86-year-old Mart.

6-May-16 – Writer, lecturer, educator, venture capitalist, serial entrepreneur, art collector. One thing is clear – Howard Tullman cannot keep a job.

Nor can the 70-year-old CEO of 1871 – the entrepreneurial hub for digital startups, located at Merchandise Mart in River North – convincingly explain his plans for retirement.

His winding career path has taken him to a place that is defining Chicago’s role on the global technology stage. Where tech visionaries, political leaders, and the occasional celebrity are among 20,000 visitors every month.

Photo by Sean Su(Left) Tullman speaks with actor Jason Alexander on April 20, 2016. Alexander’s wife, Daena Title, is an expressionist painter and her work is in Tullman’s art collection. Photo by Sean Su.

1871 was the year of The Great Chicago Fire but to the tech hub that took the year as its name, what happened after the fire was more important.

“A remarkable moment when the most brilliant engineers, architects, and inventors came together to build a new city,” says the 1871 website. “Their innovations – born of passion and practical ingenuity – shaped not just Chicago but the modern world.”

Since May 2, 2012, 1871 has not only helped tech businesses grow but 1871 has itself been growing on the 12th and 13th floors of Merchandise Mart. Last month, the tech hub expanded to 115,000 square feet in the 1930 art deco building. In the past three years, 1871 and other tech groups have taken over almost one million square feet, still just 25 percent of the building.

Tullman did not arrive at 1871 until 2014. When he did, he found its people calling it a “community center,” as it brought together people from technology, entrepreneurial, and venture capital communities, as well as universities and people from state and local government.

“We said a ‘community center’ is fine but that’s not sort of measurable or concrete enough to be a business and so we’ve changed it to more think of it as a factory for the creation of jobs.”

How to land a desk or table at 1871

(Right) Offices in a new part of 1871 called the “3.0 expansion.” Photo by Andrew Nawrocki.Photo by Andrew Nawrocki

The people who apply to be part of 1871 are designers, engineers, and entrepreneurs who are, says the website, “shaping new technologies, disrupting old business models, and resetting the boundaries of what’s possible.”

Not all applicants are accepted but most are, drawn to a place, they are told, where they can “share ideas, make mistakes, work hard, build your business and, with a little luck, change the world.”

They pay rent but no more than $500 per month. They get a desk or space in a shared co-working area, access to conference rooms, and some storage space. More importantly, their business grows in the 1871 incubator. They get help raising money, hiring employees, access to workshops and other educational events.

The businesses that hatch are all selling products and services to other businesses. “No pet dating sites,” muses Tullman. The ideas 1871 is looking for are ones they can, without actually investing money directly, get behind and steer toward venture funds and other private investors.

“Save me money. Save me time. Increase my productivity. Help me make better decisions. Those are the metrics,” advises Tullman, “and if you can’t make a pretty convincing case that you have something to offer that’s going to make a difference, that’s going to be viable, that’s not the 100th of the same thing, then our view is that we can’t bring a lot to whatever your idea is and this wouldn’t be a good place for you.”

Besides younger people growing new businesses, 1871 attracts “serial entrepreneurs” who want to see if their latest idea has traction before spending money on it. There are the “career changers” who were in one line of work for many years and now want to pursue a dream. And there are people with expertise but not in technology.

Photo by Andrew NawrockiPhoto by Andrew Nawrocki.

Technology accelerating like a self-driving car

His career may span five decades but it is the changes in the past five years that interest him the most. Information is available instantly to almost everyone on the planet.

“We believe in free speech here at 1871 but you can’t say, ‘I don’t know.’ Because it used to mean you were ignorant and now it means you’re lazy. It means you didn’t look, you didn’t do the homework, you didn’t do the research. Because there is almost nothing that’s not knowable.”

Technology will continue to accelerate at a “frightening” pace. Self-driving cars will arrive just as soon as they can react faster. Mobile phones will recognize things and faces and you will “interrogate” them for information, promises Tullman, such as getting a pill bottle to explain its dosage.

1871 impact on Merchandise Mart

(Right) Merchandise Mart from southeast on October 24, 2006. Photo by Steven Dahlman.Photo by Steven Dahlman

Beyond its own space, Tullman says 1871 has been influential with improvements throughout Merchandise Mart, a place where he has located one business or another for the past 50 years. In 1998, the Kennedy family sold it to Vornado Realty Trust for $450 million.

“The last three years, the Vornado people have all of a sudden realized that we’re making this into the hub of the tech economy, not even simply for Chicago but really for the Midwest, and this has changed the perception of this building and made it so desirable for another reason, which is not only do a lot of startups and everybody else want to be here but a tremendous number of companies from the suburbs have discovered that they cannot recruit digital or creative employees anymore – they just don’t want to go to Oak Brook. They’re just not going to spend two hours a day commuting.”

Companies such as ConAgra have or will soon move to Merchandise Mart and Tullman says it’s because they want to get as close to 1871 as possible.

Attracted to young businesses

Tullman sees himself as both a serial entrepreneur and a career changer. He was a trial lawyer for ten years and has managed businesses for more than a few years at a time. But the startup and early growth stages are what interests him the most.

“Almost no entrepreneurs survive beyond 300 people in a business. Almost none make that transition from entrepreneur to manager. A significant amount do not survive at part because at 100 there are other people helping to make the decision about whether you’re doing a good job or not as CEO. And there are definitely different skill sets.”

While he admits he is bored by the repetitive nature of day-to-day management, sweating the details is part of his role.

“It’s in those little details that you address that slippery slope between do you really care, is it really important, or not?”

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