Tuesday, October 23, 2018

Rahm Emanuel Talks Amazon, Elon Musk and His Lasting Impact on Chicago Tech


Rahm Emanuel Talks Amazon, Elon Musk and His Lasting Impact on Chicago Tech
Will Chicago's Next Mayor Be as Tech Friendly?
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At the fourth annual Chicago Venture Summit in early October, Mayor Rahm Emanuel was touting his tenure and the impact it has had on Chicago’s tech and startup scene.

Being interviewed by tastytrade Co-Founder and Co-CEO Kristi Ross, Emanuel spewed off statistics and anecdotes, and explained to an audience of venture capitalists and startup founders how Chicago’s reputation as a tech hub has been elevated since he took office in 2011. Emanuel, who in September announced that he isn’t running for a third term, will be leaving his post at a time when Chicago’s tech scene is perhaps as robust as it has ever been.
Chicago was home to more than 14,000 tech businesses in 2017, and had nearly 342,000 tech workers across all industries that year, 4,000 more than it had in 2016, according to Downers Grove-based CompTIA. According to a PitchBook report, Chicago companies now offer the highest venture capital returns of any startup hub in the U.S. with 81 percent of Chicago exits having a 3x to 10x return. And in a report KPMG released in March, Chicago tied with Boston for the second most innovative city in the nation.
“All those data points you couldn’t have had eight years ago,” Emanuel said in an interview with Chicago Inno. “And I think they show the growth, maturity and the depth of the tech space.”


Gogo President and CEO Michael Small (right) and Chicago Mayor Rahm Emanuel (left) cut the ceremonial ribbon inside Gogo’s new global headquarters in downtown Chicago on August 27, 2015.
(Photo by Jeff Schear/Getty Images for Gogo)

Emanuel’s surprise decision to end his run as Chicago’s mayor sent shockwaves across the city—with many questioning the move while others celebrated the opportunity for new leadership. But in Chicago’s business community, and the tech industry specifically, Emanuel has been an ardent supporter of the city’s startups and regularly provided civic support to help Chicago’s businesses grow, leaving some in Chicago’s tech community anxious to see if his replacement will be as tech friendly.
“Everybody has their fingers crossed that we’ll figure out a way that we can get somebody who can do this job because it’s pivotal to the success of the city,” said Howard Tullman, the former CEO of tech hub 1871 and executive director of the Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship at the Illinois Institute of Technology. “I think it’s crucial we have a mayor that signals they are business friendly.”
Emanuel has been a regular face at the city’s Venture Summits, has attended many ribbon-cutting ceremonies for the openings of new Chicago tech offices and has been vocal about the important role the tech industry plays in Chicago, which is why he helped create ChicagoNext, an organization that promotes the city’s tech ecosystem.
Emanuel’s administration also has been tech-forward on many issues, whether it was using algorithms to predict crime or more recently, installing devices on the city’s lower roadways in a partnership with Waze and Chicago-based SpotHero to prevent drivers from getting lost.
Additionally, Emanuel heavily supported the launch of Chicago’s largest tech and startup incubator 1871 in 2012, which is now home to more than 500 startups.
“[1871] spawned dozens of different incubators, workspaces, co-working spaces and programs at universities, all of which were focused on technology,” Tullman said. “Prior mayors were focused on how they could create jobs, but I think Rahm was focused on how to create a platform so the businesses can create the jobs.”
Beyond supporting resources for startups to launch and grow in Chicago, Emanuel has also been credited with persuading many large tech companies to move their headquarters to downtown from the suburbs. In 2015, in-flight internet provider Gogo moved its offices from Itasca to the West Loop. And over the summer, online grocery company Peapod and AFN Logistics also moved their headquarters to downtown from Skokie and Niles, respectively.
“All of these people have made commitments to downtown because the center of the city is where they need to be if they want to attract technical and creative digital talent going forward,” Tullman said. “[Emanuel] has made it an environment where these companies feel like the talent is here.”
“IT’S CRUCIAL WE HAVE A MAYOR THAT SIGNALS THEY ARE BUSINESS FRIENDLY.”
But not every decision made at City Hall during Emanuel’s tenure was pro-tech. He drew criticism from the tech community in 2016 for the implementation of the “cloud tax,” which taxed cloud-computing services.
And aside from tech, Emanuel has caught plenty of criticism for how he’s dealt with other issues. He has been criticized for how he addresses violent crime in the city’s impoverished neighborhoods and problems within Chicago Public Schools.
His critics have also argued that he puts most of the city’s resources downtown and in Northside neighborhoods, ignoring the South and West sides, a complaint echoed among even those in the city’s tech community, according to Emile Cambry, the founder and CEO of Blue1647, a nonprofit tech hub in Pilsen that focuses on giving STEM resources to underserved communities. Cambry worked with Emanuel initially when he was one of several tech leaders Emanuel brought together to address diversity in tech.
That helped spawn the Blackstone Inclusive Challenge, a program developed by Emanuel, the Blackstone Charitable Foundation and World Business Chicago that awards grants to organizations that recruit and support diverse entrepreneurs. Blue1647 was one of the recipients, receiving a $450,000 grant when the challenge was launched in 2017, and Cambry said Blue1647 has grown to about 300 members since.
However, Cambry said there is still work to do to spread the city’s tech and corporate resources out to Chicago’s neighborhoods.
“Ultimately, the corporate relocations are significant, but it would be great if some of those tech companies actually set up shop in our communities, especially on the South and West sides of Chicago … perhaps that would provide a gravitational pull for more resources, money and support to come to those neighborhoods,” Cambry said. “I hope that in the future, the next administration really accelerates some of that work.”
Denise Linn Riedl, the manager of ecosystem development at City Tech Collaborative and a fellow at the Benton Foundation, also said the city needs more public and private partnerships. She added that in order for Chicago to move forward as a smart city, its next leaders need to have initiatives that allow all residents to be positively affected by tech even it means engaging more with philanthropic sectors to do so.
“Civic engagement around technology is a wonderful thing that can be strengthened in Chicago,” she said.

Chicago Mayor Rahm Emanuel (left) and Elon Musk (right). (Photo by Joshua Lott/Getty Images)

Just months before announcing that he wasn’t running for a third term, Emanuel had embarked on one of his most high-profile public and private collaborations when he announced a project with Elon Musk to build a high-speed transit system connecting O’Hare Airport and downtown Chicago. But the project is a bold choice made by Emanuel given that Musk’s technology is largely unproven. Launched about two years ago, Musk’s The Boring Company hasn’t actually built any working underground transit systems yet.
Considering that, many are wondering how the project will fare now that Emanuel won’t even be in office to oversee it. And with Musk recently being sued by the Securities Exchange Commission and his other erratic public behavior, faith in the project is wavering even more. Even still, it doesn’t seem to phase Emanuel.
“I think he has a lot to prove, but what better way to do it than to have a new project that succeeds?” Emanuel said.
But the O’Hare transit project isn’t the only tech initiative on the horizon since Emanuel announced he won’t be running for a third term. Chicago and 19 other cities across the country are waiting for an answer from Amazon on where it will build its second headquarters. Emanuel has been as vocal as any mayor on the importance of landing the tech giant’s HQ2, having his administration and other tech leaders show Amazon execs around the city to highlight the city’s strengths. Amazon was reportedly back in Chicago in August touring potential sites for HQ2. But could Amazon’s interest in Chicago weaken with Emanuel out?
“They’re not making this decision based on my one term,” Emanuel said. “I’m a factor, but the biggest factor is Chicago’s strengths, and they endure past the one term of any individual mayor.”
But whoever Chicago’s next mayor is could impact Amazon’s decision and those of other major tech corporations in the future, Tullman said.
“If a new mayor is not tech-centric, or at least familiar with it, a lot of these programs are going to be jeopardized because people need to believe that there’s stable and continuing support because we’re asking all these companies to make substantial investments, and they don’t want to be in a situation where they’re halfway through something and the game changes,” Tullman said.
(Photo by Scott Olson/Getty Images)


(Photo by Scott Olson/Getty Images)

Of the 17 people who have announced they are running for mayor, about three have a tech and business background or interest. They include Bill Daley, the former U.S. Secretary of Commerce, who was also a lawyer and banker, Neal Sáles-Griffin, the CEO of CodeNow, a nonprofit that teaches young people to write code, and Dock Walls, who has proposed making nanotechnology Chicago’s newest industry.
Regardless of who ends up replacing Emanuel, he believes he has helped leave a lasting impact on Chicago’s tech and startup ecosystem, adding that it is “without a doubt” easier to start a company in Chicago than it was when he took office.
“When I became mayor, the company we were known for was Groupon,” he said. “Today, you have Braintree, Fieldglass, Cleversafe, Grubhub. There’s a whole host of companies that have been sold or gone public that know this is a really rich and diverse tech scene, and you could not have said that eight years ago.”


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