General managing partner, G2T3V and Chicago High Tech Investors
If half a dozen of your friends tell you that you're drunk, you should seriously consider taking a break from imbibing and sit yourself down before you fall over or do something equally stupid and embarrassing. What you think you're seeing and experiencing may, in reality, be radically different from what's actually happening. And, just to be clear, as timely as such advice might be, I'm not actually referring to responsible and appropriate holiday behavior, or about drinking and driving, or embarrassing yourself at the office holiday party.
In fact, I'm talking about the converse. That's when a sober (as in, objective) analysis of your environment tells you not to believe what you read, especially when you're seeing and living a different reality every day. When you quickly discover that people on the outside, and at a considerable distance, haven't a clue about what's really going on in your world, even if they think they do. Because they're not in it every day and seeing the trends, changes and growth --and the occasional bumps in the road-- that you're experiencing in real time.
The substantial and rapidly-growing tech ecosystem in Chicago was recently maligned and victimized by what I would call a "data-driven drive-by" -- aided and abetted by a report from the Brookings Institution's Metropolitan Policy Program-- and, as someone who's lived in Chicago since the tech scene was a toddler and who's helped build and grow multiple technology businesses here for decades, I don't feel that we can just sit by and take it.
The fact that Chicago's critics don't live anywhere near here doesn't prevent them from minding our business, endlessly pontificating, and making random observations and profound pronouncements about our actions, prospects or city's future without the benefit of factoring in all of the relevant facts. This has happened in a number of stories about the "best" cities for tech jobs. (Even INC. has missed the point from time to time about what's happening in Chicago and the Midwest.) Numbers don't lie, but they rarely tell the whole story. When you select and skew the data, the results are both conveniently assured and basically worthless.
And, if the parties whose oxen are being gored don't speak up and quash the half-truths that grow out of the corrupted analysis, these factoids and shibboleths become too often repeated and eventually take on an undeserved authenticity and broad adoption by those not otherwise better informed. This is the case, even if you give the authors the benefit of the doubt, and assume that they have reasonable intentions and that they aren't letting their agenda and their political and economic objectives influence their math
Journalists and think tanks may have good intentions, but it still hurts when they get things so wrong and say things that just don't make any sense. If you have a thesis, and if you torture the numbers long enough, leave out the data that doesn't support your convoluted story (Elizabeth Holmes, are you listening?), compare a few apples to a bunch of oranges, and make up your own categories, job characterizations and exclusions, the numbers will confess to almost anything. Just because it's math doesn't mean that it's good math. And wishing the truth was otherwise isn't much of a strategy either.
The technology economy in Chicago is booming. Period. You have to be willfully blind to suggest that Chicago is a laggard in terms of job creation and growth and that cities such as Madison WI, Charleston, SC, Oxnard, CA and Albuquerque, NM are doing far better. That's true even if your analysis focuses on selected segments of industries, where R&D expenditures are a crucial component, and even if you acknowledge that percentages are often useless indicators when the base for the "winners" is a small number, permitting a relatively modest amount of absolute growth to dramatically moves the percentage needle.
And the growth game is especially misleading when you exclude entire categories from your analysis-- including tens of thousands of computer consulting jobs. By ignoring those job classifications, it's easy to have the mathematical results lead you astray. The Brooking's approach rather arbitrarily dropped whole job categories that a sixth grader would know are part and parcel of and critical to any viable tech ecosystem. The facts can have diverse interpretations, but there cannot be diverse facts. In addition, it's not even clear to me that R&D expenditures, which have been plummeting among large companies for years, are the key to the rapid growth that we've experienced in technology over the last decade or two.
The reality is that large companies aren't inventing much of anything internally - it's all about M&A today. Taking a page from Microsoft's playbook (Skype, GitHub, LinkedIn, etc.) or Google's, or any of the major pharma companies, they're watching and waiting to see which startups show promise and then swooping in to fold those businesses into the mother ship. Dumping a bunch of federal money in second-tier, centrally-located cities isn't going to spur an innovation revolution, retrieve all the talent from the coasts, or turn those heartland metro areas into growth centers. It's as deluded and misguided a vision as regarding casinos and pot as saviors for the cities.
1871, which is the No. 1 private business incubator for technology startups in Chicago --and the world-- has created more than 11,300 jobs since 2012, which added more than $800 million in wages to the city's economy. Yes, you can call me biased--I ran 1871 for 5 years-- but we hosted some 650 new companies that have raised more than $1.5 billion in capital. And did I mention that Chicago is one of the best places in the world for female entrepreneurs to start their businesses. Suck on that, Salt Lake City.
The smart money in technology investments obeys a simple portfolio power law: a few big winners drive the overall return and offset the losses of a bunch of wannabes. You double down and back your best shots and you starve the losers. It's the same story for supporting cities. You don't try to be all things to all people, expect every single SMSA to hit tech home runs, or try to spread the wealth so broadly that it's a mile wide and an inch deep. This is a sure formula for wasted dollars, mediocre results, and capping the upside of the places that could and would have been standouts and big successes.
A compromised approach, in the final analysis, limits your upside and doesn't really do much of anything for the little guys either. Go big, go deep, or don't go at all. And Chicago is big. And deep.
PUBLISHED ON: DEC 24, 2019
