Tuesday, April 30, 2019


Amazon's Amazing Failure in China
Why was the world's best e-tailer unable to establish a domestic presence in a market that seemed made for it? Because it couldn't exploit labor enough.

Executive director, Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship, Illinois Institute of Technology

How did Amazon lose its way in China?

After more than 15 years of trying, Amazon has secured less than 1% of the e-commerce market in a country of some 1.4 billion people. No wonder the company just announced that it's throwing in the towel and shutting down its online marketplace there. If we were talking about Facebook or Google, whose businesses were shut out and busted by the Chinese government, this kind of failure would be a little easier to understand. But Amazon basically had none of those regulatory impediments and even acquired its main local competitor in 2004.  

While there have been some snide asides that the Amazon website design was too clean and simple to appeal to the complex sensibilities of the Chinese customers, these feel like people piling on with a bunch of after-the-fact "I told ya so" slams. As embarrassing as it sounds, my view is that they dropped the ball and were beaten in logistics, specifically the blocking-and-tackling ground game where we all thought Bezos & Co. were pretty much invincible.

This is an encouraging lesson in some ways for all the little guys like us trying to compete with 800-pound gorillas. But in other respects, this is one of those things that could only happen in China.  Because what Amazon failed to appreciate-- or declined to exploit-- is the fact that in China there are still millions of people willing to work for a pittance. And they are going to be available for at least the next decade.  These highly exploitable workers will always be the cheapest available resource. Amazon needed to change the way it organized basic delivery and just couldn't bring itself to effectively adapt to the economic realities of the local marketplace. (Yes, that's more than ironic given the criticism the company has taken for its warehouse labor practices here.)

In the constantly growing and accelerating mobile world, access, convenience, and especially speed, trump just about everything else including price. We're seeing this phenomenon globally and no place is more "mobile-first" than China, where new challenges continue to arise for many of the largest global players. They aren't responding, reacting and upping their games as quickly and aggressively as they should.

Starbucks is another business that's losing the race in China. The Seattle firm didn't see the local Chinese competition and the changes coming.  Nor did Starbucks move soon enough to shrink its store footprint in favor having more locations to reach the growing numbers of "get-and-go" customers who don't want to wait for anything. Adapting this Dunkin' Donuts approach, the local Chinese firm Luckin, a startup founded in 2017, will have more locations in China than Starbucks has managed to open in 20 years. But I digress.

Considering that Amazon is the absolute leader in speedy delivery in the U.S. and a constant innovator in that space as well, it's remarkable that the company was bested in China, in large part because it refused to match the offerings of local competitors: free shipping and overnight delivery. Amazon couldn't make the free delivery math work without requiring a minimum order size (a competitive disadvantage) because of its costly and substantial in-market structure and locked-in labor costs. In addition, Amazon didn't localize: its website and warehouses were organized in the same fashion as those elsewhere; so was the delivery system.  Remember that mantra: think global, act local?

The most interesting question is why the company was unable to do in China what it has done here, and keeps doing, with a vengeance. Amazon continues to up the stakes at home and just announced last week that it will be spending more than $800 million to enable its systems to support virtually universal one-day delivery to Prime customers--and two-hour delivery for Prime Now.  Not surprisingly, the stock prices of Walmart, Costco and the other suspects took an immediate hit. More importantly, because Amazon never stops learning, the minimum order size requirement has been eliminated.

But I think that's only half the story.

The most important reason for the China debacle was that the local competitors built a better and far cheaper mousetrap. They took advantage of the massive and readily-available "gig" labor pool in a much more effective way than Amazon, which let rivals cost-effectively use excess local labor and thereby dramatically reduce their delivery costs. The front ends of the competitors' warehouses were similar - accepting and quickly sorting inbound orders. The middle portion of their delivery depots were also similar - albeit using somewhat-accelerated "pick, pack and ship" lines, where orders were consistently assembled and ready for delivery within 10 minutes of receipt. 

But the ends of the local players' supply chains were radically different.
Imagine a sweaty, swarming and polluted marketplace of thousands of anxious and under-employed drivers waiting on a 24/7 basis at the back doors of these depots to be the next in line to grab a delivery and race off and you'll have some idea of how a cheap, quick and low-tech solution can sometimes beat the best guys in the business.  Now you might ask a couple of questions. Do they even know who the drivers are? Nope. Do they pay these folks a reasonable wage?  Nope - they tell them to make it up in the volume. Are there serious questions of quality control and disappearing orders? Yep. But no one seems to care as long as most of the time the stuff gets there as quickly and cheaply as possible.

Honestly, Amazon's problem is in part a product of political/economic correctness and a little cultural blindness. Given the criticism that companies such as Nike have experienced about labor practices in their Asian contract facilities, it's unlikely any major U.S. company could establish and defend any system that's this unstructured, undocumented and fully free form. Amazon is belatedly responding (at least in the U.S.), but in a typically U.S.-centric way. The company announced a new program called Delivery Service Partners to encourage and sign up independent entrepreneurs who want to start their own delivery businesses to ship Amazon packages. Your guess is as good as mine as to whether this will work for the little guys any better than any other part of the gig economy, but it's certainly an interesting departure from all the talk about how quickly Amazon would be taking over or competing directly with FedEx or UPS.

Bottom line: Maybe bigger isn't always better - especially when you're talking about the last mile - in delivery or really any form of transportation. There's a whole lot more and sometimes a lot less to successful localization than you might imagine.

Sunday, April 28, 2019



The paper of record needs to reflect deeply on how it came to publish anti-Semitic propaganda.

By Bret Stephens

As prejudices go, anti-Semitism can sometimes be hard to pin down, but on Thursday the opinion pages of The New York Times international edition provided a textbook illustration of it.
Except that The Times wasn’t explaining anti-Semitism. It was purveying it.
It did so in the form of a cartoon, provided to the newspaper by a wire service and published directly above an unrelated column by Tom Friedman, in which a guide dog with a prideful countenance and the face of Benjamin Netanyahu leads a blind, fat Donald Trump wearing dark glasses and a black yarmulke. Lest there be any doubt as to the identity of the dog-man, it wears a collar from which hangs a Star of David.
Here was an image that, in another age, might have been published in the pages of Der Stürmer. The Jew in the form of a dog. The small but wily Jew leading the dumb and trusting American. The hated Trump being Judaized with a skullcap. The nominal servant acting as the true master. The cartoon checked so many anti-Semitic boxes that the only thing missing was a dollar sign.
The image also had an obvious political message: Namely, that in the current administration, the United States follows wherever Israel wants to go. This is false — consider Israel’s horrified reaction to Trump’s announcement last year that he intended to withdraw U.S. forces from Syria — but it’s beside the point. There are legitimate ways to criticize Trump’s approach to Israel, in pictures as well as words. But there was nothing legitimate about this cartoon.
So what was it doing in The Times?
For some Times readers — or, as often, former readers — the answer is clear: The Times has a longstanding Jewish problem, dating back to World War II, when it mostly buried news about the Holocaust, and continuing into the present day in the form of intensely adversarial coverage of Israel. The criticism goes double when it comes to the editorial pages, whose overall approach toward the Jewish state tends to range, with some notable exceptions, from tut-tutting disappointment to thunderous condemnation.
For these readers, the cartoon would have come like the slip of the tongue that reveals the deeper institutional prejudice. What was long suspected is, at last, revealed.
The real story is a bit different, though not in ways that acquit The Times. The cartoon appeared in the print version of the international edition, which has a limited overseas circulation, a much smaller staff, and far less oversight than the regular edition. Incredibly, the cartoon itself was selected and seen by just one midlevel editor right before the paper went to press.
An initial editor’s note acknowledged that the cartoon “included anti-Semitic tropes,” “was offensive,” and that “it was an error of judgment to publish it.” On Sunday, The Times issued an additional statement saying it was “deeply sorry” for the cartoon and that “significant changes” would be made in terms of internal processes and training.
In other words, the paper’s position is that it is guilty of a serious screw-up but not a cardinal sin. Not quite.

The problem with the cartoon isn’t that its publication was a willful act of anti-Semitism. It wasn’t. The problem is that its publication was an astonishing act of ignorance of anti-Semitism — and that, at a publication that is otherwise hyper-alert to nearly every conceivable expression of prejudice, from mansplaining to racial microaggressions to transphobia.
Imagine, for instance, if the dog on a leash in the image hadn’t been the Israeli prime minister but instead a prominent woman such as Nancy Pelosi, a person of color such as John Lewis, or a Muslim such as Ilhan Omar. Would that have gone unnoticed by either the wire service that provides the Times with images or the editor who, even if he were working in haste, selected it?
The question answers itself. And it raises a follow-on: How have even the most blatant expressions of anti-Semitism become almost undetectable to editors who think it’s part of their job to stand up to bigotry?
The reason is the almost torrential criticism of Israel and the mainstreaming of anti-Zionism, including by this paper, which has become so common that people have been desensitized to its inherent bigotry. So long as anti-Semitic arguments or images are framed, however speciously, as commentary about Israel, there will be a tendency to view them as a form of political opinion, not ethnic prejudice. But as I noted in a Sunday Review essay in February, anti-Zionism is all but indistinguishable from anti-Semitism in practice and often in intent, however much progressives try to deny this.

Add to the mix the media’s routine demonization of Netanyahu, and it is easy to see how the cartoon came to be drawn and published: Already depicted as a malevolent Jewish leader, it’s just a short step to depict him as a malevolent Jew.
I’m writing this column conscious of the fact that it is unusually critical of the newspaper in which it appears, and it is a credit to the paper that it is publishing it. I have now been with The Times for two years and I’m certain that the charge that the institution is in any way anti-Semitic is a calumny.
But the publication of the cartoon isn’t just an “error of judgment,” either. The paper owes the Israeli prime minister an apology. It owes itself some serious reflection as to how it came to publish that cartoon — and how its publication came, to many longtime readers, as a shock but not a surprise.

Tuesday, April 23, 2019



All set for today's Speakers Series event

New INC Magazine Blog Post by Kaplan Institute Exec Director Howard Tullman

Are There I.T. Skeletons Lurking in Your Closet?
Technology is costly enough. But many companies are paying for software, cloud access and SaaS subscriptions they no longer use.

Executive director, Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship, Illinois Institute of Technology

There isn't a CEO anywhere today who has a clue about what his or her company is actually spending on I.T. We're talking hardware, software licenses, SaaS services and the cloud--and this is true even before you consider the accelerating costs of qualified managerial and technical personnel. Most of them are afraid to ask or don't really even know who would have the answers if they did ask. This is a much bigger concern than anyone seems interested in admitting because there are so few suggestions and even fewer solutions available to address the problem. One lesson that's critical for startups is that you need to get a handle on all of this information from the beginning and before it gets entirely out of control.

Companies like Chicago's home-grown Flexera serve mainly big firms who are already stuck in the swamp, but its offerings are great guidelines and provide some important illustrations of the kinds of questions every business needs to be asking early on about their I.T. investments. Flexera grew out of a company started in a basement by two Northwestern University computer science students whose InstallShield product was officially launched in 1990. For anyone who grew up in tech, watching the InstallShield bar load your new program was just as common an experience as hearing the screechy static sounds from your 28.8 modem or the AOL "You've Got Mail" alert. Today the company's global with more than 1,300 employees and more than 51,000 customers.

Is cost monitoring the job of the CFO, the CTO, the CIO, various contract administrators, project consultants, outside vendors, or the accountants, bookkeepers and auditors? The answer is yes; and no, because software today is absolutely everywhere and everyone in the organization owns a piece of the puzzle and is part of the problem. Worse yet, there are so many holes in the accounting and auditing functions and so many indirect and obscure ways that money gets spent on this stuff that even the most conscientious comptrollers can't keep up with the outflows. And, just to be clear, none of the software sellers are likely to become Good Samaritans any time soon and tell you that you're still paying for seats and licenses for long-gone employees, for excess cloud storage, capacity and instances belonging to projects killed years ago, and for auto-renew subscriptions that may well outlast your business.

You'd think you'd need an authorization and maybe a P.O. to buy a lot of these apps, programs, services, storage plans, and subscriptions, but you can find millions of dollars of these kinds of charges at large and small companies buried in expense accounts, bundled into other purchases of equipment and hard goods, and otherwise hidden in unmanaged and unsupervised disbursements. On a monthly basis, in most cases, these kinds of charges often fall below the minimum review and documentation thresholds-- just like all those "urgent" Uber and Lyft trips. And so they slip regularly right under the wire. In other cases, no one wants to ask the tough questions because the answers are both unpleasant and expensive.

Software in particular is an increasingly important part of our lives and our businesses. It's as essential as electricity and just as ubiquitous, but, because it's largely virtual rather than physical and because it operates mainly in the background, it's far more difficult to track and measure usage, seats, licenses, costs, etc. By comparison, we have plenty of meters to measure our power consumption and nice Nest thermostats and other systems to try to manage and control our HVAC costs.  And we know (or at least we should) how many widgets or wagons we bought this week.  But the only time we really pay attention to our software, equipment and infrastructure, and the systems that run our businesses is when they stop running. Basically, in most cases we're paying whatever we're asked to pay because we're not really buying services as much as we're buying peace and insurance. No one wants to be the guy who tried to save a few shekels and had the system shut down during rush hour.

I'm convinced that Maslow's hierarchy of needs is going to require radical revision any day now because power, software and the connectivity they enable are no less critical to our lives and our business operations than oxygen is to our bodies. And we know the moment they're missing because we hear about it from everyone and their brother - inside the business and outside as well. No one really appreciates the fact that our day-to-day operations hang on such a thin thread until the screens go dark or the cloud bursts and won't respond. I've said before that SaaS services are a very mixed blessing and the cloud, if anything, is actually worse, because we have even less of an idea of just how much and how often our people are using these resources, how dependent they've become upon them, and exactly what we are spending every day.

But there are some helpful solutions out there. I wrote a while ago about Knowledge Hound, which helps companies track and find materials, prior projects, and other resources that they have somewhere in house but have lost track of, in order to avoid paying unnecessarily for re-dos, redundant research or other wasted effort We're also seeing new entrants like Ocient addressing the need to have better analytical tools to help us intelligently manage the overwhelming flow and size of today's largest datasets, so we can turn the data glut back into good and useful information. In the specific area of I.T. tracking, the best solution I've seen lately is Flexera, which helps companies of every size get a handle on their hardware, understand their ongoing operations and exposures, and then figure out what needs to be done to rationalize and ultimately optimize the whole messy I.T. sprawl. Think of their overall offering as a virtual software utility meter.

Flexera's software and systems let you see what you have (discovery), figure out what you need (inventory) and then use that information and those insights to take appropriate action to control your spend. There seem to be some quick saves and some pretty low-hanging fruit (since most companies have someone with a red stapler and last year's Excel spreadsheet trying to keep track of this stuff) and then there are the more interesting and challenging issues. As I noted above, the controls are so porous in most businesses and the reporting is so delayed and incomplete that Flexera has determined that the only way to get ahead of the curve is by adopting, implementing and enforcing governance rules and algorithmic programs that provide real-time measurement and guard rails and prevent run-away (and often inadvertent) expenditures from blowing up your budgets. No one likes to talk about how badly their best customers businesses used to be run, but based on conversations with a few of their happy customers, it's clear that the implemented saves and catches make a demonstrable net difference in no time at all for their bottom lines.

In addition, it's pretty clear that most businesses have no idea of what their actual rights, secondary uses and other entitlements and permissions are under the I.T. contracts that they have signed. Certainly no one in senior management has any idea about any of this. And so, another critical function that Flexera brings to the process is that their teams have actually read and evaluated these torturous tomes (and all the T's & C's) and built programs to help the end users make sense out of them and to ensure they secure all the benefits and value they've paid for. If you don't know your rights, you can't do much about insisting on and enforcing them. Needless to say, while it's a little awkward to tell your clients how much they've been wasting, these contract review procedures also quickly pay for themselves.

And finally, Flexera seems to be the only one-stop shop that I've come across in a world where you need to be on top of everything at the same time. The range, scope and sprawl has never been greater - desktops, laptops, phones, data centers, SaaS services and the cloud are all now part of the equation. Certainly, there may be smaller players with piecemeal offerings. The problem is that, if you aren't working with someone who can help you visualize the entire I.T. forest as well as all of the trees, you're going to be coming up with partial solutions and trying to put out the most pressing fires without addressing the long term needs of your business and the best ways to meet them.

The bottom line is simple. If you can't see and scope all this stuff, there's no way you can manage and control it. As they say at my favorite burger joint, Steak 'n Shake, "In Sight It Must be Right".


Sunday, April 21, 2019



The downtown skyline grew taller and burned
brighter in Rahm Emanuel’s Chicago. The only
problem: He didn’t make room for everyone.
 in his obituary of Chicago’s greatest mayor, Mike Royko wrote that “if a man ever reflected a city, it was Richard J. Daley and Chicago.” That was true, but Daley, who died in 1976, was mayor of a Chicago very different from the one we live in today: Daley’s Chicago was an unsophisticated blue-collar town, with a broad middle class, powerful industries, and neighborhood loyalties stretching back generations.

If any man reflects the city Chicago has become since Daley’s death, it is Rahm Emanuel. A suburban striver who grew up in Wilmette, he moved to the city in adulthood with a fancy master’s degree from Northwestern, built a lucrative career in politics and business, competed in triathlons, and settled at a tony North Side address. Emanuel’s Chicago is a global business and cultural capital whose bifurcated economic structure is a microcosm of 21st-century Americaonly fitting for this most American of cities.
Since Emanuel became mayor, in 2011, Chicago has become more prosperous and more educatedachievements of which any civic leader would be proudbut those characteristics have become increasingly concentrated in the urban core. Imagine the city’s skyline as a bar graph of its demographics, the tallest buildings representing the most wealth, scaling downward to two-flats, bungalows, and vacant lots as it flatlines from its peak.
Emanuel did not create this Chicago, which has been developing since at least the 1990s, when the city began reversing a postindustrial trajectory that threatened to consign us to the same Rust Belt ash heap as Cleveland and Detroit. His mayoralty is, however, a product of it. In his first election, he ran up his biggest vote totals in the wealthy lakefront wards, which are populated by transplanted Midwestern professionals who share his conviction that the business of Chicago is business. The most significant decisions of his mayoralty have accelerated the city’s rise to global status. Emanuel is, arguably, one of the architects of the 21st century’s global economy. As an aide to President Bill Clinton, he helped sell the North American Free Trade Agreement to skeptical prolabor Democrats. Once he got his hands on the levers of power in an alpha world city, it only made sense that he would move to aggregate money and talent in its core. There are very few winners in globalization, and he wanted to make sure Chicago was one.
Like so many American cities, Chicago has been experiencing what urbanist Alan Ehrenhalt calls a “demographic inversion,” in which a once-derelict inner city attracts wealthy residents, while the poor are forced into outlying neighborhoods or suburbs. In the mid-2000s, Tom Tunney, the alderman of one of those wealthy lakefront wards, which Emanuel would carry with 74 percent of the vote in 2011, told me, “In 25 years, the entire city is going to look like this. It’s going to be Manhattanized. There’s nothing anyone can do about it. There’s too much demand for land in the city.”
“Then where will the poor people live?” I asked him.
“In the suburbs.”
Parts of Chicago have been Manhattanized. But other partsthe Second City’s second cityhave turned into Cleveland and Detroit, losing their industries, their business districts, their middle class. According to demographer Alden Loury, who works as the race, class, and communities editor for WBEZ, The city is losing more of its lower-income folks and gaining more higher-income workers.” While the African American population is expected to drop to 665,000 by 2030half what it was in 1980whites are the fastest-growing ethnic group. The Loop and its adjacent neighborhoods are gaining population, while the South and West Sides are declining. For the first time, Lake View has surpassed Austin as the city’s most populous community area.
The African American population declined under Mayor Richard M. Daley, but he “tried to manage the fallout,” says Jawanza Malone, executive director of the Kenwood-Oakland Community Organization. “He saw himself as another Chicago guy who knew what was happening in the neighborhoods. Emanuel is not a Chicagoan. He doesn’t see himself as a Chicagoan. He brought in all these people from outside Chicago who didn’t understand the Chicago Way.”
Emanuel simultaneously nurtured the rise of a global metropolis and managed the decline of a Rust Belt city, both coexisting within Chicago’s borders. The exigencies of this dual task ultimately undermined his mayoralty. Emanuel left Chicago a more prosperous place, but at the cost of his own popularity. A police shootingthe murder of 17-year-old Laquan McDonaldcreated the biggest crisis of his administration and may have done more than anything else to bring about his downfall, because many Chicagoans believed, rightly or wrongly, that he had covered up the video of the crime to preserve his 2015 reelection. As an urban planner, he succeeded; as a politician, he failed, because some Chicagoans came to believe he was indifferent to their struggles.

Rahm Emanuel has his super-fans. To tech entrepreneur Howard Tullman, he is the best mayor of a big city in the United Statesan irreplaceable civic ambassador who connected with international businesspeople and White House staffers as no mere ward politician could have done. If Richard M. Daley was a transitional figure between the industrial Chicago in which his family’s political dynasty was born and the cultural and financial capital it was destined to become, Emanuel put the final stamp on Chicago as a global city.

“I think that in these days it has a more direct impact on more people’s lives to be the mayor of one of these megacities than to be a governor or senator or member of Congress,” Tullman says. “I don’t think it ever used to be a global job. Now it’s important to attract talent. It’s important to get financing, investment, and connections.”
In 2013, Emanuel was instrumental in hiring Tullman to run 1871, the city’s new tech incubator, named for the year Chicago burned, only to rise again. It was actually the brainchild of then future governor J.B. Pritzker, but Emanuel made it his baby, seeing it as integral to transforming Chicago into a technological rival of Silicon Valleyan ambition of his that fueled even his lame-duck months, when he made a last-ditch pitch to bring Amazons second headquarters here after the company announced it was pulling out of New York City.
Emanuel loved bringing distinguished visitors to 1871’s offices on the 12th floor of the Merchandise Mart, where young entrepreneurs sit behind gunmetal-gray MacBook Pros in the wide-open bullpen, beavering away at Chicago’s next internet success story. On a wall of the auditorium are tiles with the 1871 logo signed by visitors such as Emanuel’s ex-boss Bill Clinton, YouTube cofounder Steve Chen, and Shark Tank investor Daymond John.

“Emanuel was there a lot,” says Tullman, who spoke with the mayor about 1871’s progress at least once a month before stepping down in 2017. (He now heads the Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship at the Illinois Institute of Technology.) “He put the arm on companies to be supportive by giving, doing events, working with our startups. He was a great bully pulpit in the sense that he talked it up all the time. It was a funny thing. As it got bigger and bigger and more successful, it wasn’t clear whether he was doing us a favor or we were doing him a favor.”
SpotHero, a service that helps motorists find parking spaces, spent its early years inside 1871 and now has 165 employees in its own Loop office. Thyng, an augmented reality platform that has been used to create everything from ads for Rice Krispies to 3D medical images for physicians, found both investors and employees through 1871. Thyng’s founder, Ed LaHood, has been part of the Chicago tech scene since the early 1990s. Never in his career has the city nurtured new tech businesses the way it does now, he says: “Thirty years ago, if you wanted to start a startup in Chicago, you were on your own. 1871 really created a technology ecosystem in Chicago. Rahm has been a huge part of the tech sector’s growth. Not only in 1871, but wanting to bring tech industries to Chicago.”
During Emanuel’s tenure as mayor, the share of the city’s economy attributed to tech more than quadrupled, from 2 percent to 9 percent, according to 1871. The footprint of tech companies inside the Merchandise Mart increased from 100,000 square feet to 1.5 million. As LaHood notes, it wasn’t just 1871, even though companies founded there have now created more than 8,000 jobs. Salesforce, Facebook, Yelp, and Google all opened Chicago offices while Emanuel was mayor. When Google was planning to open a Midwestern headquarters in the Fulton Market district, Emanuel “was in almost constant communication with their executives,” says Andrea Zopp, a former deputy mayor who is now president and CEO of World Business Chicago. “I think if you talk to any CEO who’s moved here, they’ll tell you he’s relentless.”
The Rahm Butterfly Effect

For better or worse, Chicago (probably) wouldn’t have any of these things without Emanuel’s influence

There’s another aspect of globalization that Emanuel turned to Chicago’s advantage: In the aftermath of late-20th-century deindustrialization, there could be only one Midwestern metropolis. Chicago was the winner, and it’s been sucking the economic vitality out of surrounding statesand the rest of Illinoisever since. At first, this took the form of brain drain, as college graduates from Indiana, Michigan, and Wisconsin flocked to the city. Now, under Emanuel, Chicago has been the No. 1 American city for corporate relocations for five years running. Headquarters that were once synonymous with their small Midwestern hometowns are following the talent here. Archer Daniels Midland moved its global HQ from Decatur to an office on West Wacker Drive. ConAgra moved from Omaha to the Merchandise Mart. And corporations that built office campuses in Chicago suburbs during the urban flight of the 1960s and 1970s are following the white-collar class back into the city: McDonald’s from Oak Brook, Motorola from Schaumburg. So powerful is the global city’s lure that Emanuel rarely granted tax breaks.
“The mayor’s philosophy about it is, ‘If I have to buy your way here, don’t come,’ says Zopp. We have so many great assets. Theyre coming because their people want to be here. It’s the trend toward urban growth.” Still, Emanuel’s approach was hands-on: He lured Ferrara Candy from Oakbrook Terrace to Chicago after striking up a conversation with a company employee on a flight. She told him many of her coworkers wanted to work downtown, and suggested he call the CEO. Emanuel did, and Ferrara’s 400-employee headquarters are now in the Old Post Office.
The thousands of employees working at relocated companies didn’t just want to live in the city; they wanted to live right by their jobs. Though neighborhood life is the essence of the Chicago experience, the Loop was designed as a place of business. Emanuel set out to change that, with a special emphasis on the desires of millennials, who are “uniquely city-dwelling compared to previous generations,” according to demographer Ed Zotti. Emanuel hired a hotshot transportation planner from D.C., Gabe Klein, who laid down bike lanes and established the bike-sharing service Divvy. “Increasingly, young people were looking for thattech companies in particular,” says Ron Burke, executive director of the Active Transportation Alliance. “Rahm saw this eight years ago.”
Emanuel cleaned up the Chicago River and built kayak liveries along its branches. The $100 million Chicago Riverwalk expansion, with its restaurants and bars, brought the public down to the level of a body of water that became known as the city’s second shoreline. “[The Riverwalk] has helped define the Loop,” says Michael Edwards, president and CEO of Chicago Loop Alliance, and it is among the reasons Chicago has one of the fastest-growing downtowns of any big city in the United States, adding 5,000 residents to the Loop between 2010 and 2016. Those newcomers are moving into buildings such as Marquee at Block 37, which opened in 2016 and rents one-bedroom apartments for $2,400 a month. (That’s affordable housing in the Loop, where 82 percent of residents have college degrees and the median household income is $98,000.) So intense is the demand for downtown housing that Magellan Development is building on the river the 101-story, 396-unit Vista Tower, which will be the city’s second-tallest residential structure.
Five miles south of the Loop, at the corner of 49th Street and Indiana Avenue, Irene Robinson stands alone on the playground of Anthony Overton Elementary School. The playground has been empty since 2013, when Overton was one of 49 “underutilized” or “underperforming” schools closed by Emanuel’s handpicked school board. A map of Chicago stenciled on the asphalt pinpoints their locations: almost all in African American neighborhoods on the South and West Sides.

 “This was my second home,” Robinson says. “All my kids went to this school. My grandkids. I raised so many children here. Now it’s like a graveyard.”
When Robinson learned that Overton was closing, she thought her family’s world was coming to an end. She confronted the mayor at public meetings. She was arrested for protesting outside his City Hall office. The school was shuttered and sold to developers who plan to repurpose it as a business incubator. But six years on, Overton remains empty, boards covering its windows, graffiti climbing its walls, the words “Anthony Overton” visible only as ghost lettering above the front door. Robinson’s grandchildren were scattered to elementary schools throughout the South Side. Robinson, who for 15 years lived cater-cornered from the school, moved out of the neighborhood. One of Robinson’s daughters took her children to Iowa partly for a more stable educational environment.
Emanuel believes political capital is worthless unless spent on difficult decisions. In his first term, he spent a lot of capital on the school closings, and he never recovered it. Some of that was a result of the policies themselves, and some was a result of a perception that the prickly Emanuel was an autocrat and a bully who did not truly understand the city he governed.
Perhaps it made demographic and financial sense to close Overton. Since the school was built, in 1963, the surrounding Grand Boulevard community area has lost 75 percent of its residents, falling from a population of roughly 80,000 to 22,000. Public housing has been demolished (most of the Robert Taylor Homes were in Grand Boulevard). The blue-collar jobs that supported the black middle class have left Chicago. Families are trying to escape gangs and crime. Changing racial attitudes mean that blacks can now live in suburbs that once discouraged them from moving in, and Chicago’s Manhattanization means housing is often less expensive outside its borders. When Overton was slated for closing, its enrollment of 431 pupils was only half its capacity.
“We’ve lost thousands of kids,” says Chicago Public Schools CEO Janice Jackson, pointing out that enrollment has dropped to 361,000 from its all-time high of 500,000. “What people don’t understand is that when a school is underenrolled, it’s harder to attract teachers. We should not be making decisions on schools based on one factor, or politics, or optics.” Jackson believes CPS students are learning more than they were when Emanuel took over. Emanuel lengthened the school day and instituted full-day kindergarten. The district’s graduation rate increased from 57 percent to 78 percent during his tenure.
“The question of whether 50 school closings are ‘necessary’ is, in my view, a little bit beside the point,” says University of Chicago sociology professor Eve Ewing, author of Ghosts in the Schoolyard, a 2018 book about the school closings. “It was one possible policy solution in an array of many possible solutions, but the point is that the people most harmed had no meaningful opportunity to shape that policy decision.”
Chicago was the birthplace of community organizing, and Emanuel was seen as stiffing the neighborhoods where that tradition was born. Emanuel’s decisions to close schools and six mental health clinics were blamed for accelerating the decline and disarray of already struggling communities. In a poor neighborhood, a school is one of the few stable institutions.
“What Emanuel did goes beyond just ignoring parts of the city; it actively worked to destabilize those communities,” says Jawanza Malone. Even more people wanted to leave. And between 2014 and 2016, shootings increased among those who stayed, as young people from rival gangs were thrown together in new classrooms.
“It wasn’t about what was right for the children; it was about what was right for Rahm and his friends: the rich and elite people,” Robinson says.
“Neoliberal” is the term most often employed by Emanuel’s detractors to describe his outlook on governing. As used by left-wing critics of moderate Democrats, “neoliberal” refers to a post–New Deal philosophy of government that emphasizes free-market capitalism, deregulation of the financial sector, privatization of public services, and cuts in government spending.
Emanuel was, according to Ewing, “the precise archetype of a neoliberal mayor.” Fiscally, it might have made sense to put resources into the growing areas of town and withdraw them from the shrinking neighborhoods. And Emanuel was always a fiscally responsible mayor, unafraid to raise property taxes, hike water rates, or impose unpopular fees such as speed camera tickets to balance the city’s budget. Joe Moore was a critic of Daley’s shortsighted use of funds from the Skyway and parking meter leases in order to close budget gaps, but the alderman became an ally and admirer of Emanuel (which helps explain how Moore lost his reelection bid in February in independent-minded Rogers Park). “Rahm confronted the challenges,” Moore says. “He convinced the City Council to vote for significant property tax increases. He exhibited a willingness that Daley never exhibited to spend political capital.”
Emanuel was elected mayor in 2011 with strong support in the black community. By 2015, that support was eroding. Between 2011 and the first round of voting in 2015, his share of the vote dropped from 63 percent to 49 percent in the 27th Ward, which includes East Garfield Park, and from 60 percent to 45 percent in the 4th Ward, which covers part of Douglas. (Emanuel saw little or no drop-off in the downtown wards in which he had so assiduously invested.) That loss of support from black voters was the difference between an outright win and a humiliating runoff against no-name Jesús “Chuy” Garcia, which he may have won because African Americans were reluctant to vote for a Latino mayor.
“Why did such a loyal support group get the short end of the stick?” asks political consultant Don Rose. “I think his biggest failure was to deal with the Other Chicago.”
If a Taser had arrived at the corner of 41st Street and Pulaski Road one minute earlier, Rahm Emanuel might still be mayor.
“Someone with a Taser?” an officer is heard asking a police dispatcher on a recording of radio traffic on the night of October 20, 2014. “This guy’s walking away with a knife in his hand.”
A Taser was on its way, but Officer Jason Van Dyke beat it there and fired 16 shots into the guy with the knife in his hand, Laquan McDonald. A video of the shooting was released more than a year later and was at odds with the official police report, which stated that McDonald had lunged with his knife at officers. African Americans had already begun to sour on Emanuel’s policing because of the aggressive stop-and-frisk tactics of Garry McCarthy, the superintendent he recruited from Newark. Now many viewed the mayor with suspicion and mistrust.
After the McDonald video came out, Emanuel “lost the support of the majority of the black community,” says police reform activist William Calloway, who encouraged journalist Brandon Smith to sue the city for the video’s release. Although Emanuel says he did not see the video until it became public in November 2015, some suspected that he rushed a confidential settlement with the family through the City Council in order to preserve his reelection. By May 2016, his disapproval rating in the black community had risen to 70 percent.
Only then did Emanuel begin seriously directing resources to the South and West Sides. The city announced plans to build a police and fire academy in West Garfield Park; the Department of Fleet and Facility Management’s garage moved from the North Branch of the Chicago River (on the site that will become Lincoln Yards) to Englewood. The Neighborhood Opportunity Fund and Retail Thrive Zones program, established in 2016 and 2017, respectively, distributed rehab grants to small businesses in under-developed neighborhoods.
It was too little, too late; both Emanuel’s friends and enemies agree that the fallout from the Laquan McDonald shooting, including the perception that he covered it up, was likely his primary reason for not seeking a third term. “He was unelectable,” says Calloway, adding, “The police are the only public servants who are not seen as members of the community. You need a mayor who can erase that division.”
The pertinent question is whether Emanuel could have recovered from the McDonald scandal if he had retained more political capital in the black community. That community may be shrinking, but it’s still big enough to swing an election, and Emanuel may have found it impossible to contemplate another run without its support. None of his potential successors want to repeat that mistake: Nearly everyone who ran for mayor this time promised to invest in neighborhoods beyond downtown.

When Emanuel talked to Howard Tullman about 1871, “he always said he didn’t want a kid in the South Side or the West Side of the city looking at the skyscrapers downtown and not understanding in every way, shape, and form they could aspire to being part of that opportunity as well,” Tullman recalls. “The dream was that this enthusiasm, encouraging entrepreneurial activities, would eventually spread, and the benefit of technology and entrepreneurship would be distributed across the whole city.”

Tullman, at least, can see the beginnings of a more broadly shared prosperity as the Chicago that Emanuel’s administration has been building pushes out from downtown in every direction. On the Near West Side, Google is in Fulton Market. On the Near South Side, Related Midwest is building the 78, a $7 billion residential and commercial development that will fill the gap between downtown and Chinatown, near an area already booming with hotels and the addition of Wintrust Arena, the new home of DePaul basketball. Farpoint is redeveloping Bronzeville’s Michael Reese Hospital into housing and tech space. On the North Side, the industrial corridor along the North Branch of the Chicago River is set to become Lincoln Yards, a $6 billion housing and entertainment development.
“I think his latest legacy will be getting those deals financed or getting some support for those deals,” Tullman says. “Then the next real challenge is how do you do these other areas? Englewood. Bronzeville is getting healthy already. The city is as well positioned as any major city.”
Rahm Emanuel didn’t become mayor to be everybody’s best friend. He became mayor, as he puts it, to leave the city “better prepared for the future than the day I walked into the office.” Political consultant Don Rose acknowledges that Chicago “is probably in better financial condition” as a result of Emanuel’s tenure. Demographer Alden Loury believes that a lot of things that happened when he was mayor “are certainly positive for the city overall.” But Emanuel will not be fondly recalled as a civic father figure, like Old Man Daley, or even a civic little brother figure, like Richie.
“I don’t think the city ever loved him,” Rose says. “I don’t think even his supporters loved him. Even Richie, with his bumbling, and the Old Man had people who loved them. I don’t think the people who supported [Emanuel] warmed to his personality.”
Love Rahm Emanuel or not, the forces that produced him, and that he encouraged during his administration, will continue to transform Chicago. The next mayor will no doubt do more to redistribute the city’s resources to neighborhoods outside the borders of the global city on the lakefront, but she won’t be able to arrest their ultimate fates. We’ll still be living in Rahm’s Chicago.

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