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Wednesday, August 01, 2012

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Thanks for writing a positive article about technology in Chicago. Here at http://www.cleverbridge.com, an e-commerce company for software and SaaS businesses, we have been in the Loop, starting with 300 square feet in the Monadnock Building in 2006 and growing to 20,000 square feet in the former Crain's building today.

Although we didn't move from the suburbs to the Loop and did have the option to move to Silicon Valley, we decided to stay in Chicago for the talent, reasonable costs and for time zone benefits when working with Europe. I'm very bullish on Chicago and proud to be staying put.

It's hard to back this up with data, and it may be just because I look at Chicago more, but it seems to me that Chicago may have the strongest suburb to city migration story for business. It demonstrates the continued power of the Loop not just as a tourist and quasi-public sector realm (as in most cities) but as a bona fide commercial center. And clearly economic development via Rahm's Rolodex seems to be paying off. It's good to have a heavy hitter like him running the show.

Clearly this is good news for Chicago, but I don't think it needs to be tied to woes for everyone else. The last bit seems to be suggesting that Chicago will suck the life out of every other city's tech scenes and talent base - and certainly Rahm has made no secret that his plan for Chicago is raiding the burbs and the rest of the Midwest for high end talent and business.

I don't think that's necessarily true. Tech has been decentralizing from Silicon Valley for quite some time. The same forces that enable Chicago to be viable make almost anyplace viable. Indeed, if you look around the Midwest you'll see plenty examples of tech going strong. Even a place like Fargo is home to Microsoft's second largest US office, thanks to the Great Plains acquisition. Pittsburgh is seeing an influx of investors like Google thanks to its top talent at CMU. Indy has managed to build a few pretty large publicly traded tech employers of late like Exact Target and Angie's List. Are these cities as big as Chicago in tech? No, but Chicago is also a much, much larger city.

Tech isn't a zero sum game. So I don't believe Chicago's success has much to do with anyone else's losing. Nor do I believe that Chicago is going to become place Midwest firms have go to for services or funding, though I'm sure some of it will take place.

Also, it seems that Chicago likes to play it both ways on cost. When it comes to explaining why business will pay high prices to stay in Chicago vs. moving to Texas or Columbus or something, the idea is that high prices are good as they show strong demand for the unique location of Chicago. But when Chicago's prices are lower than coastal mega-hubs, lower prices suddenly become a selling point. No one has ever articulated to me a compelling reason to believe that Chicago has some uniquely positive bundle of cost, talent, etc on any type of national or global basis. Certainly on the Midwest I'd be the first to argue that it does, however.

I think one thing Chicago should do it to not put its marketing or civic eggs into the mass market B2C or digital type starts. Not only is there a lot of froth in the market there, Chicago's strengths have always been as a B2B type town. Technology enabled business services is likely much more durable, leads to much more employment, good exits, etc.

Chicago is also very livable. My survey work of higher status home markets produced fifteen high status home markets located in the City, among forty for the entire region. Ownership came on strong in such diverse neighborhoods twenty years ago, that these markets now compete quite successfully with the north shore and Du Page. No one ever dreamed that the City would develop such diversity in its home ownership markets, but it did. River North is part of the huge demographic shift going on in West Town's eclectic communities which reminds me of the Village/West Village, Tribeca/SoHO boom that New York went through as Wall Streeters moved closer to work.

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