I was at the recent ITA dinner talking to Rob Harles from Comscore about how prominent or interesting technology firms are in the Midwest that no one knows about. My favorite example is SSA. A company that nearly no one, even folks in the tech community here, has ever heard of. SSA is a Software 50 company and has sold nearly $800m worth of software in the past 12 months, has 3,500 employees and a $1.4B market cap. Another company is Navteq. Most people a) can’t recall the name and b) don’t associate them with Chicago (even here). Where else but in the Midwest could a $3.92B market cap technology company that powers nearly every map on the web and auto remain hidden in the shadows of obscurity?
Nearly every week, I come across surprise after surprise. Few people realize Archipelago (merged with NYSE) is based in Chicago. I stumbled upon TicketsNow only after 8 years of 80-100% growth there. The Midwest is the largest medical device hub in the US (roughly $82B in annual sales). The list goes on and on.
Rob had a great term for this phenomenon…it is Shadow Tech. Midwesterners don’t tend to like to promote themselves and successful entrepreneurs tend to keep their heads down building their businesses. They hide in the shadows of the Midwest corporate scene. While this is admirable, it makes it more difficult to get critical mass and build out community when the "lobsters" are hold up in their caves.
The Midwest tech scene is much more vibrant than most people realize but, like an underground club, it is very challenging to find. This makes it ideal for venture capital (opaque, inefficient markets) but you have to work hard to uncover the opportunities.
I’ll write in the near-term about why traditional networking efforts don’t work well in this kind of environment. As a community, we need to experiment with different alternative models. The base is here but we need to connect the dots.
In Chicago, traditional networking events tend to draw only those peripherally involved with building a business. No offense, but talking to yet another lawyer is not that interesting. Events that also promise intellectual engagement are far more likely to draw a crowd of entrepreneurs. Tonight’s “Whiteboard Challenge” by the MIT Enterprise Forum is a great example of what works.
In Chicago, traditional networking events tend to draw only those peripherally involved with building a business. No offense, but talking to yet another lawyer is not that interesting. Events that also promise intellectual engagement are far more likely to draw a crowd of entrepreneurs. Tonight’s “Whiteboard Challenge” by the MIT Enterprise Forum is a great example of what works.
No offense taken 🙂
Relevant people, symetrical benefit and common interest/overlap are key to any kind of networking that will drive value.
No offense taken 🙂
Relevant people, symetrical benefit and common interest/overlap are key to any kind of networking that will drive value.
yes, it’s an underground club because there are not enough venues get quality feedback from investors. i have been trying to get some level of quality feedback, but all i got was how to CHANGE my model instead of ADJUST it. i have tried for 4 months to get something in return, only to be given the perverbial “let’s keep in touch” carrot.
so, i have also gone “underground”. once the investment community becomes more familial with entrepreneurs and gains a trustworthy relationship, instead of that of a shark, then i think entrepreneurs will come out. until then, i would rather just work on my software in my nice cozy chair and create real value :).
I believe we did discuss something similar to this in another post.
yes, it’s an underground club because there are not enough venues get quality feedback from investors. i have been trying to get some level of quality feedback, but all i got was how to CHANGE my model instead of ADJUST it. i have tried for 4 months to get something in return, only to be given the perverbial “let’s keep in touch” carrot.
so, i have also gone “underground”. once the investment community becomes more familial with entrepreneurs and gains a trustworthy relationship, instead of that of a shark, then i think entrepreneurs will come out. until then, i would rather just work on my software in my nice cozy chair and create real value :).
I believe we did discuss something similar to this in another post.
Manish, setting the sharks aside, I am sorry that there is not more entrepreneur to entrepreneur and technologist to technologist networking going on. There is a lot of experience and knowledge that could/should be shared between folks. Make the sharks earn their way into these circles…:)
Manish, setting the sharks aside, I am sorry that there is not more entrepreneur to entrepreneur and technologist to technologist networking going on. There is a lot of experience and knowledge that could/should be shared between folks. Make the sharks earn their way into these circles…:)
Matt-
Although I would hardly call SSA ($800m worth of software in the past 12 months, has 3,500 employees and a $1.4B market cap) or Navteq($3.92B market) “shadow” companies, I do think you hit the nail on the head with your statement:
“-The Midwest is the largest medical device hub in the US (roughly $82B in annual sales).”
That’s what is casting the shadow. The huge biomed industry is “overshadowing” much of the other technology sectors. Just a look at the local incubators and “technology” centers, most are dominated by either biomed or “advanced materials” another “new” technology paying homage to some of the midwest’s famous “industrial belts” (rubber steel, etc.). When you see the administrators of these incubators and centers with 25+yrs experience, you can bet it is in an industry that has come and gone.They have very little knowledge of emerging technology trends or markets.
Even though they are “really nice” people, (because they are midwesterners!), most midwestern VCs know very little about the Internet or heavy enterprise technology (at least the ones I have met here in Ohio)
The midwest holds on to its heritage. It likes its roots in traditional manufacturing (thus the med device market). Intangible ideas such as software and web services usually leave midwest VCs in a haze.
That is a shame too, because there are some very cool things going on at Purdue and U. of Chicago, Argonne Labs, etc.
One of my biggest complaints is that the midwest has poor “scouts” when it comes to Internet. If you get a chance, read the book, “Moneyball” (Michael Lewis). I t talk about how the Oakland A’s have been successful despite their finanacial handicaps, because they focus on a “new” method (one developed by Bill James 25yrs ago) to scout and recruit talented, undervalued players.
Midwest scouts tend to use the same “old school” criteria for selecting talent. It is my contention that the midwest VCs need to start looking for talent in non tradtional areas and through non-traditional methods.
Matt-
Although I would hardly call SSA ($800m worth of software in the past 12 months, has 3,500 employees and a $1.4B market cap) or Navteq($3.92B market) “shadow” companies, I do think you hit the nail on the head with your statement:
“-The Midwest is the largest medical device hub in the US (roughly $82B in annual sales).”
That’s what is casting the shadow. The huge biomed industry is “overshadowing” much of the other technology sectors. Just a look at the local incubators and “technology” centers, most are dominated by either biomed or “advanced materials” another “new” technology paying homage to some of the midwest’s famous “industrial belts” (rubber steel, etc.). When you see the administrators of these incubators and centers with 25+yrs experience, you can bet it is in an industry that has come and gone.They have very little knowledge of emerging technology trends or markets.
Even though they are “really nice” people, (because they are midwesterners!), most midwestern VCs know very little about the Internet or heavy enterprise technology (at least the ones I have met here in Ohio)
The midwest holds on to its heritage. It likes its roots in traditional manufacturing (thus the med device market). Intangible ideas such as software and web services usually leave midwest VCs in a haze.
That is a shame too, because there are some very cool things going on at Purdue and U. of Chicago, Argonne Labs, etc.
One of my biggest complaints is that the midwest has poor “scouts” when it comes to Internet. If you get a chance, read the book, “Moneyball” (Michael Lewis). I t talk about how the Oakland A’s have been successful despite their finanacial handicaps, because they focus on a “new” method (one developed by Bill James 25yrs ago) to scout and recruit talented, undervalued players.
Midwest scouts tend to use the same “old school” criteria for selecting talent. It is my contention that the midwest VCs need to start looking for talent in non tradtional areas and through non-traditional methods.
Michael, great comments. I do believe that the entrepreneurial talent is here. As you said, because there are not an over abundance of start-ups, they must be hanging out elsewhere. Since VC is a pattern recognition business, VC’s tend to look for analogs (or similar experience bases). Pulling bright, unproven people from elsewhere is clearly more difficult. Finding a way to identify talent this way would be very advantageous.
Regarding SSA and Navteq, I refer to them as Shadow Tech because, of the last 20 people I asked here, only 2 had heard of SSA and 4 knew that Navteq was a) in Chicago and b) as large as it was. That is a sign (amongst many) that communications channels within the tech community is broken.
Michael, great comments. I do believe that the entrepreneurial talent is here. As you said, because there are not an over abundance of start-ups, they must be hanging out elsewhere. Since VC is a pattern recognition business, VC’s tend to look for analogs (or similar experience bases). Pulling bright, unproven people from elsewhere is clearly more difficult. Finding a way to identify talent this way would be very advantageous.
Regarding SSA and Navteq, I refer to them as Shadow Tech because, of the last 20 people I asked here, only 2 had heard of SSA and 4 knew that Navteq was a) in Chicago and b) as large as it was. That is a sign (amongst many) that communications channels within the tech community is broken.
Well, thank god for Ron May to dispense with the shadows.
Well, thank god for Ron May to dispense with the shadows.
Our challenge in the Midwest tech community is to get more reporters covering our community, if for no other reason than to help us all better understand what companies and entrepreneurs are in our backyard. Ron is one of few that has continued to cover the beat post bubble. He does a great job getting into the heart of the action. Though some might not enjoy being on the wrong side of one of his pieces, I would argue that he has had an impact in making our local community more transparent.
The Sun Times and Crain’s have also generally been active and more open to cover tech. Unfortunately, Tribune sees its charter as being focused more on larger, public companies. Hopefully, that will change.
Our challenge in the Midwest tech community is to get more reporters covering our community, if for no other reason than to help us all better understand what companies and entrepreneurs are in our backyard. Ron is one of few that has continued to cover the beat post bubble. He does a great job getting into the heart of the action. Though some might not enjoy being on the wrong side of one of his pieces, I would argue that he has had an impact in making our local community more transparent.
The Sun Times and Crain’s have also generally been active and more open to cover tech. Unfortunately, Tribune sees its charter as being focused more on larger, public companies. Hopefully, that will change.