
Why Chicago Doesn't Produce Innovative Startups: Midwest Mentality - ezl
http://www.pandodaily.com/2012/03/18/the-midwest-mentality/
======
SMrF
It's insulting to be lumped into a stereotype, so it's hard for me to not get
defensive. Chicago is one of the greatest cities on the planet. The population
is very diverse. It's why I moved here in the first place and why I just
bought a house here. So it's pretty strange for me to hear someone say we're
all "midwestern". But we're used to name calling in the Windy City, so I'll
let it go.

Bottom line the startup ecosystem in Chicago doesn't have it's fair share of
Webvans for one simple reason: people go where the money is and the money is
in Silicon Valley. It's an accident of history that all the money is in
Silicon Valley. "Midwestern culture" has nothing to do with it.

Or maybe everyone is starting up in Silicon Valley because of the weather, I
think PG mentioned this once. Well to that I say it's 70 degrees and sunny in
Chicago as I type this...in the middle of March. Maybe global warming will
mean we get a few pets.com here in the midwest.

~~~
mml
As we say in Minneapolis, "The weather keeps the bums out", but we're usually
talking about Chicagoans ;)

------
mml
As a midwestern startup-y guy, with coastal exposure, and a number of friends
and acquaintances who are trying to, and/or have landed vc, some of whom have
moved to the coasts, some who have not: I think this article is more self-
congratulatory bullshit from coastals who thing the sun shines out of their
nether regions.

Some points:

1\. It's _very_ hard to raise vc out here. We like it that way (at least I
do). There, I said it. The pie in the sky bay area nonsense ideas just don't
hold water here. Nor should they there, but they do. Twitter couldn't happen
in the midwest, it shouldn't have happened anywhere else either.

2\. Stealth mode. anything you do here is stealth mode. Probably forever.

3\. LOTS of startups move from here to the coasts when they start to pick up.

4\. As a midwestern startup, you need business presence on one or more coasts,
so there are significant efficiencies to be gained by moving your entire
operation there. Unfortunately, everyone else has the same idea, so rents are
huge, and the giant money you have to pay the local talent just winds up in
landlords' pockets in the end.

5\. If you can do startup-y stuff from the midwest, for coastal clients, you
will live like the king of france, in your giant, and incredibly cheap house.

6\. Many people dislike California, and/or Californians.

7\. If you can make it here, you can make it anywhere.

8\. Many natives of the coasts have never even been to the midwest. Ever. The
midwest is an enormous geographical area, full of enormously different people.
To paint the midwest with a single brush is incredibly ignorant and
patronizing.

9\. Many midwestern families haven't lived on farms for hundreds of years.
Just thought I'd mention it.

10\. Working insane hours just means you're young. Kids do that in flyover
country all the time, usually to make up for the crap quality of their code in
volume.

</rant>

~~~
wj
Any insight into the dislike of California and/or Californians? (I've noticed
that too while visiting the Midwest.) Your eighth point about stereotyping of
the Midwest seems to be what people are doing about California.

A slight replacement to your sentence "California is an enormous geographical
area, full of enormously different people. To paint the midwest with a single
brush is incredibly ignorant and patronizing." California is mostly
agricultural land. It has some large cities on the coast. Los Angeles is one
of the most diverse cities in the U.S. with wonderful cultural pockets all
over the place (Koreatown, Chinatown, Little Ethopia, Little Tehran, Little
Osaka, etc.)

Also, a lot of people's travel is predicated on a need to travel somewhere. If
you don't have family in a place, or do a school trip there, or business trip
when you're older, there is a good chance they won't vacation there.

~~~
saalweachter
It's mainly sour grapes. California has ascended while the Midwest has
declined.

On the farm front, there was a bit of a migration of second sons from the
Midwest to California in the 50's, I believe. Some of those who left
(abandoning their Midwest roots, traitors) became rich; some of those who
stayed became poor. The poor cousins on the family homestead in Minnesota or
Indiana look at the rich cousins on new farms in California and say, we
wouldn't want to live there anyway.

Economically, in the last thirty years the Midwest has turned into the Rust
Belt, while California has become Silicon Valley. More resentment builds.

On the wine front, the Ohio River Valley was once wine country, centered
around Cincinnati, perched to rival the Rhine. Now it's all Napa, Napa, Napa.

But hey, at least in the Midwest you don't have to put up with _Californians_.

~~~
angersock
Hey, how's that state budget doing
([http://www.lao.ca.gov/reports/2010/bud/fiscal_outlook/fiscal...](http://www.lao.ca.gov/reports/2010/bud/fiscal_outlook/fiscal_outlook_2010.aspx))?

And those friendly gun laws? And quality police force?

------
cantastoria
I think pinning this on a "Midwest mentality" is really missing what is
probably the biggest reason. _There is no tech industry in the Midwest_ If
your starup fails there isn't another cool startup down the street you can
work at instead (a la SF, NY, Boston, etc...) Startups here (I'm in Kansas)
are real small businesses that either make money and allow you stay or fail
and force to you move. You simply can't wait two years to figure out your
business model or hope for a buy-out. It's just that simple.

~~~
jremsikjr
I'll go ahead an disagree here from Madison, WI as well. In fact, there are no
less than three cool startups within a block and a half (Murfie.com,
ContextClothing.com, Asthmapolis.com) of our offices. There is plenty of
opportunity to land if your startup suddenly goes away.

And that doesn't even take into account the option of working remotely.

~~~
cantastoria
But none of those companies are "twitter-like". They all have fairly low-risk
and clear business models. The lede of the article is essentially why aren't
there more businesses like Twitter starting in the Midwest. If a number of
high-risk twitter-style startups descended on Madison tomorrow do you think it
could absorb all the out of work employees when/if they got laid off?

------
dkrich
It is hard to take this guy seriously while looking at that profile pic.

I find it kinda funny that he states that midwesterners focus on profit to the
exclusion of innovation, and cites Twitter as an example of a company that
couldn't have been create there. Yet Twitter is hardly what most would
consider an innovative startup, and it actually gained most of its early
traction in Austin, Texas, at SXSW. All this while ignoring companies like
Apple, Intel, Cisco, and HP that really built what we consider the high-tech
startup ecosystem of Silicon Valley that we think of today. Does he really
believe that these companies weren't worried about making a profit?

I think it is kinda dumb to loop a company like Twitter, which is really not
all that innovative at all with the companies that produce hardware and health
care solutions. Most people pursuing startups could build the exact same web
or smartphone app anywhere else. Chicago, Seattle, or Kansas City. Location is
really an excuse. I know plenty of people who have moved to the Valley to
pursue startups simply because "if you're serious about your startup, you have
to be there." Or because they are hoping to find cofounders, or funding or
some other thing they view as a prerequisite for success. The reality is that
great innovators made SV, not the other way around. If people think they are
going to go some place and morph into brilliant entrepreneurs because of their
environment, they are misguided and probably going to be disappointed.

------
dwrowe
As a Nebraskan, I resonated with this - big time. My first question is
_always_: "How does it make money?", and I've shied away from ideas that had
no clear money-making potential. It is likely the predominant 'agricultural'
culture.

~~~
randomdata
> It is likely the predominant 'agricultural' culture.

Ironically, farming is kind of like a startup. You raise millions in capital
to get started, and then you work for many years without making a cent in
hopes that one year you'll finally hit it big.

With that said, I farm in Canada. Perhaps the subsidies you American farmers
have access to changes the dynamics.

~~~
eurleif
Pardon my ignorance, but how does a farmer hit it big?

~~~
randomdata
Exceptionally high yields, combined with unnaturally high prices. It happens
sometimes. The people growing white beans in my area did amazingly well last
year, seeing $1,000/acre in net profit, where normally you make little to no
profit.

Others bank on the sale of all the assets when they retire. A farm that cost
$25,000 30 years ago is now worth $1.6M. But when you are starting out, you
have no idea what the future will hold. Just as many defaulted on their loans
for those $25,000 farms and are no longer in the business.

------
joedev
So funny to hear "Chicago" and "the midwest" in the same sentence. Chicago is
different enough from the Midwest that usually organizations serving both have
both in their name to make it clear they serve and understand the differing
needs and mentalities. Though Chicago and the midwest share the same
geography, they do not, thank goodness; share the same mentality. I can say
that as a proud Midwesterner.

------
krsgoss
Clearly the author can make broad sweeping generalizations after having talked
to a few people in a city of 9.8M.

The logic that 9 to 5, work, life, kids and profitability can't lead to
anything "revolutionary" (whatever that may actually be) seems dubious.

Finally, assuming everyone there operates under a single "midwestern" mindset
and philosophy also seems ignorant.

~~~
dwrowe
I don't think that is the authors point. I think the point is that the
_majority_ of startups you see on the coasts wouldn't _likely_ succeed or
originate in places like Chicago, Omaha, Kansas City, Minneapolis because
people are less open to risks of that nature. There are new businesses /
startups in the Midwest but the majority worry about the business plan from
the outset, rather than later. I didn't read the article as negative on the
Midwest, rather, showing the differences in the areas.

~~~
krsgoss
Perhaps it was the journalistic tone that the author presents while relying on
stereotypes and massive generalizations that makes it difficult to take
seriously.

------
kristianc
I was rather looking forward to why Groupon was such an exception to the rule
("more on that later")

Sadly, "more on that later" turned out to be Pandospeak for "That doesn't fit
my argument, so I'm going to gloss over it."

------
kemiller
That actually sounds pretty great. The Silicon Valley Mentality is what it is
because it advantages the venture capitalists and the small number of
companies who "made it." I think for a lot of the rank and file, not to
mention the 90% of entrepreneurs who don't make it, it is a net loss.

------
christopherslee
another way to phrase this is that not everyone drinks the silicon valley
kool-aid that raising money equals success.

------
fudged
Counterpoint: <http://37signals.com/>

~~~
hapless
37signals had an obvious business model and revenue stream on day one.

It's pretty much the perfect example of the difference the author is trying to
draw: google and twitter were highly experimental ventures with no visible
means of support in the early days. 37signals was explicitly a paying
business.

------
wj
As somebody who has lived on the West Coast my whole life but has married into
a very large family in St. Louis I've spent a lot of time there over the past
five years. Anecdotal evidence disclaimer.

I think there isn't so much a fear of failure as much as a fear of risk. I
think people doing the startups aren't afraid of failure. It is their friends,
families, and community that might not view taking a risk as an intelligent
move. When I was discussing the side company that I was trying to start I was
immediately dismissed by a few people. I think their mindset might still be in
the brick and mortar style of business. Some people might take that negatively
while others embrace it as a challenge. I'll show them!

One other thing that I've noticed is that there is a certain energy in some
cities that I haven't found in St. Louis. There is electricity in San
Francisco, Portland, Los Angeles, New York, and London that isn't there. One
that feels to me that maybe the person sitting at the table next to you in the
coffee shop might be a great connection. That you're always one chance meeting
away from a great opportunity.

I'm not sure if Chicago is like this but many people in St. Louis (well into
their 30s) still form opinions based on what high school you went to. In fact
it often the first question out of their mouths after introductions. With my
background I find that custom weird if not unhealthy.

Also, it does seem to me that people as a whole do get married earlier there
than on the West Coast. At least among the people that I have met. Having a
family and doing a startup is tough (particularly if it is on the side of a
9-5 job) but people make it work.

~~~
TDL
I have heard about the high school thing from others from St. Louis (or people
who have lived there.) I believe that is unique to St. Louis. In Chicago, we
do ask what high school somebody went to, but more often than not it results
in a good nature ribbing than anything else (kind of like the South side vs
North side, all in good fun.)

------
MarkPNeyer
his point about the work ethic being a strong point rings for me. chris
wanstrath is from cincinnati, ohio and pj hyett is from north dakota.

the midwest would be a great place to build startups, as long as you tailored
them to the pragmatic mentality there.

for example, what i'd like to do if i get the money to become an angel
investor is start something like an incubator there, but do it differently.
instead of buying a small amount of equity in a team to work on their cool
idea for a location-based mobile social realtime group deal game platform
service API framework, i would pay people a decent salary (which is still
significantly lower than a startup salary in silicon valley) to work on
building niche services for particular established industries. as they worked,
they would gain equity that would provide dividends. i would position this
company primarily as an alternative to college - you'd get paid in both salary
and equity to learn to program, instead of putting yourself tens of thousands
of dollars in debt to study amortized analysis of fibonacci heaps - which is
awesome but kind of impractical at the moment.

so instead of building a generalized web analytics platform and trying to
compete in that large space, build a platform tailored to the construction
industry, with feedback and metrics designed just for them. couple it with an
ipad app for foremen and you have a product that will never be the next
google, but can earn money from day one.

if you can develop a reputation for building lots of profitable companies that
serve real needs (something else midwesterns are big on), you could attract a
lot of funding from investors in the area (they do exist) who are more
interested in serving human need than earning lots of money.

------
peg_leg
I can sum it up in three words: Prarie Home Companion. Listen to that and
you'll understand. Especially the part where Garrison has a fake phone
conversation with his mom. We aren't raised to be innovators, we aren't raised
to be on the edge. We're raised to do well in school, help our family, and
just be good people. Can't say that about Zuckerberg. He dropped out of
school. Not supposed to do that. Mom? Mom?....

------
samirageb
As a Chicagoan trying to build a social network, I can say that this article
hits a little too close to home; our ecosystem is completely dysfunctional. Go
to a start-up event, and you'll see mostly service providers and FTEs that
aren't willing to get engaged in anything new unless there's an income
attached to it. Talk to investors, and they're mostly looking for traditional
income streams or cashflowing properties. Any tech talent is either still in
college (not terribly useful), or happily employed at corporations and NOT
looking to change their disposition. It's been an ongoing struggle.

I worked in Santa Clara for 1.5 years and I love the Nor-cal energy, and while
I there are plenty of pluses to Chicago (and the Midwest) in general, I must
agree that a Twitter or FB would probably never have been successful here. For
any Midwesterners reading this that disagree, I would ask if they've ever
tried to rally Midwest resources around a project that isn't creating revenue
within 90 days of launch.

Btw, if your an HNer in Chicago, or a tech/design resource interested in
chatting let me know :)

~~~
bookshlf
Reach out, happy to network.

------
TDL
I've commented about this in the past. A Chicago angel investor friend of mine
once made the comment that the local investment community was always looking
to talk, but not willing to follow through. There is a conservatism here that
allows people to hide behind the conventional; it's practical, ergo the right
course of action.

I have friends and family who think I "lack experience" and "don't know about
the world" because in the past 8 years I have been a trader, been involved w/
two start-ups, and went back to trading; all that effort for little (actually
no) financial reward. What they can't grasp is all that is involved with the
entrepreneurial enterprise. In the Chicago area, an entrepreneur is someone
who buys a franchise or an existing small business (this is not a knock
against those folks.)

That is why I'm moving to Austin (not the Valley, but not Chicago either.) I
also want make clear: I love this town, but it's becoming like New York (a
great place to live if you are rich and a great place to visit.)

------
mml
Also, I should point out, the VC who realizes there's a vast, fairly untapped
pool of talent in the midwest, will make a killing.

------
vannevar
I suspect Silicon Valley industry has shaped Silicon Valley culture more than
the other way around. After all, much of California was settled by displaced
midwesterners during the Dust Bowl. Silicon Valley (does anyone there even
touch silicon anymore?) became the tech capital in much the same way that
Detroit became the auto capital: historical accident. Once tech became
established there, it became a virtuous cycle as employees of successful
startups cashed out and became the founders and investors for the next
generation. Now there's a mature network of venture capital, skilled workers
and emergent tech culture that would be difficult for any other city to catch
up to.

------
mindcrime
Interesting. I'm camping out in Chicago for the next few months doing some
consulting for my $dayjob, and I'm hoping to learn more about the Chicago
startup scene while I'm here. If the locals really do have that "pragmatic,
Midwest mentality" it will be interesting to talk to them and see how their
viewpoints contrast with those of us from North Carolina. I'm actually
wondering if some of the investors here might not be more friendly to the
kinds of things I'm interested in (enterprise software) than the investors
back home.

At any rate, it's going to be fun meeting some Chicago based HN'ers and
hanging out a bit.

~~~
there
There is an hn-chicago mailing list, but it doesn't see any traffic. The last
meetup that I know of around here was in December but it had a pretty decent
turnout.

------
fleitz
This article might be something other than a massive troll if it actually
included an objective framework for what constitutes 'innovation'. As it
stands it's a tautology, it isn't even wrong.

------
bdunbar
It's down to the weather.

But this is not a bug, but a feature.

Team an Idea Man from the Valley up with an Ops guy from the Midwest and
you'll have excellent software on infrastructure that won't melt.

And you'll always have good backups.

------
ajdecon
Having lived in the Midwest most of my life, a lot of the talk about the
culture does ring true. At least enough to make me smile. But I'm not sure the
problem of a startup ecosystem that won't take off is because of that culture,
because it's not unique to the Midwest...

Serious question: is there _any_ region that regularly produces "tech first,
business model second" startups apart from Silicon Valley? New York, maybe?
(Though you get "Why New York Sucks" posts too.) If this particular brand of
lightning has only struck once or twice, the question isn't "why does
everywhere else suck?" but "what kind of bizarre conditions made Silicon
Valley happen in the first place?"

I suspect that this is a strongly path-dependent phenomenon: part culture and
attitude, but part historical accident. If so, it's going to be very difficult
to duplicate.

 _Edit: typo_

------
rooshdi
tldr; stereotypes are stereotypes.

------
PaulAnunda
it's just noise guys. the writers will keep writing, and the builders will
keep building.

------
Harkins
Can we make it part of the midwest mentality to discourage linkbait
overgeneralizations?

------
xiaoma
Chicago isn't mid-west. It's east, if anything.

------
michaelochurch
VC. Or, lack thereof. What VC there is goes into older, more established
companies and founders.

There isn't a lack of talent. Far from it, in my experience. (Actually, I
think Minneapolis and Chicago would be great places to start a startup, on
account of talent and COL. If the three worst things about a place are
December, January, and February, you live in a great location.) Nor is there a
mentality problem among the people who would be founders. It's a funding and
access problem.

It's not just Chicago, of course. This funding problem is the reality pretty
much everywhere and for everyone except extremely well-connected, upper-
middle-class kids in California.

If I had the money, though, I'd drop a wad of cash on a Midwestern city like
Madison or Minneapolis and try to build a Silicon Valley there-- not that
there's anything wrong with the existing one, but just because I don't think
it's healthy to have most of our innovation in one or two locations, and a
place with low COL and high QOL might be a great place to start trying to do
something new and different.

~~~
tomjen3
Couldn't you dump the money on some place warm? Nobody is going to work in a
garage in Minneapolis.

That might actually have something to do with California -- even if you are
broke the weather is still quite good.

~~~
michaelochurch
The Minnesota winter is not as bad as it's made out to be. Yes, it's very
cold, but you learn how to dress for it and you do stuff outside anyway-- such
as an 8-mile hike I did in -10 F under 3 layers. Also, by this time of year
it's 40-50 and you can do pretty much any three-season outdoor activity.

IMO most Northern European winters are worse than Minnesota's-- not nearly as
cold, but longer (in Europe, it starts getting cold in October), darker, and
much cloudier.

~~~
tomjen3
I am European and I can remember winters that were so cold that I would forget
how it felt being warm (Scandinavia, not Siberia).

