
How Early Exit Disease Stunts the Growth of Midwest Startup Communities - mtviewdave
http://techcrunch.com/2015/11/16/how-early-exit-disease-stunts-the-growth-of-midwest-startup-communities/
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Jun8
Here's a Chicago Tribune story about Chicago's startup drain that was on the
front page recently: [http://www.chicagotribune.com/news/globalcity/ct-global-
city...](http://www.chicagotribune.com/news/globalcity/ct-global-city-talent-
drain-met-20151023-story.html)

It seems the most important issue is the chicken-and-egg problem: Chicago
doesn't have a large magnate company with lots of b/millionaire founders that
then fund the ecosystem. Groupon was once thought to be just that company but
hasn't turned out good.

The other problem seems to be plain and simple: being in the middle of nowhere
doesn't help. From the article:

"The University of Illinois at Urbana-Champaign turns out more engineering
graduates than any U.S. school except the Georgia Institute of Technology, yet
no tech scene has grown around it — or 140 miles north in Chicago. Fewer than
half of these engineers remain in the state while 10 to 15 percent have gone
to California in each of the past five years"

For a young person, there are many more opportunities to do sports (mountain
biking, hiking, skiing, kayaking) in other places.

As a final point: Chicago, long the city of broad shoulders, is not famous for
its counterculture, like Seattle or Portland is, so loses that chance for
attracting people, too.

~~~
klunger
Yes yes yes. I am from the Chicago burbs and a UIUC engineering alum ('09).
Even though I would have preferred to move back to Chicagoland, there were
simply not any relevant/compelling jobs in that area, or really anywhere else
in the state. Around graduation, I got offers in several different states and
inevitably moved. Most of my classmates - at least the ones who decided to
continue with engineering after graduation - did the same.

ps - Chicago might not be famous for counter-culture, but it has amazing live
comedy and various other fun cultural trends. It is a generally nice place to
live and I would have preferred to move back after graduation, if there had
been any good work for me there.

~~~
rhino369
I think there is a real opportunity for companies to exploit the talent that
is generated from Chicago and nearby universities.

Chicago doesn't just have Illinois, but UW Madison, Purdue, UMich,
Northwestern, etc. The Midwest is churning out tons of qualified engineers.

And the cost and quality of life is dollar for dollar the best in America.

Also the engineering culture is more geared to industrial and mature
technology companies and less to software. There are ton of engineers doing
jobs that are vital but HN would probably consider boring. That might explain
why there is less entrepreneurship. Engineers have work experience in and are
exposed to industries that don't easily lend themselves to entrepreneurship.

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strebler
Perhaps if the investors in these Midwest startups enabled founders to take
some funds off the table from a round, it could help to alleviate this
problem.

If founders have all the stress of low salary + not much savings + lots of
work to do + maybe starting a family, of course a $10M exit starts to look
good.

But if they're achieving good results, why not give the founders a small taste
of the billion dollar carrot?

~~~
tfe
The article actually suggests this near the end, and discusses some reasons it
doesn't happen currently.

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p4wnc6
I live in the Midwest and would happily consider living here long-term in
order to work at jobs like these, except that the jobs are generally terrible.
They don't pay well, even by lower-cost-of-living Midwest standards. Yet they
do all of the same nonsense that companies do in larger urban areas: open-plan
office layouts (even when private working space out here is much cheaper than
the already cost-effective prices you'd pay for it in a city), Agile/Scrum
crap, various over emphasized alcohol-based social functions, ping pong
tables, etc.

Why would a talented person stay around here for that? Most of us who like it
out here like it because it's _different_ than Silicon Valley or New York, and
it suits our preference better.

You're not going to win with the talented people in the Midwest if you just
try to make it feel like Silicon Valley Jr. -- you have to be different, with
a whole different ethos that's a bit more about the style of life here. Many
people choose to live in the Midwest because they like having more personal
space, they want to raise a family, they value frugality and consider cost-of-
living carefully, they might possibly actually want to own property some day,
and/or they just may not personally derive much value from urban amenities.

But I've never seen start-ups or tech businesses here aim at providing a kind
of working life that affords these values. It's all still the same "work hard
play hard" bullshit as if by making yet another app or something-as-a-service,
we're going to become masters of the fucking universe or something.

That stuff is already stupid even in the urban tech hubs. It just comes off
even dumber when you're farther away from the tech hubs.

At any rate, I question the article's claim that there's a talent problem in
the Midwest. The problem isn't that there are no talented people. The problem
is that companies are not providing the opportunity for a lifestyle that
matches up with the values of someone who would prefer to live in the Midwest.

If I have to work a million hours, put up with aggressive deadline culture,
deal with Agile/Scrum "sprint cycle" idiocy, and feign social interest in rock
climbing while I code or joining the same people I've been working with for 10
straight hours at a bar for 2 more hours of trite conversation where I'll be
judged by how much overt social signalling my alcoholic beverage of choice
emits, then fuck it. I'm just going to move to a big city and demand a big
city wage and career opportunities.

On the other hand, if you can give me what the big city folks can't, like say
a private office where I can actually get work done and feel productive
instead of listening to the person at the desk next to me chew potato chips,
or you can provide me with a work environment where 40 hours is exactly all
that's expected, and also is exactly what is _rewarded_ (i.e. you encourage
workers to have a substantial life outside of work), and I don't feel like
you're just doing a bunch of stuff like whisky night and ping pong to try to
affiliate with the cool kids in SV, then we could talk.

~~~
bkjelden
> Many people choose to live in the Midwest because they like having more
> personal space

I've been in the bay area for about a year now and this hits on what has been
by far the hardest part of the transition for me, and what will eventually
drive me away.

Things are so congested and crowded that it feels like some sort of dystopian
novel. And there's also this weird subliminal cultural value that people
actually _like_ it. I get judged when I suggest to people that continually
waiting in line for basic necessities is maybe a shitty way to live, and that
it'd be kind of nice to open my window and not look directly into my
neighbor's window. Having come from a very rural upbringing, it's hard to not
feel like an outsider.

The rest of your analysis is spot on in my experience too. Some of the most
talented people I know live in Nebraska because they want to be close to
family. And while the cost of housing is drastically lower, companies also
tend to not pay very well at all - and the successful ones instantly try to
emulate SV culture instead of having the confidence to be themselves and
embrace their own local culture.

~~~
eplanit
In one year's time you have observed well and grown wise. I moved to the Bay
Area 18 years ago -- I share those observations and agree very much with your
conclusions.

> ...weird subliminal cultural value that people actually like it. I get
> judged when I suggest...

Yeah there's a bit of a cult to the place, for sure. I guess it requires
believing in the Unicorns that the author of the OP alluded to.

> Some of the most talented people I know live in Nebraska because they want
> to be close to family.

Yes, and in my experience I find the much of the best talent I know in my
clients' businesses in Southfield Michigan and in Japan (auto tech. industry),
and for similar reasons -- strong family ties.

~~~
bkjelden
Thanks. It's been a rough few weeks and it helps to hear that I'm not the only
one who feels this way.

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twoquestions
I think Midwesterners are just too conservative for a startup scene to take
root here. Venture capital, computers in general even are too new of ideas to
depend on. We're used to industries springing up around us, then running away
to China or California, so investing in a 10-year plan when the next market
crash could destroy the industry utterly seems kind of stupid.

Besides, as the article said, $10M is more than enough to look down on your
neighbors for the rest of your life, what more benefit could $10B give you?

~~~
jerf
Well, conservative's a hard call. It's not so conservative that startups or
new businesses are impossible, and it's not like everyone you encounter
socially will look befuddled at you if you claim to be working for yourself.
It's still the US here, and not some culture completely unfamiliar with the
entire concept of working for yourself.

It's just that if you ask anyone around here "Would you like $5 million now,
or a chance at an unknown percentage of somewhere between $5 billion and $0 in
10 years?", even the entrepreneurial types are going to take that first one
most of the time.

Interesting thought: $5million is totally "f you" money around here in the
Midwest; that's retire instantly for a fairly nice lifestyle, plus a quite
healthy buffer. In Silicon Valley, that's still nothing to sneeze at, but
it'll certainly seem like a lot less; a lot more people for your monkey brain
to see around you that are still richer, a lot of single houses that can soak
up that entire fortune and more, etc. You could retire instantly, but you'll
have a lot more pulling you away. I wonder if that has any influence in the
results?

And of course there's also the fact that anyone who won't settle for anything
less than the % at billions above will move to Silicon Valley. There's a lot
of places in the world where you can make a successful startup, sometimes HN
even has articles pointing that out, but there's not very many places you can
get the rocket-powered VC capital to either grow a unicorn horn or die trying.

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metalliqaz
When I read articles like this, all I can think about is Pretty Woman. When
the main character laments, "What do we do? We don't make anything." And the
response, "We make money."

I don't care for the culture of start-sell-repeat.

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karmicthreat
This hits close to home. I am a software developer in Grand Rapids, Mi and we
have a so so burgeoning startup scene here.

We have a couple incubators here but they are not particularly great and their
money is expensive with few useful benefits. We have a decent concentration of
software developers in town. Cheap office space and ok rents make boot
strapping a bit easier. But like everywhere else we don't have nearly enough
software developers here on the founders need to start scaling. I can think of
a number of companies in town that are having problems due to a lack of devs.

But at least we have large tech meetup scene that likes to share.

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phkahler
YC used to do one batch in CA and one out east each year. I see they've moved
both summer and winter to the west coast now. Was it that hard to get
established in two places that even they couldn't do it?

~~~
nostrademons
It was because Paul and Jessica were having a kid, and it's disruptive to a
child (not to mention quite a hassle) to shuttle between two coasts every 6
months. Palo Alto won out as the nice neighborhood to raise a family in. When
YC discontinued the Boston SFP, it was still largely run by the original
founders and didn't have many (any?) additional partners.

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slyall
Exactly echos complaints about the New Zealand startup scene. The catch phrase
here is "The three B" meaning Boat, Bach (holiday house) and BWM. Lots of
founders sell out for just $10-$30 million which sets them up nicely but often
means the startup/product gets buried inside a big company and jobs move
overseas

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shanemhansen
I know multiple amazing developers in the midwest. They work remotely for bay
area companies.

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timrpeterson
This also explains why nobody in the Midwest values academia, value isn't
imminent unlike hauling around rocks.

~~~
grillvogel
what are you talking about

~~~
timrpeterson
People in Midwest, I lived there from aged 0-22, value tangible things with
present day value.

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applecore
The simple explanation for this phenomenon: bad founders tend to sell early
(if they succeed at all).

