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$1.6B in funding and $7B in exits: Chicago tech just had its best year ever

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Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#61

Post by kasey_junk »

spamizbad wrote: post #44

Eh, three things really grind me gears about the tech scene in Chicago. 1) Lots of mediocre entrepreneurs that seem to have the same story: - Little to no hard skills. - Probably got an MBA from a good B-school - Did a stint at a consulting firm and is going to outsmart the competition with all the wisdom they gained at Accenture, McKinsey, BCG, Bain, or some big IL firm. - Does NOT have a technical co-founder but is…

Hah. I worked for that startup before I moved to Chicago. I suspect that doing SV style startups is something that is hard to do outside of SV and as it gets "taught" in B-schools around the world more and more people will try to emulate it poorly.

Maybe I run in the wrong circles, but developer compensation is actually slightly elevated due to the trading houses. This is cyclic to some degree but when trading houses are flush they tend to be able to just come over the top of other businesses (and they have a culture of doing so). I think that also depresses the value of "equity" compensation. Lots and lots of developers in Chicago actually know how options work (how to price them etc) and are weaned on a diet of cash bonuses. It makes equity packages unattractive to that class of developer. Maybe that has a trickle down effect that causes equity to not be a major compensation component?

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#62

Post by kasey_junk »

deet wrote: post #48
spamizbad wrote: post #44

Eh, three things really grind me gears about the tech scene in Chicago. 1) Lots of mediocre entrepreneurs that seem to have the same story: - Little to no hard skills. - Probably got an MBA from a good B-school - Did a stint at a consulting firm and is going to outsmart the competition with all the wisdom they gained at Accenture, McKinsey, BCG, Bain, or some big IL firm. - Does NOT have a technical co-founder but is…

I'll offer a hypothesis to explain #1: It's because Chicago's culture is excessively risk averse. There seems to be a tendency to seek permission or acceptance from peers and others before taking a risk (either in business, fashion, life, whatever). This is actually great for bootstrapping, because it keeps you in touch with the real world and immediate customer demand. But it leads to fewer qualified, technical peop…

>It's because Chicago's culture is excessively risk averse.

Again this seems like selection bias at play. Chicago's history is actually built on the back of excessive risk taking, not risk aversion. Its a cultural touchstone that is built into the cities image.

And if you look at areas outside of the web, there have been huge payouts for risk taking very recently (trading is the most obvious one).

I suspect that what people are saying is "Chicago doesn't do as good a job of building SV style startups as SV. The kind that is based on a constant flood of inexperienced dev talent, high turn over, and equity based compensation. Due to this there are very few blockbuster technology firms and relatively fewer people with that kind of experience to lean on when trying to emulate the SV model."

I think that is probably a fair assessment, but I also think that it is generally a bad idea to try to emulate the SV model, when for the price of a cross country voyage, you could be in SV.

SV has similar problems in the reverse direction. Talk to bootstrapped founders there some time. They walk around feeling like they have 3 heads. And don't get me started about the misconceptions of the way capital markets work. Having been pitched a couple of SV startups that were going to disrupt commodities trading, I can assure you misconceptions about how "business" works go both ways.

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#63

Post by kasey_junk »

ForHackernews wrote: post #54
encoderer wrote: post #37

My impression is that in Chicago -- and really everywhere outside the SF BA and NYC -- has much weaker comp for engineers. It makes sense, really. By far the majority of SE jobs in these places are in IT departments writing line of business software. These are Java and .Net shops usually and anecdotally it seems they pay from $60-90k. The companies where engineers are profit centers -- web startups and software compa…

I'm getting $75k as a Python engineer with 5 years experience. Am I absurdly underpaid? My job feels easy, I have flexible hours, little oversight, independence to build cool things, good benefits, and I feel very lucky that anyone would pay me so much money to sit in a climate controlled office playing with a computer.

As with any market based pricing its hard to say whether the price is right or wrong. Because the real price is what the market will bear.

I will say, for the broad outlines that you've given that is a low compensation figure. And projecting a bit, I can probably figure out why. First you said yourself, that you don't value yourself much more highly than you are currently getting paid. Why should anyone else?

Secondly, the way you present your product (Python engineer) lowers the prestige/premium it should cost. First, but least importantly, because Python, in general, pays slightly less than other technologies. Second, and much more importantly, being a programming cog to be placed into a programming assembly line is much less valuable than being a business problem solver that uses and builds technology.

I'd recommend going over to patio11's blog and reading:

http://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-pro...

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#64

Post by chriscampbell »

rayiner wrote: post #35
bunderbunder wrote: post #13

Earlier quoted context omitted.

Just looking at racial demographics, the level of diversity is about the same, it just skews differently. The % white and latino are about the same, but Chicago has as many black folks as San Francisco does asian folks, and vice versa. San Francisco's quite a bit more wealthy, though - median household income upward of $73k vs $47k. Perhaps that contributes to more of a perception of diversity for certain folks. Chic…

> San Francisco's quite a bit more wealthy, though - median household income upward of $73k vs $47k. That $2k-ish per month is entirely eaten up by the cost of housing. Median rent for a 2BR in SF is $4,000/mo. Chicago is a little over half that. Not to mention much lower taxes than in California.

Chicago apartments are way cheaper than $2k a month. Most of my team pays less than $1k in great neighborhoods such as Lincoln Park and Wicker Park. If you want a building with a pool, doorman, gym, etc. then you can spend $2k a month but you would have to try to find a place that expensive.

To give perspective in Chicago $4k a month can you get a modern 3,000 sqft home or the penthouse in a swanky building vs a studio/ 1br in SF.

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#65

Post by selectodude »

bunderbunder wrote: post #13
ingenieros wrote: post #7

Earlier quoted context omitted.

"Not as socially, ethnically or culturally diverse as many other tech hubs." Chicago has world class museums, music venues, restaurants and ethnic enclaves like Ukrainian Village, Maxwell St., Devon, Pilsen.. and you mean to tell me there's more diversity up in the bay area? LOL

Just looking at racial demographics, the level of diversity is about the same, it just skews differently. The % white and latino are about the same, but Chicago has as many black folks as San Francisco does asian folks, and vice versa. San Francisco's quite a bit more wealthy, though - median household income upward of $73k vs $47k. Perhaps that contributes to more of a perception of diversity for certain folks. Chic…

If a 10 minute subway ride to Wicker Park is too far outside downtown, I don't know what to say.

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#66

Post by rayiner »

deet wrote: post #48
spamizbad wrote: post #44

Eh, three things really grind me gears about the tech scene in Chicago. 1) Lots of mediocre entrepreneurs that seem to have the same story: - Little to no hard skills. - Probably got an MBA from a good B-school - Did a stint at a consulting firm and is going to outsmart the competition with all the wisdom they gained at Accenture, McKinsey, BCG, Bain, or some big IL firm. - Does NOT have a technical co-founder but is…

I'll offer a hypothesis to explain #1: It's because Chicago's culture is excessively risk averse. There seems to be a tendency to seek permission or acceptance from peers and others before taking a risk (either in business, fashion, life, whatever). This is actually great for bootstrapping, because it keeps you in touch with the real world and immediate customer demand. But it leads to fewer qualified, technical peop…

> It's because Chicago's culture is excessively risk averse

I don't know if the culture is that much more risk averse than SF, but rather that the risk calculation is different. There's such a big tech ecosystem out in SF that "failure" as an entrepreneur might mean raising more money for the next project, or failing that BigCos fighting to hire you. Without the same depth of tech infrastructure, the downside risk is much higher in Chicago (or really, anywhere that's not SF).

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#67

Post by icebraining »

hueving wrote: post #58
icebraining wrote: post #32

Earlier quoted context omitted.

Remember, you're talking about the 90s which had as a flagship startup a company that sold pet food. Broadcast.com alone was purchased for $5.9B (eq. to $8B of today's money), and all they did was stream video over the Internet.

All Youtube does is stream video over the internet. Your argument isn't that convincing.

Yes, and Youtube isn't making hover cars nor extending life. Are you sure you read the context of my reply?

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#68

Post by eldavido »

Chicago has a significant advantage: it's more "normal" in that it's more representative of the United States, than the Bay Area. This provides a fertile ground for new companies to emerge:

  - Childcare / anything to do with children (e.g. Sittercity)
  - Things for people without college degrees -- SF has 48%    [1] degreed workforce vs. 28% [2] nationally.
  - People in Chicago/the rest of the US have houses; over 80% of SF's population lives in apartments. There's tons of businesses involving housing including lawn care, general home improvement, construction, contracting, etc.
  - People in Chicago have cars; many people in SF don't drive (surprised Uber came from here? I'm not)
  - Anything involving small business
  - Also, world-class financial center
There are other things, the point is to focus on your strengths, not try to be a knock-off of something else (an idea from Richard Florida's "Who's Your City", a book about the relative strengths of various cities)

[1] Saw this in Business Insider a while ago [2] "Coming Apart" by Charles Murray

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#69

Post by larsberg »

spamizbad wrote: post #44

Eh, three things really grind me gears about the tech scene in Chicago. 1) Lots of mediocre entrepreneurs that seem to have the same story: - Little to no hard skills. - Probably got an MBA from a good B-school - Did a stint at a consulting firm and is going to outsmart the competition with all the wisdom they gained at Accenture, McKinsey, BCG, Bain, or some big IL firm. - Does NOT have a technical co-founder but is…

> I know these people exist everywhere today but there's an unusually large number concentrated in Chicago. Must be something in the water?

Finance is also an extremely tempting lure. The pay is quite good (e.g., significantly better than Google), the hours are better, and the firms are generally supportive of external work. Many of the finance firms my friends work at (I've lived in the Chicago area most of my life) allow/encourage/hire people to serve on the C++ standardization committee, were co-founders of major open source projects such as R, etc.

It's hard to lure people away from jobs like that where you're paid a lot and have a ton of freedom for a potential exit that's smaller than what you currently make, unless your startup becomes Google.

Re: $1.6B in funding and $7B in exits: Chicago tech just had its best year ever

#70

Post by [deleted] »

spamizbad wrote: post #44

Eh, three things really grind me gears about the tech scene in Chicago. 1) Lots of mediocre entrepreneurs that seem to have the same story: - Little to no hard skills. - Probably got an MBA from a good B-school - Did a stint at a consulting firm and is going to outsmart the competition with all the wisdom they gained at Accenture, McKinsey, BCG, Bain, or some big IL firm. - Does NOT have a technical co-founder but is…

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