Catapult Co-founder Galen Mason talks Chicago and Silicon Valley


There has been a lot of talk going around, claiming Chicago may become the next Silicon Valley. Catapult Co-founder Galen Mason weighs in with his perspective on this common notion.

With all due respect, asking if Chicago can become another Silicon Valley, in many ways reveals a common and completely wrong stereotype - that Chicago thinks that it can be Silicon Valley.  That's crazy.  It's a bit like someone in Palo Alto hitting a three-point shot and then yammering about whether they've got the next Michael Jordan on their hands.

I do think Chicago can learn something from Silicon Valley and I think know-how and capital in Silicon Valley can add a lot of value to Chicago while earning tremendous returns in what is essentially an unfished pond.

Movements - or economic or cultural shifts, whatever you want to call them - are built from a group of highly motiviated people acting on opportunity.  Groupon's meteoric success (say what you will about the company): 1) sheds light on the existence of opportunity in Chicago (and really everywhere for that matter when it comes to web development or web enabled start ups), and 2) motivated some very smart people to go to work thinking about ways to do things that captialize on that opportunity. So now that the wheels are really in motion, what becomes of that process will, largely depend on what Chicago is already really good at.  That means a few things.  First, very big business - Chicago has a long list of Fortune 100 companies whose primary goal is to execute on its proven business mission (Kraft to sell food, Abbott to sell drugs, United Airlines to fly passengers etc).  I also include in this big business expertise some of the derivative and trading financial services businesses that exist here, but not New York City.  Second, a massive service industry which has grown up to serve those big businesess.  And, third, its simple geographic existence as a destination/urban center for the entire middle portion of the country.

Chicago's strengths, big business execution and service professionals, plus our Midwestern sensibilities have also been a bit of a hindrance in some ways too.  That is, there is a gulf (though it is shrinking) between big business resources and our home grown start up innovators.  Most big businesses don't know what to make of Chicago's start ups or how to take advantage of them.  Everyone in Chicago is excited about the new cool tech scene, but what exactly is it they wonder?  How would they get involved?  After all, it's crazy to not go work for one of the big businesses or service firms, right?  Furthermore, because they run Chicago's big businesses and service firms, this plays out personally with the executives and wealthy residents that make up our region's potential seed investors.  After all, their neighbors haven't made a living or purchased a second home because many millions of people clicked a like button.  That's currently not the case elsewhere - how many households in the Palo Alto suburbs do you think could attribute their income/wealth to a like button or something closely related to it?  So, in Chicago (and again this is changing) the initial overall impression of a "start up" is more akin to the kids that couldn't get in to college (or get that big company job) rather than wondering how these new innovations can be leveraged.

Big Chicago business does sometimes get involved.  But all too often it's an order from the CEO to the public relations department to do something.  That usually results in said CEO serving as a keynote speaker to a group of young entrepreneurs trying to grow businesses.  Mission accomplished.  No.  What needs to happen - and what's beginning to happen - is that the CTO and her top leutanants start to get to know which start ups may be sources of innovation that can help them with their big business mission - executing, improved performance, cost savings.  But those meaningful connections require 1) more advanced startups to compensate for the cultural stereotype, and 2) interested (even if only by monetary gains) senior level folks at big Chicago businesess.  Our fanastic mayor is getting bad advice if his way of showing support for this market is to tell our home grown college grads to please come to Chicago.  Rather, he should be asking Chicago's big business elite to direct their real operators to "go interact with the startups and find a way to make yourselves a lot of money."  The college grads will follow opportunity.

Lastly, I think it's important to remember that new industries can indeed happen in Chicago.  Few people may think of it now, but in 1976 a banker named Stan Golder at one of Chicago's largest banks, First Chicago, gave office space and capital to three young guys named Kohlberg Kravis and Roberts (ie., BigCo helps start up...) and that began an unprecendented run of investment returns and created Chicago's modern day private equity LBO industry - a major American force.  It paid for a lot of houses in Chicago's suburbs.  Chicago won't be Silicon Valley, but it is taking a few pointers and doing what it's done for generations - finding its own way and it usually does that with remarkable results.