Can Tech Rescue America's Big Cities?

Posted by: Michael Arndt on August 19, 2009

Many times being big and diverse with business is a good thing for a city. It buffers the local economy from industry-specific slowdowns, and it gives people more options for careers. Fred Hoch lives and works in big and diverse Chicago, but sometimes he wonders if the city would be better off if it were more like San Diego or Austin—smaller places defined by a growth industry like biotech or semiconductors.

(This isn’t just about Chicago, btw. Commodity cities across the U.S. might find a lesson here.)

Hoch is president of the Illinois Technology Assn. (ITA), and through a facility calledTechNexus, he’s doing his part to create a mini-Silicon Valley in Chicago. He walked me through TechNexus the other day. It’s a good start, and Hoch deserves more support and recognition than he’s been getting. The 2016 Olympics shouldn’t be the city’s only economic redevelopment plan.

I feel awful to say this, but it also seems so puny. TechNexus occupies one 22,000-sq.-ft. floor on a high-rise across the street from the building formerly known as the Sears Tower. It offers high-speed wireless Internet and telephone connections, conference rooms, and the other things that startups require (plus a view). More than two dozen companies have some presence on the floor, ranging from a single desk to a suite.

But I recall touring a business incubator at the University of Florida in Gainesville a couple of years back. As I wrote here, it had 40,000 square feet, 19 wet labs for biotech startups, $1 million in equipment, a dozen tenants, and alums that had outgrown their first home. And, for Pete’s sake, it was in Gainesville.

Hoch argues that TechNexus isn't only an incubator. He prefers to call it a "clubhouse." Any of the ITA's hundreds of members can swing through, and he says many often do, to see what startups might be intriguing as an investment, supplier or acquisition, or to provide mentoring. That includes IBM, Microsoft, Google, and other tech giants with sizable offices in Chicago. In an average week, he says, 300 to 400 people ride the elevator up for a visit.

A few of the Chicago-based tenants seem to have potential, such as CohesiveFT, which custom-builds crowd-sourced operating software for businesses; ArtistData, which handles new and old media placement for musicians; and GeeYee, which goes beyond key-word searches to find opinions in social media and the blogosphere.

Chicago's big problem—and this applies to most other major cities as well—has never really been a lack of tech smarties, however. Netscape, which invented the Web browser, was begun at the University of Illinois. Two of YouTube's three founders were also Illinois computer science grads. And the founding CEO of biotech giant Amgen had been a VP of research at Abbott Labs.

It's also not a lack of heft. Altogether, Hoch points out, Chicago has more tech employees than Austin. The state ranks seventh in high-tech jobs, according to a recent study.

So why isn't Chicago, or New York or Los Angeles, for that matter, seen as a tech capital? In smaller cities, tech can define the place because it's so important to the local economy. But in the country's largest urban centers, tech is just one of many industries, among hospitality, health care, finance, manufacturing, etc. Its impact is diluted.

There's a mindset to deal with, too. Tech may be fundamental in virtually every big-city industry, but IT workers at Kraft Foods, say, or Sears would almost never describe themselves as working in the tech sector. "Technology defines Austin," says Hoch. "Technology does not define Chicago."

Hoch is trying his darndest to change that. I wish him luck. Perception often becomes reality.