Reading time: 2 – 3 minutes

Chatter in the media about Chicago’s status as a technology hub seems to be growing. In the last few weeks I have been quoted in a couple articles on the topic. The first was a Medill article by Melissa Aparicio that looked at some of the policy issues in the state focused on technology growth. The second was a piece in the Tribune by Wailin Wong that focused on the possibility that Motorola may move their handset division to the west coast after they split the division off in 2011 and what the move may mean for technology.

In both articles I consistently stated my thinking:

• Chicago shouldn’t try to be Silicon Valley.
• Chicago should focus on what it is good at (e.g. building companies that use technology to disrupt businesses like trucking and printing and companies that focus on online advertising, ecommerce, etc.)
• Early stage funding in Chicago is getting better but is still extremely lacking (we need family capital focused on supporting companies in the region).
• There is a lot of great development talent in Chicago but keeping them here is hard and building tech teams is equally difficult.
• What you really need to build the scene in Chicago is to have some home runs hit and then help the lieutenants from those companies start their own companies (we’re starting to see more of that now).

Chicago has a lot going for it but also has some holes that are tough to fill (since they are chicken and egg problems for the most part).

Matt McCall – my former boss and one of my mentors – has a great interview in Fast Company (source: VC Confidential) where he describes his thoughts on the technology scene in Chicago (he even mentions a study/chart on exits in the area that he and I prepared a year or so ago that shows how many billions the Midwest has generated in the past five years). I agree with him on most points but I will say that being an entrepreneur here in the earliest stages is still very hard (but not nearly impossible).

Reading time: 2 – 2 minutes

Those that know me well know that for the last year or so I have been working with Noam Wasserman on a case for one of his classes at Harvard Business School.  The case was based on FeedBurner but was more specifically centered around the founding team’s journey through their four businesses with the case culminating with the FeedBurner years.

The case is finally finished and Noam will be teaching it for the first time this March.  I have to say I am very grateful for the whole experience for a number of reasons:

1. I had a chance to co-author a case with Noam Wasserman, a guy I consider to be a foremost thinker on entrepreneurship and venture capital (and he’s an awesome guy to boot).
2. I had a chance to really learn about all that went into the four ventures the FeedBurner founders have built over the years and why they made the choices they made.
3. I had a chance to reflect on my time at FeedBurner, the company itself and the ultimate sale to Google and nail down all the takeaways for my future endeavors.

If you ever have a chance to spend some solid time reflecting on anything you’ve done (successful startup, failed startup, etc.) I would suggest working through a case like this to achieve some solid results for your comtemplation time.  I believe writing allows you to firm up your takeaways from the business or experience and you’ll be better off because of that. And if you can’t work through a case just try talking through the business or experience with others that were there with you (and with the founders if possible) and perhaps write a blog post based on your talks or just write something for yourself.  You’ll be glad you did.

Reading time: 4 – 7 minutes

Crain’s Chicago Business published a great article about technology transfer in the Midwest a few weeks back entitled “Seeking a breakthrough“.  The article specifically focused on tech transfer in Illinois and mentioned that, to date, Illinois has not done a great job of tech transfer.

Having come to Chicago from one of the most vibrant tech transfer centers in the world, Boston, MA (second only to Silicon Valley imho), I have seen what a great tech transfer system looks like and what it can do for the local economy.  Compared to Mass and the Valley we haven’t been doing a great job of commercializing technology from university labs (and from government labs) here in Illinois.

We all know the stories that still break our hearts.  Mosaic/Netscape, PayPal, YouTube, etc.  All of these companies were founded by Illini and yet ended up on the west coast.  The numbers also back up our lack of tech transfer.  From the Crain’s piece:

Between 1996 and 2006, Illinois universities spun off 124 companies and made $180 million from startups and technology they licensed directly to existing companies, according to the Deerfield-based Assn. of University Technology Managers. In that same period, the Massachusetts Institute of Technology alone started 220 companies and made $344 million. Stanford University made $209 million between just 2002 and 2006.

Those numbers say it all but we can (and will) turn this around.

What can we do to turn this around? One of the first things we need to do is not so easy.  We need to build some high profile success stories here in Illinois.  I would argue that is already happening with FeedBurner (acquired by Google in 2007) and TicketsNow (acquired by Ticketmaster in 2008) along with a handful of other solid companies that have exited recently (disclosure: DFJ Portage was an investor in FeedBurner and TicketsNow).  That said, those companies did not come out of university labs.  However, the success stories should still show people both in and out of labs and investors that great companies can, and are, built right here.

As the Crain’s piece suggests, more high profile successes in the state will create more technology millionaires who will then help to mentor and seed the next generation and so on and so forth.  This is the same way Silicon Valley and Boston, MA were born and why the biggest thing we can do is build some very successful technology companies here in Illinois.

The infrastructure is also being put into place to make technology in Illinois a mainstay.  The University of Illinois at Urbana-Champaign has built a fantastic research park and incubator (which I frequently visit and which will house TECH cocktail Champaign this week) as has the Illinois Institute of Technology (again, another place I frequent).  Both of these places along with other facilities are helping to change the tide of tech transfer here in the state.

What about the money though?  We all know that investors like to be close to their companies, which is why many Illinois startups have to leave the state to get up and running.  So we also need more investors here in the state.  The good news is that we are starting to see a growth in the investor pool here in Illinois.  From the Crain’s piece:

U of I created an independent fund, Illinois Ventures LLC, based in Chicago, with the help of private donors in 2002. Its goal is to provide early-stage money and logistical help to university-based startups.

Illinois Ventures has invested $20 million so far in 15 companies, among them Tetravitae Bioscience Inc., an alternative fuel company in Chicago, and has attracted another $300 million in outside investments, much of it coming from venture-capital funds on the coasts.

Ron Kirschner, a retired physician with an MBA from DePaul University, started Heartland Angels in Skokie in 2004. The group has grown from six to 22 investors and has put more than $3 million into six early-stage Midwestern companies. Four of those grew out of universities, among them Abiant Inc., a Deerfield company based on research from the University of Chicago and New York University. The startup uses imaging to help drug manufacturers improve products by mapping how they affect the brain.

I would also add the the Chicagoland Chamber of Commerce created a fund a little while back called the Illinois Innovation Accelerator Fund (i2A for short) which is a $10mm vehicle dedicated to funding innovative technology companies here in Illinois.

Also, as most of you know, the firm I am an associate with, DFJ Portage Venture Partners, focuses only on the upper Midwest and has for quite some time.  We are able to bring the global resources of Draper Fisher Jurvetson (DFJ) into the region while remaining locally focused, something we think will really help the region grow and help entrepreneurs create world class companies right here in Illinois (and throughout the Midwest).  As you can imagine we are very bullish on the Midwest as a technology center and we are excited to be part of the growing technology community here.

Successful technology transfer efforts will be a big part of what ultimately makes Illinois a leader in technology and tech transfer efforts are certainly getting exponentially better each and every day here in Illinois (for example Northwestern did a $700mm deal last year to sell part of its royalty rights to Pfizer’s pain drug Lyrica – a drug based on Northwestern research).

We are just now hitting the big upswing in the “hockey stick” here in Illinois and across the Midwest.  We are well on our way to rivaling the coasts when it comes to technology but we’ll no doubt do it our own special way making the Midwest a unique and exciting place to start and build technology companies.

Further discussion on this topic: Chicago Tech Report: “Understanding why Marc Andreesen left Illinois” by Blagica Bottigliero

Reading time: 2 – 2 minutes

Just a quick note to inform all of you Olson’s Observations readers out there that I will be making some observations on WGN radio this Friday from 9pm – 11pm on Extension 720 hosted by Milt Rosenberg. Since I am unsure if a lot of you out there are listening to AM radio (and because a lot of you are located outside Chicago) I want to point out that you can listen live online as well.

This show has had a lot of prestigious guests over the years and Milt Rosenberg is known as one of the top interviewers around so I am very excited, honored and humbled to be asked to come on the show. I should note that this is a panel discussion though, not an interview, so I will be on with a few other top notch guests making the show that much more interesting.

This will be my first time on the air since I stopped doing a radio show with my friends back in high school on the local college radio station (95.1 FM WNRC baby!) and I am looking forward to it. I have always loved radio as a way to communicate and talking about what Web 2.0 has done in terms of revolutionizing communication via one of our oldest communication technologies will be a treat. Who knows, maybe we can even get Milt to start podcasting his shows!

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Editor’s note: I have bee lax in writing on this blog lately due to my new gig, TECH cocktail and my studying for the GMAT. That said, I plan to overhaul the site over the next couple months and start writing more frequently again so stay tuned and thanks for your support over the years.

Reading time: 1 – 2 minutes

It is official. Jim Cramer of Mad Money and TheStreet.com loves the Midwest. Today on the roof of Soho House Jim talked about the Midwest, which he refers to as Cleveland Valley (man, I hope that name doesn’t stick), and about how some real solid innovation is happening here.

Cramer took a number of swipes at the internet and technology landscape today specifically calling out the me-too companies in the media space. Here is one quote that stuck out in my mind (via PaidContent.org):

Guitar Hero is “amazing… but when you look at the companies that are innovating, they’re in the Cleveland Valley, not the Silicon Valley.”

As pointed out by PaidContent.org when Cramer uses the term Cleveland Valley he is referring to the industrial firms here in the Midwest who are asking themselves: “What are the big problems of mankind and how can we solve them?”

So Cramer is not quite endorsing the Midwest as a high tech hub per see but I think he gets at the heart of what we’re all about out here and that is creating sustainable businesses and innovation by solving real problems. It is good to see more and more people looking to the Midwest for innovation. We’re at an inflection point in this region. No doubt about it.

Reading time: 2 – 3 minutes

As programs like Y Combinator and TechStars gained popularity I started to wonder why something along the lines of those programs didn’t exist here in Illinois. After all the modern web was pretty much born at the University of Illinois at Urbana-Champaign (mosaic/netscape, apache, etc.) and other notable web superstars like PayPal and YouTube have come from the minds of U of I grads. Well, I didn’t have to think about this idea for long…

Enter the iVentures10 program. iVentures10 is a program created by Illinois VENTURES initially as a “new kind of internship” for U of I computer science students. However, they recently announced a partnership with Mozilla along with their intention to take applications from around the world.

I think this is a fantastic thing for tech entrepreneurs based here in Illinois and a great way to get others that aren’t based here to spend a summer here in Illinois building their companies. Hopefully we can all show them such a good time they won’t want to leave! Keeping our tech talent here in the state is crucial to Illinois becoming the tech center it deserves to be and this program will clearly help with that effort.

You can learn more about the iVentures10 program on their site and if you think you want to submit an application make sure to get it together soon. The final day to submit applications is May 15th.

Side note: You can also learn more about the iVentures10 program at the next TECH cocktail mixer on May 29th. The team will be at the event along with some of the folks who have been accepted into the program.

Reading time: 2 – 2 minutes

Just wanted to post a quick update on the TECH cocktail conference that is coming up on Thursday, May 29th. Frank and I recently finalized the schedule and posted it on the site. We really have a fantastic speaker line up if I do say so myself. We’re really psyched and appreciative that so many top notch folks were willing to give up time in their day to come and talk.

If you have been thinking about buying a ticket but haven’t yet here is your chance to get $25 off the already low introductory rate of $225. Just use the promotional code olsonsobservations when you register and you’ll be $25 richer (or I guess you could say $200 poorer but I really think the content we put together is worth much more than $200 – the glass is half full people!).

I look forward to seeing everyone at the conference. (Oh, and I really do have some more “real” posts coming up soon. I swear… Stay tuned!)

Side note: We even have “Attending” and “Speaking @” TECH cocktail Conference badges for your site. Snag one and add it to your site when you have a chance. Attending & Speaking