IVCA Q&A: Talking Technology in Chicago – John Tolva, City of Chicago Chief Technology Officer and Dan Lyne, Director of Technology Development for World Business Chicago

IVCA Q&A: Talking Technology in Chicago – John Tolva, City of Chicago Chief Technology Officer and Dan Lyne, Director of Technology Development for World Business Chicago

September 26, 2012

CHICAGO - “ Mayor Rahm Emanuel has been a leader in bringing the Windy City into the 21st Century, developing the Department of Information Technology as part of his new administration. The Mayor believes it is up to the City of Chicago to remain competitive within the a fast-paced environment of technological developments.

In 2011, Mayor Emanuel named John Tolva - “ former Director of Citizenship and Technology for IBM - “ to the key position of Chief Technology Officer. Tolva's responsibilities include innovation and technology initiatives for Chicago. Working closely with the city is World Business Chicago (WBC), a not-for-profit economic development organization chaired by Mayor Emanuel. The Director of Technology Development for the WBC is Dan Lyne.

The IVCA interviewed these two post-millennial leaders and city advocates who are vital to the future of Chicago's economic growth. The discussion centered around the technology status for the city today, and in the future.

IVCA: From both of your points-of-view, what is the most important trend for tech development in Chicago since Mayor Rahm Emanuel started his term?

John Tolva: Number one is transparency applications, and two, business development implications. We see these with the primacy of data, both internally with deep analytics as a decision-making tool, and also externally as a kind of platform, for all of the different vital signs of the city that are being made public and leveraged in services and applications that are being built on top of Chicago's data. It is encouraging to see an eco-system of development that is built on a platform that the city is publishing.

Dan Lyne: Mayor Emanuel has put a strong emphasis on new company formation and growth as critical bedrock for our economy, which is essential. He is focused on both immediate innovative impacts - “ such as his dedication to open data or his role as champion for the successes and milestones of our local startup scene - “ while his emphasis on education and workforce clearly outline a much longer term commitment that is going to drive the growth of our tech economy for decades to come. It is also clear that he shares a deep commitment to increasing STEM (Science, Technology, Engineering, Mathematics) skill sets across all levels of education; this is game changing in terms of investing in the city's future. And by tapping into our region's distinguished universities to keep talent here, he is helping to secure Chicago's long term success.

Moreover, he is leading by example, which is inspiring in its own right. He has surrounded himself with tremendous tech leaders in John Tolva, Brett Goldstein (Chief Information Officer) and many others who are committed to the hard work in front of them. Whether it is driving open-data initiatives or improving the efficiency of City government, the Mayor is forward- thinking and looks both inside, and outside, the city to propel ideas and initiatives.

IVCA: What steps are being taken to solidify a true technology hub in Chicago, and what will be necessary from the business community to make that happen?

Tolva: There are a couple things. We are very shortly going to make an announcement - “ which I can't get into too much detail at this time - “ regarding the infrastructure, the actual connectivity that our digital companies need. It's a multi-pronged approach that growing, digital businesses will use as a through-put to locate their high capacity needs in the city.

The other detail is a little more squishy, attracting and retaining the talent that these companies need. That is more about the livability and targeted improvements in Chicago - “ and that covers everything from transit, beautification, retail and arts - “ the kind of thing that people in these industries crave. You can argue that tech entrepreneurs and workers need that the most. We are competing with other highly livable places around the country.

Lyne: One of the greatest steps that the business community can take is to look in its own - ˜backyard' for products and services. When a large, local company engages with a hometown startup or a new innovation - “ not only is it cool to have that connection - “ but it provides tremendous marketing cache to say, - ˜...this large established company is using us for this pilot program, maybe you should consider us as well?'

Never underestimate the benefit a more established company or executive can experience by taking a simple 20 minute meeting with a startup, or by considering a new product or service application, or even by just taking the time to connect an entrepreneur with somebody who might be helpful. One single customer or client can literally accelerate massive growth for a startup as an early credibility generator.

Proximity and participation matters. You will notice that a lot of these core hubs of tech growth in the city - “ whether it's in the West Loop, or in single structures like the Merchandise Mart or 600 W. Chicago - “ all are within a stone's throw of the Loop, creating almost a boomerang around the central business district. In Chicago, we have one of the most diverse economies in the world, and access to this broad base of businesses is so crucial for startups to gain traction and ultimately become successful themselves. So, when you start talking about what is really going to move the needle for Chicago, it is oftentimes the non-technical pursuits that pave the road best.
It can be as simple as business mentors, advisors and leaders being able to participate during their lunch hours or at the end of the business day - “ in content and programs with companies at 1871, TechNexus, Catapult Chicago, The Coop or others.

IVCA: With the venerable Merchandise Mart becoming the center of this potential hub, what do you think are some of the exciting things happening as part of the 1871 tech incubator there and the evolution of nearby companies in relationship to the Mart.

Tolva: There is a center of gravity at the Mart because it's an iconic space, and it's central to the city. But also I see 1871 as part of a number of innovation zones. One of the reasons the incubator located itself at the Merchandise Mart was the critical mass of digital companies already located in River North. You can draw a line between the Merchandise Mart and 600 West Chicago along with the Fulton Market, the Kinzie corridor and Ravenswood as being the real nexus for tech in the city.

1871 specifically has a lot of symbolic import [the name derives from the year of the Great Chicago Fire, and the rising of the city from those ashes] and is kind of a - ˜Town Square' for the tech folks. It's a great place to take out-of-towners and students, plus it has the feeling of seriousness that probably influenced the relocation of Google in there. It's a snowball effect.

Lyne: As 1871 was being conceptualized, there was this very powerful notion that we were seeking to create a place that essentially accelerates serendipity. That's a very elusive concept to capture, especially when you talk about making its home inside a massive physical structure like the Merchandise Mart. But as it turns out, it was the perfect location for this type of venture - “ and J.B. Pritzker should be applauded for his extraordinary vision and commitment. 1871 also joined fellow Mart tenants Allscripts, Tribeca Flashpoint, TapMe and the startups that grew inside Failcube. 1871 helped evolve the Mart into its next great phase - “ as an anchor for innovation that attracts not just great startups, but also world-class players such as Google's recent HQ move of Motorola Mobility. And throughout the loft-riddled River North area and West Loop, we can see the spill over affect as companies pepper the floor plates and continue to grow and expand.

IVCA: When pitching Chicago as a location for tech companies, what aspects of the community - “ in both amenities and talent pool potential - “ do you both like to emphasize?

Tolva: Two big things. One of which is the diverse legacy companies that are already here. We are not a mono-industrial city. Sometimes we get dinged for that, but it's a good thing. The reason it's a good thing for our digital start-ups is because it's a good thing for our professional services companies. There is a huge cross industry customer base that is built-in here. One of the great elements of the 1871 office, and what the Mayor's office is attempting to do, is create the link between the legacy companies and the digital companies. You want to locate here? You already have a customer base.

The other thing - “ which is not emphasized enough, and we need to do more rebranding on - “ is that we have world-class universities here. We really do have world-class engines in computer science and engineering here, and we need to make that known for potential companies that can locate here.

Lyne: Sometimes you don't have a choice, but more often than not the frontrunner is talent. Make no mistake, both domestic and international cities are always in the middle of a talent war - “ now more so than ever - “ especially on the computer science and engineering side. We are very cognizant on what attracts technical talent, and there is a broad range of questions for which companies need answers: Is it a livable city, offering great job opportunities as well as cultural amenities, affordable housing, and a great nightlife? What are we doing to attract that next generation of technical talent? And as a city and business community, what are we doing to lessen the burden of recruiting for these tech companies? How are we utilizing our tremendous universities to help keep their talent here? We can never rest on this front. We must always do more.

IVCA: As recently as in August, Mayor Emanuel was touting the Motorola Mobility move to the city and the example of three homegrown tech startups that were both expanding and staying in Chicago. How is the city making more accommodations for these industries and what has been the feedback from those successful homegrown startups about those accommodations?

Tolva: The truth is, unlike other industries that are extremely capital intensive, or have implications for the built environment, there actually isn't that much that a digital start-up needs from the city. What we hear from them is: how do we make the talent here more visible? Back to previous point, it's about how - “ for instance - “ in October the Mayor is taking a couple dozen CEOs of these companies down to the University of Illinois for the day, to recruit several thousand computer science undergrads and grads for kind of a job fair, but this one is specific to Chicago. Basically saying that we're open for business, and that we're hiring. The other way to procure talent is a program during Chicago Ideas Week called - ˜Think Chicago.' which is specifically geared toward graduating students.

There are financial incentives like Excelerate Labs, a nationally known incubator, which started as a TIF [Tax Increment Financing] industry, which goes back to infrastructure. We don't want everything to be in the River North neighborhood, so we're looking at use of TIF funding in providing incentives to spread out.

Lyne: If we are doing our job right, we are constantly engaging and listening to the tech industry's leadership - “ from startups to established companies alike. Everyone's needs are a bit different, and the accelerated pace of technology tends to keep cities on their toes. Concentrating on infrastructure and talent are constants. And oftentimes, companies need cities to ensure predictability and efficiency in municipal services - “ and also then to step aside and let the companies grow. But there are times the city is asked to play a stronger role in convening leadership on areas of growth, or addressing new demands that surface with time -- whether it is helping link companies to universities or sources for talent or simply celebrating the success or growth of those companies. In these instances, increased participation is encouraged and typically is genuinely appreciative.

As a brief example, Mayor Emanuel recently visited Braintree's new West Loop offices [Braintree is a Chicago-based online payment company]. They are a tremendous company that received a large venture round last year from West Coast-based Accel Partners. Rich Wong, a Partner at Accel, came here specifically to stand up and celebrate his firm's investment in Braintree. Also standing alongside Mayor Emanuel was Braintree's Founder, Bryan Johnson, and their CEO, Bill Ready. They shared their own personal experiences doing business in Chicago, and it was very positive. It was a very powerful message, I think- ¦and one that Chicago is clearly interested in amplifying.

IVCA: Finally, what can the local Venture Capital and Private Equity investor community do to help the city maintain tech growth and viability for tech companies looking to lay down roots in Chicago?

Tolva: If you're talking about VC and PE that's local, homegrown as well, the obvious point is to - ˜support your neighbors.' But the IVCA and the local industry is plugged into a much larger community of VC and PE houses around the country than our start-ups are. Our belief is that if an out-of-town investor is making a meaningful money pledge to a local company, they should have an office here. What we would ask of the local VC and PE community is to champion the level of innovation that is happening to your peers in other states and other areas. We need more visibility. I am convinced that it's not that we need more money, we just need more visibility - “then the money will come.

Lyne: Continue to lead. I think our VC, PE and investor communities are the big arrows in our quiver - “ Baird, New World Ventures, Lightbank and many others. Not only are they responsible for leading the investment charge in Chicago companies, but they constantly have their eyes and ears on the investment chess board -- often bringing national and international partners to the table with them, casting a tremendous light on Chicago for future investments.

Those same leaders have also been responsible for much of the focused self-organizing and growth of our angel and early stage investment community; they are our big boosters and we should support them to the hilt. And when they invest outside the city, we are hopeful that they consider Chicago for the growth of those target investments - “ potentially bringing jobs and attracting more great leaders to our community. And when they interact with their peers across the country and globe, we want them to take tremendous pride as ambassadors for the great things going on in the tech and investment community back in Chicago.