By Ann Meyer
Expect to see rapid change in Chicago’s business community in the coming year, as technology disrupts old industries.
“Think about what the Internet has done in the last 10 years,” said Matt McCall, partner at New World Ventures. It has created companies, while putting others out of business. “I also call it the venture capital employment act.”
Most of the entrepreneurs who made predictions and projections at the Chicagoland Entrepreneurial Center’s 2012 Startup Forecast event Wednesday morning were bullish about the coming year and said technology was likely to drive economic growth. “2012 will be the year Chicago gets noticed,” said Matt Spiegel, chief executive at TapMe, who predicted two more Chicago tech startups would issue Initial Public Offerings in the coming year.
With a plentiful labor pool, university resources and a growing network of startup investors, Chicago “holds the pieces” for sustainable business growth, said Kevin Willer, president and chief executive of the Chicagoland Entrepreneurial Center. Unlike in the past when startup capital for new businesses was a rare find, Chicago now hosts angel networks and seed funds from local venture capital firms, Willer said. “You have a lot of people writing checks to help companies get off the ground,” he said.
Still, how many jobs will be created was less clear.
Increasingly, companies are using contingent labor to keep costs low as they figure out ways to turn a profit from businesses that often deliver information or networking at no cost to users. Even when they provide free access, many companies struggle to attract sufficient users as a proliferation of websites, apps, videos and games compete for consumers’ limited time.
“Free isn’t cheap enough,” said Howard Tullman, a serial entrepreneur who is president and chief executive of Tribeca Flashpoint Media Arts Academy in Chicago. “No one wins the race to the bottom.”
At the same time, free can work if the digital company can provide a compelling reason for people to become regular users, Tullman said.
Even when money isn’t exchanged, consumers make a deal with websites in the amount of personal information they’re willing to share. “I’ll give you more and more of my private information if you save me time, if you save me money,” Tullman said.
When building a team, entrepreneurs should look for problem-solvers and encourage them to practice devising solutions on and off the job, said Harper Reed, the former chief technology officer at Threadless, who is now working for the Obama campaign. When putting together an optimum team, he said, “Hire problem solvers. Fire non-problem solvers.” And don’t be afraid to prune your staff to get rid of bad apples.
Cash isn’t the only incentive entrepreneurs can offer job candidates. While software engineers are in demand, many will accept a job at a startup because they relish the opportunity to make their marks. But to keep them, business owners have to trust their engineers and provide them a say in the company, instead of treating them like a resource, Reed said.
Entrepreneurs should give credit where credit is due, and celebrate successes along the way instead of dwelling on failures, Reed advised.
Build sensible businesses
Chicago has an advantage over other markets because of its “sense of sensibility” in building businesses, said Jim O’Connor, managing director of MVC Capital and co-chairman of the Chicagoland Entrepreneurial Center’s board of directors. “This community you see built today is really additive and is going to build,” he said. “You’ll have some failures along the way, but we’ll have some really big successes. This is because this community works together.”