Chicago didn’t win the HQ2 Amazon lottery….now what?

A year ago, Amazon announced an RFP from cities around the country to compete to become the site of HQ2. In the RFP, Amazon highlighted considerations such as infrastructure, educated workforce, population, transportation and real estate. We wrote about all the great reasons why Chicago should be selected.  This week, it was announced that Northern Virginia and New York city will be splitting the promised 50,000 jobs and billions in investment. They are also on the hook for tax breaks that were designed to make their cities more attractive to Amazon. It’s looking more like, it is an HQ2a & HQ2b. Congratulations to both of these cities for creating the right set of economic incentives for Amazon!

There are some that are upset about the process or not winning. But, those are the same officials who would have been cheering had their cities been selected. 

While, it is disappointing not to get the huge economic boost that would have been associated with Chicago becoming the site of HQ2; Chicago has it’s own plans that are in the making. The great part is that we were going to do this whether or not Amazon selected Chicago. 

What’s even better is that we have the opportunity to repurpose the incentive package offered to Amazon to create a once-in-a-generation investment in Chicago people, business, and infrastructure.

If we create the right environmental conditions for startups, established corporations and everything in between using the capital that we planned to allocate to Amazon, we can create in Chicago a place that the next Amazon can be born, raised and grow.

Often innovation and disruption seem to come out of nowhere. When Amazon was founded 24 years ago in Seattle, it would have been hard to imagine the profound impact this company would have first on book sales, then on e-commerce and now in brick & mortal retailing (Whole Foods & Amazon Go) & cloud computing. Amazon is quite simply hitting on all cylinders for markets that they choose to enter.

However, Amazon is a mature company. For a period of time this year, they were within spitting distance of a trillion dollar valuation.  As much as we might hate to admit it, putting money behind Amazon HQ2 was a safe bet. 

The goal of economic development in Chicago should be to create the right framework for new and exciting innovations to occur. These are often the result of talent ultimately believing that Illinois has the potential to support an Amazon like organization. Recent research from the University of Illinois Urbana-Champaign suggests that we are moving in the right direction.

However, until we achieve that outcome, we need to redouble our efforts to create the next Amazon.

While it would have been nice for Amazon to join second city, they chose not to. However, Chicago was one of the top 20 contenders out of 200+ candidates. That means that one of the largest and most powerful organizations on the planet found a lot to love about what’s going on in Chicago. Let’s take the package that Amazon didn’t want and invest it in our local community to meet or exceed the economic growth that Amazon was projecting.

We have new leadership in the Governor’s mansion with JB Pritzker for the State of Illinois. And, we will soon have a new Mayor for the City of Chicago as well. 

Let’s demand that our government invest locally in existing startups and create a more fertile environment for other startups that can generate the returns that exceed what Amazon was projecting for HQ2.

Let’s face it, we have world class colleges and universities in Illinois. From the University of Illinois campuses in Chicago, Springfield and Urbana-Champaign to Northwestern and University of Chicago. What we haven’t created is the strong sense of community necessary for our talented graduates to remain in the area upon graduation.

There are numerous successful companies founded by Illinois graduates that now call California, New York and Boston home. In order to reverse this costly brain drain, we need to create community much earlier.

At Digital Adventures, we envision a community of young technologists who develop and create projects together while they are in elementary, middle school and high school from all across the city and surrounding suburbs. By collaborating with students in different communities and different backgrounds, they can build strong relationships much earlier.

In turn, once they are ready to turn an idea into reality, they will have several partners that they can call on to help them in that journey. 

The way we bring this to life at Digital Adventures is through structured competitions that participants from our studio join and by hosting field trips at tech companies in Chicago that give them snapshots of a day in the life. Our goal is to create every opportunity to have the rich interactions necessary for community to develop during students formative years.

One of the biggest challenges of any city is showing how awesome it is for those who don’t call it home. Companies that are planning to go public often go on the road to institutional investors in order to convince them that they should invest.

Chicago needs to make a similar push for investors to open actual offices in Chicago so that they not only contribute to the local community but also can see how special the emerging technology community is in Chicago.

Most investors prefer to invest in companies that are in close proximity to their offices. We don’t have enough capital locally to make the investments necessary to create the next Amazon. 

While this has been a known issue for many years, it’s time for Chicago to get creative with attracting top-tier venture capitalists. There is a window right now where valuations are high in Silicon Valley and people are wondering if this geography has lost the secret sauce. 

Instead of pitching ourselves as Silicon Prairie, we need to be considered as the Chicago Creators. We are a group of fearless entrepreneurs and technologists who build meaningful companies of enduring value who aren’t afraid to roll up our sleeves to get the job done.

We’ve built a world class technology incubator with 1871.  However, we have not yet created an environment where the entire city including the creators on the South and West Side are fully engaged in making sure that we are supporting the ventures of tomorrow. 

Success requires a group effort and those who are willing to try to products and services of early-stage companies along with giving them the necessary feedback to iterate/refine their products.

Chicagoans have always been known for their values and work ethic. But, we need to expand that to being the biggest supporter of new ventures in the nation. 

From introductions to new customers, investors and partners; small businesses need lots of help if they are to grow into sustainable enterprises. 

And, if there is a company that was born and raised in Chicago, there should be lines out the door during their launch and subsequent growth. This is not to suggest that we support sub-par businesses. Instead, it is recognizing that supporting our local entrepreneurs and small businesses is the best thing we can do to take an idea from a concept to the next Amazon.

Since the next Amazon isn’t going to look like the next Amazon, we need to help these emerging businesses as much as we can.

Amazon is famous for using a flywheel of growth to keep their team focused on what it takes to ultimately drive the value proposition needed to sustain their success.

For new businesses, nothing is more important than building companies that are capable of achieving meaningful liquidity events. As successful founders and builders of companies that are acquired or go public, that creates a group of investors to fund the next wave of innovation.

These may have been junior members of the team who learned a ton about building while supporting the next Amazon and are now ready to roll up their sleeves and try to develop a new concept on their own.

Without this flywheel of growth, it is very difficult to be attractive as a true hub of innovation. Capital flows more freely in hubs such as Silicon Valley, Boston and New York because quite simply they have had more meaningful exits.

In order to improve upon this, we need to make sure that not only are we building great companies but we are building those companies that can create groups of millionaires to fund the next batch of companies.

Even though Chicago didn’t win the Amazon HQ2 competition, that doesn’t mean that we can’t create the fertile conditions for the next Amazon to succeed here.

While we don’t know exactly what the next Amazon or Facebook or Uber will look like, we do know that there are certain baseline conditions that are necessary.

From being a talent magnet to supporting local businesses, we have everything we need already to create the next Amazon. Let’s get started. The Midwest is famously known for our values and work ethic. We need to prove that these characteristics can result in the creation of enduring companies of value.

Just like the next Amazon doesn’t look Amazon, the next global hub of value creation and innovation doesn’t necessarily look like Silicon Valley, New York or Boston. Perhaps, it looks exactly like Chicago.