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More Than Coupons: The Reality of Chicago Tech

The success of Groupon is a feather in Chicago’s cap, but it has also colored general perceptions about the makeup of Chicago’s technology community. The latest example comes from Siri co-founder Dag Kittlaus, who recently urged local technorati to think bigger than “coupons” and instead step up to the innovation plate with game-changing ideas like nanomanufacturing and driverless cars.

That call to action is spot on and one we’ve been discussing at the Illinois Technology Association for quite some time. But missing from that discussion is a recognition that innovation comes in many forms. Groupon famously figured out how to use collective buying to make online deals worthwhile for participating merchants while simultaneously giving companies – especially smaller businesses – a new way to drive sales. Other local ventures have their own claim to innovation fame.

Modern technical mobility came out of both the University of Illinois (Mosaic browser) and the cell phone that was created by Motorola. The basis of all electronic trading on the NYSE is technology that was built on Wacker by Archipelago Holdings. SPSS defined the predictive analytics market that presaged “Big Data.” Orbitz revolutionized the way we purchase plane tickets and travel. NAVTEQ was the leading force behind mapping technology in the world.

Looking at this list and other examples, it’s clear that most people remain unaware of Chicago’s technology achievements. That’s because, unlike Groupon, most of them are B2B plays. These companies may be stars in their respective sectors, but they aren’t selling the headline-grabbing app or gadget that everyone’s mother knows about. That means they’re virtually invisible to the public and even to many tech VIPs.

The reality is that every business community has to play to its strengths. In Chicago, those strengths involve legacy expertise in core areas like healthcare, travel and hospitality, manufacturing and financial services that have grown and flourished for more than a century. Many tech startups and growth companies that take root here grow directly out of that fertile soil.

In the healthcare arena, for example, we have more than 200 healthcare tech companies – including publicly traded businesses like Allscripts and Merge – partly because we have a large base of domain experts ranging from hospitals to drugstore chains whose insights can help shape the products and services needed to support today’s medical-related information technology needs.

Likewise in financial services, online brokerage firms OptionsHouse and TradeMonster set up shop here because of the city’s status as a leading commodity trading center. (Symbolically as well as practically, OptionsHouse is headquartered in the historic Board of Trade Building.) In May, the companies announced a merger that will create the largest options technology company in the country.

These companies may not have given birth to jaw-dropping inventions like Google Glass, but their contributions to how we live, work and manage our everyday activities are incalculable. So are their growing contributions to the Chicago economy.

The other issue is that innovation is frequently evolutionary rather than revolutionary. Just as new pharmaceutical drugs grow out of basic research, so do even the most knockout new technologies ride on the shoulders of what has come before.

Siri, Dag Kittlaus’ big payday, could not have been developed without underlying speech recognition technology that had evolved over several decades. Driverless cars like those now in development at Google cannot happen without a combination of radar, lidar, GPS, computer vision and artificial intelligence. Personal robots designed to do household chores are emerging from industrial robotics, motion planning, natural language processing and more.

So let’s give Chicago’s technology entrepreneurs their due. They’re working in the trenches every day. They include hundreds of startups as well as more than 1,000 growth-stage technology companies with revenues from $2 to $250 million and an average 20% annual growth rate. Many are being built on the pillars of Chicago’s established industries. Many others are in completely different sectors ranging from electronic discovery (kCura) and data storage (Cleversafe) to logistics (Arrowstream) and advertising (Centro).

The work these companies are doing may well lead to the kind of “big idea” that Dag was talking about. Meanwhile, there’s ample room in the technology universe for innovations both large and small. Chicago is solidly in the game and is increasing its influence on a daily basis with a diverse technology scene that goes far beyond coupons and apps. One never knows what fruit will sprout from the seeds that are planted here in Chicago, but I am sure they will grow to redwoods over the next decade.

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