I was at the bookstore today, and I was reading a magazine about new companies. It had a list of the nation's 400 fastest-growing private companies. On it, only 1 Chicago company was listed, as well as several suburban companies. Either way, the top big cities for these types of companies were Washington DC, Boston, NYC, and San Francisco. Chicago didn't even make the top 10!

Interestingly, Chicago is ranked one of the top cities to relocate headquarters, has the highest business activity index in the nation, and over the years has continued to be a top financial center attracting and supporting the growth of major corporations.

So my question is, what's Chicago's problem? One major issue that we all recognize is a relative weakness in attracting Venture Capital dollars. But still, why aren't Chicago startups gaining the kind of recognition that they deserve? Also, does this really imply something about Chicago's future? Because for some reason or another, despite these stats, Chicago continues to have a robust financial core that continues to thrive and attract business...

^ I saw your note to me about this post in another thread over the long weekend, TUP, and didn't respond right away because I needed to think about it. I still don't have an answer. The only thing that comes to mind is that the big cities that are doing the best with new companies seem to be on the coasts, and maybe that's important because of international business factors. This is just a guess though.

Otherwise, I'm at a loss. The costs of living and doing business in Chicago certainly are lower than in New York and San Francisco. And you can't throw a cat in this town without hitting a recent Big 10 graduate, so it's not as if the city isn't attracting young talent.

The fact that the area isn't generating new companies is cause for concern in my book. Chicago is thriving as a professional services center (law, consulting, accounting, advertising, etc.) and that's not going away, but these professionals need local clients to serve in addition to the regional and national clients they have. Without that local base, even these firms will start losing business to sun belt counterparts.

Hopefully, the city will find more success in selling its relatively low cost of living compared to the coasts as a plus for entrepreneurs. And maybe some universities in the area need to direct some attention to developing incubators for business spin-offs of the research going on on their campuses. How about an alliance among the University of Chicago, Northwestern, and UIC/U of I to develop a research park on abandoned industrial property on the west side? I suppose if it were that easy, something like this would have been done long ago, but it's just an idea that occurs to me.

^Hmmm... we'll just have to see what Chicago can pull out of its hat.

Funny thing is, Chicago is the kind of place that always has another trick up its sleeve. It's such a damn resourceful city, ya know?

Venture Capital is the biggest problem IMO. Most new companies are started by university graduates as well. Our Illinois universities don't have strong local ties and deep venture capital pots of cash as they should.

The story of Illinois, and Chicago in general is, invent the idea here, then take it somewhere else and get rich. That really sucks. There are so many companies, especially those in silicon valley, that could have been based in Chicago, but California was giving out money like it grew on trees, so they went there, and of course, California reaped the benefits.

What we need to do is keep ideas here. The University of Illinois Urbana-Champaign is the powerhouse where all computer savvy folks come from, there should have been a venture fund to keep that brain power here instead of exporting it to Cali. I read a statistic that out of 100 UIUC graduates, 60 leave Illlinois for employment or to start their own business! And out of those 60 that leave, 30 went straight to Cali during the 90's. You can't blame them either, there is and was no money in Illinois to get those people on the right foot.

Right now, Northwestern is leading the way with nanotech, something needs to be done ASAP to establish nanotech companies here using NU brain power. I honestly won't be surprised if nanotech geniuses move to some obscure place like memphis and make it the nanotech hub of the world because Tenessee was smart enough to give money to them. That's what Chicago seems to do best, export brains.

Gosh, there are so many examples. Why isn't Second City on TV? I don't understand how something useless like Mad TV can compete with SNL and Second City Comedy isn't on TV.

All we do is give our ideas, our talented people, our innovations to everyone else. I'm tired of it.

Actually, last year I read that 2 guys in Chicago were planning to launch a comedy channel here. Many of its shows would be broadcast from Second City.

Regarding Venture Capital, couldn't agree more. Although Illinois set up a state fund of a few hundred million dollars to fund new upstarts; apparantly it was really successful last year. I also heard they want to make it permanent, although I haven't heard much about it ever since...

Be careful what you wish for regarding Second City being on TV: a significant number of the cast members of "Mad TV" are alumni of the Chicago Second City company.

But the point is well-taken: performing arts are another example of Chicago being a training ground for people who eventually take their talent somewhere else. You would think that with the opportunities presented by first-run syndication and dozens of cable channels, Chicago's Second City could land a TV deal that would allow them to keep some of the talent they grow at home for awhile. In the early 80s, the Toronto Second City group (John Candy, Eugene Levy, Rick Moranis, et al) managed to get on American TV. If they could do it, I don't see why it couldn't happen on a smaller scale now with Chicago.

Kraft is coming back, baby!


Kraft to expand board, buy back more shares

December 3, 2004

BY ERIC HERMAN Business Reporter




Kraft Foods Inc. made good on a seven-month-old promise to expand its board of directors Thursday, tapping Dutch food executive Jan Bennink to help oversee the company. Northfield-based Kraft also revealed it would spend up to $1.5 billion repurchasing its shares.

The moves come as Altria Group, which owns about 85 percent of Kraft, prepares to spin the rest of the company off to the public. Altria's control has contributed to Kraft's disappointing performance in the stock market, since Altria also owns the Philip Morris tobacco companies and faces billions in potential damages from lawsuits. If Kraft were fully independent, it could use its stock to acquire food businesses.

In the past year, some shareholders and analysts have pressured Kraft to name more directors without ties to Altria. Bennink fits the bill. "There is no board in the food industry we have criticized more over the last few years than Kraft Foods. Its lack of independence has been our principal complaint," Prudential Equity Group analyst John McMillin wrote in a research note. "We view the arrival of Mr. Bennink as good news."

Bennink, 48, is chief executive and chairman of Royal Numico, a Dutch company that sells infant nutrition products. But before that, he was a senior executive at Group Danone, the French maker of Dannon yogurt.

Bennink's appointment brings Kraft's board membership to 10 -- split evenly between insiders and outsiders.

Kraft will repurchase about 8 percent of its Class A shares, starting as soon as it completes an earlier $700 million buyback. Share repurchases typically help boost a company's share price, and Kraft's has suffered in recent months because of declining profits. Kraft shares rose 20 cents, closing at $34.78.

From an old Business Week article: "Chicago Blues"

"Chicago had a shot at being a center of the New Economy. Only six years ago, Marc Andreessen, then a student at the University of Illinois, was forced to move West to California to pursue funding for a great tech idea: code for a browser that would help transform the Internet from monochromatic text into pages of colorful information and imagery. The problem: a lack of venture capital. And so, Silicon Valley became the home of Netscape Communications Corp. ( AOL) and the World Wide Web, not Chicago. Laments Shaye R. Mandle, president of the Illinois Coalition, a tech booster group: 'One of our nightmare stories is Netscape.'"

"Although Illinois ranks sixth in the number of high-tech jobs added from 1993 to 1998, it falls short in the all-important area of venture capital. The state ranks a dismal No. 22 in the growth of venture-capital investments from 1997 to 1999, the years when the tech boom took off. What's more, even though the area boasts some of the best technology schools--Illinois Institute of Technology and Northwestern University--faculty members have not shared the entrepreneurial spirit of their peers at Massachusetts Institute of Technology, Columbia University, and Stanford University, where Jim Clark, for instance, left the ivory tower to found Silicon Graphics Inc. ( SGI) and then help Andreessen start Netscape."

"For Chicago, the stakes couldn't be much higher. More than a decade ago, the growth of Los Angeles turned the moniker of Second City into a joke, and it's now just the dated name of a comedy club in the U.S.'s third-largest metropolis. If corporate leaders can't rise to today's new challenges and turn Chicago into a 21st century city, the joke will get even crueler."



You know, we like to boost chicago like chickens with our heads cut off, but this is the real story, not the amount of high rise construction. If we love Chicago so much, we need to be rational, perhaps get more involved with civic clubs and other forums.

^I remember reading that article. It's true. Chicago needs to attract more Venture Capital dollars. However, we all have already discussed this. The State of Illinois is taking some decent steps, and a large local tech convention that attracted dollars to some local nanotech startups occurred a few months ago. Buy more still needs to be done, and a lot of local civic groups have already long since recognized this. I hope to see some progress in this department in the future. Maybe Kevin J, our inhouse economics expert, can give us some more detailed insight....

Venture capital honored



Illinois Venture Capital Association President Robert Finkel offers a positive outlook on the state's private equity industry tonight when his group convenes its annual awards dinner. Four hundred members of the local VC community are expected at the Ritz Carlton.

"IVCA has grown from eight people thinking about private equity in the state four years ago to over 500 private equity professionals," Finkel said. His group represents the majority of funds in Illinois, and manages more than $35 billion in assets.

Its efforts in Springfield created a $50 million Technology Development Fund, and it will pursue creation of a $200 million Illinois Opportunity Fund supporting Illinois start-up companies in the spring legislative session. IVCA is pressing our public pension funds to invest locally, and it's seeking tax relief to help Illinois attract investors.

I heard (from the Washington Post) that Chicago has launched a new exchange selling industrial emissions futures. Also, the CBOT (or Merc?) is studying selling Housing futures.

Sounds interesting. Seems as if the Chicago Futures market is aggressively looking towards expanding into new realms. Anybody have any thoughts?