Chicago or Silicon Valley? We chose Chicago!

Dhruv Saxena

File 38202

When we decided to launch our company ShipBob  in Chicago, our investors (Y-Combinator, California) were a little skeptical of our decision. We ourselves were paranoid in the weeks leading to our launch. Going through an intense accelerator, the expectations are high and user acquisition is the only yardstick for measuring consumer startups. So were we making the right decision to be in a city, which is not the tech hub nor filled with early adopters?

A lot of startups would give an arm and leg to be in Silicon Valley, a city which we were willingly foregoing to be in. So why did we decide to launch in Chicago and why do we believe you should do the same. Here are the 5 reasons we stayed:

1. Be where your network is

The first hundred users of your startup are going to be your friends, family, ex-colleagues, high school classmates, college roommates, ex-flames..etc. They are the people who know you and can vouch for you. They will use your product even if it is semi-functional, buggy and lacks any coherent UX. They will be the source of your first real world feedback and being physically close to them will ensure you can sit down and see the product through their lens. We tapped deep into our network in Chicago to get to our early users. Getting the first hundred paying customers is the hard part. The rest usually follow. Make sure you launch where you know your first hundred won't be a challenge. Chicago was the place for us.

2Tech skills are easier to find

Believe it or not, hiring an engineering intern in California is a nightmare. You are competing with other startups along with the big names of Google and Facebook for a very limited talent pool. We realized that with our limited budget, getting engineers to work on a risky startup like ours will be an uphill task. On the other hand, Midwest is home to a lot of good engineering schools (Purdue, UIUC, UIC, and University of Chicago).  A lot of students come home to the suburbs of Chicago for their summer. We recruited all our engineers with the perk that they could stay at home for the summer, yet be a part of a cool startup. Movies at the park and Chicago Street festivals played their own part in the recruiting as well ;).

3You are not one in a million!

Agreed, with your unique product which is faster, better and cheaper than any other out there, you should be able to make your startup stand out from the rest. But when you are starting out, it is really hard to identify the winners of the pack. We strongly felt, that being in Chicago, away from all the noise, we could solely concentrate on building our company and not worry about standing out from the rest of our batch companies. A lot of startups spend way too much time explaining how they are different from the startup next door. Being in Chicago, we found peace in our solitude and this kept us focused on our vision, unmindful of our competition. 

4. Chicago is representative, San Francisco is an exception

Both me and my co-founder strongly believed in this. If we can make ShipBob work in Chicago, we could make it work in any other city in the country. San Francisco has an eco-system which is unique to itself. There are numerous examples of companies which flourished in the valley but failed to find any traction anywhere else. On the other hand, companies like Belly, Grub Hub , Groupon started right in Chicago and quickly expanded to other parts of the country. We just couldn’t give up on the opportunity of being in the latter list of companies launched in Chicago. 

5. Chicago tech scene is starting to thrive

If you attended the TechWeek, Chicago, you cannot be complaining of the lack of tech awareness in the city. We were amazed by the sheer number of attendees and the encouragement we received from the local community at the event. Having been part of several tech events in the city now, we are starting to meet a lot of folks who are regulars at these events. Chicago tech community is closely knit and very welcoming. We couldn't have met a more helpful group of people anywhere else but in Chicago. Whether it is answering technical questions, or helping us get some warm introductions, the tech community has been very generous with their help and support.  

It’s been four weeks to our launch in Chicago. We continue to hustle, work hard and enjoy the Chicago summer. We have been overwhelmed with the support we have received from the windy city and we have a strong feeling that this love affair will last for a very long time. :) 

 

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Comments

Rich Kaminski
I'm glad to see that you chose Chicago, but I have to be a little nitpicky: the University of Chicago isn't an engineering-focused school and has one engineering program (molecular engineering). You probably meant "engineering" in a very general sense, but aside from that institute and UChicago's computer science major, its larger engineering credentials definitely aren't like UIC, UIUC, and Purdue. And I say this as a proud UChicago alumnus.
Jamie Russo
Dhruv, I just came across your post and wanted to say cheers. I lived in Chicago for 15 years and am now in Silicon Valley. I own a coworking space in each location so I see the markets pretty intimately. I love your Chicago choice. I wrote a blog post a few months ago on the topic: http://www.builtinchicago.org/blog/chicago-vs-silicon-valley-view-valley
Marcy Capron Vermillion
Welcome Dhruv; you made the right choice.
Tracey Wiedmeyer
Great view point Dhruv, I think more are starting have the same thought process. Best of luck to you!
Dhruv Saxena
Thank you Tracey!. Incontext sure lead the way with the Chicago mindset. Infact, I remember asking you the same question when I was interviewing!
Matt Weirich
Great post, Dhruv! Couldn't agree more with you.
Dhruv Saxena
Thanks Matt! Looking forward to the launch party!

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