In the past four years, a slew of articles have been published comparing the Midwest tech scene to Silicon Valley: in 2014, 2015, 2016, and ending with a recent one from the New York Times. While well-intentioned, these articles all have at their premise the same core element — a comparison. For those of us who live and breathe Midwest tech, the analogy is tired. We have our unique ecosystem, and while there are things that make us different from Silicon Valley, there are also a few stereotypes that seem to permeate any “vs. the Valley” article or conversation.
Myth 1: The Midwest is all about B2B
Yes, we have a slant toward B2B in the Midwest. That’s because we are concerned with fundamentally different industries in this part of the country. Our tech ecosystem grew from the sectors that have been here for decades, even centuries. Transportation, finance, manufacturing: These are the infrastructure industries that transformed different parts of the Midwest throughout the 20th century. As we’ve moved into the 21st century, our most robust and innovative technical practices stem directly from these foundational industries.
However, that doesn’t mean that we only produce B2B companies.
Midwestern states like Minnesota, Ohio, Wisconsin, and Illinois are fostering B2C upstarts. Grubhub and EatStreet are modernizing the food delivery process. Trunk Club made shopping enjoyable for men by combining technology and a personalized touch. Kidizen is creating a marketplace to sell and buy the latest styles for kids. Spothero and Parkwhiz brought mobile-driven convenience to the age-old frustration of finding a parking spot, while Clearcover and Root Insurance have managed to redesign the car insurance experience, each in its own way.
All these companies have taken a common consumer pain point, rejected the status quo, and applied technology to create whole new categories of B2C companies. They’ve built on the region’s B2B strengths to become intermediaries, creating new marketplaces and finding new ways to connect with consumers.
Myth 2: There are no significant tech companies here
Some of the biggest tech companies in the world have sizable offices in the Midwest. Google and LinkedIn are in Chicago, Salesforce plans to employ 2,200 people in the coming years in Indianapolis, and Pittsburgh is home to Uber’s Advanced Technology Group. Just as importantly, local businesses are making their mark on a global stage. Granted, companies like Madison-based Epic and Chicago-based Relativity and Trustwave may not be household names, but they are scaling at a rapid pace.
One hundred and ninety million patients have a current electronic record on Epic, one of the world’s largest health technology companies. Relativity provides legal software that helps corporations, government agencies, and law firms review and analyze large volumes of emails and other documents during litigation and investigations. Relativity has users in over 40 countries and counts more than 70 of the Fortune 100 as its customers. Trustwave helps businesses fight cybercrime, protect data, and reduce security risk, servicing more than 3 million businesses in 96 countries.
And let’s not forget that the Midwest is now producing unicorns on a regular basis. In early March, Chicago’s Tempus exceeded the magical $1 billion mark. Founded a little over two years ago, Tempus had doubled headcount in the past 18 months and is making waves in the medical community by leveraging engineers and data scientists to give doctors more information about a patient’s cancer treatment options. In October, Duo Security raised $70 million at a valuation of $1.17 billion. Founded in 2010 in Ann Arbor, Michigan, Duo helps organizations scale their security strategy and tools.
Myth 3: The Midwest is a late adopter
Because of the rapid pace of change in our industry, it’s no wonder the tech community is often affected by recency bias. We’re inclined to use our recent experience as the baseline for what will happen in the future.
What’s been forgotten is that the Midwest is the birthplace of some of our most foundational tech, from the futures and options exchanges that defined the modern approach to structured finance, to the development of the cellular phone in the 1970s, to the perfection of the browser in the 1990s at the University of Illinois Urbana-Champaign.
Today, we are leading the way in the Internet of Things (IoT). Real IoT is happening here in the Midwest in varying degrees. Traditional hubs like Chicago boast progress, but there is also movement occurring in Indiana in the form of the recently founded Indiana IoT Lab. Because of our strong industrial sector, automotive industry prowess, deep architectural roots, heavy footprint in health care and medtech, and strong presence in transportation, telecommunications and retail, we are a focal point of current and future IoT implementations. We didn’t get here by making smart refrigerators — we got here because we recognized the value the IoT presented to our already established industrial heritage and put it to good use.
The Illinois Technology Association’s Midwest IoT Council first produced its Midwest IoT Inventory, a report that catalogs Midwest tech companies doing meaningful work in the IoT sphere, in April 2016. The first edition identified 75 companies. The most recent version, released in October 2017, highlights the growth of the sector in the Midwest, with 145 companies included in the report. That’s significant growth of over 50 percent — proving that the number of IoT companies founded in the Midwest continue to grow.
There may be myths to dispel, and we may have a lot to prove, but we’re also just getting started. The Midwest tech sector is just beginning to build upon the assorted regional strengths and lay claim to its burgeoning piece of the national landscape. As our ecosystem enters adolescence, there’s no telling what heights Midwest tech may reach — but the facts certainly dispel any myth that this isn’t an investment region worth significant attention.
Julia Kanouse is the CEO of the Illinois Technology Association.