Dear Politicians, Entrepreneurs and Financiers of Chicago,
Now is the time for Chicago to make a bold move to develop a technology and innovation-based economy. The proposal is straightforward: offer a basket of tax incentives, political support, direct subsidy, and venture capital to establish a “Mobile App Development Economic Zone” in downtown Chicago. The initiative should be aimed at both incentivizing existing mobile app developers and publishers to relocate to Chicago and for new entrepreneurs to choose Chicago as their metropolis of choice.

Chicago & IT: Now or Never?
Why do this? Let’s be honest. Chicago almost entirely missed the boat in the past 20 years on that whole “personal computer” and “internet” revolution that has energized state and local economies in just about every other major metropolitan center in the  US. Mobile app development is one of the great frontiers of technology today with the potential to create jobs and wealth for Chicago and Illinois, while further diversifying the portfolio/mix of industries. Looking forward to the century ahead, it should be obvious to all residents that technology and specifically mobile technology will become increasingly important to our society and economy. If now is not the right time for Chicago to get involved, when is?

Why Mobile App Development?
Compared to other technology frontiers, mobile app development is particularly lightweight and democratic. For instance, it would be difficult to start a new semiconductor-based economy in Chicago now because of 1) extensive relocation costs for any preexisting company to make the leap since semiconductors are a capital (physical and human) intensive business 2) Chicago lacks the throngs of specialized hardware, firmware, tools, test and services engineers that are part and parcel of semiconductor engineering. You can’t just start a semiconductor business by yourself. You need at least 10-40 employees, which implies a much larger pool of potential employees with such backgrounds. 3) You can’t just start a semiconductor business with an idea that came to you in the shower. Semis are built on specialized knowledge generally hatched out of larger semis firms (see Intel). Chicago lacks all of the above. And this isn’t specific to semiconductors–these points apply as much to semiconductors as they do to enterprise software, consumer hardware or any number of the bedrock segments of an IT-based economy.

On the other hand, today any given mobile app development startup requires a couple of generalist software engineers and a graphics wizard/human interface designer. The idea behind the next great iPhone or Android app will not be found in some corporate headquarters in Santa Clara, CA or Waltham, MA, it could come to a Chicago CTA rider or a local university student. In fact, this has already happened with a notable startup named Bump Technologies, which was founded by a couple of Chicago Booth full-time MBAs. Unfortunately, without any incentives to stay, that company has since relocated to Mountain View, CA. Chicago had the idea and gave it up.

A Proposed Solution

1. Establish Chicago as a MADE Zone, “Mobile App Development Economic Zone”
   • Appoint leading business executives, venture capitalists, entrepreneurs, professors, investment bankers, consultants, and politicians to the Council. I’d like to see Mayor Daley, a Motorola executive, J.B. Pritzker, Kellogg/Booth professor(s), an IDEO consultant from their Chicago office, a Deloitte big wig, and a young entrepreneur such as one of the Threadless founders on the Council
   • Powers and characteristics of the MADE Zone are established below
2. Offer a 5-year state and city tax holiday to mobile app developers & publishers in Cook County (ie Chicago)
   • Specify the qualifying platforms: iPhone, Android, Blackberry, Palm, Windows, and Symbian and other requirements
   • Require all participants to submit formal applications to qualify. Companies must meet various requirements, be under a certain size, etc.
3. Offer direct subsidies for relocating companies
   • Establish a $XX million fund to promote and assist in the relocation of existing startups to help seed the project
   • Market to and work with some leading, notable and young mobile app startups to bring them to Chicagoland
   • Let’s get some really big names ones to make a splash
4. Raise $X million to lease/purchase and rehabilitate a specific industrial building to turn into a MADE Zone incubator  office building for X years–proximity of entrepreneurs drives innovation
   • Offer subsidized rent to occupants
5. Establish a venture capital initiative with Chicago & Illinois as GP or LP to fund mobile app development
   • This could be in the form of a single fund run by the city/state as the GP (somewhat akin to the New York City Investment Fund) or as an LP to third party funds
6. Offer additional tax and other incentives to qualifying new entrepreneurs and startups
   • Have you ever worked in an early stage startup? Life isn’t easy. Payroll tax breaks and other such incentives could help on the cost side, preventing the death from a thousand cuts that kills innovation. How about some pro bono basic legal and tax consulting from MADE Zone Council Members such as Deloitte?
7. Involve the Universities
   • Get the University of Illinois, Northwestern, University of Chicago, DePaul, IIT, Loyola and the other Chicagoland and Illinois (hell, all of the Big 10 and Midwest) schools onboard with mobile app development  courses (see Stanford’s CS193P taught by my good buddies), lectures, student club involvement etc. Give professors advisory positions and align incentives
8. Involve local businesses
   • Local businesses (big and small) should have every reason to support this. Think about it. Motorola: Absolutely! NAVTEQ: Yes! The sandwich shop across from where the incubator building is located: of course!
9. Get the word out
   • This is perhaps the most important initiative of them all and its the one upon which all depend
   • Take out ads, get on Twitter, scream at Michael Arrington until he writes an article and setup press conferences until the whole world knows

Now is the time to act Chicago. Become a leader and innovator.

Sincerely,

Tom Loverro