Sometimes risk is the safer option

This is a blog post that I'd much prefer not having to write, but I've learned some lessons that could be very helpful to others. I'll first describe what I did, and then, what I should have done.

In late January of this year, I ended a multi-year consulting project. Much of my role in the project was done in the fall of 2013, and to be fair, I was expecting my client to end my contract as early as October. They were a great client to work with, but I had been thinking about what my next move would be for more than a year. I worked almost my entire career on the West Coast, and I really wanted to get back there if I could. Given the cost of living in Silicon Valley, I decided to look at Portland as the place to move; I started my career working for HP in Corvallis, Oregon, 90 miles south of Portland.

When my project ended in January, I had a lot of money set aside to pay income taxes; more than enough to pay for the move and several months of rent and utilities. However, I decided that it would be very risky for me to pick up and move to Portland without having a job lined up. In addition, I was convinced that I could find a new job or project in the Chicago area within a month or two. So, I stayed here, applied to jobs and took calls from recruiters. Unfortunately, from February to today, I've had exactly one job opening that resulted in onsite interviews, and the client ended up hiring none of the candidates, including me. I burned through the tax money to the point that it was insufficient to pay for a move, so I was stuck here. I ended up selling some of my belongings, and then my car, in a last-ditch attempt to move, but that fell through.

Now, I've got three job prospects, two in the Chicago area and one on the West Coast, and I'm hoping that one of them turns into a real job. I've also been working on a crowdfunded Internet of Things project since May. However, in hindsight, when my project ended in late January, I should have immediately booked a flight to Portland to find an apartment, and then moved. Moving without a firm job offer or contract in hand seemed like the much riskier option at the time, but in reality it would have been no worse than the situation I'm in right now. In fact, given that Portland has a far superior public transit system than the far northwest suburb of Chicago in which I live, it would have been better because there's an excellent chance that I could have sold my car if I'd needed to without having to buy a replacement.

The lesson is that you should look at the worst-case scenario for all the options available to you, not just what you believe to be the most likely scenario. In my case, I compared the worst-case for Portland with the most likely case for Chicago. If I had compared the worst-case for both locations, I would have moved immediately. Given my background and experience, I have a much better fit with the companies and markets along the West Coast than I do with Chicago. I could have lived in Portland and either worked full-time for a technology company there or consulted for firms from Seattle to San Diego.

Staying in Chicago, which I believed to be less risky, turned out to be the much riskier option. I made the mistake because I didn't judge both risks equally. Keep that in mind when you're making a major business or personal decision.

Should I base my start-up in Chicago, or move to Austin, Portland or Silicon Valley?

I'm in the early days of working on an Internet services start-up, and one of the questions that I'm wrestling with is where to base my business. In the early days, it's very easy to move from one city to another; once my business has multiple employees, many with families, it'll be much more difficult (and more disruptive) to move. I haven't yet come to a decision, but my thinking may be of value to some of my readers who are also going through the process, or who may do so in the future.

Let's start with Chicago, since that's where I'm currently based. Specifically, I'm located in a far northwestern suburb of Chicago, not the city itself. As a practical matter, I'll have to move to Chicago or to one of the near suburbs, such as Evanston or Skokie, to find the talent I need. Chicago has just about everything a technical startup needs--excellent colleges (University of Chicago, Northwestern, Illinois Institute of Technology and University of Illinois at Champaign-Urbana) for talent, a culture with plenty of night life and social activities to attract young people, and reasonably priced office space. It's also got some angel investors and venture capitalists, but by and large, they're significantly more risk-averse than investors in Silicon Valley. Investors in Chicago like to see a start-up making money before they invest, which goes against the whole purpose of seed funding, which is to help new businesses get to the point where they can generate revenue. If you need to be generating revenue in order to attract the necessary investment in order to generate revenue, you're not being offered seed money.

Another problem with the Chicago financing community is that there's a big hole between angel investors and when most local venture capitalists will participate. Even if you manage to get angel investment, it's extremely difficult for growing businesses to get the next round of funding. The amount needed is too high for the local angels, and the risk is too high for local institutional investors.

There are two other issues that make Chicago less than ideal for start-ups (I'll deal with weather in the section titled "Potential Natural Disasters"). The first one is political corruption. Chicago is the most corrupt major city in the U.S., and Illinois is the most corrupt state in the U.S. Last Night's "Daily Show" gave an amusing, but accurate, look at the situation, but for now, consider that you're more likely to go to prison if you get elected Governor of Illinois than if you commit murder in Chicago. This corruption adds billions of dollars each year to the cost of government (which results in higher taxes), and to the cost of running businesses (in the form of those same higher taxes, plus payoffs, contributions to political campaigns, requirements to use union labor when non-union labor is just as good and is much less expensive (even with benefits), and other expenses.)

The second issue is the risk-averse nature of the Chicago community. Just as investors look to minimize their risk by focusing on revenue-producing businesses, Chicagoans would much rather take a job with a start-up, with a guaranteed income and benefits, than start a business themselves. Taking the personal and financial risks involved with a start-up simply isn't ingrained in the local culture, as it is in Silicon Valley.

Potential Natural Disasters: This is where I'll discuss weather and similar problems. For Chicago, the issues are winter weather in general, with blizzards in particular, along with floods and tornadoes in the spring and summer.

Another option is Silicon Valley. The universities (Stanford, U.C. Berkeley and U.C. San Francisco, along with many smaller colleges), existing base of trained developers, engineers, marketers, lawyers and financial experts, and deep financial resources in the form of angels, super-angels and venture capitalists, along with the local culture that supports and encourages start-ups, make Silicon Valley the best place in the U.S. to start a business. Some Chicagoans brag that there's more money in the Chicago Merchantile Exchange than in all of Silicon Valley, but if the people who are investing in the CME won't invest in start-ups because they don't fit their "risk profile", their money is worthless.

Silicon Valley's Achilles' heel is the cost of doing business. Everything in California costs more than just about anywhere else in the U.S. Taxes are higher, and housing costs more, as does medical care (and the insurance to cover that medical care). All of those costs mean that salaries in Silicon Valley are higher than just about anywhere in the U.S., yet the standard of living isn't any better. So long as I can find qualified people in another location, I can save 30% to 50% of my operating costs by basing somewhere other than Silicon Valley.

Potential Natural Disasters: Earthquakes, floods, mudslides, droughts and firestorms. Silicon Valley (and much of California) has earthquakes all the time; most of them are too small to be sensed. However, everyone waits for "The Big One", a magnitude 7.5+ earthquake on one of the major fault systems that's overdue. Any big earthquake has the potential to disrupt transportation, electricity and natural gas supplies for days, weeks or even months. It also has the potential to take many lives. The one big positive is that California's building codes have been upgraded many times, and few places in the world are better prepared for earthquakes. In the coastal areas of California, including Silicon Valley, winter is the rainy season, and that's when the state gets floods and mudslides. The summer is when California gets firestorms, usually in some of the state or national forests.

Austin, Texas is a good alternative. Austin is the capital of Texas, the home of the University of Texas at Austin, and it houses Dell's and Freescale Semiconductor's headquarters as well as major facilities for AMD and Intel. It's also a little circle of liberalism inside a huge red conservative state. Austin has a young, creative population, as perhaps best illustrated by the city's annual SXSW conference every spring that attracts techies, filmmakers and fans from around the world. Austin is a moderately-sized city, but it has technical and business resources that belie its population size. It's also small enough that a start-up isn't likely to get lost or ignored. Finally, Austin's cost of living is a bit lower than Chicago's and much lower than Silicon Valley's.

Austin has a small angel and venture capital community, but it's not as developed as Chicago and nowhere near the size of Silicon Valley. It's also largely dependent on the University of Texas to provide an ongoing supply of young talent.

Potential Natural Disasters: Summer weather in general, droughts and tornadoes. An oppressively hot day in Chicago would be considered cool and comfortable in Austin, where daily maximum temperatures near or even over 100 degrees Fahrenheit are common. Texas is in the midst of a severe drought, and the state suffers a drought every few years; combined with the heat, this causes pretty miserable conditions.

I've also considered Portland, Oregon. I haven't been there for many years, but it's a beautiful city with a strong technical community (Intel, Tektronix, Agilent, Nike and others). Portland State University is based in the city, and both Oregon State and the University of Oregon are two hours away or less. It's also less than 150 miles to Seattle, where Amazon, Microsoft, Nintendo U.S. and many other technology companies are based. Portland's a young person's city, with lots of night life, easy access to the Pacific Ocean, and a deep commitment to the environment. Surprisingly, Portland's cost of living is almost identical to Chicago's.

Portland's angel and venture capital community are similar to Austin's, with one big difference: Portland's location--driving distance from Seattle and two hours from Silicon Valley by air--makes it possible for Portland start-ups to attract funding from both areas, as well as local investors.

Potential Natural Disasters: Volcanoes, earthquakes, tsunamis, floods. When I lived near Portland, Mt. St. Helens erupted (not the devastating eruption that blew off the side of the volcano). Both Mt. St. Helens and Mt. Hood are active volcanoes. Earthquakes occur due to faults and plate lines off the Pacific coast. Portland is much less seismically active than Silicon Valley, but like California, Portland and the rest of the Pacific Northwest are awaiting their own Big One, which is likely to trigger tsunamis due to the underwater location of the faults. Perhaps the biggest weather problem with Portland is its almost continuous rain for eight months out of the year. Unlike other cities, the rain is more like a mist, and the sun comes out so rarely during the rainy season that weather forecasters predict "sun breaks". When the sun finally comes out and stays out, however, Portland is spectacular.

So, those are my options: Chicago, which has a lot of things going for it but also has some serious drawbacks; Silicon Valley, which has much more going for it but is an incredibly expensive place to live and work; Austin, which is a great city with an excellent cost of living, but is incredibly hot in the summer; and Portland, which is also a great city with an excellent cost of living, but it's rainy and overcast eight months of the year.

What are your thoughts? What other cities should I consider, and why?

Cloning Silicon Valley is a lot harder than it looks

For decades, cities and countries around the world have tried to duplicate Silicon Valley. With very few exceptions, these Silicon Valley "clones" have failed. The most common reasons given for the failures include lack of venture capital and lack of university support, but there are a number of other reasons why good intentions so often go awry:

• Technology and business centers usually grow organically, as an outgrowth of existing universities or businesses. "Artificial Trees" are "Silicon Valley" clones that are built in areas with no natural growth factors. They're a lot like farms that are built in the middle of the desert: Everything they need has to be imported. As soon as the supply of any essential ingredients (talent, technology or money) tapers off, these "Artificial Trees" die off.
• In some areas, startups get funded on the basis of political clout and power, not merit. Entrepreneurs without connections don't get funded, and if they can't make the necessary connections, they go under. It becomes clear fairly quickly that the startups that got funding did so for the wrong reasons, and the available investment capital dries up.
• Some Silicon Valley "clones" get started with verbal commitments from government or private investors to make funding available. As time goes on, however, those "investors" don't actually make any investments, or the few that they do make are small and ineffectual.
• In some areas, a handful of people have designated themselves as the "go-to" people for creating and supporting the startup community. If other investors or organizers that haven't agreed to work with the "go-to" people try to offer support to the community, the established order works to push them out or minimize their influence. In addition, the startup community defines itself by the mindset of its "go-to" people and rejects ideas and participants that don't fit.
• Sometimes, the "go-to" people are well-meaning but ineffective. The head of a startup development organization I interviewed late last year in Chicago said that his group had spent seven years trying to get the city's largest investors (family foundations and investors affiliated with the Chicago Merchantile Exchange) to get involved with venture investment, especially A and B rounds, with very little success. If you try doing something for seven years and keep failing, you're doing something wrong.
• Startups struggle in areas where there's a great deal of competition for talent from established companies. For example, New York City startups have found it very difficult to compete for technical talent with investment banks and other financial companies that pay enormous salaries and bonuses.
• If entrepreneurs focus on the wrong reasons for doing startups, they're likely to fail. For example, if an entreprenur wants to start a business in order to get rich, without recognizing the high risk of failure and tremendous effort involved in building their business, they're likely to give up as soon as running their business becomes too difficult or expensive.
• If the community puts a high price on failure, either social or financial, startups aren't likely to flourish. In the U.S., 90% of all small businesses fail, and 70% of startups funded by professional venture capitalists fail, so it's essential that entrepreneurs have the ability to fail and try again without stigma or crippling personal penalties.

There are so many ways that a venture community can fail that it's amazing when one succeeds.  There's no single key to success--there are many.

Borders closes its Chicago Michigan Avenue store

Yesterday was the end of an era, as Borders closed its huge Michigan Avenue bookstore located across from the Water Tower in downtown Chicago. The closing wasn't related to Borders most recent financial problems; the company originally planned to close the store a year ago, but negotiated a one-year lease extension. However, it is indicative of the larger changes in the overall U.S. retail book business. Borders was in its just-closed location for 16 years, and for the first time in decades, there will be no bookstores on Michigan Avenue, one of the premier shopping locations in the U.S.

Borders will be replaced by Topshop, a British-based clothing chain. There are many clothing stores on Michigan Avenue, and while I wish Topshop well, I also wish that there had been room there for at least one bookstore. There may still be, but in an era of eBooks, bookstores in the U.S. are going to have to get used to much smaller locations. As I've written previously, the new model is likely to look like an oversized Starbucks with a modest selection of print titles, rather than a book superstore with a Starbucks inside it.

A peaceful alternative to the "war" for top talent?

The Wall Street Journal ran an article yesterday that merely reinforces what anyone in Silicon Valley has known for some time--there's a war going on between the startups looking for hire top developers and the established companies looking to keep them. (Example #1 of the established companies is Google, which has raised salaries by 10%, gave every employee a surprise $1,000 cash bonus and offered insane stock options to top developers to keep them from defecting.)

According to the WSJ, Okta, the San Francisco-based startup that's the focus of the article, plans to spend 80% of its $10 million Series A round on salaries, most of which will be for developers. Part of the problem is that salaries for developers in the San Francisco Bay Area are dramatically higher than in most other parts of the country; Okta is paying $75,000 for developers just out of school, and up to $150,000 for top developers, while the national median salaries for entry-level developers is $51,000, and $101,000 for experienced, senior-level developers (based on figures from Salary.com).

These costs are driven in part by the cost of living in Silicon Valley, which is higher than anywhere in the U.S. except for portions of New York City. In addition, even though there are far more developers in Silicon Valley than in any other comparable area in the U.S., everyone wants the best developers, and there are only so many of them to go around. That competition inflates the salaries that companies have to pay for talent.

In addition, the decline in IPOs has made candidates skeptical about the value of equity. In the "Dot-Com" years, startups could offer sub-par salaries, even to top talent, so long as they gave them substantial stock options. Today, when the exit strategy for most startups is to be acquired, most of the proceeds go to the angel investors, venture capitalists and founders; very little is left over for employees. So, while startups are very picky as to who they hire, the candidates demand top salaries (and still demand equity as well).

One solution to this logjam is to stay away from Silicon Valley. I've written about this many times before, but moving from almost anywhere else in the U.S. to Silicon Valley will instantly impose an operating cost penalty of 30-50% on your startup. Cities like Austin, Boston, Boulder/Denver, Chicago, Pittsburgh, Portland and Raleigh/Durham/Chapel Hill have excellent quality of life, strong technology bases, top universities and much lower costs of living than Silicon Valley.

Here's the key: These areas don't need to be "the next Silicon Valley" in order to be successful. They don't have to replicate the entire Silicon Valley infrastructure: Money and resources are now global. The biggest investor in Chicago's Groupon, for example, is Digital Sky Technologies, based in Moscow. Moscow is a long drive from Sand Hill Road.

Having lived in Chicago for two years now after 25 years in Silicon Valley, there's not much that I miss. The weather was much more to my liking, I enjoyed being able to drive to the Coast in an hour, and the seafood was far better. On the other hand, I paid 50% more for a semi-squalid apartment, virtually everything cost much more, and state income taxes were three times higher than those in Illinois. For me at least, it's a reasonable trade off.

So, one solution to the "war" for top talent is to stay out of the battlefield.

Opprtunities for angel investors and VCs in "Flyover Country"

Earlier this week, Technori published a two-part article that I wrote for it on "Angels in Chicago". The first part explained the concept of angel investing and introduced readers to four active angel investors in Chicago, and the second part discussed the problems that angels see in funding proposals, compared angel investing to incubators, and offered some suggestions for entrepreneurs.

There's a surprising number of angel investors in Chicago. AngelList only names 16 Chicago angels, but Hyde Park Angels, the biggest angel investing group in the city, has 76 members, only a handful of which are on AngelList. There are other angel groups just getting started, like Wildcat Angels. And Groupon notwithstanding, the angels I interviewed said that the valuation inflation and competition for deals that investors are seeing in Silicon Valley and New York isn't happening in Chicago.

Terry Howerton, the head of the Illinois Technology Association, believes that the lack of VCs in Chicago is a bigger problem for startups than the number of angel investors. He said that there's only three or four VCs in the city doing Series A or later rounds, so VCs from other cities in the Midwest come to Chicago to look for deals. There's an enormous opportunity for angels and VCs outside Chicago to do deals here.

According to Bankrate.com, the cost of living in Silicon Valley is more than 30% higher than Chicago, while New York/Brooklyn is more than 50% higher, and New York/Manhattan is almost 80% higher. That means that a startup's labor costs (as well as taxes and some other operating costs) are going to be dramatically less in Chicago and other Midwestern locations. In addition, there isn't the competition for deals and valuation inflation that's occurring in Silicon Valley or New York.

Chicago has become a center of startup activity, especially for online services, as well as vertical B-to-B applications (financial, real estate, travel, etc.). There's a real opportunity here for investors, especially if you keep the companies in Chicago (rather than moving them to Silicon Valley or New York) and take advantage of the area's lower costs.

The Chicago startup competition this week that you didn't hear about

This was the week of TechCrunch Disrupt in Silicon Valley, where perhaps the biggest news was AOL's (or is it aol's) acquisition of TechCrunch itself. There was a startup competition in Chicago this week as well, midVentures LAUNCH, but it didn't get much press coverage, even in Chicago. I was very pleasantly surprised and encouraged by some of the startups at the event, and the health of the startup community in general.

First, we need to define the Chicago venture community as covering a lot more than Chicago. Some of the most impressive startups I saw at the event were from Indianapolis, Bloomington, IN, and even Bethesda, MD. Rather than being a standalone center for startups, Chicago is really the hub for ventures throughout the Midwest. Next, there were companies competing that are actually making money. TinderBox, for example, is already very successful "under the radar" with an impressive service for creating, managing and tracking proposals that's integrated with Salesforce.com. There were contestants with pre-release services that already look very refined: MyJibe is going after the Mint.com market space with a personal financial management and budgeting service. They're targeting the local and regional financial services companies (banks and credit unions) that want online services to compete with those of much bigger companies like PNC, but don't have the resources to build their own solutions.

For all the hand-wringing over the lack of new hardware startups, the winner of midVentures LAUNCH was a hardware company. The winner, Wearable, makes the AirStash, a $99 wireless flash drive with built-in media server that fits into your pocket. It holds any SD card with up to 32GB of capacity and then shares the contents of the card with other WiFi-enabled devices. It also connects via USB and looks just like a flash drive to a PC. The AirStash is an impressive device, and it's shipping now.

The one thing still missing from Chicago that's holding down the number of startups is a large angel community. A large, successful startup that cashes out in an IPO or acquisition spins out lots of potential angel investors, and the only company in Chicago that's likely to be in that category soon is Groupon. However, those Groupon angels will fund other startups, and as those companies cash out, a new generation of angel investors will be born. That cycle is the backbone of seed funding in Silicon Valley, and it needs to be "jump-started" in Chicago, possibly through Silicon Valley angels investing in some Midwestern startups. They would have been very excited by what they saw, had they attended midVentures LAUNCH.

w00tstock: The melody lingers on…and on…and on…

I attended w00tstock 2.1 in Chicago last night—three hours of entertainment that lasted 4 ½ hours. I’m not kidding you. The show was scheduled to run from 7:30 to 10:30 p.m., but it didn’t end until after midnight. If the show had been 4 ½  hours of unalloyed entertainment, that would have been fine, but it was a few entertaining performances sandwiched in between a lot of filler. The introduction to the last song of the night by Paul and Storm ran more than 30 minutes long. It got so bad that Peter Sagal, the host of NPR’s “Wait, Wait, Don’t Tell Me,” who had earlier done a very funny reading about the everyday life of a James-Bond-villain-type henchman, came out and told them to “finish the f*%#ing song.”

Long ago, entertainers recognized that it was much better to leave audiences wanting more than to have them grumbling about how long the show was. Last night’s w00tstock could have been a tight, well-organized 2 to 2 ½-hour show, sans filler acts, filler videos and the excruciatingly long final act. If you haven’t seen the show, I won’t spoil it for you further, and if you enjoyed the show last night, please accept my apologies. I enjoyed large parts of the show—it was just way too long.

For whatever reason, the Internet seems to encourage people to throw away schedules—there’s no clock, so you can go as long as you want. But, one of the reasons for schedules is to keep audience attention spans in mind. w00tstock is hardly the only offender; there are many “talking heads” podcasts and webcasts that run 90 minutes long or longer. If you clipped out the asides, the digressions, and the requirement that every member of the panel answer every question, you’d have a much tighter, more interesting 60 or even 30 minutes.

“Leave ‘em laughing” and “leave them wanting more” may be clichés, but they’re true. And, if you don’t buy that, at least listen to the immortal words of Albert Brooks, performing his own candidates for new National Anthems: “Get on with it!”

Go where the talent is

TechCrunch wrote today about two companies opening new geographic outposts: Facebook is planning to open an engineering office in Seattle, and Chicago's Groupon has acquired mobile application developer Mob.ly, which is currently based in San Francisco, and will move it to a new Groupon Silicon Valley office in Palo Alto. In Facebook's case, the company is probably looking to tap into engineers that work at MySpace's Seattle offices, as well as talent from Microsoft and Amazon. Groupon's CEO Andrew Mason made it clear that has company has had difficulty getting talent to relocate to Chicago from Silicon Valley, so Groupon will go where the talent is.

Opening up satellite offices is hardly a new tactic; Google has had a Chicago office ever since it purchased Feedburner, and has large operations in New York, Pittsburgh and other cities. Microsoft's Silicon Valley engineering center is in Mountain View, a couple of miles from the Googleplex. Amazon's A9.com search engine operation is headquartered in Palo Alto, and it designs its Kindle hardware at its Lab126 in Cupertino, not far from Apple's headquarters. The point is that all these companies found it easier or more cost-effective to find the talent they needed in cities other than their headquarters.

You don't have to have a billion-dollar valuation to play at this game. Chicago's 37signals is perhaps one of the best at using virtual offices to get the talent it needs without relocation expenses or physical offices. Probably half of 37signals' team is scattered across the U.S. and Europe; they use the company's own tools to communicate and keep in sync.

VCs often demand that startups relocate to Silicon Valley, New York or Boston so that they can be close to investors and talent. However, it's far more cost-effective to create outposts where the talent is than it is to move everything to a region that quite often has much higher costs of living and doing business.

The Chicago startup scene is starting to take off

I attended an event in downtown Chicago tonight called MidVentures25, a presentation and competition for 25 startups from Chicago and other parts of the Midwest. One company that participated came all the way from Athens, GA. The event was very well-organized and equally well-attended. The organizers took over 22,000 square feet of "see-through" space in an office building across from the Willis (Sears) Tower for the night.

Each of the startups had a separate display area, much like a trade show.  The judges (drawn from companies such as Groupon and Google, as well as VCs and local entrepreneurs) visited all 25 tables, got demonstrations and then chose their five favorite startups to present in the final round. The winner got $16,000 in cash, goods and services. UPDATE: One thing that I forgot to mention when I wrote this post last night is that the startups didn't have to pay a dime to enter the competition or for exhibit space at the event. The event organizers and sponsors picked up all the costs. The TechCrunch50 was the first major startup competition that chose not to charge the selected startups. MidVentures25 has picked up on that trend, and I hope that it becomes the rule, not the exception, in startup competitions in the future.

What's so exciting about this is that Chicago is starting to feel like a viable place to base a startup. There still isn't much of a VC community in Chicago; I'd like to see a "Sand Hill Road East" spring up somewhere in the city, even if it's only remote offices for a handful of VCs from Silicon Valley, New York and Boston. As I've written before, just about everything needed for a vital venture community is here, and the costs of operation are very low compared to Silicon Valley, New York and even Boston.

Tonight's turnout indicates that there's a lot of interest in startups, even though the local culture hasn't exactly been supportive of the startup mindset. Three new incubators recently opened in Chicago, so there will be more opportunities for entrepreneurs to pursue their dreams.

Helping startups get started

I moved to the far northwest suburbs of Chicago a year ago from Silicon Valley, but I've stayed interested in and involved with new ventures, having founded or co-founded three companies myself. One of the things that surprised me was how much more difficult it seems to be to start new businesses here than it is in Silicon Valley. There are plenty of universities to provide technology and motivate students, including the University of Chicago, Northwestern, IIT and the University of Illinois. The Chicago area also has Argonne National Labs and Fermilab, two of the top scientific research facilities in the country. 37Signals and Threadless thrive here, and I know of a number of startups that are under the radar. Nevertheless, for those startups that do get traction, there's overwhelming pressure to move, usually to Silicon Valley or New York.

I recently signed up for The Founders' Institute, a program of lectures and team assignments designed to help aspiring founders to gain the skills and make the connections that they need for success. I was accepted but had to decline when I learned that I couldn't participate remotely and would have had to fly back to Silicon Valley for all of the sessions, or attend sessions in one of their other cities, none of which is even remotely convenient for me. There are other groups that do similar things, from Y Combinator (the best-known of the group) on down. The problem is that all of these groups depend on getting members and lecturers together in one place over a period of months. It won't work if there aren't a lot of qualified lecturers and interested participants in a city.

Given the success that for-profit educational instutitions such as University of Phoenix and DeVry University are having with remote learning, I'm convinced that a similar approach will work for training and encouraging new business founders, no matter where they're located. We use the Web for collaboration, messaging, teleconferencing and entertainment all the time--why can't we use it to help people learn how to launch their new businesses, wherever they are?

Let's be realistic--there are millions of jobs in old-line manufacturing industries that are gone in this recession and will never return. We have to encourage new ventures across the U.S and create jobs where the people are. Let's use the tools that have so dramatically lowered the barriers to entry for technology companies to lower the barriers to entry for teaching and encouraging entrepreneurs, across the country and around the world.

I've got a new job!

As some of you know, I've been looking for a new job for almost six months. Last week, I accepted an offer with a large, privately-held company outside Chicago, IL, USA. I'll be starting in mid-December, so I have to find a place to live, move and get settled in over the next two weeks. As a result, I'll be posting on this blog intermittently (if at all) for a while. Thank you for your patience!