A year ago, Tony Rizzo worked for Uber Freight, enjoying a Silicon Valley salary alongside perks such as free meals, phenomenal health care and, of course, Uber credits.
Then last October, the suburban LaGrange resident took a business development job at Isometric Technologies, an early stage transportation-tech startup based in Northern California but with a fully remote team that includes several Chicagoans.
The benefits weren’t on par with those offered by Uber Freight, but what Isometric Technologies did offer Rizzo was an ownership stake in a company that still has only about two dozen employees.
“I’m still young and taking calculated risks,” says Rizzo, 31. “The equity was an incentive: If the company does well, hopefully that correlates to me making more.”
That’s typical Silicon Valley logic, and it’s about to be put to the test in Chicago. In July, tech giant Google announced plans to buy and renovate the cavernous James R. Thompson Center in the Loop, which it will then use to substantially expand its local workforce of 1,800 employees — likely adding several thousand jobs along the way.
That makes this a good time to be a talented tech worker. But if you’re working in HR at a Chicago startup that’s aiming to expand, it’s daunting.
“Google does have some things that are going to make it very tough on some of the local companies: They have stock that is worth a lot of money, and they have bushels of cash,” said Troy Henikoff, managing director of Chicago-based tech investor MATH Venture Partners, and a longtime startup mentor.
Google’s land grab — and looming employee grab — are both a boon and a potential beast for a local tech scene that has blossomed over the last two decades, spawning high-flying startups such as Grubhub, Groupon, Relativity and SpotHero, along with an array of venture funds, incubators and accelerators. So far in 2022, more employers are attempting to hire software workers than any other job category besides nursing, according to the Computing Technology Industry Association.
Google’s planned expansion will help lure more tech talent to the region, insiders say, which is good for the tech sector as a whole. But it’s also a gut-check moment for companies that want to hold onto their workers: Is there enough tech talent here to feed that broader, burgeoning ecosystem while also satisfying Google’s appetite?
A magnet for young Midwest coders
Google came to Chicago in 2000, establishing a small sales outpost just as city leaders were beginning to dream about Chicago’s potential to mature into a national technology hub.
Back then, the biggest reason to bet on Chicago’s promise was the emergence of the “PayPal Mafia,” a handful of University of Illinois graduates who left for Silicon Valley and quickly became moguls. That was the group that got away, but the idea was that serious talent was coming of age here. If Chicago could cobble together enough tech infrastructure, perhaps the next batch of software stars might choose to stick around.
The basis for that thesis still holds: The University of Illinois at Urbana-Champaign offers the country’s fifth-ranked graduate computer science program, according to U.S. News & World Report. Other nearby universities such as Purdue, Northwestern and the University of Chicago also rank in the top 30, while the University of Illinois at Chicago and the Illinois Institute of Technology crack the top 100.
Google’s expansion announcement pointed to the draw of downtown. Chicago site leader Karen Sauder wrote an enthusiastic blog post proclaiming, “We will be getting in on the ground floor of a broader revitalization of the Loop” shortly after the announcement in July — the company is likely betting that revitalization will be compelling to the area’s concentration of computer science talent. The company, headquartered in Mountain View, California, didn’t respond to a request for comment.
Those same dynamics also serve as good news for local tech leaders.
Google’s expansion “is huge for the tech community, full stop. It’s awesome because it makes that graduating student say, even more than before, ‘Chicago is a great option to come be a technologist,’” said Kevin Willer, a partner at the venture capital firm Chicago Ventures, which has nurtured several local companies such as Cameo and Tock.
Willer is a longtime tech scene cheerleader and a former Google insider. He helped launch Google’s Chicago office in 2000 and worked there until 2012 when he became the founding CEO of 1871, an incubator and co-working space in the Merchandise Mart.
“Short term, yes, you’re going to see wage pressures on some of the startup companies that won’t necessarily be able to compete with the big tech companies,” Willer said. “But what you see in the Valley is that people work for those big companies, they develop professional networks and skills, and then they transition to something like a venture-backed startup where there are more growth opportunities. So people will join Google and then eventually migrate to other companies in the area.”
About 41,000 software developers are employed in the Chicago area, according to CompTIA, and Chicago ranked fourth among U.S. metro areas with nearly 11,000 job postings across the technology sector in August, according to CompTIA’s monthly Tech Jobs Report. New York City, Washington, D.C., and Dallas were the top three. At the moment — granted, well ahead of the Thompson Center’s renovation — Google lists 338 available jobs here.
Boss mode
What Chicago’s cadre of top university computer science programs can’t supply right out of the gate is a cohort of seasoned tech executives. That’s an acute need for growth-stage tech companies here, and it’s why CEOs such as Jellyvision’s Amanda Lannert are happy to bear some short-term wage pressure in the battle for software developers.
As a result of Google’s expansion, Chicago is likely to see an influx of the sort of seasoned tech executives often called on to help successful startups navigate the next phase of growth. “That’s where traditionally we’ve had to go to the coasts to try to convince people to come here,” said Lannert. “Chicago is still an area where the tide raises all boats, and where anyone’s big exit or [investment] creates value for everyone because it makes people look at this as an ecosystem where you can win.”
Another plus is Google’s emphasis on pulling employees back to the office. Lots of tech companies such as Tony Rizzo’s Isometric Technologies have embraced a fully remote-work model, but Google wants its people to spend time in the office — which means people hired as part of Google’s Chicago expansion will have to live here.
So while Lannert laments that Jellyvision’s “ability to woo the best talent will continue to get more expensive” in the wake of Google’s expansion, she says to bring it on.
“I truly believe we can absorb this, we can handle it. This is a really big city that’s had a sleepy reputation, but Google wouldn’t come here if they didn’t have the data that proves that we can play,” Lannert said.
Steve Hendershot is a freelance writer for WBEZ.
