The Great Chicago Fire of 1871 threatened the future of the entire city. However, out of the ashes came spark after spark of innovation, as engineers, architects and entrepreneurs worked together to rebuild what had burned down.
Now, the disaster has become the namesake for one of the largest tech incubators in the U.S., one that houses hundreds of early-stage and high-growth startups focused on various aspects of the digital world. Since its founding in 2012, 1871 has become a powerhouse for innovation, tripling in size and garnering international attention that included the mayors of London and Paris visiting to see what they might be able to bring back home. While it started with 50 companies, 1871 now has around 500. Meanwhile, total square footage has tripled, from 50,000 square feet to around 150,000. The incubator also cross-pollinates internationally, swapping startups from more than a dozen different countries and cities, including places like Tel Aviv, Mexico City, Finland and Turkey, all coming to Chicago for a period of time.
Along with providing financial resources and one-on-one mentorship, 1871 has brought in a variety of high-profile guests for special events, including Facebook COO Sheryl Sandberg, former U.S. CTO Megan Smith and AOL co-founder Steve Case. It’s also connected with seven of Chicago’s universities, along with bigger businesses, that provide opportunities for collaboration.
“This isn’t like, ‘Come in, rent a desk and we wish you the best,'” said 1871 CEO Howard Tullman. “This is a complete sort of solution for how you make it highly likely that the companies that get in here and work with us are likely to be more successful.”
The companies aren’t all just pie-in-the-sky ideas. They’re already offering real returns and creating real jobs. According to Tullman, the companies at 1871 have created more than 8,000 jobs and raised $250 million in funds.
A startup hub
In May, 1871 announced a partnership with Bosch, the German dishwasher manufacturer, to launch a new incubator focused specifically on the Internet of Things. The Connectory, as it’s called, will let startups within the 19,000-square-foot space innovate on ways to work with the world of wearables and other connected devices. Two 1871 startups have already moved in. One of them, Glance Displays, is creating “smart mirrors” to turn any mirror into a digital surface that can display numbers, text and images. The other, Xaptum, creates infrastructure for communication between various connected devices.
Increasingly, 1871 is also becoming a place for startups focused on virtual and augmented reality. Take Midwest Immersive, a Chicago-based agency focused on experiential design. For the city’s Magnificent Mile Lights Festival, Midwest Immersive let visitors write VR holiday greeting cards that were then pushed to social channels. This year, on Martin Luther King Jr. Day, another company, EX3 Labs, hosted a mixed-reality experience that let users interact with a hologram of the Civil Rights leader as he recited parts of his famous “I Have a Dream” speech.
It’s not just startups that are choosing to experiment at 1871. In fact, Apple has chosen the space for the only Genius Bar anywhere in the world that’s not operated within an Apple Store. With 2,000 people passing through on a daily basis and 20,000 in any given month, Tullman said, Apple sees it as a prototype for future Genius Bar extensions worldwide. Right now, 1871 is working with Apple on a plan to develop a way to go to market inside 800 to 900 incubators around the world.
Innovating in the VR space
While 1871, a nonprofit, is focused on helping companies thrive, other companies and organizations in Chicago are working on innovation from within. Isobar, the international advertising agency, chose the city as the hub for its research and development facility, NowLab.
“This is my corny saying, but if Isobar is an all-digital network that focuses on innovation, then we are the routers in the NowLab,” said Dave Meeker, vp of innovation at Isobar. “We are the ones that are working all the time, behind the scenes, that pass information around to get collaborations happening.”
Isobar, which now has three R&D locations in the U.S., has been working on VR projects related to behavioral analytics and location-based ad targeting, according to Meeker. It’s also working with the music industry and recently started a collaboration with Facebook’s secretive research unit, Building 8. (Meeker declined to provide details about how the company is working with the social network. However, at Facebook’s F8 conference in April, the company revealed two of the projects in the works: a brain-to-computer interface to let humans type with their minds and a way to hear through their skin by wearing a sleeve-like technology that understands words based on vibrations in their arms.)
Through NowLab, Isobar has worked with hospitality brands like Wyndham on machine learning technology and an in-store neuroscience project in Tokyo with Uniqlo designed by Isobar’s company, Dentsu Science Jam. Through a project with MIT Media Lab, Isobar created a way to measure consumers’ reactions inside of VR or mixed-reality environments.
Here’s how the latter works: While it’s easy to have someone try a VR experience and then ask them what they thought of it, there are all sorts pitfalls in that type of qualitative research. For example, people might lie or say one thing and feel another. However, using “co-presence”—going into a VR system with someone to see how they interact—can help them design content that’s more user friendly. The team is also monitoring neuroscience signals like brain waves through an EEG and heart rate through an EKG to understand how people think and feel, even apart from what they’re saying.
“With the biometric data along with the behavioral data, you and I can go in, and we can determine someone’s mood,” Meeker said. “We can determine if you say, ‘No, no, I’m not frustrated,’ but yet your body is showing me that you are frustrated.”
Meeker said the goal of the research is twofold. The first part of that is to be able to make VR applications that balances the art of design and the science of data. He said this will allow designers to understand how a person is feeling as their emotions are pushed and pulled in different directions.
“This is the real moment of ‘aha!’ for us,” Meeker said. “At what point in this VR experience or in an augmented-reality experience did your emotions get you in a certain state? Where are you more inclined to either contact an agent or take a test drive or purchase or commit in some way to furthering the relationship a brand has through a VR ad, an application or an out-of-home experience?”
The future of voice
While 1871 might be one of Chicago’s tech epicenters, it’s not the only place where emerging technology is gaining ground. Before voice assistants like Apple’s Siri and Amazon’s Alexa gained relevancy, Will Underwood and Jarrod Wolf were researching semantic search and realized a lot could be done with natural-language search by taking the words humans use on a daily basis and making them comprehensible to a machine. AddStructure, which Underwood and Wolf co-founded to analyze reviews automatically and thereby understand what makes a restaurant good or bad, worked early on with service-based platforms like UrbanSpoon before partnering with retailers including Target and BestBuy.
“When you go to a Yelp right now, you just see this five-star rating, and you don’t really know what’s behind it,” Underwood said. “It could be any of hundreds of factors. It could be dishes or the ambiance or the service. You never really know.”
By analyzing reviews and ratings, AddStructure can better help users find what they’re looking for based on what they’re researching or requesting at any given moment, along with what they’ve asked about in the past.
Over the past few months, AddStructure has focused more heavily on voice-activated search, allowing customers traveling to certain places to receive recommendations based on their preferences. While retail has been the biggest focus of late, they’re now doubling down on customer service.
Last year, the company participated in the TechStars incubator in Minneapolis and has since focused on developing commerce experiences for Alexa and Google Home, along with white labeling voice services for retailers. While many agencies are beginning to build voice skills for Amazon and Google devices, building custom products provides more autonomy than they have with Alexa’s parent company, Amazon. This can allow retailers to better customize experiences based on specific devices or messaging apps. It also lets brands have more control over their own data.
“As we all know, Amazon is pretty much eating every retailer’s lunch,” Underwood said. “And so, if they want to compete in these emerging channels, then they need to be able to handle voice and natural language to stay competitive. And that means potentially participating in the Amazon Alexa ecosystem but also providing their own branded, more personalized experiences.”
AI is good for business
While some artificial intelligence is focused on voice, others are using the technology to help with business efficiency. In the third quarter of this year, Strike Social will start offering a new AI service to help clients buy digital media in a way that the company’s co-founder, Patrick McKenna, says will make buying across YouTube and other platforms faster, cheaper and smarter.
According to McKenna, the tool could save some companies from needing to hire more people. And while he admits it sounds bad to eliminate jobs, he said it helps current employees be more productive. AI will eventually change workforces as we know them, McKenna said, so he’d rather disrupt his own company now than wait for it to be disrupted in a way that’s out of his control.
“If you’re not working on it, you won’t survive this next wave of business—you just won’t,” McKenna said of the rapidly increasing role of AI in every aspect of commerce.
While Strike Social started in Los Angeles, the company’s team quickly realized managing East Coast clients could be a problem. Since moving to Chicago, the social analytics firm has maintained a focus on efficiency for itself and its clients.
Like other tech hubs, Chicago offers a combination of human and financial capital. It’s got schools like the University of Chicago and Northwestern. But it’s also got something else: that Midwestern nice. Many entrepreneurs described the city as feeling more collaborative than cutthroat.
“It’s kind of like Chicago versus the world instead of Chicago versus Chicagoans,” Meeker said. “We’re in this together. We’ve got three months before it snows again.”