Editorial: JB Pritzker's 1871 is exiting the Merchandise Mart. What does that mean for Chicago tech?

Chicago Tribune

02-03-2025

The news that 1871, Chicago's best known technology incubator, is leaving its longtime home at the Merchandise Mart seems at first blush like a warning sign — yet another indicator of the city's declining business environment.
Don't get us wrong, we don't see this news as a positive sign. But we also don't believe Chicago's future as a vibrant tech hub hinges on the future of 1871, whatever that ends up being now.
Then a venture capitalist, JB Pritzker co-founded 1871 some 13 years ago, some six years before he first won election as Illinois governor. The incubator's space at the Mart quickly became an energetic locus for tech startups in Chicago and, just as importantly, gave the city's nascent tech community a brand that was recognizable to Chicagoans outside the startup orbit as well as to funders and entrepreneurs in other cities.
No doubt the governor is experiencing the same bittersweet feelings we heard and read from others in the tech world. The success of 1871 served Pritzker well in establishing his business bona fides with voters during his first campaign against another businessman, then-Gov. Bruce Rauner. It branded Pritzker as someone with his eye on the future.
Much has changed in the 13 years since 1871 started. Most obviously, a pandemic upended office life as we knew it and nearly overnight forced business of all kinds to learn to work effectively from remote locations. Just last week, we heard Walmart CEO Doug McMillon address the Economic Club of Chicago making the point that Walmart now thinks of itself more as an e-commerce company than a brick-and-mortar retailer despite the continuing ubiquity of its stores throughout the nation. McMillon said that technological change had upended everything about the company, at least beyond its commitment to its culture and low prices.
But as important as the pandemic's continued fallout in this instance: Chicago's tech scene has gravitated away from River North, where 1871 was located, and west to Fulton Market and the West Loop.
Angel investors, venture capitalists, tech-focused bankers and entrepreneurs still gather in person; if ever an industry needs human connection, it's the startup world. But they do so increasingly in each other's offices, coffee shops and other dispersed locations like the Soho House. And those are largely in the West Loop.
For 1871, as many employers discovered post-pandemic, physical space became an overly costly burden rather than a facilitator. The Chicagoland Entrepreneurial Center, the nonprofit that runs 1871, was losing money due to the rent it was paying at the Mart, and the number of tenants of space within the incubator had dwindled. CEO Betsy Ziegler said in a letter to members that 'we want to exit the leasing business.'
Will 1871 have a physical presence at all in the future? That seems an open question at this point.
The organization will need to decide its future role now that the 'incubating' part of what it does is over, at least in terms of physical space. The brand remains well-known, so we hope 1871 continues to play an important role in helping fledgling Chicago companies find their footing. But there are no guarantees.
For Chicago leaders, the end of 1871 as a physical gathering space for techies is a reminder that nurturing and preserving the city as a tech hub is an urgent task. Chicago remains the capital of the Midwest and is the natural landing spot for ambitious, smart graduates from the universities throughout the region. The startup world is a youthful one, given the necessity of long hours and high energy to succeed as an entrepreneur or even a worker in the space.
The job of marketing Chicago as a national tech player and serving as a fulcrum for what can be an insular world is critical and isn't a luxury the city can afford to do without. So who? What?
Let's hope we know the answer to those questions soon.