Growing startup scene, employer loyalty lure tech talent to Midwest

Midwest companies are opening downtown offices to combat perceptions that innovation is limited to the coasts

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When Abby Cohen and Andrew Brimer decided to locate their health IT startup, Sparo Labs, in St. Louis, neither one considered a Midwest location as a challenge to attracting top technology workers.

"You can grow a great company anywhere as long as you can get the right people as part of your team," said Cohen, whose company is developing hardware and software that allows people to track and monitor their asthma in real time using a smartphone.

sparolabs Fred O'Connor/IDG News Service

Abby Cohen and Andrew Brimer haven't had problems finding IT workers to fill jobs at their health IT startup in St. Louis.

This theme is echoed by other Midwest technology and hiring professionals. While the central part of the U.S. may lack the technology cachet of its coastal counterparts, IT professionals are attracted to the region's burgeoning startup movement, its abundance of top-tier companies, sense of employer loyalty and more affordable cost of living.

To challenge the notion that technological innovation happens primarily on the coasts, companies based in Midwestern suburbs are opening offices in cities to attract young employees interested in working with trendy technologies.

Cohen considered setting up in San Francisco or New York. The opportunity to contribute to St. Louis' developing startup scene, a pipeline of talent provided by area schools such as Washington University and the chance to help people in a part of the U.S. with high asthma rates kept the company in Missouri.

Employees are attracted to the company's mission and its projects, she said, and "location, while it's important, it isn't the limiting factor."

Selling job candidates on Whirlpool's small-town location can prove challenging, said D'Anthony Tillery, director of talent acquisition at the appliance manufacturer based in Benton Harbor, Michigan, which is located on Lake Michigan approximately 90 minutes from Chicago.

To overcome this issue, the company emphasizes its growth, soft factors such as area schools and cultural diversity and Whirlpool's use of leading technology.

"We recently launched Google as our email platform, which I think is more progressive than Microsoft Outlook," he said. "We're looking to drive collaboration and help us continue to move fast in the marketplace. That attracts IT talent because they want to be on the cutting edge."

Still, a marquee technology company, which the Midwest lacks, would help attract attention to IT jobs in that part of the country, Tillery said.

"You don't have larger brands that are recognized in the marketplace from a technology standpoint," he said.

The area has major companies that employ tech workers, including heavy-industry equipment maker Caterpillar in Peoria, Illinois, a plethora of automakers in Detroit and health IT vendor Cerner in Kansas City, Missouri. What's missing, Tillery said, is a business synonymous with IT, a company akin to Apple. Google has a Chicago office and that presence helps highlight Midwestern technology jobs, he added.

But even without a well-known IT company calling the middle of the U.S. home, "when you think about technology talent in the Midwest there is an attractiveness because of the opportunities within certain markets," mainly those that are close to large cities, Tillery said.

Being located in a major metropolitan market like Chicago helps companies attract workers, said Joe DeCosmo, chief analytics officer at Enova, which is based there.

Chicago's lifestyle rivals those found in other technology epicenters, said DeCosmo and, with a lower cost of living, keeps employees from defecting to companies on the coasts.

"The folks that we attract here from the coasts end up ahead because we pay pretty competitively and couple that with the lower housing costs, it's a benefit to come here," he said.

And with Chicago's technology scene growing, a company across town may prove a bigger threat to tech talent than one from across the country.

"We haven't lost too many folk to the coasts," said DeCosmo, whose company offers financial and credit services products. "I don't feel like we're fighting much on that front these days. When we have lost tech talent it's mostly to other [Chicago] startups. The technology community and the startup community in Chicago [have] really picked up. There's more competition than ever."

Chicago's startup and technology scene has grown more robust in the past five years, helped by GroupOn, a website that offers member daily discounts on lifestyle items, and GrubHub, an online food ordering company, which are both located in the city, DeCosmo said.

"In the past a startup scene and technology innovation, those things weren't as vibrant," he said. City officials took notice as well and began pushing big-data initiatives in recent years, including appointing a director of data analytics in 2012. In July, the city began adding sensors to lamp posts to collect data related to air quality and pedestrian density, among other metrics. These programs placed Chicago at the forefront of technology and data-driven cities, DeCosmo said.

Excluding Chicago, since its status as a metropolitan city makes it easier to attract top talent, there is a perception that Midwestern companies lag in innovation compared to businesses in coastal cities, said Larry Williams, senior vice president of IT recruitment at staffing firm Addison Group.

"I do see a little bit more out-of-the-box creativity in the coastal cities," he said. "Some Midwest companies are very rigid and do not want to change how they've been conducting business, which is fine. The way that Midwest companies have been able to solve that is by innovation labs."

These labs are in Chicago as well as downtown St. Louis and Milwaukee, and are usually staffed by younger tech workers who live in the city and work on projects involving new technologies, Williams said. Companies with innovation labs also operate primary offices in the suburbs where infrastructure and IT services professionals, many with families, are located.

Still, even Chicago's strong technology scene may not prove a challenging enough environment for the most skilled technology workers.

"It's a narrow niche," Williams said of those candidates whose advanced skills won't fit with Chicago's technology companies. "We usually gravitate for innovative startups or we'll make some calls to Silicon Valley and we'll talk to some companies in New York," he added, regarding how his company recruits and places job candidates.

The Midwest may work better for IT professionals who are more interested in solving business problems instead of more consumer-focused projects, like developing video games, said Zach Brandon, president of the Greater Madison Chamber of Commerce.

"Consumer technology has taken root and grown on the coasts, but the opportunity for enterprise software is a differentiator for the Midwest," he said.

Madison, Wisconsin, has emerged as a health-IT hotspot given its proximity to Verona, home of electronic-health-record software company Epic Systems. Several health-IT startups have set up shop in Madison, as well as technology heavyweights such as Microsoft, Amazon and Google, which all operate software development offices there.

IT workers who opt for a career in the Midwest will find a culture where employees change jobs less frequently and companies use their stability as a selling feature.

"That does resonate because the IT market has been very volatile in the past 14 years," Williams said. "It's perceived that companies will invest more in you from a long-term basis. I don't want to say that workers are disloyal on the coasts, but I do see that people change jobs more frequently on the coasts."

Developers are generally collaborative because they realize that solving problems sometimes requires another set of eyes, said Sparo Labs' Cohen. Combine that with their desire to grow the Midwest technology scene, especially in St. Louis, and technology professionals will find an environment where "people are committed to developing St. Louis entrepreneurial ecosystem, people want to learn, they want to make it better," she said.

"If you're coming here, you have the opportunity to really excel and get better at your trade," Cohen said.

Fred O'Connor writes about IT careers and health IT for The IDG News Service. Follow Fred on Twitter at @fredjoconnor. Fred's e-mail address is fred_o'


Copyright © 2014 IDG Communications, Inc.

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