Good for Twitter, not so good for the Chicago tech/startup scene. Dick was an inspiration to many local entrepreneurs, and the Feedburner exit is often cited as evidence that "it can be done here."
You can do anything anywhere, but your odds of success are much, much better on the coasts. The lawyers here have fucked me, the (few) investors here have toyed with me and left me hanging, and the actual number of people who can actually deal with startup culture (no, it's not "working 40 hours for a small company", asshole) is abysmally small. Tech Cocktail and the like are swamped with recruiters and "social media experts".
There are successes, such as 37signals, PerkSpot, skinnyCorp, but almost all of them are bootstrapped. If you need money because you're doing interesting technical things, leave.
I should have started my company in the Bay Area. It's too late for me. Save yourself.
Strongly object to the idea that it's harder to find people to put in a 60-hour week in Chicago.
Having said that, were I to do it all over again, I'd have to think harder about which region is appropriate, even though my business is not web-based.
Here's a story that I think illustrates everything about Chicago: so a group of people decided to form a new angel group (http://www.hydeparkangels.com). Got a lot of people together, associated with U of C, lots of smart, hardworking people. A little younger skewing than other "groups" (I use the term loosely because they're more social clubs since they don't actually invest) in town. What's their first investment?
A company that makes automatic fucking card shufflers for home poker games. Yeah, if it's not a manufacturing model - $x input => direct $x+y output, good fucking luck.
EDIT: The lawyers, combined, have charged me $60K for stuff that could easily have been done for $10K by an experienced firm in SF (as confirmed by a partner at a representative Palo Alto office of a representative firm). And $10K would have left me another $15K on the loan most good firms will do for a leveragable company targeting VC investment.
I see what you're saying. Although my business isn't web-based, it is a media company that relies on advertising as a sole source of revenue. There were a lot of misconceptions and distrust about anything related to advertising. I've gotten the most absurd questions during pitch sessions. To the extent anyone invested, it was because there was personal trust.
My challenge has been that most rich people here have, by and large, not made their money in "startups" (even more loosely defined than on HN). Many of them have made their coin in big corporate management, finance, or from family. That kills the investment ecosystem because they largely turn it over to their financial advisers, who have no reason to consider risky startups.
Angel groups here are a joke. Our money came from getting to know people individually.
Have you considered pulling up stakes and moving?
Edit: on VC -- I have turned quite anti-VC since being here. I think it is because most of the VCs, when asked why they are in Chicago, tell you it is because they can get "great deals" on "desperate" companies. Even on the angel side, I've had to explain to people why EBITDA multiples are not an appropriate valuation mechanism for early stage ventures. And then they act like I'm trying to con them.
Yeah, I've been saying that "Chicago is the next Detroit" to kind of drive home the fact that this region isn't well-equipped to deal with non-linearbusiness models (the "manufacturing mentality"). Instead of trying to really go after a change in environment (like North Carolina did over a 20-30 year period with the Research Triangle), we get World Business Chicago throwing money at firms to establish corporate headquarters here. (I admit the Detroit thing is hyperbole; a better example is St. Louis. If we get the Olympics, it'll be Chicago's last hurrah the way the 1904 Games were for St. Louis.)
As for VC, well, I used to work for a VC shop, so I'm not anti-VC at all. I don't blame them for their approach to Chicago; it's up to Chicagoans to get the fuck out.
I started here because I wanted to have a big successful startup, give back to Illinois by providing jobs and opportunities here (I went to IMSA), and then become Governor or Senator or something. Ah, the idealism of youth (I was 26 when I started Dawdle).
Also, please e-mail me (in profile); I'd love to get beers and compare notes.
However, one of the great benefits of Valley representation is the intros you can get to investors. Those investors tend to be local. Thus, the best situation is to be wherever your lawyers and the investors you wish to be introduced to are. (My Chicago-based counsel intro'd me to a few Chicago-based VC firms and no angels or seed groups. There are precious few of all three here.)