ps - Chicago might not be famous for counter-culture, but it has amazing live comedy and various other fun cultural trends. It is a generally nice place to live and I would have preferred to move back after graduation, if there had been any good work for me there.
Chicago doesn't just have Illinois, but UW Madison, Purdue, UMich, Northwestern, etc. The Midwest is churning out tons of qualified engineers.
And the cost and quality of life is dollar for dollar the best in America.
Also the engineering culture is more geared to industrial and mature technology companies and less to software. There are ton of engineers doing jobs that are vital but HN would probably consider boring. That might explain why there is less entrepreneurship. Engineers have work experience in and are exposed to industries that don't easily lend themselves to entrepreneurship.
One machine learning job. For a company in Berkeley. The majority of java jobs were in CA [1]; of those remaining, perhaps one looked interesting. Rails has a similar story [2]. Indeed has a bit more stuff but the pickings are slim; lots of the jobs for eg rails are attempts at relos elsewhere. Of the jobs actually in Chicago, a common refrain is senior and/or 3-5 years of experience. Experience which seems hard to get in Chicago, so instead of getting people to stay, they need them to move back.
[1] http://chicago.craigslist.org/search/jjj?query=java
[2] http://chicago.craigslist.org/search/jjj?query=ruby+on+rails
https://company.here.com/here/
It isn't a startup though. For startups people can check out http://www.1871.com/
It seems the most important issue is the chicken-and-egg problem: Chicago doesn't have a large magnate company with lots of b/millionaire founders that then fund the ecosystem. Groupon was once thought to be just that company but hasn't turned out good.
The other problem seems to be plain and simple: being in the middle of nowhere doesn't help. From the article:
"The University of Illinois at Urbana-Champaign turns out more engineering graduates than any U.S. school except the Georgia Institute of Technology, yet no tech scene has grown around it — or 140 miles north in Chicago. Fewer than half of these engineers remain in the state while 10 to 15 percent have gone to California in each of the past five years"
For a young person, there are many more opportunities to do sports (mountain biking, hiking, skiing, kayaking) in other places.
As a final point: Chicago, long the city of broad shoulders, is not famous for its counterculture, like Seattle or Portland is, so loses that chance for attracting people, too.