A decade before his company, YouTube, forever changed popular culture and media economics, Steven Chen just wanted a little respect while studying computer science at the University of Illinois. He added: “In the Midwest environment, as an engineer you are looked down upon,” said Chen, a mega millionaire since YouTube was acquired by Google for $1.65 billion in 2006.

Chen was in Chicago on May 22, 2008 to share his thoughts on entrepreneurship at the 2008 National Summit on American Competitiveness.

From an early age, the Taiwan native and 1996 graduate of the Illinois Mathematics & Science Academy had high aspirations and obvious technical talent. However, like Netscape founder and University of Illinois computer science graduate Mark Andreessen, Chen felt there were more business opportunities for him to explore on the west coast.

“Silicon Valley is the fertile crescent of start-ups,” he said, adding that the area’s younger business community serves to “foster the importance of people with great ideas”.

Chen, who met YouTube co-founder Chad Hurley while working at San Jose, Calif.-based online payment pioneer PayPal, noted that there were minimal technical barriers to inventing what is today the worldwide leader in online video. All the company needed at first was a computer, a few servers and Chen’s credit card account.

What Silicon Valley offered was immediate access to marketing and financial professionals who know how to guide innovative companies in their early months of operations.

While Chen may have inadvertently thrown the Illinois entrepreneurial community under the cable car with some of his remarks, aspiring business owners in the area would be wise not to immerse themselves in Silicon Valley envy. More than $400 million in venture capital was invested in Illinois in 2007, which is more than any time since the dot-com boom.

Young entrepreneurs have considerably more access to mentors and networking opportunities than they did during the Netscape days. Reduced technical barriers to entry will continue to welcome more local innovation in the financial, manufacturing and professional services industries. While Chicago may not be the fertile crescent of business innovation, the city’s also not exactly in a Paleolithic Age.

Ifbyphone to Launch iPhone Application

With the aim no less ambitious than to “do for telephony what the Web did for the Internet,” Ifbyphone in Skokie, Ill. on July 1, 2008 will release its first iPhone application.

The application allows users to send a recorded message to an unlimited number of recipients while not absorbing extra calling-plan minutes. Ifbyphone, which helps small businesses optimize their telephone systems by synching them to the Web, also markets applications through Facebook and eventually will offer services via Salesforce.com.

“Small businesses have found over the last 10 to 15 years that it is increasingly difficult to be competitive in today’s world,” said Ifbyphone CEO Irv Shapiro. “The real differentiation is around service. There is no better way to provide a service to your customer than to find a way to talk to them.”

Shapiro founded the 19-person company in 2005 and has raised $2.75 million from Northbrook, Ill.-based investors Origin Ventures and Chicago-based Apex Venture Partners. He says the company will not raise another formal round of capital until early in 2009.

Tie Goes to the Winners

There was a photo finish for two companies founded by students from the University of Chicago’s Graduate School of Business on May 29, 2008 as Captain U and CureParticle tied for first-place honors at the university’s 12th-annual New Venture Challenge.

Each company received a $25,000 grant. Captain U manages a Web site that helps athletes in high school better connect with college coaches. CureParticle uses nanotechnology to help pharmaceutical companies produce better drugs.

Other finalists included Nursync, SoCore Energy and eSpace. In all, more than $80,000 was awarded to five finalists. The New Venture Challenge was created by acclaimed finance and entrepreneurship professor Steven Kaplan. Presenters were judged by several local venture capital and angel investors.

Gathering For Chicago New Media

The launch event for the Chicago New Media Summit will be held on Thursday evening at the Chicago Cultural Center at 78 E. Washington St. Bruce DuMont of the Museum of Broadcast Communications will moderate a panel discussing the rapidly evolving landscape for media, entertainment and technology. More information about the program and the new organization can be found here.