Five One-Way Tickets to Michigan, Please
As a venture capitalist in sunny (and smug) Santa Monica, who happened to often travel to Michigan, I'd heard every possible joke and put-down about the Michigan economy (you know, how it's cheaper to buy a foreclosed house in Detroit than a decent used car, but at least you can live in the car if you have to, ha ha ha.) Well, I'm not laughing any more. This summer, I decided to move my wife and three little kids away from the sunny beaches and new media millionaires of Southern California to -- you guessed it -- Michigan.
Yup, we bought a one-way ticket to Michigan. Five of them, actually.
What was I thinking? Don't worry, you're not the first to ask. For several months I've been explaining my decision to friends, family and work colleagues. Why walk away from good weather and a sweet gig investing in new media companies for a cold, Rust Belt state that's been hemorrhaging jobs and hope for decades?
Quite simply, because I believe it's a hell of an opportunity -- despite the jokes, the put-downs, or the perceptions of Detroit as a lost city -- I wouldn't be moving to Michigan if I didn't.
The opportunity does not lie in saving General Motors, rather in giving primarily non-automotive related entrepreneurs and technologists the capital and market access to enable their companies to achieve their fullest potential. Knowledge-based and high-growth sectors like clean tech, life sciences and health care are perfectly suited for Michigan's deep engineering, research and advance manufacturing base (a welcome legacy of the automotive industry), not to mention the ample natural resources of the state, notably fresh water, wind currents, vast forests and agricultural lands - valuable assets for a "greening" U.S. and global economy.
Yes, the current economic situation stinks, but Michigan has a lot to work with, namely a hard-working, well-trained labor force, an infectious local pride, and a united desire to make things better. History has shown us numerous times that desperation and misery are often the muses of creativity and innovation. Michigan has the misery bit nailed, and I'm betting that the innovation will indeed follow - I see it in the entrepreneurs I have the honor to work with every day. We just need more of it.
Though it is indisputable that Michigan's economy been kicked in the proverbial groin, the upshot is that the state's culture of entrepreneurship has gotten a much-needed kick in the pants as a result. Some of America's historically most successful companies were created by Michigan entrepreneurs. Everyone knows about Henry Ford and the great run many Detroit businesses had with the auto industry, but Michigan spawned other global success stories as well, such as Dow Chemical, Kellogg's and Whirlpool. But in hindsight, this historic success was a bit of a curse for entrepreneurship in the state.
For several generations in the latter half of the 20th century, it took an inspired Michigander to assume the opportunity costs of starting an entrepreneurial venture rather than joining the local assembly-line workforce or simply going to work for someone else. Confronting the entrepreneurial risks typically experienced in launching a new venture, or simply making the decision to work much more than 40 hours a week creating a new business, were options that were easily dismissed when a comfortable middle-class lifestyle awaited those willing to simply work for someone else.
Clearly, this middle-class "nirvana" has not proven to be eternal and even feels like Hell to some at present, as many of Michigan's largest employers have downsized or disappeared all together. But the silver lining to this dark cloud may be that the current economic environment is forcing Michiganders to find their inner-entrepreneur once again. We receive scores of business plans each week from Michiganders applying their world class engineering skills or research abilities to new, rapidly growing markets. The turnaround of the Michigan economy will not occur overnight; however, the challenges brought by the current economic crisis are inspiring an entrepreneurial surge that I expect will engender a long term, diversified and sustainable rebirth of the economy.
I'd like to get into more details in future posts, but my hope here is to start a dialogue: tell me about your ideas to rebuild and re-energize the Michigan economy, or even more broadly, the Rust Belt economies. Tell me about your company, your innovation, your product, your town. Though my firm invests in a variety of sectors, we are focusing our Michigan efforts on clean technology and health care. We feel the best opportunities are there, and the dealflow of our first year seems to have verified our gut instincts. But we could be wrong. See, I'm going against the grain yet again - a VC that admits to not having all of the answers!
I do sincerely welcome your views. Just do me a favor and keep the Michigan jokes to yourself. As if putting up with the Detroit Lions isn't enough, there's just nothing funny about 15% unemployment. However, if you've heard any good California jokes, I'm all ears...
Jeff Bocan is a Managing Director at Beringea, LLC, a global venture capital firm which manages the Invest Michigan! Growth Capital Fund, amongst others.
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Welcome Jeff! Hopefully all of your focus will not be centered in and on just Ann Arbor. Looking forward to blogs.
Jeff, thank you for your post. I too have recently made the decision to move to the Detroit area from the beautiful land of San Diego. Most Californians look at me like I have sprouted another head when I tell them I am moving to Michigan. While my roots are back in Michigan, I am going for the opportunity as well. I am a bit frightened by the lack of opportunities right now in my field (public relations and marketing) however seeing VC's coming in and encouraging entrepreneurship, further growth is not far behind.
In a way, it feels like a calling for me. I want to do more than to just contribute for the local economy and I know I'm not the only person who is feeling the same. I want to be a part of the revitalization and give the generations after me the same pride and respect for an amazing state.
Great post Jeff, I'm glad to hear there are more VCs coming to MI! I hope you'll check out the many startups in the business incubators of Ann Arbor SPARK (annarborusa.org), including my health care startup WhereToFindCare.com LLC.
There are a lot of talented entrepreneurs here, so I'm sure you'll feel right at home. Welcome!
Jeff -- Welcome to Michigan. If you're looking for entrepreneurial success stories, look no further than Michigan's craft beer industry. Michigan's breweries are turning heads nationally with the quality of beer produced in-state. Every year, Michigan ranks in the top 4-5 states in terms of total barrels produced, barrels per capita, breweries per capita, and medals won at national competitions. The past 10 years have seen steady sustainable growth, outpacing national trends. And in spite of the economic hardship our state faces right now, production volumes continue to climb.
All our local breweries started out as small-time operations cobbled together by independent souls with a passion for their craft. I firmly believe the main reasons for the success of our local breweries are the personal qualities of the people who started them -- entrepreneurship, passion, grittiness, and a fierce loyalty to this state of ours.
And unlike the brewing monoliths in St. Louis and Milwaukee, our local breweries run very green operations. We reuse waste water, recapture steam and CO2, compost, and deliver spent grain for use as animal feed.
Plus, Michigan has a great brewing history, sporting hundreds of breweries pre-prohibition, and being the former home of the fourth largest brewery in the US (Stroh's).
In the ever-growing craft beer industry, Michigan has a seat at the big kids table (which includes Colorado, Oregon and of course California) in spite of the fact that all our breweries started out as little players.
-Matt Roy, Ann Arbor
Welcome Jeff to four seasons southern Michigan. Reading your post reminds me of my journey from southern California to Ann Arbor in 2001. Shortly after hitting the northern shores state, I joined the Bank of Ann Arbor to establish a Technology and Life Sciences banking practice in the center of Michigan's venture community. Seven years later, we are still growing, helping entrepreneurs start new spin-outs from one of the nations' leading research universities (University of Michigan), actively contributing to the evolution of our innovation community as a Founding Member of organizations such as Ann Arbor Spark and the Michigan Venture Capital Association, and providing specialized banking products and services to the region's expanding legion of Information Technology, Industrial Technology, Small Tech, Environmental Tech, and Life Sciences companies. If you are ever in the neighborhood give me a shout and we can reminisce about the Third Street Promenade and talk about Michigan's exciting 21st century opportunities.
Jeff - Welcome to Michigan!
I have a need to point out that, as too many people outside of Michigan misunderstand, Detroit is only a very small part of Michigan!
I live 2 hours north of Detroit and it is a different country here! I live in Port Sanilac, a community of 700 year-round residents on the shores of the blue waters of Lake Huron. We have $2.3 million in new development going into historic renovation, new construction, and added businesses to our tiny downtown! In this economy, who else can say that?
People who visit this "close up-north" are amazed as the natural, quiet, and quaint beauty we have so close to the metropolitan area.
Michigan is not just Detroit. Detroit offers us professional sports (big time!), Greenfield Village & the Henry Ford Museum, a world-class zoo, opera & refined culture, plus some of the best technology innovation available. But it is also so, so much more!
We have some of the best hunting, fishing, boating, sailing, scuba diving, wine country, agriculture, shorelines, history, and hospitality in the WORLD!
Our "Pure Michigan" advertising campaign tells it all.
Thank you for the opportunity to tout the rest of Michigan! And we welcome you and your family. You will not regret your move!
Rita Dahmen
Monitor Marketing
Excellent post, Jeff. Do you know what is equally as excellent? MICHIGAN beating Notre Dame this year! w00t!
But on a serious note, turning MI into the nations leader in eco-friendly energy production is the only way to go from here. I wish I could get into that business, still waiting to hit the lotto though.
P.S. Thanks having your team bounce back and beat MSU. That's always good for a nice hearty chuckle. BOOM!
Jeff, thanks for the post. I have an idea which could help the region: I am all for high-speed rail, but to the best of my knowledge, all the high-speed rail stock comes from outside the US. Why not use the skilled labor and unused manufacturing facilities in Detroit to build the rolling stock we will ultimately need? GM used to have a locomotive division - I'm sure many of the physical plants and skills are transferrable.
Jeff,
Welcome to MICHIGAN!
There are many great things happening in MI which the Upper Hand commercials can only cover so much ground in 30-60 seconds ~ Sure life-sciences and green technologies, are sexy and get all the news and attention, but the real story is in common thread of innovation and true-collaboration, where people are really working well together to solve any problem and find a better way.
As the CEO of a very progressive technology start-up in Ann Arbor MI we are on that leading edge of this entrepreneurial can-do attitude, and in the face of all the bad press and adversity, (real or imagined), we see Michigan making great strides to not only rebound from what has been a tough 10 years coming but truly evolve into the National leader of just how to survive and thrive through it all.
No, I'm not referring to the Lions, but we can always hope...
GT
eChamberConnect.com
Ann Arbor, Michigan USA
Onward and Upward ~
Here's a simple one: I agree that the United States needs high-speed rail. That means we'll need rolling stock, too. How about using the unused manufacturing skills and facilities here in Michigan to build it? GM used to make locomotives, and I'd hate to see US high-speed rail cars from abroad. If you're looking for some of the more unusual sights around town, check out my cycling blog: http://www.tourdehood.wordpress.com
Welcome Jeff! I moved up here about 7 years ago and wouldn't trade it for the world. If you really want to see some entrepreneurial spirit, come check out the Ignite Lansing 2.0 event tomorrow night. Short notice and all, but it is going to be killer, and I am in charge of the attendee list, so I am sure we can find a way to get you in! Lansing is trying to pull ourselves up the by the technology/insurance bootstraps and some of the best and brightest will be in a previously abandoned building tomorrow night talking about some amazing ideas.
Welcome!
Have any ideas for Flint?
Glad to have you back in Michigan, Jeff! Lots of interesting local VC developments lately. :-)
See you at the next Ann Arbor New Tech Meetup http://a2newtech.org - and you can catch up on this month's companies at http://annarborstartups.com
Glad to have you back in Michigan, Jeff! Lots of interesting changes in the local VC landscape lately. :-)
See you at next month's Ann Arbor New Tech Meetup http://a2newtech.org - catch up on this month's companies at http://annarborstartups.com
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