How Michigan grew its startup ecosystem
timesofe.com
timesofe.com
Tens of thousands of jobs were created by FCA/Stellantis with the renovation of Sterling Heights Assembly Plant for Ram 1500 Production, the brand new $1.6 billion plant on Connor and Jefferson (which builds Grand Cherokee L (WL75) and Grand Cherokee (WL74) in Detroit across the street from Jefferson North (which still builds WD/WK2), and the GM renovation of Hamtramck (Factory Zero) for Hummer EV/Silverado 1500 EV/commercial EV VAN production.
Detroit's economy is still 95% automotive. Those four plants I referenced were huge positive developments for the local economy - SHAP, JNAP1, JNAP2, and Hamtramck are the heart of the working class economy in Detroit, providing good union jobs building high margin products, along with the suppliers that feed those plants.
What Lansing does do is have social events trying to convince junior and seniors at MSU to stay locally and they've had some success with it.
I've personally tried to get several MSU alums Valley startups to outsource customer service jobs to East Lansing. The salaries they pay for those positions make it a struggle to live in SF but would be a fair wage in Michigan. I haven't had any success yet but I won't stop trying ;<).
https://lni.wa.gov/workers-rights/workplace-policies/Non-Com...
https://www.mintz.com/insights-center/viewpoints/2015-07-17-...
I'd emphasize "one reason" and de-emphasize "always" :)
The site linked above likes to throw cold water on the idea that non-competes are bad for workers, startups, etc (e.g., ND and OK aren't famous for their tech industries), see blog posts at https://faircompetitionlaw.com/ ... my bias is the other way (particularly enjoying https://ssrn.com/abstract=2517604), but the evidence is complex. Fortunately the aforementioned changes should generate new evidence.
Rest in piece Compuware.
An big issue is brain drain. UM is a major recruiting school for entrenched Silicon Valley corps (Google/Facebook/etc), and getting software tech talent to stay in-state is a challenge. California has a certain for new grads (though many are disabused of this mystique after a few years).
Beyond that, for senior level talent, you quickly run into ceilings where working remotely for a California company nets you a 50% compensation bump vs a comparable Michigan company. Founders can have a tough time finding quality local talent in early stages.
I personally love my life in Michigan. I can afford and enjoy a lifestyle that would be difficult in California. It's definitely an exciting time here.
In hindsight... only a few ever moved back to Michigan, and wow, yeah, what a recruiting pipeline, and what brain drain.
I imagine that only accelerated the last decade as midwest total compensation likely trailed significantly.
For a while, it felt like the tech firms were strip-mining all the talented midwest engineers who were willing to relocate. I hope the more remote-friendly future helps people keep their local roots.
One of the things that always struck me here is the number of midwesterners I'd come across. It has long been my suspicion that Midwestern culture is better suited to creating companies that are highly collaborative and focused on value delivery. A great example to me is Atomic Object, mentioned in the article. They've been doing well for decades, and the couple times I've visited it seemed like such a sane place to work.
Part of the above in my opinion is due to there being a far smaller gap between the wealthy people in the area and the poorest both financially and physically. A plumber, doctor and retail worker can live on the same street as homeowners. Not to knock the coastal cities too much, but contrast this culture to homeless people sleeping right outside a $3200/month flat, or primary teachers living out of their van, and you can see how it can have a different effect on those who are raised in those areas.
Supposedly there is some history behind this and people who want to be in the media business will actually learn to speak Midwest-style English. Can’t find the article though.
On Facebook subscribe to Hackers and Hustlers which has Michigan entrepreneurs all over the world but primarily in state. If you're looking for jobs open check HnH Freelance and Jobs.
You can also subscribe to Crain's in Detroit which is a business paper for SE Michigan and has a lot of stories on startups.
Also, non-competes are enforceable (§ 445.774a) for, among other things, goodwill. A not good situation for an area interested in creating a thriving tech scene.
That just demonstrated your ignorance. I advise companies in Australia, Asia and Europe. Also, I am establishing new facilities in Maryland to help international companies establish in America.
Costs matter...Baltimore is about 1/2 the price of Boston with a similar employment pool. Almost all B2B is easier if you are physically closer to your customers. in Life Science, FinTech or GovTech is a necessary.
Location matters but so does employee lifestyles. Affordable housing and family support is more important.
How are you defining "nationally upper-middle class"?
That's just the price for senior talent. Isn't it a non-functional business model to just expect senior tech talent to just take a 50% haircut when they don't have to?
Obviously small companies aren't somehow entitled to cheap labor, but that doesn't mean that the market dynamics don't make it very hard for a small company to break through the initial 'activation energy' of scaling to the point where they have the cashflow (or guaranteed growth to get reasonable investment terms) where paying competitive salaries becomes viable. What kills me is when the companies don't offer decent amounts of equity, which is essentially free, to these early employees as a compensation for the lower salary.
Some of our recent hires have come from the west coast. We're pretty blunt, so we've asked people: Why the hell did you come here?
Some have family in the region. Some anticipate a more laid back work culture, better lifestyle, more outdoorsy, easier to get around, 15 minute commutes, available housing. Some have a spouse or partner who isn't a techie, and they may have their own career reasons to be in the area. Sometimes we hire older people.
The world that isn't the advertising business still needs to exist, and has less of a reason to locate around the tech hubs, especially if they anticipate making physical things. I develop measurement equipment. I opted out of a programming career sometime around 1983, because I thought it would be boring. Oops. ;-) There's technology in agriculture.
Many of the startups in my locale are health, biology, or agriculture related.
But in general, we get the people we get, and we do OK.
All of my smartest and most competent friends from high school - in every field - moved out of state. So did all of my friends of any kind of minority group who could afford it. I don't see any reason that's going to change.
There are small pockets of comparative tolerance, usually centered around universities.
Take any smaller town, even outside the larger cities like Lansing and Grand Rapids: Charlotte, Eaton Rapids, DeWitt, Wyoming, and more. It gets worse as you go further north. I've been to potlucks in Traverse City (of friends of friends, not relatives, thankfully) with racial slurs being thrown around left and right. Let's not even talk about the Upper Peninsula.
I've always contemplated moving out of MI to the west coast, but I've heard it's just the same sort of dynamic. So I just stick to metro Detroit, Flint, Ann Arbor, etc
No one in Washington was overtly plotting to kidnap the governor. The Eastern counties hate Inside but they're not as maniacal.
I got a call from that Fruit company a few years back, which seemed really compelling, but the economic quality of life change to move to CA was alarming.
As an "older person", ugh thanks for the charity?
Thanks for calling me out.
When I did work for a startup in town a couple of years ago we were constantly talking about how to entice UoM grads to stay after college.
The biggest industry here seems to be the hospital system. Throw a rock at a crown and you’ll probably hit a few physicians.
A2 has a ton to offer for being such a small town. Personally, I love the small town feel but still manages to have all the amenities of a larger city.
As long as you can handle the Michigan winters the summers are very temperate. There’s a lot to do here especially if you aren’t afraid to travel up north and enjoy the outdoors.
I certainly used to feel the lack of VC activity in Detroit, but that is also what made the startup scene so ridiculously scrappy. I truly believe constraint breeds innovation, and I miss that aspect of the companies I worked with and helped start in Detroit.
Theres a lot to love and hate about California, but for me the dealbreaker was the price of housing. You shouldn't need to be a Founder with a phat exit or Senior Engineer at FAANG to afford a house... While I myself could probably swing it, why would I want to live there long term if that's the case? I miss having friends and neighbors from different walks of life. Theres a perspective you get from being connected to the greater ecosystem of humans, and that is increasingly evaporating in the Bay. Pretty soon it may only be tech people left. Most of my friends who weren't in tech left long ago.
On a different note, what really excites me about Detroit at this moment is the vast opportunity to build and shape a city rising from the ashes. A friend of mine is starting an eVTOL company and getting a 12k sqft hangar at Detroit City Airport (class charlie, international airport) and it's going to cost less than my SF apartment. Theres actually another eVTOL startup already there that has some hangars in the same building. It's ~10 minutes from Downtown.
Ford is building their EV/Self driving HQ in Corktown. GM is going to be manufacturing their EV's (including the Cruise Origin) at the Factory Zero 10 mins from downtown. Theres a ton of VC moving into the area, and an unbelievable amount of housing developments (~$200 million in brush park alone).
The momentum in Detroit is astounding and exciting, and when I'm ready to start another company it'll absolutely be there.
You need but look at Miami to find a polar opposite of advantage, opportunity, and excitement with longevity.
Talent retention is a major problem for the state. The brain drain really stems from the University of Michigan. I don’t think there’s a public state university in America that sends so many of its graduates out of the state after graduation. The data is a little sparse, but the career center estimates something like 66% of all graduates leave post-graduation. In Computer Science, it’s like 75% (and I think that’s low).
The fact is, those graduates are the ones that attract jobs and startups. We talk about how egalitarian tech is. But, the fact is that companies want to hire graduates from premier colleges first and then settle for others later (at least for new grads).
Michigan’s economy is so automotive dependent because companies without a Michigan presence can’t hire UMich grads in state en masse. Nobody wants to create a new office out-of-state to hire new graduates from other schools.
I’m speculating that we tend to hear more about startups from top-tier college graduates because those graduates have a bigger cushion thanks to their degrees. A UMich/Harvard/MIT graduate can very easily fall back on their degree to get a regular job if their startup fails. (Yes, I realize there’s a socioeconomic component here as well)
Long term I think the best bet is let people go and get experience and find a way to get them to move back later in life.
This isn’t surprising to me considering 47% are out-of-state students to begin with (at undergraduate level, at least)[1]. This is a very different picture than the rates of a comparable public university like UCLA or UC Berkeley.
Not too sound too skeptical but I’m doubting UofM would try to change this due to the financial incentives of receiving out-of-state tuition.
[1] https://obp.umich.edu/wp-content/uploads/pubdata/almanac/Alm...
For more tech-ish things, the University of Michigan has a number of solid programs, strong enough that half its students come from out of state. (Google's Larry Page did his undergrad there, for example, and he seems to have done ok.) I graduated before the Internet bubble, but even then there were a bunch of small tech companies in Ann Arbor staffed by people who liked the area enough to stay. And there's now a lot more explicit support for entrepreneurship, like Wayne State's TechTown: https://techtowndetroit.org/programs/
I'll be really interested to see how this goes now that the pandemic has broken a lot of traditional views about the need for tech companies to be within a stone's throw of Sand Hill Road money. I always suspected that was more about investors not wanting to travel than it was about practical necessity. If getting capital becomes easier, I expect to see a boom in the area.
[1] https://theculturetrip.com/north-america/usa/michigan/articl...
They said "The decline of the auto industry forced people to get into entrepreneurship." But this fundraising explosion started in 2016, about 40 years too late there. And the auto industry hit way more areas than just Detroit, why haven't other cities seem the same growth?
Then they push some empty fluff statements like "Having that unique culture and being really scrappy" or "For one, the state’s midwestern culture is more family oriented." Again, not really real. Empty platitudes.
I think it's an interesting question on how they are raising so much money, but this article has no legitimate answer.
It seems like an enormous gap in this article. I was just there a few months ago and it is a pretty exciting environment downtown.
These fluff pieces irritate the snot out of me. I get that they're trying to promote a new potential economy. I wish them the best. However, I encourage anyone I can to leave and seek a better life. Because a better life exists in an increasing number of alternative places.
Can you talk more on this? Just curious your perspective.
I would disagree with your sentiment about cost-of-living, especially. Particularly with housing costs and taxes, Michigan seems much better than other states.
Housing prices overall are lower than other states outside of places like Ann Arbor. If you like the idea of living in a college town like Ann Arbor, be prepared to shell out.
I found property taxes reasonable if you’re outside of Detroit. Detroit, IMO, still has the vestiges of the corruption that caused its original downturn. I know of one company that moved to TX due to it; the last straw was a 7-figure “license” to hang their company sign on their building.
Do people in Michigan refer to Grand Rapids as "up north"? Doesn't look like it on the map. Sure it's a little bit north of Detroit, but a lot to the west.
I have zero Michigan connection and near zero knowledge, but the tech thing there that has always struck me as being cool is indeed pretty far north, https://www.appropedia.org/Category:MOST at Michigan Tech.
There are some rules to the classification - Traverse City and Charlevoix are unambiguously Up North for example, and the Upper Peninsula is so utterly North that the designation "Up North" can seem a bit ridiculous, so it gets its own term - The U.P.
Anyway, this is all to say that no one has ever in the history of Michigan referred to Grand Rapids as "Up North". Certainly not on a latitudinal argument. But the author appears to be from Chicago, so perhaps it's her family's personal Up North.