[HN Gopher] How Michigan grew its startup ecosystem
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How Michigan grew its startup ecosystem
Author : rmason
Score : 63 points
Date : 2021-11-13 20:36 UTC (2 hours ago)
(HTM) web link (timesofe.com)
(TXT) w3m dump (timesofe.com)
| helloworld653 wrote:
| Plex Systems and Duo Security are the only two software of
| companies of relevance/size - both were bought within the last
| two years, by Rockwell Automation and Cisco respectively (both
| for $2 billion-ish). The metro Detroit/Ann Arbor startup scene is
| tiny. OneStream will probably have an exit north of $2 billion in
| the next two years.
|
| 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.
| michigama wrote:
| As a hopeful founder here in Michigan, it's been interesting to
| watch this at the ground level. The article alludes to it, but
| the University of Michigan in Ann Arbor has been the driving
| force behind several startups in the area. Many of these are
| robotics or automotive startups, like May Mobility. The software
| world is sparser; Duo Security was a big success, but with a lot
| of mixed feelings around their sale to Cisco.
|
| 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.
| jeffwilcox wrote:
| When I graduated in 2005, I was so happy to be moving somewhere
| (Seattle) with essentially my entire graduating class. That
| social network was comforting and fun, and it was great knowing
| people working at Amazon, at Microsoft, and other firms to
| compare and contrast experiences.
|
| 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.
| wpietri wrote:
| Do you have tips on how to keep an eye on the Michigan startup
| ecosystem? I live in CA now, but would love to be better aware
| of what's going on in my home state.
|
| 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.
| foobiekr wrote:
| It's pretty weird to me someone would found a company in
| Michigan. In general, unless you plan to entirely bootstrap and
| pursue a slow-growth strategy, recruiting and selling are going
| to be your biggest bottlenecks. Recruiting is unnecessarily
| hard in places other than first and second tier tech areas - so
| the bay, then NY, LA, Seattle, Austin, RTP, and to a very
| limited extent, NoVA. Companies founded elsewhere inevitably
| find themselves either paying more for talent (because that
| talent can work remotely for 50% more than the local prevailing
| comp, with added stability) or starving and unable to hire.
| Basically, it's a question of priorities.
|
| Also, non-competes are enforceable (SS 445.774a) for, among
| other things, goodwill. A not good situation for an area
| interested in creating a thriving tech scene.
| aussiegreenie wrote:
| >It's pretty weird to me someone would found a company in
| Michigan.
|
| 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.
| zip1234 wrote:
| The main problem is Seattle/California engineers can make way
| more than Ann Arbor, although pay seems to be trending up.
| jdhn wrote:
| I'm glad to hear you like it there. I just moved out of
| Michigan this summer as I couldn't tolerate the winters
| anymore, and the local job market isn't that good for my field.
| You're right about brain drain, although I'm curious to see
| what'll happen if remote work becomes the norm rather than the
| exception.
| notsureaboutpg wrote:
| >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 don't get this. Presumably you raise money with a small team
| that doesn't make much and has a lot of equity. Once you raise,
| why can't you pay comparable to California companies? It will
| cost a lot, but your funders should expect you to burn through
| cash in exchange for speed of delivery. Alternatively, why
| can't you hire remote workers in the US who cost less than
| California employees?
| ojbyrne wrote:
| From the About page: " We focus on entrepreneurs who have been
| left out of the narrative: women, people of color, and those who
| are geographically outside traditional power centers." so maybe?
| alphabettsy wrote:
| It seems like a lot of fluff.
| [deleted]
| wpietri wrote:
| I grew up in Michigan and this makes sense to me. There's a long
| tradition of entrepreneurship to draw on. Grand Rapids was once
| known as "Furniture City" [1]; Steelcase and Herman Miller are
| still based in the area. Detroit's car companies produced a lot
| of small businesses across the state making auto parts; I spent a
| very sweaty summer running injection molding machines in a plant
| that made things like taillights and mirror rims.
|
| 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...
| 1270018080 wrote:
| Alright, but what's the real reason?
|
| 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.
| chrisbrandow wrote:
| I think there's been a ton of investment recently in the last
| 10 years, particularly from Dan Gilbert, the Quicken loans guy
| into literally refurbishing entire neighborhoods of buildings
| in order to make things more attractive.
|
| 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.
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