How Michigan grew its startup ecosystem(timesofe.com)
timesofe.com
How Michigan grew its startup ecosystem
https://timesofe.com/how-michigan-grew-its-startup-ecosystem-and-became-the-state-with-the-fastest-growing-venture-capital/
87 comments
The brain drain problem is very real. I graduated the University of Michigan in 2008 and the majority of my colleagues moved out of state. I can’t say I blame them. A good number have been successful at FAANG type companies or startups and seem relatively better than us who stayed in the state. The firms in Michigan just can’t compete with the total compensation you can get elsewhere. Most of the positions here are auto related still. The auto industry is cyclical and booms and busts.
Both Ann Arbor and Detroit have special events trying to lure back expatriates. Wish East Lansing did something similar but afraid we lack the startup jobs to make it worthwhile.
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 ;<).
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 ;<).
I worked at two FAANGs then moved to Michigan about two years ago, just outside of Ann Arbor. I get contacted by a decent number of recruiters but I'd estimate only about 5-10% of them represent companies with a Michigan presence.
It's notable that the phrase "eliminated non-competes" isn't there: https://www.vox.com/new-money/2017/2/13/14580874/google-self...
This. I've worked in the New York metro area for my entire working career, and non-competes are one reason why California will always, always win when it comes to fostering startups. From what I can tell, no other state has made them illegal, and none ever will because they're in the interest of employers.
Washington has it, but Microsoft and Amazon were able to water it down so that it excludes higher compensated employees ($107k salary for 2022, which basically excludes people in tech/medicine/law/engineering). Foolish decision by WA legislators, especially when they are in prime position to poach business in the same time zone as CA with only a nominal state income tax.
https://lni.wa.gov/workers-rights/workplace-policies/Non-Com...
https://lni.wa.gov/workers-rights/workplace-policies/Non-Com...
Out of curiosity, how do these non-competes work with remote work situations? Are they applicable to the state the business is in or the state the worker is in? Is this one of the reasons so many software companies are pushing to get coders back in the office, just to get rid of these little legal questions?
Good question. Seems like it could get hairy. I would have assumed the employee’s state of residence takes precedence, but then there is this case where CA courts upheld a non compete that was entered into in MI before the employee moved to CA:
https://www.mintz.com/insights-center/viewpoints/2015-07-17-...
https://www.mintz.com/insights-center/viewpoints/2015-07-17-...
Oklahoma and North Dakota. Various other states have restricted non-competes recently, particularly for low wage workers https://faircompetitionlaw.com/wp-content/uploads/2021/06/No... and more are working on it https://faircompetitionlaw.com/changing-landscape-of-trade-s...
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.
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.
Workforce software? New world systems? Llamasoft? Barracuda? I think there's more out there than you give credit for.
Rest in piece Compuware.
Rest in piece Compuware.
Censys and Blumira are mostly ex Duo folks. Arbor Networks, Clinc, there are a ton of smaller companies that have exited too
I wouldn’t cite Compuware as an example of a successful Michigan based tech company. However, some products it created, such as Dynatrace, are still around and profitable.
Dynatrace was an European startup acquired by Compuware.
OneStream is already valued well above that mark and is one of the most successful tech companies in Michigan that no one has heard of.
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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.
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.
I grew up in Michigan and live in Wisconsin, working for a F100. We're not going to get the people who want to strike it rich in California. That's not necessarily an attraction for everybody. We hire who we can, and still manage to get some great people.
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.
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.
That goes both ways, thought. I grew up in Michigan. Most of my family, and my partner's family are still there. I travel there regularly and stay in contact with a number of friends who are there, and each passing year I my resolution to never go back is stronger and stronger. The entire state is deeply broken politically, and I would never want to raise a child in that environment. Even as a white man, it's remarkable to go back, sit around in a bar or just in public, and to see the blatant racism, homophobia, and hatred around. Let's not even get into the dysfunctional state government - and the gerrymandered voters who enable it.
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.
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.
I'm curious, where in Michigan are you going where you see all this racism, homophobia, and hatred?
Any small-medium mostly white suburb or rural town - which is to say the entire state.
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.
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.
Isn't this an issue with most states though? Big metropolitan areas tend to lean liberal, rural areas tend to lean conservative, and every state has a similar distribution?
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
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
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The Midwest is far more proud of it. Yes, it you go to Eastern Washington/Oregon or Northern California, voters are more conservative, but I've done road trips in the last couple years through all that territory and I can sit in a brewery or go to a hotel without having it all thrown in my face. In suburban Michigan the locals are proud of their bigotry in a manner I just don't encounter in blue states.
No one in Washington was overtly plotting to kidnap the governor. The Eastern counties hate Inside but they're not as maniacal.
No one in Washington was overtly plotting to kidnap the governor. The Eastern counties hate Inside but they're not as maniacal.
Indeed, that culture was an undercurrent in Michigan even when I was growing up.
I have family in Wisconsin and live in Michigan. You guys have sunnier weather but a bit colder winter. I love both states. CA is low on my list but I might be down for Texas.
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.
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.
> Sometimes we hire older people.
As an "older person", ugh thanks for the charity?
As an "older person", ugh thanks for the charity?
My apologies, I was trying to be sarcastic, but it fell flat. I'm an older person too, and I like the possibility of having a career of reasonable duration. This is as opposed to the impression I've formed of work in the tech hubs being a young man's game. Which could also be mistaken.
Thanks for calling me out.
Thanks for calling me out.
Lol no problem, its probably what I expected. :)
I live in Ann Arbor and love it here. There are tech companies that operate out of this town but none of them besides Duo I would work for. Even then I don’t think I would apply. Working remote has enabled me to live here and still have a great job.
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.
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 loved Ann Arbor when I visited when I was hired at Duo and it has raised my interest in moving to Michigan (once a job allows it, my current remote gig has limited locations due to logistics) but I doubt it will be A2 just because of the cost of living. One of my interests is to drop in cost of living from Austin but Ann Arbor is not far behind.
All the surrounding areas of Ann Arbor are reasonably priced. I live in Dexter (working remote) and love it here. Close enough to go to Ann Arbor whenever I want but far enough away to get a big house and lots of land.
"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."
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?
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?
100% agree. However, because of the way that tech scales essentially for free, companies that already have large markets over which to apply an engineer's work can essentially just buy up all the talent at whatever cost and prevent smaller competition from ever forming.
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.
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.
How is founding a tech company working out? I work for an established firm in the Greater Detroit area and it’s difficult for us to find great talent. I imagine it’s more difficult for startups in the area? I’ve also heard it’s much more challenging to get VC investment?
It sounds like you're being hamstrung by a limited view. I'd encourage you to look at any number of states to the south, both for headquarters and for hiring. Michigan is a dead end, or a the most a limited end.
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.
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.
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.
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.
Check out both the Detroit New Tech and Ann Arbor New Tech. Both groups broadcast their monthly meetings.
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.
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.
It's a great place to work, thanks for the shout-out
(ex-pat Brit who was tired of the 4 hour commute to London and moved to Michigan)
Sorry, no tips for you to follow MI startups
What is Midwestern culture?
Not op, but on the business/sales side ‘midwesterners’ tend to put people at ease and are decent communicators. In my experience they’re also the clearest American speakers, so non-native english speakers have an easy time understanding them. Coming from an area (at face value) that is not widely desirable or well-known gives a decent perspective on the ability to perceive value for others and speak plainly to sell it.
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.
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.
> In my experience they’re also the clearest American speakers, so non-native english speakers have an easy time understanding them.
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.
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.
My cousin has a theory that the (sometimes brutally cold) winters and generally blue-collar background breed a bit of "suck-it-the-fuck-up-and-get-it-done" mentality.
I think that depends a lot on what your basis for comparison is. It's sort of like asking what California or New York culture is: what people notice is the differences to what they're used to.
One of my coworkers who moved to Michigan after being all around the U.S. described the culture as people who were genuinely nice and caring. YMMV
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 (§ 445.774a) for, among other things, goodwill. A not good situation for an area interested in creating a thriving tech scene.
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.
>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.
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.
Commenter OP said company so your statements are fair. But if They said startup then you’d be wrong - for startups costs don’t matter initially, growth does. You get vc funds to cover costs no matter how much they are. In that regard Michigan (till Covid) wasn’t probably a great place to start a startup.
I don't think this is 100% accurate but often spoken about, particularly in tech circles. I think it's more accurate to think of it in terms of if you're not profitable, you can buy time with growth until you can find a way to become profitable. But ultimately profits (and by extension, costs) will always matter.
If you’re okay with hiring people right out of university, there’s a new crop of thousands each year. Not everyone wants to leave Michigan right away.
If a Michigan company wanted to pay anywhere near what a CA one does, they'd have talent lined up with minimal effort. Its here, but everyone is already employed and doing alright.
The cost of living in Michigan is so much lower they shouldn't need to match west coast salaries. How many first year first year engineers are able to buy a house for example on the West coast?
The ceiling is so much higher in coastal cities though. I moved right after college because I wanted to become rich. There’s not a strong path in Michigan to become rich (or even nationally upper-middle-class)
>There’s not a strong path in Michigan to become rich (or even nationally upper-middle-class)
How are you defining "nationally upper-middle class"?
How are you defining "nationally upper-middle class"?
They provide the same value though, right? So there should be headroom to pay close to that. If Michigan companies came even close to matching 1st tier city salaries they'd have the cream of the crop lining up around the block to join.
Ann Arbor and surrounding area is approaching Portland prices, not to mention higher taxes.
The main problem is Seattle/California engineers can make way more than Ann Arbor, although pay seems to be trending up.
And Ann Arbor is probably 20% higher median compensation than Grand Rapids.
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.
I grew up in Metro Detroit. Moved to California in 2015, and while it's been fun... I'm moving back to Michigan (Downtown Detroit/Brush Park) next week.
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.
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.
I can't assume your age or knowledge of the economics of the state over time. But this suggests an extremely limited memory over time. All of this activity, everything you mention as reasons for excitement for Detroit (oddly ignoring the rest of the state, which makes up a far larger chunk) ignores the historic cycle of economics in Detroit and the automotive sector. It's going to take one healthy recession to spur layoffs en masse and send money scrambling out of state again. Nevermind the asinine city and state taxes you'll incur living within the city limits, the high cost of living. While they may appear reasonable or even desirable compared to Cali, you're buying into a disadvantage by default.
You need but look at Miami to find a polar opposite of advantage, opportunity, and excitement with longevity.
You need but look at Miami to find a polar opposite of advantage, opportunity, and excitement with longevity.
The COL in Miami is much higher than Detroit.
There's also a bunch of drone companies at City Airport. Surrounding neighborhood is challenging but I've been told you can rent a hangar incredibly cheaper than anywhere else in the US.
I grew up in Michigan and I love seeing how the ecosystem has grown.
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)
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)
>something like 66% of all graduates leave post-graduation.
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...
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...
By reputation, University of Michigan has a very good engineering program. It's good enough that if you finish you can get a job anywhere else. It's kind of sad that if the school was worse more people would stay in state.
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.
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.
Is it really a brain drain if many of the top students at the University of Michigan came from out of state (New York/Jersey or California or overseas [Europe/Israel/India/Nigeria/China]) in the first place?
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...
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...
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.
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.
I disagree with you about the veracity of the "fluff". Personally I moved to the Midwest from the east coast a few years ago for what was supposed to be a few months. I never expected to want to stay here; I was supposed to move to NYC or SF after. Instead I've realized a much simpler existence than I ever planned for myself. I'm currently in the process of moving to Northern Michigan from Chicago and couldn't be happier.
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.
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.
(I'm in tech and I have been since 2004, starting to work remotely in 2008.) It took me 35 years to escape the hell that is Michigan. From the economy to the weather to societal issues to the fickle politics - Michigan is a backwards state constantly mired in the economics of the industry that brought it to prominence. The business policies aren't conducive to starting businesses in the state, and there is a constant pull of talent to the northeast, west, and south. And for good reason! Cost of living, average salary, and mobility are consistently behind other states. It's always going to be an aggro and automotive state, and nothing is going to change that. I spent decades defending Detroit and the state, only to realize once I finally left that I had been insanely myopic.
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.
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.
>backwards state constantly mired in the economics of the industry
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.
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.
Property taxes in Michigan are unexpectedly high, and car insurance costs are VERY high. I believe Michigan is the most expensive or second most expensive state to have car insurance in. That's before you live in Detroit. If you live in Detroit, your car insurance will probably increase by anywhere from 75% to 100% from what you were paying in the suburbs. Your property tax in Detroit will also be very high as well as they basically max out the state allotted county property tax.
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.
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.
Definitely agree on the auto insurance. It’s my understanding it’s an artifact of the no-fault insurance policy but that may not be the whole story. The lack of great public transit makes it worse because there’s little option because it’s such a car-centric region. I also agree that AA is expensive, but I think that’s in part due to the affluent populace of the college. If you’re willing to forgo the status of living in Ann Arbor, reasonable housing can be found in adjacent areas including college towns like Ypsilanti.
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.
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.
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Startup ecosystem? looks around
> Up north, in Grand Rapids
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.
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.
It's a perennial topic of debate to define the borders of Up North. Growing up in Bay City, the border was generally agreed to be Clare - or Tawas if following the coast. It was a source of some amusement to learn that many Detroit residents considered Bay City to be Up North. The source of the confusion is that Up North is actually shorthand for "my family's favorite vacation spot".
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.
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.
Born and raised in Metro Detroit. Grand Rapids is def up north. So it Flint and Lansing tho lol.
Michigan is fine. Not sure its “startup ecosystem” is worth an article? I grew up there and have moved back, once. I’m happy to say I don’t live there anymore.
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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?
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.