Maybe it’s a line they hand out to every Michigander, because I have heard it several times in various configurations. But it’s heartfelt. It’s a message to people around the country complaining about current economic conditions. The gist goes something like this: “You think you had it bad? Michigan’s recession began years ago—and it was a lot worse than what you’re feeling. We’re over our grieving and are hard at work, and you should be, too.”
[Editor’s note: This article is a slight modification of Nature Abhors an Entrepreneurship Vaccum, written by Xconomy founder Bob Buderi for the Kauffman Foundation’s recently released Kauffman Thoughtbook 2011. Many of themes raised in the article will be discussed on April 14 at Xconomy’s Michigan 2031 event, which Bob will co-moderate with Xconomy Detroit editor Thomas Lee.]
I’m not from Michigan. And until last year, when I began planning a Detroit expansion of our high-tech news network, Xconomy, I hadn’t been in the Wolverine state since 2005. Now, with Xconomy Detroit successfully launched this past April, I’ve made several trips to southeastern Michigan and talked to scores of people in the state, both in person and on the phone or through e-mail. The economic pain that has been felt in the state is obvious—and hard for an outsider to comprehend in its depth. It is clearly reflected in the state’s psyche. But equally apparent is the determination to plow on and overcome by finding new ways to create jobs and growth. I can’t help but think of a corollary to the famous “Nature abhors a vacuum” saying most often attributed to 16th century French monk Francois Rabelas:
Nature abhors an entrepreneurship vacuum.
Or, perhaps more accurately–Nature abhors an innovation vacuum–because what I believe is unfolding in Michigan encompasses far more than entrepreneurs starting and growing new companies. I think that since virtually every fabric of the state has been affected by the auto recession/meltdown, the need for innovation is also pervasive—and that people and organizations of all stripes are responding. Maybe my theory is naïve. My company has been in the state less than a year. Yet we have put out hundreds of stories in that time—all of them laser-focused on innovation. Many of these stories were about entrepreneurs and their startups. But we’ve also written about innovative approaches to venture capital, such as the Renaissance Venture Capital Fund, a fund of funds that only invests in other venture firms that invest in Michigan, and innovative non-profit organizations from TechTown to the Michigan Women’s Foundation who are testing new models designed to spur innovation and entrepreneurship from a non-profit angle. As I wrote this, in fact, the Michigan Women’s Foundation was announcing a new angel fund designed to help women entrepreneurs.
Put it all together, and if I had to bet on the upside of any place in America right now, it would be Detroit—and, by extension, all of Michigan. I’m not saying Detroit or Michigan will fly the highest and have the strongest economy in America or somehow beget the new Silicon Valley. I am saying the state has the potential to show the biggest gains on a percentage basis. To put it another way, if Detroit/Michigan were a stock, I would buy a bunch of options on it.
Xconomy began eyeing Michigan in late 2009—sensing that some sort of major transformation was in the air. Our goal is to build a series of local news sites covering the business of technology and innovation in key clusters around the world—and weave them into a global network. Detroit was not in our original business plan. There were the obvious major and semi-major clusters: Boston, San Francisco, Seattle, San Diego, Austin, Research Triangle Park, even Pittsburgh or Minneapolis. But no Detroit.
But our view changed, not because of what had happened—but because of what was being attempted. First and foremost (and here I credit our chief correspondent Wade Roush, a native Michigander who was the first to raise the idea with me), we saw an effort to diversify the state’s economic base and to thereby make the economy less dependent on the auto sector. There were already a lot of efforts underway on this front. The state’s life sciences sector, especially around Ann Arbor and Kalamazoo, featured some world-class research and companies. So did a growing medical device cluster. Our Boston site had already written several stories about Michigan’s efforts in cleantech, through our coverage of New England companies like A123Systems opening a lithium ion battery manufacturing plant in Livonia, MI, or biofuels startup Mascoma planning a facility in Kinross, MI. And that didn’t count the home-grown efforts in a slew of cleantech projects, from wind to biofuels to batteries for electric vehicles. Cleantech also was benefitting from ongoing strong work in nanotechnology: after all, it was back in 2001 that Michigan’s new governor, Rick Snyder, launched Small Times magazine in Ann Arbor to cover nanotech.
Those things were relatively easy to spot from afar. Then, as we investigated further, we learned about a growing Internet gaming community, and what was quite possibly the world’s largest computer design community. The designers were hired primarily around the auto industry, but there was work underway to apply their expertise to an array of other arenas, including the design of wind turbine blades and robotics systems. And speaking of robotics: Massachusetts-based iRobot was just opening a Michigan office to tap the state’s robotics expertise for defense work, while other efforts were underway to build a new cluster of auto robotics firms. Then we learned about a series of new initiatives and programs to help start, incubate, mentor, and fund companies. TechTown in Detroit and Ann Arbor Spark had the highest profiles, but we saw plenty of other examples, including a new Detroit chapter of Mobile Monday: the group is a mainstay here in Boston that draws several hundred people to its monthly meetings but was only in the planning stages in Michigan.
And behind such examples sat an even bigger story–that is of the innovation efforts inside the big automakers. How were they planning for the future and trying to get back on track, or, hopefully, ahead of the curve?
So it was all these stories and a lot more—set inside the bigger, all-encompassing story of Michigan’s attempts at long-term economic revival—that we wanted to be on the ground in Michigan to cover. And because success or failure in this broad-based effort to promote entrepreneurship and innovation holds national and event global import, we wanted to tell these stories not just for a local audience, but for our growing global audience as well.
In early January, 2010 the Kauffman Foundation agreed to help support the launch of Xconomy Detroit. We made trips to get to know the innovation community, hired a correspondent, formed a network of about 20 top advisors (called Xconomists), and launched last April 20. In early December, we held our first event—a networking evening to thank all those who have helped us get started in Michigan. And our first public event, which I will be coming out for, is coming up at TechTown on April 14. It is called Michigan 2031, and we have assembled an all-star cast from a variety of sectors to brainstorm about what Michigan’s innovation scene will look like in 20 years—and how/where it can attain positions of national and world leadership in key sectors.
We see bringing people together across various disciplines and fields of interest as another way to catalyze innovation. Our hope is to add a different type of spark to this catalysis, both through our role as an independent media company, and by cross-fertilizing our Michigan events and coverage with perspective from around the country. We plan to invite outside speakers to Michigan, and Michigan entrepreneurs and innovators to events in our other cities, which currently include Boston, San Diego, San Francisco, and Seattle.
A brief word on the bigger picture. Michigan’s story of innovation transformation is not just important in terms of its direct contribution to economic recovery and competitiveness, say, in the auto industry. There is a bigger, longer-term issue at play here–and that involves how Michigan’s efforts might lead to whole new centers of excellence in key areas. To paraphrase Lou Galambos, a professor of Economic, Business, and Political History at Johns Hopkins University, it is the establishment and nourishment of competing centers of excellence that give the United States its long-term edge. A growing number of countries now rival the U.S. in their level of expertise in given scientific or technological areas, and they are getting increasingly better at commercializing that expertise. No other country can yet rival the U.S. in the multiplicity of those efforts, however. Through efforts now underway, and more to come, Detroit and Michigan have the potential to add several new clusters to the American competitiveness arsenal.
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