One Hand Clapping: Entrepreneurship in Ann Arbor

4/7/11Follow @sgblank

I spent a few days in March in Ann Arbor Michigan as a guest of Professor Thomas Zurbuchen, Associate Dean for Entrepreneurial Programs, and Doug Neal, Director of Center for Entrepreneurship in the Engineering School at the University of Michigan.

I gave a keynote on entrepreneurship to MPowered, the student entrepreneurship organization, spoke on a panel on Entrepreneurship and the Aerospace Industry, and gave another keynote at the Ann Arbor New Tech Meetup and A2Geeks, the regional startup network.

I got smarter about engineering and innovation in “flyover country”, met some wonderful people and shared some thoughts about what it might take to spark an innovation cluster in Ann Arbor.

This post is a personal view of what I saw in Ann Arbor—in no way does it represent the views of the fine institutions I teach at. Read this with all the usual caveats: visiting a place for a few days doesn’t make you an expert, I’m not an economist, and the odds are I misunderstood or misinterpreted what I saw or just didn’t see enough.

One Hand Clapping – Creating an Innovation Cluster – The Ann Arbor Experiment

In my short time in Ann Arbor, I spent time meeting with:

The Good News

Entrepreneurship and innovation has been embraced big time at U of M. The Engineering School has 5,600 undergrads and 3,000 graduate students. It’ s probably no coincidence that the Dean of the Engineering School founded a company and gets what “startup” means first hand. The Center for Entrepreneurship in the Engineering School is akin to Stanford’s STVP program. It offers 35 entrepreneurship courses.

Everyone I met in this program “gets” the principles of Agile, Lean, and Customer Development big time. The TechArb is the engineering student accelerator/incubator (cofounded by the local VC) and also embraces these ideas. Finally, I was impressed to find a robust local entrepreneurial community centered around A2Geeks and the Tech Brewery (after I met Dug Song I understood why).

(I didn’t have enough time to connect with the entrepreneurial groups working on medical devices and life sciences, but they are another big component of the startup pool coming out of the University.)

What Needs Work

It’s been 33 years since I was last in Ann Arbor. (I call it the best school I was ever thrown out of.) I was incredibly impressed with how far the University has inculcated innovation into the fabric of the Engineering School. However, the challenges that still needed to be addressed were pretty apparent.

You Can’t Start a Fire Without A SparkA Lack of Venture Capital

For an Engineering School so focused on innovation and startups, the lack of sufficient numbers of venture capitalists in the local community for cleantech, hardware, Web/mobile apps, and aerospace was noticeable. Given the interesting things going on in the engineering labs I visited and the startups I met, one would have thought the school would have been crawling with VC’s fighting over deals. Instead it seems that students who graduate simply pick up a plane ticket with their diploma. (Of course, some do stay. The spin-outs from Center of Entrepreneurship are impressive. Many of those companies are still Ann Arbor, but the ecosystem is a limiting factor.)

While one can’t recreate all the happy accidents that made Silicon Valley, it doesn’t take a rocket scientist to realize that it’s the combination of technology entrepreneurs and risk capital that are two of the essential ingredients in any cluster. (I list some of the others in the diagram below.)


Innovation Cluster – What’s Missing in Ann Arbor

Therefore the lack of critical mass in venture investors in Ann Arbor was palpable—and incomprehensible. This place could support at least one or two seed funds like 500 Startups, and a couple of True Ventures/Floodgate-type of VCs as well as more cleantech investors. Getting them in Ann Arbor would solve the other missing piece: the lack of a startup culture.

A Lack of a Startup Culture in the Community

Visiting Silicon Valley you can’t mistake that its primary business is innovation. In Ann Arbor and southeast Michigan entrepreneurship is a small part of a … Next Page »

Steve Blank is the co-author of The Startup Owner's Manual and author of the Four Steps to the Epiphany, which details his Customer Development process for minimizing risk and optimizing chances for startup success. A retired serial entrepreneur, Steve teaches at Stanford University Engineering School and at U.C. Berkeley's Haas Business School. He blogs at www.steveblank.com. Follow @sgblank

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  • http://monkey.org/~dugsong/ Dug Song

    Steve’s wonderful http://a2newtech.org talk from his visit is online:

    http://www.ustream.tv/recorded/13649870

    Don’t miss it.

  • Michael Cole

    Enjoyed your comments Steve.

    Next time in the region, please feel free to touch base. I would enjoy the opportunity to introduce you to a couple of the leaders at Ann Arbor SPARK, the Michigan Venture Capital Association, the Ann Arbor Angels, and Bank of Ann Arbor. Since returning to Ann Arbor ten years ago from California, in addition to UM, these are a few of the organizations that I have seen making significant investments towards building the region’s new economy ecosystem.

    Michael Cole
    Executive Director, Ann Arbor Angels & President, Technology Banking Group, Bank of Ann Arbor