Detroit Labs, Compuware & More on the Mobile Opportunity in Michigan

4/13/12Follow @XconomyDET

The scene at a recent happy hour hosted by Detroit Labs was bustling, especially considering that the only means of event promotion were flyers hastily taped to the doors in the Madison Building, where Detroit Labs is headquartered. About 50 people crowded into the upper bar—most of them young men—and discussed their latest projects and entrepreneurial endeavors.

I struck up a conversation with Dan Ward, the co-founder and vice-president of Detroit Labs. The company was formed in 2011 to build apps for a variety of clients. (Perhaps its highest-profile product is the Chevy Gametime app, an interactive interface released around the time of the Super Bowl.) Detroit Labs is approaching $30 million in revenue, has over a million downloads, and has more than 4,000 reviews in the iTunes App Store with an average rating of 4.5 or 5 stars.

Detroit Labs might be Michigan’s highest-profile mobile tech success story, but it’s not the only one. Linda Daichendt, executive director and president of the Mobile Technology Association of Michigan (MTAM), describes metro Detroit’s mobile scene as “huge” and says the sector is rapidly growing across the state.

Mobile technology, by the way, is a catch-all phrase for wireless products and services. It doesn’t just relate to cell phones, but encompasses machine-to-machine technology used in manufacturing, health care, transportation management, automotives, building management, and more. It’s hard to think of a vertical that won’t be impacted by mobile technology. According to MTAM, in 2010, the value of the worldwide mobile/wireless industry reached $1.8 trillion, a growth rate of 9 percent over the previous year.

Daichendt added a mobile services practice to her consulting business three years ago, because she felt that people in Michigan weren’t getting it and were in danger of letting the mobile gold rush pass them by. She reached out to some of her contacts in Ann Arbor and started a chapter of Mobile Monday, an organization dedicated to mobile technology education and networking. (Michigan now has Mobile Monday chapters in Detroit, Ann Arbor, Grand Rapids, and Lansing.)

“I was a little nervous,” Daichendt recalls of that first Mobile Monday meeting in Detroit, which was held in October 2010. “I didn’t know if there was any interest. But more than 100 people showed up. I was blown away. Now we have over 800 members in Detroit and 1,500 members statewide.”

Though statistics aren’t yet available for Michigan, wireless economic contributions in the U.S. have grown faster (16 percent) than the rest of the economy (3 percent), Daichendt says. According to an internal study commissioned by the Michigan Economic Development Corporation (MEDC) in 2011, over 47,000 Michigan residents are already employed at 2,300 companies in the mobile sector. The average compensation for a mobile technology job in Michigan is over $63,000 (a cost-of-living equivalent to $145,000 in Silicon Valley) and the study found that for every mobile industry job created in Michigan, 3.9 jobs are also created outside the industry—a number that is outpaced only by the manufacturing sector. Daichendt says MTAM’s goal is to create 9,250 additional mobile/wireless technology-related jobs in Michigan by 2015; the MEDC says that if that goal is achieved, it will result in over 35,000 non-mobile related jobs and over $1.7 billion in salaries and wages for Michigan residents.

“Mobile technology is becoming very viable,” Daichendt adds. “It will have a tremendous economic impact in Michigan.”

We talked to some of the key players in Michigan’s mobile technology sector to find out their thoughts regarding the industry’s effect on our economy, and what they feel our state’s unique strengths and weaknesses are. We got a wide variety of (and sometimes conflicting) answers, which is probably indicative of mobile tech’s fledgling status in Michigan. It’s a new industry, and while we have a good start, it has a long way to go.

The following are highlights from a series of interviews we conducted over the pastmonth in an attempt to get a picture of Michigan’s mobile tech sector:

Paul Czarnik, Chief Technology Officer, Compuware

About the company: The Detroit-based software giant has been in business for 40 years and counts among its clients 46 of the top 50 Fortune 500 companies and 12 of the 20 most-visited U.S. websites, including Google, Facebook, LG, Yahoo, Logitech, the National Football League, and Amazon.

Industry impressions: “All of Compuware Ventures‘ startups are mobile-based. Our perspective is to look for tech-based companies that we can incubate. We’re focused ferociously on Detroit. We tend to share the love and share the risk. If Detroit Venture Partners passes on something, we’ll take a look and vice-versa. The biggest surprise has been how cheaply and quickly you can develop mobile startups. Software companies need to understand that their biggest competition now is four kids in a dorm room with laptops. The new model for software companies is very lean.”

Michigan’s strengths: “Proximity of low-cost office space.”

Michigan’s weaknesses: “I’m stunned by the lack of talent out there. So much so that Compuware is working with the universities and the MEDC to change that. Kids are leaving Michigan because Silicon Valley snatches them up. They’re saddled with student loans, and if they can land a good job it takes the pressure off. The biggest vacuum is in startups, because there’s a shortage of technical founders. With all of that debt, the kids can’t afford to be part of a startup.”

Jim Hankins, president and founder, Safety Grid

About the company: Chesterfield-based Safety Grid offers a “panic button” app for the iPad and iPhone. Hankins, who spent nine years in the military, created the company after he lost a good friend in the 9-11 attacks who was hit in the head by falling debris and dropped his phone in the street. “I thought there has got to be a way we can leverage technology to make it easier to locate people in a disaster,” Hankins says.

Safety Grid is available as a free download or a $9.99 per month monitored system. The free version will notify up to five contacts with an automated message if the user trips the silent alarm, and the monitored version functions like OnStar, with a human handling the alert. So far, Hankins says, 2,700 people have utilized it in a rescue, and it’s the only rescue app certified by the United Nations.

“People dial 9-1-1 and can’t converse because they’re being victimized by violent crime,” Hankins says. “There’s no additional information provided to the dispatcher. Safety Grid provides medical information, and we can coordinate a rescue anywhere in the world or add medivac coverage to repatriate you to your home country.”

Industry impressions: “I have a telecom background, but I taught myself how to write apps through online courses and reading books. It took one and a half years from when I came up with the concept to when it was available for download. It’s been a very rewarding experience.”

Michigan’s strengths: “Michigan has, especially with the automotive industry, a large group of folks in marketing, advertising, graphic design, and photography. Those skill sets can be easily tapped for the mobile industry.”

Michigan’s weaknesses: “There’s a fairly large contingent of developers in the area, but I haven’t had the chance to rub elbows with them. Often, developers have personality quirks that make them pretty solitary people. [Developers] need to come together as a community to draw people out.”

Ron Harwood, CEO, Illuminating Concepts

About the company: Based in Farmington Hills, Illuminating Concepts has taken the old-fashioned studio control room mobile. The company specializes in “immersion experiences” and uses apps to control all forms of lighting, sound, and special effects at venues like Disney World and Campus Martius. After 9-11, the company delved into emergency alerts, way-finding, and digital signage. “We’re taking tech literally to the street, and all of it is controllable on the fly through mobile devices,” Harwood says.

The company is currently developing a way to use street lights to enhance mobile devices. For instance, Harwood says you’ll soon be able to “talk” to street lights and ask for directions or emergency assistance through your smart phone. (Harwood describes a scenario where you could ask a street light in Florence, Italy how to get to the Badia Fiorentina and the lights would strobe the way for you to follow like a trail of breadcrumbs.)

Michigan’s strengths: “Our strengths are our universities. Everybody on our team who’s involved in mobile apps or wireless control either attended or graduated from Wayne State University, College of Creative Studies, University of Michigan, Michigan State University, or another Michigan school.”

Michigan’s weaknesses: “The economy. The fact is that cities desperately want our equipment to pump life into their downtowns, but the government money has dried up and the tax revenue is gone. However, we continue to stay here even though we’ve been asked to open offices in New York and Los Angeles.”

Paul Jacobs, founder, JACapps

About the company: JACapps, based in Southfield, was the result of Jacobs’ 30 years running Jacobs Media as a consultant to rock radio. (Jacobs Media claims to have invented the classic rock format.) Jacobs says the company got into apps a little over three years ago through research it was doing in media and technology for some of its clients. JACapps specializes in creating apps for festivals and events like the Ann Arbor Art Fair and public radio shows like “Car Talk.” Its apps have been downloaded 14 million times since 2008.

Industry Impressions: “The secret to my success is that I hire people who are half my age and twice as smart. People always ask, how did you [diversify from traditional media to mobile technology]? I tell them I have a marketing background—I don’t lead with code, I lead with strategy.

“We do business around the world—there’s really no difference between Michigan and anywhere else because mobile tech is healthy everywhere. The interest level here is high because city and state leadership is raising people’s awareness. Twenty years ago, when people found out we were based in metro Detroit, they’d ask, “why?” Now people are asking what it’s like to live here.”

Michigan’s strengths: “There is so much business out there, we have just scratched the surface. To me, mobile apps are like websites were in the 1990s. So many businesses, especially locally, don’t even know about it yet. As huge as mobile tech is, we’re really just starting.”

Michigan’s weaknesses: “Finding talent. The mobile tech space is growing and it’s getting competitive. To find developers with some level of experience is hard. All these companies are beating each other up trying to steal each other’s talent.”

Jeff Kelley, “mobile guru” and senior iOS developer, Detroit Labs

About the company: See the beginning of the article for details about Detroit Labs. Detroit Labs is getting ready to launch Podcastic, a podcast-management app Kelley developed during the company’s lab time. (Like Google, Detroit Labs has instituted a 20 percent lab time policy, where team members propose projects and vote on which ones to develop in the hopes that they can be spun off into viable products or companies.) Kelley has also just finished writing a book called “Learn Cocoa Touch,” which will be out next month.

Industry impressions: “One of the side effects of [app developer] being a hard job to fill is that, if you’re coming out of college and know how to develop an iPhone app, I can get you a job making $40,000 to $50,000 the next day. If you make your own app, you could become an overnight millionaire. I’m not so worried about the bubble bursting as I am iPhone app developers being commodified. If you have more and more people learning how to develop these apps, eventually the salaries are going to go down.”

Michigan’s strengths: “We have the auto industry here, and cars and apps are working together more every day. Detroit people have the advantage there.”

Michigan’s weaknesses: “It could be hard to hire people. Keeping people here after college—that’s the challenge.”

Kevin Lasser, CEO, JEMS Tech

About the company: The Orion-based JEMS offers HIPAA-compliant real-time video streaming to smart phone and tablet devices. “The reason for it is lots of rural areas don’t allow people to have access to specialists,” Lasser says. “With our devices and software, they can send a live-streaming video to any doctor in the world.”

Industry impressions: Lasser says his company is both bootstrapped and profitable, and he has little use for bankers or venture capitalists, who he sees as “Johnny-come-latelys” to mobile tech that “offer you an umbrella on a beautiful, sunny day but if it’s raining, they want it back.”

Michigan’s strengths: “When we started, we said let’s try to do this with all Michigan vendors. We didn’t do it to get tax incentives or to get press, we did it because we’re metro Detroiters and we wanted to help the people around us. But we found amazing companies like Enovate IT and Secure-24 that we’d put up against anyone, anywhere in the world.”

Michigan’s weaknesses: “I’m the wrong guy to ask. I think we have an extreme amount of talent here. It’s hard for me to say we have a shortage.”

MTAM is hosting a statewide mobile technology conference in late July that will provide extensive education from local, national, and international industry experts, as well as showcase firms in Michigan that are utilizing mobile technologies in their companies. Contact MTAM at info@GoMobileMichigan.org for more information.

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

By posting a comment, you agree to our terms and conditions.