Michigan Tech Startup? Are you joking?

By Efay Guo

Before writing this post, I literally searched “Michigan Startups” on Reddit, There is 0 subreddit group result, The closest one isAnn Arbor Startups with 22 subscribers and the last post was 2 years ago. Put into perspective, there is a subreddit group called Michigan Beerwith 5,000 subscribers and the last post was 10 hours ago

I think that can somehow give us a picture what the startup scene looks like in Michigan

Before sharing my tech startup experience, let me tell a little bit about myself. I am a software developer and moved to Michigan from California a couple of years ago. The reason for moving was for work at that time. I had experience generating startup ideas, turning it to a product (software, or a mobile app) and running and growing to a sustainable business. I most of the times stay in Oakland County or Ann Arbor area.

Let’s start with Smart Zone

I assume if you are in the startup field in Michigan, you probably heard about Smart Zone. It is basically a concept that the whole Michigan is divided into 20 areas and each area has a business service center to help ambitious entrepreneurs start or grow their businesses. Some of them even have an incubator program to provide you with some business and financial related seminars..

Ironically, if you are in tech such as software / mobile / internet, you are screwed, because none of these smart zone centers support a legit tech startup. Why? Because their goals are to increase job opportunities and support some native industries such as defense, automotive, mobility things. As a tech startup, you probably want to stay lean as long as possible and will not hire anyone besides paying yourself and your co-founders until you start making good money.

Incubator / Accelerator

Michigan surprisingly has accelerator programs. To name a few: Desai and Sparks in Ann Arbor, Conquer in Lansing, and TechTown in Detroit

However, from the location, you may already figured these accelerators are tied to universities: U of M is in Ann Arbor, Michigan State University is in Lansing, Wayne State University is in Detroit. These programs are mostly for students in these universities or for their alumina. For other people, it is very hard to get in. Even if you get in, the outcomes will not be as good as you may think (more on this later) Also, to be honest, it is not worth the effort to try to get in when you have other great accelerators out there such as Y Combinator, AngelPad, TechStars which can truly help you grow, build relationship with investors and offer valuable advice.

Investors and advisors

Very straightforward, First, there are not many angel investors who actively look for startups to invest. There are some VC and I guess they gathered money from rich individuals like doctors, lawyers to fund some companies. Accelerators usually play the angel roles, but I got inside information that so many startups in the accelerators were founded by local university students and failed so quickly. Accelerators end up losing money.(That’s why you do not find many accelerators / incubator programs in Michigan, it is a losing-money business and they do not get the return on their investments)

VCs are super conservative, and most of them only invest in automotive, food, real estate, and other traditional business. I know a few who invest in tech company but only limited to enterprise software because Michigan still has the biggest automotive industry with OEMs and Suppliers, their internal software is not good.

If you are making some tech product customers, you will not likely to raise money from VC in Michigan.

Also, there are so many advisors anywhere, they are on the board or this or that startups. They are helpful in their own domains such as legal, finance, etc, but few of them had run startup themselves, so their startup advice doesn’t carry much weight

Developers v.s. Entrepreneurs

There is always a dilemma you need to solve if you want to start a tech startup in Michigan. “Entrepreneurs and developers do not go hand by hand” Most entrepreneurs are non-tech people and most developers are employees without entrepreneurial spirits. For example, in Michigan, most successful entrepreneurs are non-tech business owners ranging from CEO of movie theater franchise to small bakery. Most of them do not care about tech. People in tech are mostly developers who are employed in companies ranging from 5 people studios to giant auto OEMs. Most of them are happy with their paycheck so they will not think about starting a tech startup when they can make money by doing some fairly easy work.

Ann Arbor — the tech startup hub

If you can guess a city that is most related to tech in Michigan, Ann Arbor should be on your top list. There are many good developers I encountered in Ann Arbor. They can code and make something but they lack the entrepreneurial spirits. (You can argue about that, but that was I experienced after talking with hundreds of people) . Most people in Michigan who get in tech is to get a good paycheck, not to start a company or change the world for better. That’s why there are many coding boot camps or schools such as Grand Circuits. (80% new developers in Detroit will tell you they are somehow associated with Grand Circuits)

Part of the reason why Ann Arbor is tech hub in Michigan is because of U of M, which is ranked very high on any university ranking sites. There is no doubt that the buildings on the campus are beautiful and the interiors are well designed. However, just like most other universities, you do not really learn many practical skills from there even if you are a computer science student. Here is my personal experience. One day, I went to one of the biggest computer labs in the CS building and asked more than 30 students there if they know how to program in Swift ( the programming language used to make native iOS apps), everyone said no. When I got back home and search their curriculum, only one course is related to mobile development. But the statics show more than 75% of people are using mobile phones for personal use compared to 40% using a desktop. So just as most other universities in the US, students are not well trained to stay up to date.

There are many great meetups, one of my favorites is AA New Tech, where every month you can see tech-related startups present their companies, then you can network with presenters. However, although the meetup place is in one of the UM Ann Arbor building, 70% of the audience are over 30 years old and from other cities outside of Ann Arbor. Very few students are in the audience.

So in short, you can say AA is the Tech Hub in Michigan, but no way near compared to Silicon Valley’s standard and hardcore entrepreneurship.

Normal people

I had experience running my own entrepreneurship meetup with 1300+ members in Michigan and personally talked to more than 300 of them. One of the things I found out is the entrepreneurial spirit is lacking. Most people talk and dream, few take actions, very few have the grit to persevere long enough to see some results. I guess it is a big environmental issue. Michigan is a heavily industrial state with the biggest automotive industry. So most people have the industrial worker mentality and are into the Real Estate business. The process looks like this; Graduate university -> Find a decent job in big companies -> buy some mortgages -> Rent them out -> start collecting money and save salary at the same time -> hope to quit a job as soon as possible

With that working employee mentality, few people have the courage to take the leap and start their own tech startup.

Conclusion

If you are hardcore entrepreneur, you can make it happen no matter where you are especially for tech and internet stuff. The only difference is the amount of help and the quality of the help you can get from your surroundings.

In the tech circles in Michigan, business-minded people hardly can find a committed tech co-founder to make a startup take off. Also due to the easiness at the job, most of the developers are not skillful enough to make a great product individually. (If you are skillful, you will not say you are the front or back end developer, you do everything in a tech startup). If they could, they probably will not stay in Michigan.

In my personal opinion, I do not think Michigan is the best place to start a tech startup unless you are doing something closely related to the automotive industry. Even that, you probably will not be able to compete with other tech giants on the west coast. What’s new in the automotive industry? I guess self-driving car. Aren’t Google, Tesla, and Uber the lead in the self-driving car industry?

Let me know what you think about the tech startup in Michigan. Either you agree or disagree, I want to hear your opinion, leave the comments below.