One Hand Clapping: Entrepreneurship in Ann Arbor

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 Spark – A 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

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Author: Steve Blank

A prolific educator, thought leader and writer on Customer Development for Startups, Steve Blank is a retired serial entrepreneur who teaches, refines, writes and blogs on “Customer Development,” a rigorous methodology he developed to bring the “scientific method” to the typically chaotic, seemingly disorganized startup process. Now teaching entrepreneurship at three major universities, Blank co-founded his first of eight startups after several years repairing fighter plane electronics in Thailand during the Vietnam War, followed by several years of defense electronics work for U.S. intelligence agencies in “undisclosed locations.” Four Steps to the Epiphany, Blank’s fast-selling book, details the Customer Development process and is increasingly a “must read” among entrepreneurs, investors, and established companies alike, when the focus is optimizing a startup’s chances for scalability and success. After 21 years driving 8 high technology startups, today Steve teaches entrepreneurship to both undergraduate and graduate students at U.C. Berkeley’s Haas School of Business, Stanford University’s School of Engineering and the Columbia/Berkeley Joint Executive MBA program. His “Customer Development” teaching and writing coalesce and codify his experiences and observations of entrepreneurs in action, including his own and those he advises. “Once removed from the day-to-day intensity of founding a startup, I was able to observe a pattern that distinguishes successful startups from failures,” Blank says. In 2009, he earned the Stanford University Undergraduate Teaching Award in Management Science and Engineering. The San Jose Mercury News listed him as one of the 10 Influencers in Silicon Valley. In 2010, he was earned the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley Haas School of Business. Despite these accolades, Steve says he might well have been voted “least likely to succeed” in his New York City high school class. Steve Blank arrived in Silicon Valley in 1978, as boom times began. His early startups include two semiconductor companies, Zilog and MIPS Computers; Convergent Technologies; a consulting stint for Pixar; a supercomputer firm, Ardent; peripheral supplier, SuperMac; a military intelligence systems supplier, ESL; Rocket Science Games. Steve co-founded startup number eight, E.piphany, in his living room in 1996. In sum: two significant implosions, one massive “dot-com bubble” home run, several “base hits,” and immense learning leading to The Four Steps. An avid reader in history, technology, and entrepreneurship who seldom cracks a novel, Steve has followed his curiosity about why entrepreneurship blossomed in Silicon Valley while stillborn elsewhere. It has made him an unofficial expert and frequent speaker on “The Secret History of Silicon Valley.” Steve’s interest in combining conservation with best business practices had Governor Arnold Schwarzenegger appoint him a Commissioner of the California Coastal Commission, the public body which regulates land use and public access on the California coast. He also serves on the Expert Advisory Panel for the California Ocean Protection Council. Steve serves on the board of Audubon California, was its past chair, and spent several years on the Audubon National Board. A board member of Peninsula Open Space Land Trust (POST), Blank recently became a trustee of U.C. Santa Cruz and a Director of the California League of Conservation Voters (CLCV). Steve’s proudest startups are daughters Katie and Sara, co-developed with wife Alison Elliott. The Blanks live in Silicon Valley.