Detroit is buzzing again. Optimism about the city’s future is high. Unemployment in the state of Michigan is under 4 percent, approaching 20-year lows, and is lower than the national average. There’s lots to be excited about, and I share that excitement 100 percent. In fact, it’s part of the reason why I recently moved back from Seattle after a decade away from the region.
And while things are looking good and we should be excited, there’s a massive wave of disruption coming. And it’s coming sooner than we think. It’s the wave of automation.
As a software guy, I define automation differently than most in this area: it’s not just manufacturing and robotics (a la Automation Alley) that make up automation—though those are clearly important sectors of automation, especially to the Michigan economy—it’s anything that fully or partially replaces human effort in a task. With increases in computing power and advances in artificial intelligence and machine learning, we’re about to reach an inflection point where far more can be automated than we ever thought, even just a few years ago.
For example, I use Amy and Andrew, two “assistants” to help me manage my calendar and find meeting times, from x.ai. Except Amy and Andrew aren’t real people; they’re AI-driven bots that send and receive emails and coordinate schedules easily and effectively. The human on the other end doesn’t have a clue they’re talking with a computer.
Or take DroneSeed, an investment of mine through TechStars. Reseeding a logged forest is backbreaking, time-consuming, and dangerous work. DroneSeed does it more quickly, efficiently, and safely using a fleet of drones.
Amazon is getting into the automation fun in many ways, too. Its Amazon Go grocery market concept—currently being tested on company employees in Seattle—requires zero checkout. You simply pull products from the shelves and cameras will recognize what you pulled and charge your credit card without ever interacting with a human. Standard Cognition, a startup working on this problem for other non-Amazon stores, just raised $5 million in venture capital.
And, of course, there are all of the advances we’re seeing happening in autonomous vehicles. We can imagine what winning the autonomous vehicle race means. There are plenty of other applications for automation, too, and we’re just getting started with what’s possible.
There should be no argument this disruption will happen. The technology is already here. There is no argument there will be winners and losers. The only argument is who will be the winners and where they will be concentrated. And that’s where Detroit and the state of Michigan have even more to potentially be excited about. The beneficiaries of this next wave of automation are going to need a specific set of skills, skills that are already abundant among Michiganders.
The last 20 years have seen software as the dominant player in value creation, and while I believe that will continue, the divide between hardware and software continues to shrink. During these next 20 years, value will be created when software is integrated with hardware. Many of the tasks automation will replace exist in the real world, requiring sensors, speakers, microphones, and devices. Luckily, this is an area where Michigan has more expertise than almost any other region, including Silicon Valley. We’ve been creating systems with hardware and software intertwined for decades: in cars, robots, other manufacturing systems, and more. This expertise positions us incredibly well for the next wave of disruption.
Similarly, this next wave of disruption requires expertise in artificial intelligence and machine learning. No surprise here: our universities are some of the best in the world at A.I. investigation, including the Artificial Intelligence Lab at the University of Michigan.
But of course, we need more than just talent and expertise. I’m a believer that the best innovation ecosystems are built with a combination of talent and money that work in tandem to create huge amounts of real value for people and their economy. In my mind, we currently have a money/talent mismatch; we have both investment capital and talent in Michigan, but they don’t always work well together.
We need more seed funding administered by fund managers with operational experience mentoring and advising their portfolio to success. There are too many stories of companies who take an early-stage investment from a firm that doesn’t understand early-stage venture investing, which ultimately destroys the company. Incentives aren’t aligned, and too many investors in Michigan believe that venture capital can be treated like other asset classes, such as private equity, when, in reality, it is very much its own asset class and must be treated as such. This is even more true at the seed stage, where Michigan doesn’t have enough quality firms.
And, obviously, there will be people who lose their jobs as a result of this automation. By my estimation, over a million jobs in Michigan alone are up for grabs. We cannot allow these individuals to lose their incomes and not provide them with an alternative. We need strong retraining programs and public/private partnerships to ensure they are brought back into the workforce—ideally, with even better jobs than before.
This is our opportunity. Let’s seize it now before someone else does. Let’s transform the nation and the world just like we did 100 years ago. Our economy will be disrupted by automation, so let’s be the ones to disrupt ourselves and reap the benefits. We can do it both responsibly and successfully.
