Ann Arbor SPARK's economic development questions

I was sent some questions from Khalfini Garcia, a researcher working for Ann Arbor SPARK to get opinions on how they can work to assist in economic development in the area. Rather than keep my answers to myself I thought I'd blog them here.

In your opinion what resources make AA attractive as a technology hub?

The University of Michigan brings a lot of new people to town every year from all over the country, either as students, faculty, or "trailing spouses". There's a tremendous pool of talented and interesting people who are supported by the U but who are not on its payroll, and an opportunity to tap into their skills and expertise and interest in getting connected to what's going on in town.

Ann Arbor is for whatever reason a telecommuting hub - there is a vast and largely hidden pool of people who live here but who work for someone somewhere else. (That has been my status for more than half of my career in Ann Arbor - I reported to people in San Jose, Austin, San Diego, Boston and New York City in a series of remote working jobs). The network connections in town are good and there are lots of cafes to work at.

What type of government/private incentives do web entrepreneurs here take advantage of?

There's a regular demand for meeting space and other organizing venues, and for organizations to bring in speakers. Web entrepreneurs, when they are first starting out, are often more in need of contacts and ideas and organizational support than they are for the sorts of things that traditional economic development provides - no need for a tax break for your manufacturing plant or to locate space in a wet lab if you are doing most of the work online.

What are some of the challenges/obstacles that new entrepreneurs face when starting out?

Ideas are plentiful, but finding the team to help turn them into reality is a challenge. Pharma startups need lab space, and web startups often need a pool of talent to draw from for small bits of work done on a contract basis as they get going. Everyone needs legal and accounting support, and as you grow managing projects is often a challenge. Finding people who understand how flexible and agile organizations get started is harder here than it is in some other parts of the world.

Space can be a problem overall. If your needs fit inside the typical cafe environment, you're good to go to get started, but people often outgrow that stage quickly if there's anything really clicking. There's a dearth of flexible office or coworking space downtown that accommodates the needs of several related organizations to share common utilities but keep their businesses separate - the very few people I know who are in those settings see clear advantages to it.

Downtown parking is a problem, everyone knows that.

What can the state/city/AA SPARK do to mitigate these challenges?

It would be a great thing if SPARK could provide a transportation incentive for entrepreneurs by making them eligible for go!pass subsidized AATA bus service as a benefit of membership. Getting a critical mass of people into the downtown area to get them together and talking and putting organizations into place to support them can only be helped by removing the parking obstacle from downtown cooperation.

There's an opportunity for a private real estate venture to take a hint from the many and various coworking environment showing up all over the country to put together a group of people to share workspace without necessarily incorporating them all as a single company. I'm not sure that SPARK can provide a direct role in this, but it should be able to help indirectly by matching people with resources.

In terms of attractiveness to web entrepreneurs, if Silicon Valley is a 10 and Boston is an 8, what would you rate AA?

We joked over lunch at Eastern Accents at an a2b3 meeting what the typical Ann Arbor web development lifecycle would be. You'd take your Ann Arbor idea, get on a plane for San Francisco, get a venture capitalist enthused; he'd gladly fund you, on the condition that you move to within 10 miles of him so he could be there easily for your board meetings.

The Ann Arbor area is good in many ways for starting up web businesses, but it will never be a 10. I'd put it on part with the Madisons of this world - an 8 or 9 for quality of life, a 6 or 7 for available technical talent (though your talent is going to be recruited to the coasts), and a 3 or 4 for available management talent. Many, though by no means all, of the successful jobs in tech in Ann Arbor rely heavily on the public face of the company living elsewhere and the work getting done here.

How can the City of AA and the State of Michigan make the AA area more attractive for technology startups?

I'll keep focusing on transportation and space issues because I think they're important. If a startup can get itself launched without paying a $300/person/mo tax for parking and without having to commit to a long term lease in order to tap into the pool of people and talent who have clustered downtown, then there's a lot they can do that's relatively risky that will still work.

Health insurance is a huge problem in general for people who are doing startups, and anything to broaden availability of insurance and to reduce the cost will make it more possible to make that leap into independence.

What can Ann Arbor SPARK do to make AA more attractive to web-based startups?

I'd like to see less of an exclusive focus on new business creation (with the venture model being the dominant point of view) and more of an understanding and perspective on helping cultivate and feed and water a pool of freelance talent that is absolutely necessary for getting organizations going. It's inevitable that at points in an organization's growth that they will need to tap into help without necessarily committing to 100% full time hires, and helping build out a rich and ready interconnected pool of people to draw on for resources, support, and in some cases short term or long term contract positions is crucial for the overall development of a growing ecosystem.

Why do you think so many Univ. of Michigan graduates leave AA? How can we get them to stay?

The University of Michigan recruits students from all over the world, and it has alumni who are scattered all over the world. It's not a community college, and we should not expect people to stick around Ann Arbor just because they went to undergraduate or graduate school here.

The challenge is to harness the power of this Michigan alumni diaspora and turn it to your advantage. Consider how powerful the Zingerman's mail order message is, spread worldwide by former Ann Arborites looking for a taste of chocolate cherry bread that they can't get locally.

From a technology point of view, the opportunity is to turn Ann Arbor into a global knowledge hub knit together by and for people who have shared time and perhaps a bowl of bi bim bop in Ann Arbor but who have scattered to the four winds. This is a pool of talent and opportunity and knowledge and skills and expertise that is vastly underutilized. So many graduate programs at Michigan are narrowly constructed to isolate their students and keep them inside the departmental confines until people graduate; the challenge is to connect with people while they are still in college and then keep contact as they move throughout the world.

I'd pin some of the responsibility on U of Michigan alumni groups, but also some on the civic organizations that seem to be as unwilling to cross Division Street as are the students to do same.

Is there any other person or resource (book, article, etc.) you think we should seek out for this research?

Come to lunch, you'll get some more opinions.

Technorati Tags: aata, annarbor, bus, coffee, coworking, development, go!pass, michigan, spark, theride, umich

Comments

[Mark Smithivas]

Wow! Deep and wonderful thoughts there, Ed. Let me see if I can add to it...

1. Zingerman's is overrated, imho.

2. However, for alums like me, there is a strong fondness for A2 that as you said, could be a lever to recruit alums to return to A2. The quality of life aspects you mention are very compelling. Alumni groups spend most of their time organizing football tailgates and such. Nobody has connected the dots about leveraging the talent pool there to return to A2.

3. Please everybody, especially you economic dev types, read Michael Shuman's book The Small-Mart Revolution for an alternative paradigm of econ dev that aligns with what Ed has said above. In short, buy and invest in locally owned businesses, not global mega-corps that are never really beholden to a community.

4. Think cooperatives.

5. Instead of keeping grads from leaving, a better strategy is to facilitate alums returning. Learning conferences, film festivals, subsidized housing or transportation are all things which might get alums back sooner rather later. I'm not talking about Hertz car rental discounts or homecoming here.

6. Essentially, can Ann Arbor become the "purple cow" of the midwest, especially for its alumni?

Mark Smithivas
Chicago, IL