Case’s Advice to Entrepreneurs? Persevere, Support Local Networks

Michigan’s tech startup ecosystem has come a very long way in the past decade—a recent report in Engadget took a fair, comprehensive look—but still lacks a few key ingredients, like a culture that embraces failure and entrepreneurial leaders who aggressively work to create a welcoming, collaborative community.

Those were some of the takeaways from yesterday’s Rise of the Rest event in Ann Arbor, MI. Steve Case, author, investor, and AOL co-founder, created the Rise of the Rest bus tour to shine a light on emerging tech hubs in so-called flyover states. Joining Case on the tour was Hillbilly Elegy author JD Vance, who has joined Case’s firm, Revolution.

The Ann Arbor stop included a startup tour highlighting some of the city’s fastest-growing tech companies, including Duo Security, FarmLogs, and Nutshell, along with incubators TechArb, Cahoots, and Mcity. The governor and other dignitaries were on hand to celebrate the progress that has been made in building Southeast Michigan’s innovation ecosystem. In the late afternoon, eight local companies competed to win a $100,000 investment from Case (more on that in a minute).

During a fireside chat moderated by the Michigan Venture Capital Association’s Emily Heintz, Case, Vance, Quicken Loans chairman Dan Gilbert, and Google for Entrepreneurs director Mary Grove discussed how Silicon Valley perceives the Detroit-Ann Arbor region.

“The top pushback I get from Silicon Valley investors is that there’s not enough of a network” to facilitate the growth and pay-it-forward relationships that fuel the Bay Area, Vance said. “That’s what the people in this room need to create.”

Grove emphasized that you need a culture open to failure with plenty of capital and a favorable regulatory environment in order to have a thriving tech ecosystem, but its leaders also need to “overextend” themselves to find talent in all corners and create “one inclusive community.”

Case praised Gilbert, who has invested billions in revitalizing the Motor City’s downtown, drawing thousands of young professionals to Detroit in the process.

“We need people like Dan to step up and not just talk about it,” Case said. “Be a change agent as you build your business.”

The group also talked about Detroit’s bid to be the site of Amazon’s new headquarters, a project that would generate billions in investment and create thousands of jobs. Gilbert is in charge of the city’s HQ2 bid, which will be submitted in tandem with Windsor, ON.

“We’ve got 75 to 100 people plus consultants working around the clock,” Gilbert said. “I really do believe we have a good shot.”

Some of the reasons for his optimism? An international border, which he described as a “hedge” against uncertain federal immigration policies; the fact that the University of Michigan is a top school from which Amazon already recruits tech talent; Michigan State University’s esteemed programs teaching packaging and distribution; and relatively cheap office space.

“It’s not easy to cobble together 8 million square feet of real estate in a downtown core, but between us, the city, the Ilitch family, and a few others, we’ve got it,” Gilbert said. “You’re not going to find that in another city.”

Gilbert also mentioned that, within the past month, he’s had talks with an unnamed CEO of a large Silicon Valley tech company interested in opening a Detroit office, in part because the CEO is tired of the relentless “talent poaching” that happens in the valley. “I think the money follows—it doesn’t lead,” he added.

The winner of the pitch contest was Sahi Cosmetics, a U-M spinout focused on a line of beauty products for ethnic skin tones, particularly those with olive or yellow undertones—typically women of Arabic, Indian, Pakistani, Mediterranean, and Hispanic descent. Founder Shelly Sahi is a former Ford employee with a material sciences background. In a statement, Sahi said she plans to use her new $100,000 investment to grow her brand with “marketing and innovative product development.”

Near the conclusion of the event, the pitch competition judges went around and gave their final pieces of advice to startup founders. Case talked about the “three Ps” that he considers the playbook for the “third wave of the Internet,” which is also the subject of his latest book.

“Partnerships, policy, and perseverance,” he advised. “It took us 10 years to break through at AOL, and we almost didn’t make it. If you want to change the world, you have to persevere and be supportive of the network around you.”

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