Why aren’t there more startups in Michigan?

A friend of mine asked this question on Quora the other day and I’ve been thinking a lot about it lately. What does it take to make somewhere a good place for startups?

At first glance, Michigan doesn’t seem like a very good place to start a tech company. First of all, it’s not California. There are no sunny beaches or 25 year old billionaires. Second of all, when you think of Michigan, you think of the auto industry, not software companies. If you look a little bit closer though, Michigan starts looking like a pretty great place for startups.

We have VC. We have talent at our universities. The thing we’re missing the most is culture, but even that is getting better. I also have to imagine that Michigan was a pretty amazing place for startups not too long ago (as long as you were in the auto industry). I’ve touched on this a little bit more in a previous blog post.

So if Michigan has the potential to be a “startup state” then why isn’t it one?

When I was in college (2 years ago so not really very long), I didn’t think much about joining a startups. The .com bubble had taught me that joining a startup wasn’t actually like winning the lottery. Companies like Google, Microsoft, and Apple were doing better than ever. The idea of getting to solve interesting problems and work on products that people use was much more alluring than the long hours and risk that come with a startup.

Even more than this though, I think my biggest reason was a lack of confidence. How could I build a useful product when I was working so hard just to complete my assignments? If I went and got a “real” job, I would at least have someone to help show me what to do and I’d have experienced people to learn from.

So two years layer, how do I feel now that I’ve had my “real” job and I’ve actually built products that people do use? I feel like I could join a startup and crank out some AWESOME software. I know that I have the skills to turn an idea into an actual product. (A successful one? Who knows?) What I do know, is that I owe most of that confidence to the job I have right now.

There are very few places in Michigan for people like me to work and gain the skills and confidence necessary to be successful in a startup. I feel like you’d be hard pressed to find more than a dozen big (more than 100 employees) software companies in Michigan that you’d actually want to work for. On the other hand, California is practically overflowing with companies where you can do this. After working a couple years, if you decide that a startup is right for you, you are already surrounded by thousands of people that want to do the same thing you do. In Michigan, you’d be lucky if you can find anyone that is interested in what you want to do.

So it seems like I’m saying “Michigan doesn’t have startups, because Michigan doesn’t have startups.” I guess that’s a bit how I feel in a nutshell. I don’t feel like theres much about Michigan that’s necessarily hostile to startups (although you hear very few good things about doing business in MI) , it’s just the fact that there isn’t a ton of good reasons to do a startup in MI.

I’ve been toying around with this idea that the tech industry is a little bit like Hollywood. People make movies in California, because that’s where people make movies. You don’t make movies in Michigan because there’s no advantage to making a movie in Michigan. Michigan tried giving out incentives for making films and it actually was starting to work. Lots of movies were filmed in Michigan in those couple years. I even heard about a few studios and sound stages being built so that the whole movie could be filmed here.

People don’t do startups in Michigan, because there isn’t an advantage to doing it in Michigan. I don’t think there is one single thing that we can do to make Michigan a place where people want to start a company. I think it will take a lot of small things and the passion of a lot of people to turn Michigan into a place where everyone wants to be. Luckily, those things are already going on. Detroit, Ann Arbor, Lansing, and Grand Rapids already have growing startup communities and I can’t wait to see all the cool stuff that comes out of them.

4 comments on this post.
  1. Sherilynn "Cheri" Macale:

    Spotted this, and it actually reminded me of a comment someone had left on an article I wrote recently about incubators, accelerators, etc — Do you think positioning a startup accelerator in Michigan would help with this whole, “No startups in Michigan” business?

  2. Randall:

    I think more accelerators would certainly get some people to stick around in Michigan. Check out Momentum in Grand Rapids. They’re a pretty new accelerator. http://momentum-mi.com/

  3. Jared:

    Yeah, I would agree that one of the main reasons is the lack of the startups already in Michigan. In the Bay Area it is common to hear of coworkers and other people leaving steady jobs for startups, as well as many different meetings for people in startups to get together and network (multiple per week).

    One of the other reasons there are less startups in Michigan is the lack of venture capital groups. Even Boston (home to MIT/Harvard) has a hard time attracting many VC groups, and it forces many startups to the Bay Area.

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