Howes: Entrepreneurs help MI, Detroit open for business

Daniel Howes
The Detroit News

If there’s anything the home of Detroit’s automakers and its bygone era of entrepreneurs should be, it’s open for business.

This week brings more evidence that it is — in ways that might cheer early innovators with names like Ford and Dow, Kellogg and Kresge. Those century-old cornerstones of Michigan business and philanthropy each began as plucky entrepreneurs driven by ideas in search of capital.

Today is no different. Long caught between Big Companies and Big Labor, the archetypal industrial state is showing signs of morphing into something potentially different. General Motors Co. and Ford Motor Co., to name two, are pushing to emulate the speed, risk-taking and innovation of startups.

The industry long associated with gritty manufacturing, poor labor relations, plodding decision-making and meager financial performance is proving less connected to that lazy caricature. Detroit’s automakers, and critical suppliers, are battling Silicon Valley tech giants for position in next-generation transportation and mobility — hardly evocative of the Rust Belt stereotype.

And Detroit startups, far removed from the tool-and-die shops of two generations ago, are starting to get the respect and capital they need in a community that for too long equated small and agile with second class and irrelevant. Not anymore.

Venture capital activity is taking root in the city America gave up for dead, according to a new report by the Michigan Venture Capital Association. In just the last three years, Detroit startups have increased 50 percent. And in the past year, 14 startups have received more than $62 million in venture capital funding.

Less than 15 percent of Detroit startups are directly linked to manufacturing or mobility services tied to the traditional auto industry. Information technology accounts for 43 percent of the start-ups and life sciences account for 23 percent.

In the nation’s quintessential Big Company town, entrepreneurs are cool ... and successful. From Dan Gilbert’s Quicken Loans Inc. and affiliated companies to the Ilitch family’s pizza-fueled empire, Cindy Pasky’s Strategic Staffing Solutions Inc. and Andra Rush’s auto parts-and-trucking empire, entrepreneurs with moxie and vision are today’s titans.

And a whole new generation is recognizing it. This is unambiguously good news — for the reinvention of Detroit. For the long-sought diversification of the regional and state economy. For loosening the psychic grip of Big Manufacturing on the body politic. For blunting endless cynicism about the ability of Detroit and Michigan to re-chart their futures.

If only. But times change. Economies change. And politicians need to change, too, because maintaining the status quo and refusing to play the competitive game as it is would be tantamount to conceding defeat.

The state House on Wednesday passed the “Good Jobs for Michigan” legislation, vaulting a crony capitalist backlash with a realistic, bipartisan play to enable the state to compete for large jobs-creating investments too often won by rival states.

The Good Jobs package would entitle companies creating new jobs in the state to capture new personal income tax revenue associated with new hires, subject to annual audits and sustained investment. The package aims to sidestep the Granholm-era nightmare of shackling Lansing with budget-killing tax credits, a hangover still looming over the Capitol.

Oh, it won’t end debate over government’s role in economic development, especially if a state-backed package fails to land in Michigan a likely U.S. investment by Taiwan-based Foxconn Technology Group. The multi-phase project could produce thousands of jobs, say people familiar with the plans.

It won’t quiet critics somehow invested in a past that delivered less economic dynamism, less diversification, less urban redevelopment and less enthusiasm than the past eight years since the Great Recession ended.

Who cares? Not the automakers fighting for their pieces of an uncertain and evolving future. Not the successful entrepreneurs of today helping to reshape the city and its business culture, generally with strong support from Mayor Mike Duggan’s City Hall.

Not statewide economic development officials soon to be empowered with a new incentive tool. And not the venture capitalists backing Detroit start-ups whose principals are emulating, in their own ways, the innovators who laid the foundation for what became Michigan’s 20th century.

Backed by venture capital and powered by a vision, they’re moving ahead — more pieces of evidence that Michigan and Detroit are open for business, again.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.