neighborhoods of Highland Park (home to Ford’s original Model T factory), the funky and young Ferndale, and then Royal Oak, to the upscale suburb of Birmingham. It’s about twenty-five minutes outside of the city limits, with tree-lined residential streets, a low-rise commercial district, and even some light industrial space.
But for Jeff Epstein, who founded Ambassador—a company that helps corporations create, track, and manage their custom referral programs—in 2010, setting up shop in Birmingham just made sense. He had grown up nearby in West Broomfield and wanted to be close enough to the city for meetings, but didn’t want to sign on for “the big gamble” before the downtown tech community really got established.
“Birmingham is a cool place and there are a lot of young people here,” he says, in Ambassador’s small office space off of a residential street. “The whole Woodward Avenue corridor from about 9 Mile to about here is all where the young people who are staying in the area live, so I wanted to be close to that. It’s a really great spot. It’s easy access to downtown and you can get to pretty much anywhere in southeast Michigan pretty quickly.”
What’s happening in Downtown Detroit is “awesome,” Epstein says, but it’s still too early for him to consider moving down there full time.
“In the past year it’s gotten more interesting to move down there and a lot of people are doing that,” he says, “but a lot of people still don’t live down there and it can be sort of challenging, especially when you’re working twelve to fourteen hours a day. What they’ve done downtown is amazing, and it’s nothing about what they’re doing, but the infrastructure just isn’t there. It’s tough. In the past six months there’s been a lot more to do down there, and Gilbert’s been buying buildings, and I think in five years it’s going to be great, and you’ll be able to walk around at night and not be nervous. It’s definitely getting there; it’s pretty exciting.”
For Epstein, however, picking up and moving his company downtown just doesn’t make sense yet. He and his employees all live out in the suburbs anyway and, for a scrappy startup like Ambassador, it’s easier for them to be located near everyone’s homes. An hour-long commute over the course of a week can be an extra day of work that’s not getting done otherwise.
But, as far as local entrepreneurs are concerned, Michigan native Epstein is blazing a path nonetheless.
“My peers, my generation, all went to other cities,” he says. “Even if they stayed to go to U of M or MSU [Michigan State University], they went to Chicago or New York or LA after graduation. Nobody, nobody, stayed. It was a sort of a lost generation. And those people are starting to come back.”
There remain a lot of political hurdles in Detroit, he explains, and figuring out transportation and fire and police for the city are top priorities. But it’s happening. If nothing else, there is money flowing into the city now, more employees are coming to work downtown, for Quicken Loans or otherwise, and it’s making a noticeable difference.
Is the suburban location holding back his growth? Does he wish he had done things differently? Not necessarily. The Internet works from anywhere, suburbs included.
“I think people are rooting for Detroit,” he says. “I think Detroit gets an overly bad rap in the press, and that has people rooting for it. Detroit was really bad when I was growing up; in the eighties to maybe 2000 you’d go there for a show or a sporting event and basically that was it. It wasn’t a cool place to go. It’s way better now, and people are coming in with a fresh perspective. Yeah, it’s a little gritty, but that’s sort of cool.”
And with jobs come people.
“People will start coming here,” Epstein says, “but at the end of the day, the companies need to offer a compelling reason.”
Just beyond the Detroit suburbs, about forty-five minutes from downtown, lies the small city of Ann Arbor, home to the University of Michigan and many of the state’s traditional innovation industries. In fact, for a college town of just over 100,000 people, Ann Arbor is well connected. There’s quite a bit of venture capital in town, mostly focused on biotech and the life sciences, as well as a small but growing community of more traditional tech entrepreneurs.
Erick Bzovi and Lance Carlson cofounded HealPay Technologies in 2010 to develop online applications to support billing and collections services. Based out of a small, walk-up office in the middle of Downtown Ann Arbor, the company now has a roster of clients ranging from collections agencies to attorneys to real estate investors, anyone who can benefit from online billing tools. Bzovi and Carlson still run the operation with a staff of about five total employees.
But it ended up in the shadow of U of M almost by accident.
“Lance has been an Ann Arbor guy his whole life,” Bzovi says, “and when we got together he was like, ‘Dude, Ann Arbor is so much more techie than Detroit.’ And it is. You can go to any of these cafés around here—Starbucks or Sweetwaters—and you hear people talking about JavaScript or Ruby or cloud computing. And you don’t often hear that in Detroit. So Ann Arbor has that tech cluster feel. It’s kind of cool.”
But that doesn’t mean it’s an easy place to start a company. Having a major research university in town—particularly one as well regarded as Michigan—is theoretically great for recruitment and great for talent, but convincing a twenty-one-year-old computer science major coming out of a school like that that he’s better off staying in southeastern Michigan than trying to make his name in San Francisco or New York is almost a losing proposition. Most of these graduates feel like they can do better.
“There are so many smart kids here,” Bzovi says, “but we just have a window [to keep them around]. We had an intern who was a data scientist and we would have loved to have kept him, but he left. Ann Arbor has a window and then they leave.”
Still, HealPay is making its mark on the fledgling “fintech”—financial tech—space. They’re traveling the country to attend banking and collections conferences—“I actually got licensed as a collection agent,” Bzovi says. “It’s not something I ever wanted to do, but it helped me understand how these companies operate and how they make money”—and have recently expanded into residential billing and big data services. The goal is to help collections agencies and other clients better understand their own customers via the reams of data that HealPay processes for them.
“What we do is a business solution, and it’s actually a legit business model that makes money,” he says. “It’s not about downloads or shares or apps or whatever. Enterprise is not sexy, but in enterprise just being visible is the most important thing. You don’t need an elaborate setup.”
As in many university towns I visited across the country, the university is “sort of but not really” part of the local startup discussion. Michigan, however, is actually trying, if in no other way than by encouraging current students to consider working for a startup after graduation. The student-backed MPowered tech entrepreneurship organization, for example, hosts a startup career fair that, in 2013, attracted more than 100 small companies from all over the country and hundreds of qualified soon-to-be graduates. And that was in addition to the 1,000-plus business ideas that competed in its recent elevator pitch contest, or in what has become the world’s largest student-run hackathon.
I sat down with Scott Christopher, the president of MPowered, at Sweetwaters coffee café in Downtown Ann Arbor to learn more about the university’s interest in entrepreneurship and how Michigan students are getting involved.
“Staying in Ann Arbor is becoming a lot more likely than when I first came here,” he says, referring to his freshman year in 2010. “I remember when I was a freshman I saw a talk where the speaker said, ‘When you graduate, the school should give you a plane ticket to either the East Coast or the West Coast,’ because nobody stays in Michigan.”
But there’s been a real push in the last few years, he says, to try to get U of M students excited about the possibilities of a career in Detroit. The startup career fair is part of that, as is the army of Michigan interns that now work locally