Detroit is among cities primed for high tech, Techonomy speakers say
A near-capacity crowd in the Community Arts Auditorium at Wayne State University Wednesday heard that cities far from Silicon Valley, such as Detroit, will be a focal point for high-tech entrepreneurship in the coming decades, that the U.S. must change its immigration policies if it wants to keep its worldwide lead in innovation, and that the era of do-it-yourself manufacturing and distribution is here to stay.
Those lessons were delivered during a series of panel discussions at Techonomy Detroit, an event put on by the Economic Club of Detroit and New York-based Techonomy Media Inc.
The event drew local business leaders and nationally known figures in technology and venture capital to discuss how rapidly changing technology will impact economic competitiveness, jobs and the urban future. An estimated 500 people attended the morning sessions.
Techonomy was founded by former Fortune magazine reporter David Kirkpatrick and puts on conferences and seminars around the country about technology, its impact, and how community and business leaders can help harness it.
Topics of panel discussions Wednesday included how technology-based entrepreneurship is spreading beyond Silicon Valley; how cities like Detroit that are losing population and tax base can still adopt technology; the democratization of manufacturing through the do-it-yourself economy; how start-ups are marrying traditional engineering disciplines with social media to upend manufacturing processes; and whether Detroit can be the next Berlin, a recently hard-on-its-luck city that has had a rebirth in the last 15 years.
"Ten or 15 years ago, Berlin had many of the same issues Detroit has," said Carlo Ratti, director of the SENSEable City Lab at the Massachusetts Institute of Technology. He said that because of a much lower cost of living than in other European cities, it became a magnet for artists and entrepreneurs and is thriving today.
"Detroit can borrow Berlin's brand: Poor but Sexy," said Bruce Katz, a vice president at the Brookings Institution.
"Entrepreneurship is spreading through America faster than we realize … Detroit and Cleveland and St. Louis and Denver are becoming interesting emerging technology markets," said Steve Case, founder of America Online, who shared a panel on entrepreneurship and American relevance with Josh Linkner, founder of Pleasant Ridge-based ePrize LLC and managing partner of Detroit Venture Partners, a venture-capital firm.
"In many ways, Detroit was the Silicon Valley of 50 years ago. It was the home of the fastest-growing companies in the world, and it's fighting its way back," Case said.
"Detroit is a town on the rise … You don't need a Silicon Valley address to be successful," said Linkner, whose VC firm is housed in the Madison Building, the building bought and rehabbed by Dan Gilbert and now at full capacity with high-tech startups.
"It's weird. You can bump into someone and they know we have a bustling tech scene, and then bump into the next person and they have no idea what's going on," said Linkner. "We need to scream about it from the rooftops."
When asked about the importance of disruptive technologies in growing the 21st century economy, Linkner said: "I consider myself a disruptor. Detroit was born on the spirit of disruption and became the Paris of the Midwest. But stifling bureaucracies were created, and we crumbled."
Linkner said it is counterproductive to worry about being the Silicon Valley of the Midwest, or about trying to recreate manufacturing successes of the past. "We need to get out of the trip of apologizing for yesterday, and get going."
The topic of crowdfunding came up in several panels, both the current crowdfunding that raises money online, sometimes in return for products but not in return for any equity, which is currently illegal, and the proposed crowdsourcing the U.S. Securities and Exchange Commission is expected to approve next year as part of the Jobs Act, which will allow entrepreneurs to raise up to $1 million by selling equity in start-ups.
"Being able to raise up to $1 million will be the difference for thousands of entrepreneurs in underserved regions and underserved sectors," said Case. "It won't help people in Silicon Valley, where there is plenty of money, but it will be helpful in places like Detroit."
A recurring theme in various panels was the shortsightedness of current U.S. immigration law forcing engineering and science students from places like China and India to return to their homelands as soon as they get their advanced degrees.
"Half of the Ph.D. and master's students get kicked out of the country when they get their degrees, and they go home and create companies," said Case. "We need to win the first for talent, and now is the time to make sure we keep them."
"America is still the best country in the world to start a company," said Vivek Kundra, the first chief information officer for the U.S., from March 2009 to August 2011, and now a visiting fellow at Harvard University. "But the main issue facing us is that immigration is broken. It makes no sense. Why are we not stapling a visa or a green card to their diplomas? … Talent and capital will flow where they are more welcome. We need to create policies that do that."
Kundra said that there are 3,400 IT job openings in Detroit and 3.6 million job openings for skilled workers in the U.S. To bridge the skills gap, he said the U.S. needs to change immigration policies and to "become better at retooling the workforce we have. The problem at the base of this is education."
Michael Teitelbaum, senior adviser to the Alfred P. Sloan Foundation, said the problem isn't the number of immigrants the U.S. allows, but in deciding which immigrants to welcome.
He said the U.S. currently allows in one-third of all the immigrants who move to other countries in the world each year, but that family relationship is the dominant factor. "Skills is last. That's not healthy. We don't need more immigration, we need better immigration."
Grady Burnett, who launched Google's Ann Arbor office and grew it to more than 250 employees before joining Facebook as vice president of global marketing solutions; Mark Hatch, CEO of Menlo Park, Calif.-based TechShop Inc., which opened a do-it-yourself workshop complete with a wide arrange of design and manufacturing tools in Allen Park last year; David Ten Have, CEO of San Francisco-based Ponoko Inc., an online service to help would-be manufacturers bring products to market; and Danae Ringleman, a co-founder of Indiegogo, a leading online crowdsourcing platform, were all passionate in arguing that the DIY movement is here to stay and will be a major part of American manufacturing in coming years.
"For the first time since the Industrial Revolution, you can have access to tools for the cost equivalent of a daily Frappuccino. This is a new day," said Hatch.
He said that the cost of high-end manufacturing tools has fallen so much in the last 20 years, entrepreneurs no longer need high volumes to make a nice living. And that computer-controlled machines make it easy for relatively untrained and unskilled entrepreneurs to use them.
Hatch said the cost of starting a manufacturing business has fallen so far that crowdfunding alone has helped dozens of entrepreneurs launch businesses at TechShop facilities.
Ringleman told examples of entrepreneurs launching successful businesses on her site ranging from devices that shoo bugs to macaroon cookies.
Burnett told the story of one woman who liked to sew as a hobby. She connected with some friends on Facebook to see whether they would be interested in kids' clothes made to order, soon had 80 employees, and is shipping product all over the country.
Hatch told of TechShop customers creating small-volume successful businesses by making the world's fastest motorcycle, an iPad cover and high-end, customized bass violins.
"You can now do small-volume production runs you never would have been able to do before," Hatch said. "You're not going to sell a million of the world's fastest motorcycles, but you might eventually build 400 or 500."