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Ann Arbor's Growing Tech Culture: The New San Fran of the Future?

Friday, June 14, 2013

Ann Arbor is not the city it used to be-it is changing. It has a growing tech culture of people running after their dreams and aspiring to make their great ideas happen. Ann Arbor is a fantastic place for tech-oriented entrepreneurs to get the support they need: the University of Michigan, the state of Michigan, economic development organizations, young professionals launching tech firms, national tech companies planting offices in A2, and new venture capital enterprises which would cover the need for seed funding. This fusion of visionaries and benefactors is nurturing an augmenting high-tech startup culture here.

In February, the Brookings Institution reported that Ann Arbor has the seventh highest rate of patents per capita in America. U of M's Office of Technology Transfer launches a startup about every 30 days. According to the governor Snyder, practically every part of the information technology industry is represented here in A2, with more than 300 companies offering all sorts of technical services including cloud computing, website hosting/development, and mobile app creation.

Ann Arbor missed its first opportunity to capitalize on the high-tech boom 3 decades ago, said Craig Labovitz. He said he began working on the development of the Internet for the National Science Foundation here in 1982. Ann Arbor had the strong engineering talent, but the environment to retain the talent was absent, thus companies moved to the East and West coasts, taking the engineering talent with them.

The U of M is the most important driver of this high-tech operation. It's $1.27 billion research budget makets it the top research spender of any public learning institution. The money has provided a means for starting and growing new tech businesses and commercializing ideas. For great business ideas to be developed, bright faculty need to partner with industries and the state. At U of M, there is a Center for Entrepreneurship and there is a program, TechArb, which helps any student who wants to start a company. One success story is Mobiata, which manufactures iPhone apps for trip planning. It was generating more than $2 million in revenue when it was purchased by Expedia in 2010. Mobiata is still in Ann Arbor, in fact, many of the companies created by students remain here, fostering a driving startup culture.

Google set up an Ann Arbor office in 2006 for its AdWords operations, designed for advertisers to reach out to customers using Google. It moved to its current East Liberty location a year later.
Google spokeswoman Julie Currie said the talent base from U-M is a big attraction to Google.

Silicon Valley-based Barracuda Networks, which focuses on network security and storage, outgrew its 12,000-square-foot Depot Street location where it had been since 2008 – jumping from 25 people to 200 – before it moved downtown into the former Borders space in November, encompassing 45,000 square feet. It’s now at 250 employees and is hiring one to two people a week. “Ann Arbor is a logical place for a Silicon Valley company to expand,” says Sean Heiney, Barracuda’s vice president for strategic initiatives. “You get incredible engineers at a fraction of the cost of Silicon Valley.”


Systems in Motion, a technology services company also headquartered in the San Francisco Bay area, picked Ann Arbor over Phoenix, Chapel Hill, N.C., and Austin, Texas, as a place to open its delivery center in January 2010. Now employing 130 people, the company was motivated by relatively lower resource costs and the university, said Debashish Sinha, chief marketing officer: “The talent at the senior level and the entry level has been outstanding.”

MyBuys, which offers personal shopping services for online retailers headquartered in the San Francisco Bay area, has grown its Ann Arbor workforce by 20 percent each year since 2008 when it set up shop here.

Ann Arbor has a long way to go before it becomes the next Silicon Valley. Ann Arbor needs a major corporation to be based in the city in order to bring it more credibility and wealth. An example of this is Dell, which completely transformed Austin, Texas. Having a recognizable, international brand would truly help A2 become a bigger player in the tech world. Some think that Ann Arbor should not try to be another Silicon Valley, but be like other university towns such as Austin and Boulder, which have a great network of entrepreneurs and corporate giants. It has a ways to go, but with roughly $1 billion in startup exits over the past five years and a company sold every year, Ann Arbor is keeping pace.

Ultimately, Ann Arbor is a fantastic community to conceive a tech startup, and to feel like a person instead of a number in the sea of people. California-based companies like Barracuda, Google and MyBuys are in A2 because its all about resources, ecosystem and growth, qualities that are hard to retain out West.

There are some great tech gatherings that occur regularly here. A2 Geeks is a group that “supports and promotes geek culture in greater Ann Arbor,” sponsoring events that attract thousands. Beer: 30, occurs in the Tech Brewery every Friday, where up to 80 people convene to socialize and network. We have LA2M, which is a weekly lunch gathering where a speaker talks about marketing related topics and the latest technological trends. There is also engagement from the audience as each person introduces them self to the crowd and talks about them self.

Big Ideas Big Money

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