Michigan's image problem repels investment by ex-Oracle Corp. president
Michigan’s emerging alternative energy industry, biotech sector and growing software industry are but a fleeting speck of opportunity in the mind of one of the world’s top venture capitalists.
My conversation this week with former Oracle Corp. President Ray Lane was a gloomy reminder that Michigan’s greatest challenge is not its frightening unemployment rate but instead its dreadful image.
Michigan’s 15.3 percent unemployment rate may eventually fade, but I fear that the state's image problems will complicate our recovery.
Lane is now managing partner of billion-dollar California venture capital firm Kleiner Perkins Caufield & Byers -- which famously reaped a windfall from its providential investment in then-unknown Google in 1999.
Kleiner Perkins’ investment focus includes companies in clean energy, information technology and life sciences. All sectors that Michigan - led by Ann Arbor’s entrepreneurial community - is targeting for economic growth.
I asked Lane whether Michigan harbors any opportunity for Kleiner Perkins.
“Beyond automotive, I don’t think so,” he told me in Detroit at “The Business of Plugging In,” a conference on electric vehicles organized by the Ann Arbor-based Center for Automotive Research. “In life sciences, in the computer industry and other areas that venture capitalists invest in, (Michigan) just doesn’t really compete.”
Bad news for Lane, who is missing excellent investment opportunities in Michigan. Not to mention that Kleiner Perkins actually does have Michigan connections; the firm is an investor in Massachusetts-based startup Mascoma Corp., which is building a cellulosic ethanol plant in Chippewa County.
But whether Lane is right or wrong is beside the point. His assertion that Michigan doesn’t offer investment opportunities for his firm underscores the fact that Michigan needs an image revolution.
It’s a daunting task. How to start? A return to entrepreneurialism offers a promising route.
Matthew Neagle, a former executive for Google’s Ann Arbor office, believes the region’s return to entrepreneurialism may offer the path to recovery.
“Michigan got too comfortable and lost its desire to take risks and build new things,” Neagle wrote in a recent blog post for Ann Arbor-based think tank Michigan Future Inc. “Well, the situation today flips that on its head. We do not have the prosperity or the security any more and thus we need to create, build, and take risks again. And, we will begin to do this because for many people, they have little to lose by doing so.
“This is already happening,” he added, “in a spirit of collective renewal versus individual gain."
Perhaps, on his next trip to Michigan, Lane will identify opportunity in the form of Michigan's entrepreneurial ambitions.
Contact AnnArbor.com’s Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter.
Comments
adameichner
Mon, Oct 26, 2009 : 10:13 a.m.
@johngault I think somewhere between too much union and sending the jobs to china is a middle ground. States like Kentucky have gotten Toyota to pay relatively reasonable (living?) wages for their populations. Somewhere between people viewing the corporation as a "cash cow", and the corporation being allowed to operate without paying something of a "fare share" falls a reasonable, responsible tax level that the corporation should be required to bear, whichever state it operates in. I think blaming the companies exclusively, or the unions / tax systems exclusively is the easy way around wrestling with a real ethical question. What is FAIR?
Paul Taylor
Mon, Oct 26, 2009 : 4:13 a.m.
Bold ideas are in short supply. It's the same old same old. You'd almost think Michigan was never a travel destination, based on how neglected are the State's natural and cultural resources. How about some bold ideas, like getting in on the sub-orbital launch business. We already have much of the basic infrastructure (Kincheloe AFB, for example) and exciting geography central to that industry (Michigan has a lot to look at from the edge of space). But, no. You'd think no one ever paid to visit Michigan for the absolute joy of SEEING Michigan. That's a pity, as it is a beautiful state, and still has a lot to offer people with money looking to spend it in visiting Michigan. The same old ideas every time is what we get. Yawn.
John Galt
Sun, Oct 25, 2009 : 4:41 p.m.
When corporations and businesses are viewed as a cash cow by the State and the Unions drain all possible resources from the former established companies, it is no wonder we have a bad reputation. Over time, business shuts down, relocates and/or decides to invest in more friendly States.
adameichner
Sun, Oct 25, 2009 : 12:33 p.m.
I'm just kind of curious, when these folks speak about how the state stopped "building new things", what states are we being compared TO? By which I mean, if you look at the last hundred years of this country's commercial history, it seems like UNIFORMLY the states all went from agrarian communities, to industrial / manufacture as the basis for employment. Since American corporations have been allowed to move their manufacture and industry for the most part to third world countries, it seems like uniformly, across the country, states have hemmorhaged jobs. That across the country high school senior math and science scores (not to mention graduation rates) have been abysmal. While New York will always be New York, and California became a MIGRATORY point of meetup for people in technology, what other states have really "built things" that make it more attractive than Michigan as a place to put their businesses? What I really believe, is that since the automobile was the biggest production item for consumers to consume, Detroit quickly became the first and biggest economy for manufacture, and, as the jobs left, was the first and biggest failure. I believe we are now seeing that all the other Central States economies have simiiarly tumbled, in domino fashion after Detroit / Michigan. If you aren't a warm weather / travel destination state that, in good times can generate travel revenue, what else are the states doing to create jobs en masse for their native populations? It seems to me that the interviewer might have done well to ask Mr. Lane, "what other states or regions have actually developed a viable, post manufacture jobs base?" I would be surprised to see if he could name anything. As to happy senior's comment, it would be wise for the states to quickly adopt a team approach, whereby companies cannot shun one state for another as they get us to engage in a "race to the bottom" whereby the state most desperate for attention actually ends up spending money in return for empty promises. A recent article in the NYTimes and Free Press indicated that many companies who negotiate ridiculously low tax schemes for themselves have been failing to provide even a fraction of the jobs that they "seduced" the state with while bargaining away our right to have them pay to play in our state.
HappySenior
Sun, Oct 25, 2009 : 6:59 a.m.
What Michigan needs is a tax overhaul. What Michigan needs is a better business climate with lower taxes. Businesses invest to make a profit. Businesses need to believe making a profit in Michigan is possible before they will invest here. Spin and PR are not economic tools. Image revolution is a wobbly phrase in marketing-speak.