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Posted on Wed, Oct 17, 2012 : 10:18 a.m.

Ann Arbor as an innovation center: Speakers say it just keeps growing

By Ben Freed

The Ann Arbor-Silicon Valley comparisons just keep coming.

Wednesday morning’s A2Y Chamber of Commerce's Early Edition featured two speakers with valley connections in Ann Arbor SPARK’s CEO Paul Krutko and Barracuda Network’s backup services general manager Guy Suter.

Both speakers highlighted the growing innovation sector in Ann Arbor and offered their own explanations for why major (and minor) technology companies choose to set up shop in a city that is dwarfed by many of its competitors.


Paul Krutko and SPARK worked with Barracuda and the city to help facilitate the move into new downtown offices expected to be finalized later this fall.

Melanie Maxwell |

Krutko’s work at SPARK is to make Ann Arbor a more attractive home for businesses. He said that the Ann Arbor area had proven its resiliency during the economic downturn and is primed to continue on a positive direction as the rest of the country tries to catch up.

“The most recent [August] unemployment rate here is 5.9 percent, and that’s compared to 9.2 percent for the state and 8.2 percent across America,” he said.

“We are always three to four percent(age points) less the national average here, and we look for that to continue.”

Previously the head of economic development efforts in San Jose, a city nine times Ann Arbor’s size that houses 60 percent of Silicon Valley’s companies, Krutko said the tables have now turned as he’s gone from attempting to keep companies in in the valley to attracting companies from the valley to open offices in Ann Arbor.

One such endeavor - started before Krutko arrived in Ann Arbor - is the small Barracuda Networks research and development office that moved here to work with University of Michigan graduates. Today, Suter said, the office employs 200 people and is still growing at the rate of one new hire per week.

The office grew quickly enough that in June the software company struck a deal nominated by as a Deals of the Year nominee to move downtown into offices on Maynard Street behind the old flagship Borders store.

Suter said the offices are still undergoing a “massive renovation,” but that the company is excited to move into its badly needed new offices.

“The software development world tends to be very male dominated, just from the standpoint of the talent available,” he said.

“So we have 200 people, mostly men, working on Depot Street with just one urinal between us. It’s like the bathrooms used to be at Michigan Stadium before the renovations.”

Suter said companies have a number of complex considerations that go into finding a place to open or maintain an office, and sometimes those considerations are simply serendipitous. His decision to move his company BitLeap, acquired by Barracuda in 2008, to the Ann Arbor office was aided by the fact he has a brother in Southfield, had visiting many times, and liked the culture.

He added that the Barracuda's move has been in the works for a year and a half as they looked for suitable space to house their growing offices, always with an eye towards moving downtown.

The decisions that different companies make are also aided by groups like SPARK and the DDA at that help companies negotiate tax structuring with the city or convince them that there will certainly be enough parking.

Ann Arbor still has work to do before it reaches the upper echelons of high tech concentration, but, as Krutko pointed out in his remarks, none other than Thomas Friedman in a column in January casually listed Ann Arbor next to innovation centers Austin, Denver, Cambridge - and Silicon Valley.

Ben Freed covers business for Reach him at 734-623-2528 or email him at Follow him on twitter @BFreedinA2


Kai Petainen

Thu, Oct 18, 2012 : midnight

I keep hearing about 'false job creation gains' a lot on the comment boards. I'm not a member at SPARK nor speaking on their behalf, but I'm going to try to answer this question. Like Governor Snyder, I'm a self-described nerd, so I look at numbers. I'll try to look at what Snyder's firm, SPARK is doing. For those who think I'll bash SPARK, I won't. I'd rather have SPARK in Ann Arbor than any other city in Michigan or in the USA. They seem to do a lot of good for this area. Let's suppose SPARK is invested in at least 100 active venture capital investments. In each of those investments, SPARK might be adding the number of jobs at each firm. A chunk of the job creation portion of SPARK comes through their management of the Michigan Pre-Seed fund. That is a fund at the Michigan Economic Development Corporation. I believe the MEDC got $195 million from the state and another $25 million for their marketing arm -- Pure Michigan. Since the state government is involved with the MEDC and the Michigan Pre-Seed fund (SPARK), then that's why I say, "Snyder's firm, SPARK" -- as they manage $$ for the state. For example, in the latest(?) investment at Axonia Medical and The firm got $2 million and it employs 0-10 people. So SPARK can bank 10 jobs into its database. Then you go to the next investment and add up the people, and so on. But, this is a bit misleading because SPARK is not the only VC firm in on the Axonia deal, so if they're doing the math this way then perhaps SPARK should count 20% of the 0-10 people. If you go through the 100+ firms and add those people, and then add the jobs that the Michigan government (MEDC) / Pure Michigan is creating, then perhaps that's how they get the jobs figure.

Kai Petainen

Wed, Oct 17, 2012 : 10:41 p.m.

"Wednesday morning's A2Y Chamber of Commerce's Early Edition" this was a good article and it does not come across as a marketing or propaganda plug. it's good stuff and it's referring to the remarks at the chamber of commerece. important and good stuff. Paula is right, has mentioned Laurel on many occassions and I don't think they're hiding that at all. they're pretty good at disclosing that. spark seems to do quite a bit of good stuff for the city, and so i think it's a great asset for the city. but, in the spirit of journalistic integrity, i do take a bit of issue with how spark is characterized by if i was writing the article, i'd talk a bit about what Spark is... first and foremost a venture capital firm... so I'd write... "Spark, a venture capital firm with over 100 active investments, and manager of the $8 million Michigan Economic Development Corp pre-seed fund.... " and then I'd talk about the cool things they did. in some way, by talking about spark, you are promoting this venture capital firm (without saying venture capital) over the other venture capital firms in the city. it's still newsworthy and good that they're doing stuff, but i'd like to see a bit more clarity with how they are characterized in the news. look at: and

Dave Koziol

Wed, Oct 17, 2012 : 3:24 p.m.

Rick, maybe you missed the part about Barracuda in the article. The article was clearly focused on the information presented at this mornings meeting, sorry it wasn't the article you wanted, but that doesn't make it a bad article. I also thought the article pretty accurately reflects what I hear in the tech community, and I think it's important to share that information with the greater Ann Arbor community.

Ron Granger

Wed, Oct 17, 2012 : 3:19 p.m.

Newsflash: There is a lot going on in ann arbor with startups, entrepreneurship, and economic progress It is tremendous incremental improvement and momentum. It isn't all about trying to throw a wet blanket on Spark, no matter what axe some may feel the need to grind.

Paula Gardner

Wed, Oct 17, 2012 : 2:54 p.m.

We do disclose Laurel's relationship to SPARK on stories about the agency. There was no intent to hide it here.

Rick Stevens

Wed, Oct 17, 2012 : 2:30 p.m.

Another PR ad for SPARK... How about a story about the false job creation claims, the total and utter lack of transparency in their finances? How about asking for and publishing their audits for the last 5 years? Not from - just this kind of propaganda. Why is there no disclosure about Laurel Champion's relationship with SPARK and