TechTown's Wide Web

The irony that the future of Michigan's economy may be evolving within the shell of an old manufacturing building in Detroit isn't lost on Howard Bell, executive director of TechTown. (http://www.techtownwsu.org/)

He reminds people all the time that the old buildings around TechTown, including the Piquette Plant Building where the Ford Model T was conceived, were also centers of entrepreneurship. "Those guys were really brave, courageous people to think that the idea of a buggy with wheels would turn into the biggest corporations in the world. These guys defined entrepreneurship. What we're doing here is taking their ghosts, their spirit and history and transferring it into different industries."

TechTown, located in between Midtown and the New Center, is an entrepreneurial incubator, providing the costly infrastructure that might prevent a group of people from turning an idea into a business, and lessens the risk for entering the marketplace.

In fostering new businesses, it has created a unique urban entrepreneurial ecosystem that balances market discipline and support systems to launch new businesses in the life sciences, manufacturing technology and other new industries.

Research meets market

An entrepreneurial ecosystem requires a variety of relationships, from investment capital to customers. It also needs a source of new knowledge, explains Sergio Mazza, president and CEO of SenSound (http://www.sensound.com/), a start-up technology company that originated from collaboration between entrepreneurs and university researchers.

"In our case, Wayne State is an integral part of our ecosystem in several ways," Mazza says. "They effectively supply all of our technology. They are a stakeholder in our company – they own equity. They supply talent – six of our 10 employees are Wayne State university graduates or a professor."

Mazza knew he wanted to build a company "where the brains behind the technology would be an active participant. I know from experience that technology companies do not stand still. They have to continually develop new products or they will be a flash in the pan."

Knowing that he wanted to develop either a medical device or software, he selected Wayne State's research in noise diagnosis.

TechTown offers the opportunity to transform pure research into applied research via a commercial product, Mazza says. Sometimes the research needs to be formulated into a product, sometimes it's already a product.

The commercial end of the business, however, needs to be done somewhere away from campus, but not too far away. "If you're going to continue to be a professor and also contribute to the growth of a company, you can't spend an extra two hours of your day commuting to the university. That physical proximity is not to be understated in importance," Mazza says.

The blurring between academic and commercial interests is very carefully managed, says Fred Rheinhardt, assistant vice president for Research and Technology Transfer at Wayne State. TechTown provides the separation needed to avoid the conflict that could arise if a professor conducts commercial functions while still acting in an academic capacity. "They walk out the door, take off their academic research hat, walk over to TechTown and put on an entrepreneur hat. They need a different mindset," Rheinhardt says.

Making things happen

TechTown addresses another aspect of an entrepreneurial ecosystem: the more mundane needs of a small business. You need, Mazza says, "a package of services that is very fertile ground for the growth of a business – throwing fertilizer at your plants. You need meeting rooms. You need a copy center. You need cafeteria space – all of the little things you need (that) by themselves would seem trivial, but as a package it provides fertile ground for the company."

Rheinhardt likens it to a nest of young birds. "You have a protected area until something gets big enough to fly, then you kick it out…they've got to be on their own two feet at some point. We don't even want them to get government grants for too many years because that's a trough. It skews (market) behavior. We want to see them selling products and services to customers."

TechTown, Rheinhardt says, is "a dynamic vortex through which university-business relationships can spark economic development in a variety of ways." Simply put, things happen. "Our philosophy is that every relationship will spawn multiple other positive relationships."

When Neocutis,( http://www.neocutis.com/) a biotech in TechTown, was in its early developmental stage, Mark Lemko, senior vice president for Sales and Marketing, met Rheinhardt at a conference. Rheinhardt introduced him to the university's biotech research capacity, as well as TechTown.

Lemko was attracted to the Frontline Accelerator for Science and Technology (FAST) program offered to promising start-up companies at TechTown. FAST companies receive a variety of free or low-cost consulting services, including market research, business plan writing, public relations and marketing, and human resources, as well as access to investment capital, legal help, information technology and other forms of professional support. They are also exposed to the Detroit Entrepreneurial Network, a support group of entrepreneurs, and the Great Lakes Angels(http://www.glangels.org/default.htm), an investment group that targets entrepreneurial ventures. Both are located at TechTown.

"The biggest thing was getting our arms around our business plan and making sure it was in a format that every type of reader could get a grasp on: what our concept is, what our business model is, what our plans are and where we're spending money," Lemko says. "We have been able to present to no less than 20 potential investors." He believes that the credibility of companies like Neocutis is enhanced by an introduction from TechTown.

Companies in the FAST program face an arduous screening process before being admitted, explains Becky Davenport, program administrator who also helped write the original business plan for TechTown developed by Wayne State business school faculty. Milestones for growth/development are determined for participating companies to ensure that they progress out of the program. A "champion mentor," or dedicated consultant, is identified for the company to provide ongoing support.

"We try to help them (companies) make better decisions," says Davenport. "A lot of entrepreneurs flail around in a number of different directions. We use the experience and expertise of the staff and consultants to make better decisions earlier on and not waste time and money."

Identifying and protecting intellectual property is important for technology companies. To that end Detroit law firms, such as Clark Hill, Butzel Long, and Dykema Gossett have been generous in working with TechTown firms for no or reduced fees, Davenport says.

Why should entrepreneurs be helped at all? Why not let them prove they're strong enough to survive on their own merit and let the weak perish? "A lot of what we do is help these companies refine, develop business plans, business models, so they're in a better position to get money from the angels (investors)," Davenport says. "We're leveraging resources … in a way that gives us the most bang for the buck; get more companies from great idea to solid businesses producing revenue, employing people, paying taxes."

Entrepreneurial campus

TechTown is a "complex network that changes according to the need … a huge universe of resources to draw upon," says Terry Cross, WSU executive in residence for entrepreneurialism. He is also member of the Great Lakes Angels board of directors.

But, in a virtual world, why is there a need for an entrepreneurial community at all?

"There are a lot of advantages to being in a building with 30 other companies," Rheinhardt says. "Whether you're exchanging ideas – you might exchange personnel (or) you might talk about 'pre-competitive' ideas – there's a tremendous advantage to having a physical community. It's a lonely profession to be an entrepreneur. You've got to have stimulation from like people doing the same thing."

It's fitting that this "campus" has "First Friday" mixers that promote socializing outside of the workplace. These parties are important to creating a culture in TechTown, says Bell. "People will now come out of their doors, walk to our party and celebrate. That's how communities get formed – people deciding that they want to spend time out of their day socializing with people of like ilk."

The result of this "entrepreneurial campus" is significant not only for Detroit, but for Michigan, says Jim Croce, president of NextEnergy,(http://www.nextenergy.org/) which is located in TechTown. "This is an emerging opportunity for all of Michigan; not only an emerging opportunity, but an absolute requirement that we foster entrepreneurialism."

NextEnergy, which has projects in other Michigan university technology parks in the state, also serves as an alternative energy incubator for alternative energy companies, offering technology collaboration, access to investors, and market development.

"We need to recognize the true gem that's emerging here and foster that. What I'm seeing is the business community, particularly the economic development leadership in the community, is recognizing that opportunity and I'm seeing signs of support," Croce says.

TechTown is not only building on the area's university resources, but also the existing talent in the region, says Bell, an engineer. "We've got some of the most talented engineers in the country. In fact, we have more engineers with advanced degrees in this region than any place in the world.

"Give us space to create in and we'll create. We have to figure out what that is and put these people in it. They'll create solutions."

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Photos:

Ramon Crowe Jr., The Java Exchange; John Corvino, Wayne State University; Jonathan Shuttlewood; Katherine Abramczyk, Visca; Gary Shields, Detroit Entrepreneurial Network; David Weaver, Great Lakes Angels

Howard Bell, Techtown

Sergio Mazza, SenSound

Techtown

Next Energy

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All Photographs Copyright Dave Krieger