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ACE13 Draws Huge Crowd; Michigan Entrepreneurship Growing Fast

LIVONIA -- Michigan is learning the lessons of Silicon Valley and adapting them to its own unique entrepreneurial advantages, a veteran venture capitalist with experience in both locations told a huge gathering of entrepreneurs Thursday night.

Terry Cross, owner of Rochester-based Windward Associates, provided the inspiring keynote at the Annual Collaboration for Entrepreneurship '13, which drew nearly 1,000 people to the Burton Manor conference center.

ACE was born in Ann Arbor under the sponsorship of the Ann Arbor-based New Enterprise Forum and the MIT Enterprise Forum of the Great Lakes. It moved to Wayne County this year after outgrowing many of the conference venues in Washtenaw County.

Cross, who spent nearly two decades doing deals in Silicon Valley, cited several advantages of Silicon Valley's business culture -- but said Michigan is picking up on many of them.

First, he said, was the willingness to take risk and break hard-and-fast business rules.

"Silicon Valley was a place where rules might charitably be called lip service," Cross said. "Breaking the rules is the leading edge of risk taking and innovation. I refer to this as the willingness to dream. We in Michigan are finally beginning to break some rules. I think this is a wonderful thing. At Google you get a bonus for breaking the rules. One day a week is devoted to breaking the rules. Breaking the rules is associated with success more than failure."

Ah yes, failure. In Silicon Valley, Cross said, "failure is a merit badge, not a scarlet. Fail fast and pivot -- that's Valleyspeak for change. And how do venture capitalists feel about failures? Three words, 'Serve 'em up.' The more merit badges, the closer they feel they are to big stock options."

But how do we in Michigan too often feel about failure? Said Cross: "Assuming you are lucky enough to survive the fight for a college degree, try telling your parents you are going to start a business. They will say: 'Are you nuts? You will march yourself down to Ford's and get a job and work 30 years and never break the rules, especially the UAW's rules, and you will get retirement and free health care for life.' Not to mention the reception you will get at Thanksgiving, assuming you are invited back, when you say your first idea failed and you are about to try another."

Well, those kinds of lifetime employment rules have changed, obviously. Cross said that's a good thing, because it makes Michiganders, especially young ones, more willing to take risk.

Silicon Valley is "also open to diversity and immigrants like no other place I know of." Michigan, by comparison, still struggles with this.

Silicon Valley also places ultimate value on networking. "I refer to networking in the valley as the great miracle," Cross said. "Suffice it to say, everyone there is separated by one degree. It is the key to success. Successful venture capital executives say they spend 40 percent of their time building their networks."

Finally, Cross said, the valley's great advantage is "public relations and telling the story. The valley gets PR. Any startup has a substantial budget for PR. The three biggest pay rates generally go like this: chief technology officer, CEO, PR firm. And the wealth creation chain goes like this: Observe a problem and develop an idea for a solution. Identify the investable market. Do a proof of concept. Tell the world and create a buzz. Then raise the funding. Productize the idea. Tell the world again. Pump up the value. Repeat two or three times. Then sell it and make a fortune, then do that again and again and again. The biggest fear in the valley is not finding the next great idea, it is missing out on a great idea that is getting a lot of press. If you want to be the next hot startup in Michigan, be the first to include a top-notch PR adviser in your budget from the get-go."

Cross said Michigan is learning how to do all these things, And it has one advantage the valley doesn't: People who work incredibly hard, yet put a real emphasis on work-life balance and raising great families.

"We can never re-create Silicon Valley in Michigan, or anywhere else for that matter, nor do we want to," Cross said. "What we want to do is adopt the useful stuff and never lose our greatness."

And Michigan has a couple of great things going for it, Cross said. He said he came back because "I wanted to be with real people and real values. Those things are really hard to find in California, especially in the valley. In the Bay area it's all about me. On a business level, I'll collaborate with you and network with you, but on every other level, it's 'Who are you again and why do I need to know you?'"

After all his years in California, Cross said he and his wife tallied up their close friends -- and two were from California, and six were from the Midwest.

"People from the Midwest have characteristics that make them real people with real values," Cross said. "In the valley, families implode there by the hour. My observation was that raising a family was a spousal duty. It's never a great idea to generalize nor is it fair, but living and working in the Valley taught me about it. People in the valley consciously consider work life balance and consciously vote for the enterprise."

Why is it important to vote for balance instead? Cross said he's betting that "a company full of people with great families can outcompete a company full of worker drones. I bet we can learn to network, use PR and collaborate faster than they can learn to raise a great family, and that is worth more than the next Tech Crunch headline."

Michigan's other advantage? It actually knows how to make things, which is a resurgent, important part of the American economy.

"In the last 40 years making things has become a capital offense in our country," Cross said. "But it's becoming increasingly evident we cannot survive on apps alone ... The world cannot survive on virtual farming, gossip, or Angry Birds."

Cross said events like Maker Faire Detroit and institutions like the Tech Shop in Allen Park provide a place for makers to make unique, salable things.

But it's not just metal bending, either. Today's manufacturing includes stuff like nanotech and synthetic biology."

Back during the days of Henry Ford and Durant and Chevrolet, Cross said, Michigan was "the entrepreneurial soul of America." If we bolt that spirit onto the lessons of Silicon Valley, Cross said, we can be again.

After Cross' speech, ACE held its annual elevator pitch competition. The winner was David Suehrer, CEO of CureLauncher of Bloomfield Hills. CureLauncher solves the clinical trial enrollment problem in the United States -- the country's 50,000 clinical trials are delayed an average of 4.6 months due to a lack of participants.

CureLauncher provides easy-to-understand information about trials and helps people with and without illnesses find the right trials. For instance, every enrolling breast cancer trial n the country is available on curelauncher.com right now.

The elevator pitch was based on three-minute presentations made before venture capital veteran judges.

The event began at 2 p.m. Thursday with small-group sessions on building, managing and funding startup businesses.

More about the event at www.ace-event.org.

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