America’s “Big Three” automakers once dominated the auto industry and, because they were all based in the Detroit metropolitan area, they were a huge boost to Michigan’s economy. But today, Tesla’s market capitalization is larger than the Big Three combined. It began production in 2008, first in California and now in Texas. There are many lessons from this for Michigan, for other states that have suffered major manufacturing losses, and for our nation. These lessons, and the culture they inspire, can foster innovation and business growth across America.
I’ve seen this firsthand as co-founder and former CEO of Duo Security, Michigan’s first tech unicorn (a unicorn is defined as a startup valued at over $1 billion) and the largest exit for a Michigan-based venture-backed software company when it was acquired by Cisco for $2.35 billion in 2018. Since then, I have served on the U.S. Secretary of Commerce’s National Advisory Council on Innovation and Entrepreneurship and have dedicated significant time and resources to finding ways for states like Michigan, with their large and catalytic history of innovation and manufacturing, to regain that power.
We will prioritize innovation and entrepreneurship to secure the future of our state.
Michigan learned the hard way that it’s not enough to just be ahead, you have to stay ahead.
Michigan has lost nearly half of its auto manufacturing jobs since 2000, and that perception still dominates, but the expertise of many people who helped grow the auto industry and other vibrant industries with global brands across a broad industrial base remains. From furniture and appliance manufacturers to pharmaceuticals and healthcare, chemicals, food and beverage, and financial services, our state hasn’t just launched and grown many companies – it has pioneered and dominated entire industries.
Michigan is also home to advanced technology, from the development of World War II-era remote sensing and surveillance, to the expansion of the commercial backbone of the internet, to today’s military and industrial applications of AI, and the nation’s largest concentration of industrial robotics.
Nearly half of the venture’s funding is invested on state land in Ann Arbor, where the University of Michigan spends more on research than nearly any other university in the country.
Retaining and connecting this talent is critical across industries and specialties so we can inform, inspire and mentor a generation of founders and spark innovation and new sectors of economic growth. In Michigan’s case, that includes industrial robotics, but also embodied AI applications that sense, think and act in healthcare, energy, logistics, security, defense and finance, creating the next generation of unicorns like Acrisure, OneStream and Our Next Energy.
Michigan excels at getting things done, but execution is about doing what you already know how to do. Innovation is about tackling problems you don’t fully understand, often by doing things that have never been done before. Supporting innovation needs to focus not just on nouns like enterprise, capital and talent, but on verbs like connect, scale and advocate. It’s the verbs of community development that drive entrepreneurship forward.
Remove barriers to entrepreneurial talent.
“Every Michigander deserves the opportunity to build a high-growth, high-wage business. But struggling industries, including the auto industry, too often lobby for deregulation and legislative subsidies at the expense of the vitality and dynamism of our state’s economy. Michigan should have been the logical place for Tesla to grow, given its auto manufacturing and technology expertise, but regulations designed to protect the Big Three ended up pushing its future outside the state.”
Statewide trade associations have an important role to play, but they must be careful not to focus on protectionism over innovation. Similarly, elected officials who are accustomed to answering to the state’s largest employers must ensure they focus on growing the next generation of businesses and industries to create the good-paying jobs Michiganders desperately need.
Founders are typically “all in” building and growing their businesses. You have to seek them out, but you also have to be ready to help them when they ask. Create a vibrant ecosystem that supports the burgeoning entrepreneurship in your state, building true community, listening to entrepreneurs, and removing barriers that stand in their way. Right to Start is a great resource, as it’s a national nonprofit that promotes entrepreneurship as a civic priority for every community.
I promise to give back.
Michigan ranks above the national average when it comes to philanthropy, but when it comes to supporting new businesses, there isn’t enough money or time reinvested from successful companies to the next one.
We formed the Michigan Founders Fund, a nonprofit made up of over 150 founders of fast-growing companies who are donating 1% of their company equity upon exit to help other founders. This funding will be used to support local nonprofits and a stronger, more inclusive entrepreneurial ecosystem.
Similarly, at a time when Michigan universities and philanthropic endowments invest almost exclusively in out-of-state funds, and Michigan family offices rarely invest in local emerging fund managers, the Renaissance Venture Capital Fund of Funds serves as a bridge for large corporations to invest in the next generation of world-changing companies, creating a flywheel where success breeds success.
Now is the time for Michigan to bet on Michiganders and give people a chance.
Michigan is rich with talent and resources, and our potential for business growth is extraordinary. But to realize that potential, we must connect our business, education and philanthropic communities and prioritize inclusive innovation and opportunity across our state. Culture drives action, and action drives results. And if there’s one thing we can never lose, it’s our entrepreneurial spirit.
Doug Song is co-founder and chairman of the Song Foundation.
