There are clear signs that the automotive industry is recovering, but Michigan Growth Capital Symposium Founder David J. Brophy, Director and Professor of Finance at the University of Michigan Ross School of Business, notes that the industry will likely encompass a smaller portion of the state’s economy than it ever has. This should, however, make it easier to start small companies in Michigan. “When the automotive industry was dominant, it was like having a big oak tree in your yard,” he said. “It just sucked all the sustenance out of the soil. And it was very difficult for young companies to attract engineering talent or marketing talent, when big salaries were available from the automotive companies. That’s not there anymore, and people have this idea that they’re going to have to scratch hard to find a way to make a living. So the idea of new companies forming is not such a foreign idea anymore.”
Brophy said there is an attitude shift emerging in the state, resulting in a more favorable view of start-ups. “If you just look at what’s going on at the universities – everybody it seems is trying to start a company. It’s not that they’re all going to succeed, but it does plant a seed in your mind that you can do it. It’s that whole attitudinal change that is required for any of this to work. I’ve always compared it to trying to turn the Queen Mary with a canoe paddle over the years, trying to get people to see that the large companies do not monopolize opportunities for economic advancement. You’ve got to have demonstrated success before people join in.”
Jay Hoag, founding general partner of California-based Technology Crossover Ventures, embodies one of those successes. Hoag was a student in one of the first venture capital classes Brophy taught at the University of Michigan. Now a well-known player in the industry, he represents the potential of the state’s talent pool. Hoag will give the luncheon address at this year’s MGCS. “When I see guys like Jay, who have gone out of here and proved themselves in this business – they didn’t do it in Michigan but they did it where the markets were hot – it just proves that we’ve got the raw talent to do it. These are success stories, and I’ve been trying to bring them back to show them to people over the years.”
Brophy said there’s enough proof to show that Michigan’s entrepreneurial climate is changing for the better. “It’s working the way a bunch of us always thought it would. It’s just taking a long time. If we hadn’t been so stuck in the mud with the auto companies and other things that we thought were the way to go, it might have happened sooner.
“Michigan is coming back, and I think it will come back bigger and better than ever. It’s going to take a little while, and we’re going to have to figure out who we are and what we are, but that seems to be happening every day now.”