09 April 2013

Tom Walsh: For Michigan to succeed, Detroit and Grand Rapids must work together

Story originally appeared on Freep.

GRAND RAPIDS -- If ever a place was the embodiment of Rudyard Kipling's poetic assertion that "East is East and West is West and never the twain shall meet," it was Michigan for many a decade, right?

Not anymore.

In a post-recession Michigan, business leaders from Grand Rapids and Detroit realize they must cooperate like never before to survive and grow. Together, they're providing money to fledgling start-ups, helping each other with sister initiatives to recruit and retain young talent, infusing respective city cores with new development and retail, and recognizing they are stronger if East and West are both thriving.

This developing east-west harmony is crucial to the state's economic future, said Chris Rizik, CEO of the $100-million Renaissance Venture Capital Fund created by Business Leaders for Michigan.

"We can no longer be looking at Michigan as silos," he said. "When we've got Detroit seemingly not in sync with Grand Rapids, we look like a smaller, less cohesive state, and we look less attractive to companies looking to be here and to talent looking to be here."

Consider these recent developments:

  • Dan Gilbert, the Quicken Loans billionaire based in Detroit, and Rick DeVos of the founding family of Amway in Grand Rapids, are investors in both Chalkfly and GreenLancer, young Michigan start-up companies selling school supplies and green engineering services, respectively.
  • Forbes magazine now lists both Grand Rapids and Detroit among 15 American cities with "emerging downtowns," thanks to a burst of investment, entrepreneurship and an influx of young professionals in the city cores. Yes, that's the same Forbes magazine that recently dubbed Detroit the nation's "most miserable city."
  • Corporate CEO groups in west Michigan and Detroit are backing aggressive initiatives to recruit and retain more top talent. Talent2025, a coalition of more than 70 CEOs from 13 west Michigan counties, aims to double the region's post-secondary education rate, from 32% to 64% by 2025. In Detroit, a group of employers is striving to hire 10,000 or more interns to work in the city core this summer.
  • Grand Rapids will host the 2013 national conference of CEOs for Cities, a group of urban business and civic leaders, beginning Sept. 29 during the city's fifth annual ArtPrize international art competition.
  • Varnum, a Grand Rapids law firm, is providing $1 million in free legal services over five years to new businesses in Michigan. Varnum lawyers are working with start-up firms at both the Start Garden seed fund in Grand Rapids and the Gilbert-backed Detroit Venture Partners in the M@dison Building.

For much of the 20th Century, Michigan was a highly polarized place -- culturally, economically and politically -- as Republicans from the burghs around Grand Rapids and Holland could barely hide their disdain for dysfunctional Democratic Detroit, and vice versa.

The economic upheaval beginning with the dot-com bust of 2000 and exacerbated by the financial crisis of 2008-09, however, was a sobering experience for the state.

Bailouts of General Motors and Chrysler got more national attention, but the office furniture companies of west Michigan -- Steelcase, Haworth and Herman Miller -- were also hammered by the pullback in corporate investment. As Michigan's jobless rate soared past 14%, no one in the state was immune.

While the auto industry's restructuring was overseen by the federal government and bankruptcy judges, west Michigan's business community had an epiphany of its own.

No longer could patriarchal families that had built large employers such as Amway, Meijer and Haworth -- and pumped lots of philanthropic money into the arts, hospitals and other civic projects -- keep the region humming without help. The entrepreneurial spirit of the area needed re-stoking, new industries needed to arise, and the region's largest city, Grand Rapids, needed to be reinvigorated.

An odd alliance has emerged to make those things happen.

Craft beer brewers and purveyors -- such as Founders, Hopcat and Grand Rapids Brewing -- have given the city a certain cachet, abetted by the B.O.B. (Big Old Building) and a collection of 22 other bars, restaurants and entertainment spots in the region run by entrepreneur Greg Gilmore.

Four major companies in unrelated industries -- Amway (vitamins, soaps), Steelcase (office furniture), Wolverine World Wide (shoes) and Meijer (grocery, retail) -- joined forces in 2010 to launch the GRid70 design hub in a renovated downtown Grand Rapids building. Creative teams from each company work in open collaborative spaces strewn with colorful products and design ideas.

Wolverine, a Rockford-based firm of 8,200 employees whose footwear brands include Merrell, Hush Puppies, Keds, Saucony and Chaco, has 40 designers in GRid70 and 600 more at headquarters 15 miles away.

"Product cycles are shortening, merchants want something new on the shelves every three to six months, and we need to develop young millennial talent," said Jim Zwiers, a Wolverine senior vice president. A stimulating work space is part of the answer: "It's less about what the title or salary is," Zwiers said, "than, 'Who am I going to work for?' and, 'What am I going to learn?' "

Buzz on the street in Grand Rapids is that another GRid70-style collaborative may open downtown soon.

As an instigator of entrepreneurial activity, Rick DeVos, grandson of Amway cofounder Richard DeVos and son of former GOP gubernatorial candidate Dick DeVos, has emerged as a key force in Grand Rapids, just as Gilbert has in Detroit.

DeVos has launched an entrepreneurial boot camp called Momentum, monthly 5X5 Nights to pitch ideas for cash, and Start Garden, a $15-million seed fund that selects two ideas each week for $5,000 investments and will invest more in new entities that demonstrate growth potential. Start Garden will invest in its 100th idea this month.

In an interview last week, DeVos said similar beliefs drive both his Start Garden of small bets and the collaboration of giant global companies like Steelcase and Amway at GRid70.

"It all comes out of the growing awareness across the region that there's huge value unlocked when you bring people into proximity. It's very much an ecosystem. You need the organisms able to interact with each other," he said.

And like Quicken's Gilbert, who moved his mortgage company from Livonia to downtown Detroit in 2010, DeVos said he believes renewing the core of the region's major city is crucial.

"We were very intentional with Start Garden about having a physical space downtown," he said, "because we think it's important to be in the center of things, to be very visible and very permeable from the street."

DeVos said much the same thing as a 24-year-old in 2006, when he launched his first entrepreneurial venture, a social networking site for movie enthusiasts called Spout.com, in an old downtown Grand Rapids building.

Spout didn't pan out as a big money-maker -- DeVos sold it in 2010 -- but he said lessons learned from Spout paid off in conceiving ArtPrize, which has exploded into a huge event, involving more than 160 venues and attracting 400,000 visitors to Grand Rapids last year.

Sandy Baruah, president and CEO of the Detroit Regional Chamber, has visited Grand Rapids three times in the past year and said he's impressed with its transformation. "It was led by the private sector. They didn't rely on government for the plan, but the public sector came in behind to support. That's starting to happen now in Detroit," Baruah said.

Gilbert and several of his top executives also toured some downtown projects in Grand Rapids last year.

Conversely, DeVos said he and his colleagues keep track of the action in downtown Detroit. "Absolutely," he said, "we're trying to make sure they're aware of things coming through our pipeline on our side of the state and they're doing the same."

Rizik, the Renaissance VC Fund manager, said west Michigan and metro Detroit each have distinct strengths and gaps, and can thus help each other.

"Grand Rapids has, I think , a cultural advantage over Detroit in that the big employers there have been entrepreneurial family businesses into the second and third generation," he said, while the auto companies and other larger Detroit businesses went public, becoming more institutional and bureaucratic.

"On the flip side," Rizik said, "southeast Michigan has been way ahead of Grand Rapids from the standpoint of venture capital, particularly in the Ann Arbor area, and Grand Rapids is now working to try to catch up in that."

What's clear now is that smart people from both East and West realize that the twain must meet if Michigan's economy is to grow again.

"It's almost a generational thing," Rizik said. "You're seeing the younger people in both communities completely wiping out those lines that have stood between the two sides of the state in the past."

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