You can work anywhere in the world. Give an example of something that keeps you in Ann Arbor and how we can use it to retain and attract more high-level talent?
I am still in Ann Arbor is my wife and family. I have a 5-year-old who just started kindergarten this fall. I have a brand new baby girl that I am hoping to raise here. It took me some time to figure out that Ann Arbor is a good place to settle down. I don't think we play that up enough.
The Michigan legislature is debating angel investor legislation that promises an income-tax credit equal to 25 percent of an investment, which proponents say could really energize the local entrepreneurial community. Do you believe the hype?
It's helpful. There are a lot of individuals who could be angels in Ann Arbor, a lot. The bigger problem we have is there is no culture around it. The first thing that happens after you successfully exit a company in Silicon Valley is you find ways to make more money that keep you involved in the community. I can't tell you how many successful entrepreneurs I have met here who don't roll back in. You have to pay it forward because that is the only way we can build a real entrepreneurial community.
You have said that we teach the wrong way to raise seed funding by focusing too much on an in-depth business plan and not enough on making connections. Does that mean the personality of an elevator pitch is more important than the nuts and bolts of a business plan?
I can't tell you how many companies I have seen start off spending months writing a 30-page business plan before they build anything or talk to their first customer. Reality doesn't exist within the walls of the office. You need to go out there and meet folks and figure out what you should be doing. In an early stage start-up the only things you should be doing are either building or selling.
Doesn't writing out all of that detail help an entrepreneur master his vision for the company and enable him to give a better elevator pitch?
It's probably useful to somebody somewhere, but it's a lot more useful to just go and do it. Talk to some customers. Figure out the business model and pricing. See how customers react. See what kind of value they place on whatever you are proposing to build, and just build it and sell it.
You have raised a lot of venture capital for your start-ups. Which is more important, the amount of seed capital or the quality of the resources that come with it, such as an angel investor's Rolodex?
Very few investors are value added. Money is money. There are very few that do much for you after they have wired the money to your account.
It's funny you say that because all of the angel investors I have spoken to say it's more about the value they add than the money they give.
I am glad people think that way and try to be that way. However, that's not the typical experience for folks.