Where The Deals Are Done

Why negotiate a deal in a cluttered office or smoky lounge when you could be at Café Zola eating waffles or a duxelles omelet? Especially when Café Zola is the hottest place to see and be seen in town – if you're a venture capitalist or the proprietor of a high tech start-up.

Did we mention that you have to be an early bird, as well?


"Café Zola is the most common meeting spot for breakfast for venture capitalists and new economy folks. 8-to-8:30 is the most crowded time. It's easier to answer questions in a more casual setting. People open up more,” said Michael Cole, vice president of the technology industry group at Bank of Ann Arbor


Business meetings that used to take place on the links have moved from the 14th or 15th or 19th hole to a downtown landmark on West Liberty Street. Why is Café Zola better than golf?


"Golf takes too much time – end of story,” said Jesse Bernstein, president of the Greater Ann Arbor Chamber of Commerce.


Well, not exactly the end. Tiger Woods' perfect play – "the perfect Aristotelian golfer” according to Bernstein – has ruined the game for amateurs. He also decries new equipment and sportswear so advanced that you should score "18 holes-in-one.”


"It's taken all the fun out. Even without that, it takes four to five hours to play, plus the time to get there and prepare and clean up after. Golf was never the place, only a place,” he point out.


If networking used to mean 18 holes of utter boredom, now it's breakfast and a meeting, preferably in the company of your peers. Don't get too close, though - wouldn't want anyone to overhear the deal-making.


"Generally, if you're getting close to a transaction, you move to a more private setting,” Cole said.


Cole's banking group focuses on the technology and life sciences sector, as well as the growing population of nano-tech companies. He recently learned that Ann Arbor has a growing contingent of photo-voltaic companies.


Greater Ann Arbor has hundreds of such companies – and any one of them could be the next Health Media, he noted. Health Media was recently acquired by Johnson + Johnson. Overnight it changed from a $25 million a year revenues company striving to grow to a $100 million-a-year company into a semi-behemoth with a $500 million revenue goal.


Keeping such companies here is challenging – and not simply because there are more good networking cafes on the West Coast, although there are. If their financing comes from a coastal VC, the VC may want the company to move closer to take advantage of its own network of suppliers and consultants.


"We're got a great labor force and the university is developing great technology but we're missing capital and the CEO/CxO talent, risk capital and leadership, Cole said. (CxO executives are any of the senior C-level managers – CEO, CFO, COO.)


"You do find those (missing links) at Café Zola. There are angels in town. It's not unusual to see somebody who's moving here from the coast at Zola, finding out where the hot spots are, making contacts,” Cole said.


Is Café Zola the only magical spot where deals begin? Bernstein said The Broken Egg is often a gathering place for government types, although another downtown business type scorned it – "only when you're desperate." Not-for-profit execs (intentionally not for profit, that is) are also spotted frequenting Café Zola.


Bernstein is more wide ranging than others – "I like to support all my members who are food servers,” he says. "One uncommon place that I find wonderful is the Campus Inn. It's downtown, it has parking, it has booths and places to sit privately and talk about whatever you want…”


"Then of course, there are the coneys – Mark's on Plymouth Road and on State Street. It's interesting – if you get a booth, the noise level and activity make it as private as anyplace. You're alone in a crowd – and there aren't as many people to stop and say hello to,” Bernstein added.


He noted that Ann Arbor is lacking one common feature found in larger cities: "You can walk into a more upscale restaurant at lunch or dinner and find one or two big tables where rotating groups of people are sitting – a community table. We don't have any of those here.”


Breakfast is clearly the most important meal of the day and not just for Mom's reasons.


"My best time for getting something accomplished is morning. I tend not to eat lunch. It's so easy to stay at my desk because many of us deal with multiple time zones. Our lunch time is a great time to catch West Coast people,” said Mary Campbell, managing director of EDF Ventures, a long-established Ann Arbor VC partnership.


Café Zola is the clear favorite, Campbell said.


"The coffee is good, service is good, the atmosphere is warm and inviting on cold days, cool on warm ones and there's parking nearby. It has it all,” she claims.


Well, on second thought: "It isn't very private – it is not the place to finalize a deal. Zola is my #1 favorite. My #2 favorite is the Starbucks branch at State and Liberty,” she added.


Does Campbell ever wish for curtained booths for transacting business out of sight of prying eyes? Not really.


"For us, it's the camaraderie, like walking through the (farmers) market on Saturday. Still, I would call the venture capital scene in Ann Arbor more competitive than collaborative. There is always a shortage of deals that are good and fit investors' needs. It's a good sign that we have enough venture capitalists to be competitive,” Campbell said.


A voice from the other side of the bargaining table concurs.


"I meet a lot of people at Café Zola and at Grizzly Peak. It's one of the beauties of having an office downtown. I think the most interesting place is Café Zola. Whenever I'm there I know somebody or the person I'm meeting knows someone. That's where everybody meets, said Jonn Behrman. (CQ)


Behrman is CEO of uRefer LLC, a downtown Ann Arbor start-up that offers a platform for creating connections for both businesses and individuals.


"If I'm worried about being overheard, I specify my table, depending on the topic. A Grizzly Peak booth is your own private space. I've waited for just the right table.”


Café Zola works hard to accommodate its customers' requests, said Alan Zakalik, one of the café's owners. (CQ Alan Zakalik)


"I think it's our location and the personal service,” he said. "I know many people who work downtown. Our hours also contribute. (Brunch is served from 7am-4pm daily, dinner from 5-10pm Sun-Thurs, until 11pm Fri + Sat.) When people want a more private table, we try to oblige. If the background music is too loud, we turn it down. Whatever it takes.”


Are any menu items de rigueur for VCs and their clients?


"Breakfast is not an adventurous time for most people. Their orders are predictable. At night, it's a lot different,” Zakalik said.


Behrman is one of the few entrepreneurs or VCs interviewed for this article who would admit to eating lunch.


"It's often more convenient and easier to get people's time over lunch. It makes the tone more social than super-business-y. We have a bullet-point, dive-right-in culture in America,” he said.


Bernstein says there are more and more "third places” including SPARK's Hot Shots and the Economic Club's wine and cheese events. The Chamber is considering a similar program. Hot Shots is an informal after-work job fair that rotates among fashionable downtown restaurants and bars monthly.


"There are also groups of what I call the '1099 people,'” Bernstein said. "We can't look only at full-time traditional jobs – if we don't look at 1099 income, we aren't considering our whole economy. They network at informal gatherings and lunches."

Who knew the fate of the Ann Arbor's economy hinged on a good cup of espresso?


Constance Crump is an Ann Arbor writer whose work has appeared in Crain's Detroit Business, The Ann Arbor News, The Detroit Free Press and Billboard Magazine. Her previous article was Bite Sized Luxury.

Photos:

Michael Cole and Co. of Bank of Ann Arbor Working and Sipping Coffee at Cafe Zola-Ann Arbor

Jesse Bernstein of the Ann Arbor Chamber of Commerce at Zingerman's Next Door-Ann Arbor

Looking Very Business Like Heading Into Cafe Zola-Ann Arbor

Ann Arbor Resident Danielle Bober Getting Some Work Done Over Zola's Breakfast-Ann Arbor

My(Dave Lewinski) Breakfast and Most Used Business Materials at Cafe Zola-Ann Arbor

John Behrman of uRefer Calling Someone While at Zingerman's Next Door-Ann Arbor

All Photos by Dave Lewinski

Dave Lewinski is Concentrate's Managing Photographer.  He gets lit on Cafe Zola's Lattes.
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