Blog: Pavan Muzumdar & Neal Fairbanks

In the movie Moneyball, a pro-baseball manager isn't afraid to turn conventional recruiting practice on its head. When it comes to VC funding, shouldn't the same daring apply? This week software execs and entrepreneurs Pavan Muzumdar, CFA, and Neal Fairbanks have a friendly back-and-forth on the state of funding from the investor and entrepreneur points of view.

Post 3: What's Different About Michigan

Neal:  I said before that there were a couple of other things different about Michigan.

Let me explain:

Michigan has been making cars for the longest time and a car has to be safe and reliable.  Engineers here, even the high-tech ones, are very particular in how things are made. I notice a sense of independence and wanting to have control over how the entire product is made.   I don't think this is being a perfectionist, as much as wanting to be one hundred percent sure in understanding how the product is built.  The stuff that comes out of here is usually solid and works really well.  

But that also has a drawback.

I don't see much collaboration here.   For example, I rarely see someone who I consider a strong networker from a collaboration perspective.  I don't mean someone who networks for sales and business development opportunities. We have lots of those kinds of people.  What I mean is someone who develops an enabling technology and then looks for other similar minded people to partner with to complete the solution and quickly take it to market.

Generally this means that products take too long to market.  More likely than not, however, they don't even get developed.

At the same time though, I think it's amazing what does come out of here.  The fact that the auto-industry has come back as strong as it has is pretty incredible.  I get the sense though the shock was so strong that people are still a little cagey about where it's all going.

Pavan:  I agree.  

Silicon Valley does have an incredibly collaborative culture.  It's like collaboration is ingrained in their DNA.  The other thing about Silicon Valley is its tolerance for failure.  Just the other day I read an interesting study indicating that the CEO of a failed venture is more likely to get capital from the same venture firm than a successful entrepreneur!

But we are also starting to get better at this.  In fact, just yesterday we had the ACE (Annual Collaboration for Entrepreneurship) Event.  I have enjoyed attending, participating, and volunteering for it for around 10 years, including this one.

What started humbly as a gathering of lonely entrepreneurs in 2001 has become a veritable celebration of entrepreneurship with the event in 2011 attracting almost a thousand entrepreneurs, accountants, attorneys, consultants, marketers, academics, techies, and pretty much anyone wanting to drink the Kool Aid.

The Great Lakes Entrepreneurs Quest (GLEQ), a statewide business plan competition, has seen consistent growth in the number and quality of entries for several years now.  Yours truly has volunteered as a coach and I am happy to report that not only are these cool companies, but some of the technologies that they have is truly world-changing stuff.

Our focus on reliable products may be leading to our conservative approach in other areas as well.  But that's not necessarily a bad thing.

It reminds me of the joke that was going around a few years ago comparing a car to a computer.   It said that if technological advances of the car had kept up with the computer, you would be able to shrink it down to the size of match-box and carry it around in your pocket.  

To which the automotive engineer responded, "Yes, but it would shut down randomly in the middle of the highway and for some reason you would accept this as perfectly normal behavior.  Oh, and to start it again, you would have to put one finger on the door lock and another on the radio switch while you turned the ignition key."

Next:  Where do we go from here…