A Piece Of Silicon Valley: Q&A with Howard Brown


It's fair to say Metro Detroit wants Silicon Valley. It wants its diverse economy, its piles of venture capital, its fleets of cutting-edge start-ups and legions of innovative entrepreneurs. In essence it wants Howard Brown. And it has him.

Brown, a Silicon Valley veteran, has seen it all, and it has made his life a little bit more than comfortable. The graduate of Babson College --an entrepreneurial-focused college with alumni like Edsel Ford II and Daniel Gerber-- has worked in the corporate world for AT&T. He has launched start-ups in Silicon Valley that took off like gangbusters ($500 million Avid Technology) and some that have gone bust (Liquid Audio). He has ridden the IPO roller coaster and known when to throw in the towel on an idea that was before its time. He survived the tech bubble burst in 2001, dusted himself off and, unafraid to fail, started a new company, PlanIt Jewish.

All of those experiences have taught him valuable lessons that he has brought to Metro Detroit. He married a Michigander and they decided to move to Franklin to raise their daughter. He now runs CircleBuilder from his home office, equipped with four computers and all of life's distractions. And that's just the life he wants. The one where he can take his family on cider mill runs and drop his daughter off at school each day, and still be able to easily jump on a plane at DTW and throw himself back into the California fray to promote his new company.

CircleBuilder is literally a passion Brown wears on his sleeve. He wears a CircleBuilder Polo shirt, clutches his CircleBuilder info packet, hands out his CircleBuilder business cards three at a time, and even gives out foldable blue disks (similar to the light shades photographers carry, only smaller) that carry the CircleBuilder logo. He talks about his 3-year-old company incessantly with an excitement in his voice that sounds like he just came up with the idea. He speaks in short sentences that almost make his mouth a stenographer for what he's thinking, as his mind races to the next thought and idea.

Brown's latest venture offers Yahoo Groups-like services to churches, creating websites, blogs, and social networking. The basic services are available free of charge to any religious community that wants to sign up. More services, like podcasts, are available for a small fee. He has raised about $2 million in venture capital (including more than $700,000 this year, not the easiest time to raise money) for the firm that employs six people. He expects it to be cash-flow positive within 20 months, a feat Internet darling Twitter has yet to reach and Facebook just hit last month.

What shone through the most is how enthralled Brown is with being a Michiganian. The Massachusetts native is a complete team player for improving Michigan, offering idea after idea and careful constructive criticism to spark an economic revival. He has the confidence and know-how to make a big difference here. The question is, are Michigan and Metro Detroit willing to listen?

METROMODE: Metro Detroit's leaders always talk about reinventing the region into the 21st Century's Silicon Valley. Is that a wise strategy? Should we be trying so hard to recreate ourselves in the image of other places or just focus on being the best Detroit we can be?

HOWARD BROWN:  What does that mean to be the best Detroit? Are you going to latch onto auto companies that are shrinking, and shrinking their infrastructure and hiring? They have to reinvent themselves. I don't know how long that's going to take. There are always going to be car makers. Is California or Israel going to beat Detroit to the electric car, to the batteries? There is innovation, there are things happening that way. For example, the Detroit population is getting older. There is a shortage of nursing. Let's make nursing scholarships available for anyone that wants to change careers. 

I think you need to emulate things that work. We've seen what the digital environment has done for Silicon Valley, for Boston, for Hollywood, even in the defense business. It's more like playing Star Wars in a game than it is fighting a war now, right? Everything is now digital. It's not so much about being a copycat. It's so much about forging entrepreneurs and encouraging freedom of expression. The answer is that we need to challenge ourselves to reinvent ourselves. I am for the digital reinvention of Michigan and Detroit. Others are for the renewal of housing and real estate, and what's the time frame? Is it a 20-year plan, a 50-year plan? In our business we think one month, three months, one year, three years, and five years. After five years it gets fuzzy. It gets fuzzy even to three years about what that crystal ball is going to look like. 

Ten years ago you used to call up the airline and get a paper ticket. You can't get a paper ticket without them charging you today. How do most people who get on an airplane do it? They go to a website, they book their ticket, they print out their boarding pass and they scan it at the airline. That's how you get on a plane today. So from 1997 to 2007 that whole training happened and that's how you get on a plane today. 

You gotta think long term and you gotta invest in the people. You gotta invest in people staying here and building families. Take my nursing example. What do nurses do? They work locally. They potentially marry doctors. They spend their dollars locally. They build their families locally. What is the incentive for a Michigan-based business to stay here? The Michigan Single Business Tax was brutal. For a young guy starting out a company, it's absolutely X box. Why did Comerica leave and go to Texas? Taxes. What they tried to do was, which I thought was much more bribery, was reinvent the film business. The problem is if you do tax incentives at 40 percent, California says it will do it at 42 percent. It becomes a bidding war. There is no sustainability. They're just giving away the farm. Google built a facility here. They hired a bunch of kids and got huge tax breaks. When they're done hiring, they're done. It's not sustainable just to offer all of these tax breaks. A lot of these companies where they are building business, taxes are a big incentive so you need to think of this in a big plan from what is going to get people to start and innovate. I'm not saying you have to go all digital, but that's the way of the world. 

MM:  Name one no-brainer change Metro Detroit or Michigan could do to encourage more entrepreneurship here?

BROWN: One no-brainer change. That could encourage entrepreneurship? That's a great question.

I would actually start in the elementary schools. I love these science fairs that they do, science clubs and culture clubs that they do. I want all of these kids to start a lemonade stand so that they can actually build something. I would teach entrepreneurial skills at a very young age. Let's brand the next generation with a skill set to be able to make it when they're coming up through the ranks of their lives. Let's give them a lot of support. When it really comes down to it, we need to do a better job educating the kids that it's OK to go try and fail and still support that. 

Places like Automation Alley and these incubators need to get out of this bureaucracy that they're in. They have to be able to get broader reach, broader education, and broader funding. You really have to be able to put your money where your mouth is. The Michigan 21st Century Investment Fund has been a lot more bureaucratic than it has to be. It's not getting funds to the people that really need it, and that's a shame. Let's really go and put our money where our mouth is and support it. Let's tell you that it's great to do business in Michigan, and it's not only lip service. Let's prove it. It's sort of like taking a bet. This is what venture capital does, and I am not saying it's a great model, but they'll bet and invest in 40 companies and hope that one will make it big. You need to take a little more risk. The biggest advice is apply the resource, put your money where your mouth is and be a little less risk averse. Take a chance. It's the only way to promote change.

MM:  What is one thing Metro Detroit does better or has going for it that the Silicon Valleys and Research Triangles don't?


Brown: We have fresh water (laughs).

I will tell you that it's got infrastructure of real-estate and hard-working people at a lower cost than Silicon Valley. That's what we have right now. We have got a work ethic and people who are willing to work hard and a low-cost infrastructure to get started. 

MM:  What's the difference between the venture capital culture here in Michigan and on the coasts besides there is more money in places like California and Massachusetts?

BROWN:  Risk. Willingness to take risk. They are more willing to take more risk. It's much more conservative here. Almost too conservative.

MM:  Is this a good thing or a bad thing?

BROWN:  It is what it is and it's how you define yourself. I would say it's a bad thing. You can't change without risk.

MM:  Expand on that.

BROWN:  If the car companies don't reinvest and don't renegotiate with the unions and be able to change to make a profitable car, they will be out of business. If a restaurant serves bad food, no one will come and it will close up shop. If you build a car that can't be profitable you go into bankruptcy, like the car companies did. You have to invest intelligently and more broadly in things outside of our standard auto/real-estate. You gotta change. It could be bio-tech, it could be medicine, health-care is big. You don't necessarily have to pick one. You might want to pick more than that. What the state did was it had these little funnels. They had bio-tech, homeland security, blah, blah. But they left out software. They now fixed that, by the way, but it's late in the game. That's one of the reasons Automation Alley couldn't fund me. (It eventually did, making a six-figure investment earlier this year) You can't fund software? How did you miss the boat on that one?

*Note: Automation Alley is a key investor in CircleBuilder Software LLC as of April 2009

MM: That approach of the state picking these five industries, and that's what we're going to go for, is it a sound strategy to focus on those sorts of things or should it not have these limitations?

BROWN:  You can't fund everything. Are you going to fund a furniture maker? Maybe not today. It's OK to pick those five funnels. Now that software is included, I am happy about that. But how does the money get to the people who need it? Is the money getting to the people that are starting the companies and making a go of it? Not enough and not easy enough. It's not a bad strategy. Actually, it's a good strategy. But is the money getting to the end user? How fast is it getting there? What's the process of getting it there? That's my issue.

MM:  Image-wise, what is something Michigan or Metro Detroit could do to attract more investment here or even help convince coastal venture capital firms that it's OK for their investments to stay in Michigan?


BROWN:  I think that when I am in other states and I see the advertisements for Pure Michigan, that's a good thing. We've got to prove it. It's not about talking the talk. It's about walking the walk. We have got to prove that we're growing businesses here, and advertise them out and prove it. A company like ePrize that was a poster child for that hit the slump just like everybody else. So what? Keep promoting it. But don't just pick one or two. Feature a bunch of companies in different industries. Pick your shining stars and promote them like crazy, and support them, and move them forward. Tell the rest of the world that it's OK to come start a business in Michigan. 

MM:  Name an aspect, policy or mindset from elsewhere that you would like to see this region adopt?

BROWN:  I want it to be a more tax friendly state for business.

MM:  Expand on that. What does that mean?

BROWN:  I think that one of the things you want to be to build is your business. Right now you have to allocate a huge amount toward taxes, but taxes fund social programs and the state lottery does that, too. Re-ask the question?

(Question re-asked.)

There are a lot of walking wounded around here. I want the state to hear the call of the people. People are struggling. If people need food, feed them. If people need education, educate them. If they need support, support them. But don’t make it so bureaucratic and difficult to be able to hear the call of the people. That is much more theory and sloganism, but you don't turn the Titanic around very quickly. What can we do to move that, not in an unnatural way, to hasten it and get our rebound going? What are other parts of the country doing to rebound and emulate them, and see if it applies here. It's not a bad thing to look at that. I think we're still bottoming out here. It's tough and plus a lot of people are still leaving. Job creation is what stops that. Create more jobs. People want to work and people spend locally. I think it's job creation. That's it. Create more jobs in more diverse fields.

MM:  What's something that turned you off about moving here, but eventually won you over or you began to see it as an asset?

BROWN:  People used to say, 'You moved from Silicon Valley to here? What are you doing here?' I think people walk with their heads down. A lot of negativism turned me off. I am not letting that bother me. I see pockets of that change. The negativism of that. The reputation of Detroit. Home is where you make it. You know, I am making a pretty good home here. My daughter is thriving here. She goes to a private school. She has family and friends. I have adjusted, too. I play basketball. I play poker. I am going to build a business here despite all of the naysayers. I am the guy who sees the cup is half full, not half empty. A lot of people think the cup is half empty around here. I see it changing slowly.


Jon Zemke is the news editor for Metromode and Concentrate. His previous article was An Artistic Vision: The Red River Artists Center. Send feedback here.

Photos:

Howard Brown owner of Circle Builder at St. Hugos Catholic Church in all but the last photo

Photographs by Detroit Photographer Marvin Shaouni Marvin Shaouni is the Managing Photographer for Metromode & Model D Contact Marvin here
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