Venture Capitalists, Entrepreneurs Bet On Detroit As Detroit's "Big Three" keep getting smaller, the challenge is to somehow create jobs as fast as the auto industry loses them. To do that, Michigan is making a series of bets on smaller companies like defense contractors and biotech firms.
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Venture Capitalists, Entrepreneurs Bet On Detroit

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Venture Capitalists, Entrepreneurs Bet On Detroit

Venture Capitalists, Entrepreneurs Bet On Detroit

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That expected GM shutdown serves as one more reminder that Southeastern Michigan is looking for a job. Its big auto companies expect to get smaller if they survive at all. So Steve Inskeep is in Detroit this week, tracking the effort to diversify in a deep recession. And Steve, I suppose if you are Michigan, you can't go looking for another General Motors.

INSKEEP: Another giant corporation that's going to dominate most of a century and be for a while the largest corporation in the world, provide all those jobs? No. So one official says Michigan is making a series of smaller bets, Renee. And of course the challenge, as we heard yesterday, is to somehow create jobs as quickly as the auto firms are losing them.

MONTAGNE: Well, give us some examples of some of those smaller bets.

INSKEEP: Well, they're pushing employers toward things like defense contracts or biotech work. And if you want to know what that means, you could snap on a pair of surgical gloves.

(Soundbite of snapping)

INSKEEP: Those are going on the hands of an employee at a firm called Asterand. And by the way, Renee, don't worry, this won't hurt a bit. And you walk into a storage room full of silver tanks. Our guide here is Victoria Blanc, who says the inside of each tank is cooled - 190 degrees below zero.

Ms. VICTORIA BLANC (Asterand): So they're basically giant thermoses that are very, very, very, very cold.

INSKEEP: Stainless steel tanks, each one about four and a half, five feet tall.

Ms. BLANC: Yes.

INSKEEP: What's in here?

Ms. BLANC: There are small pieces of human tissue samples - pancreas, liver, breast cancer, lung cancer.

INSKEEP: These are leftovers from surgery or autopsies. Asterand sells them to medical researchers who study the DNA. This rapidly growing firm keeps its storage tanks in a former General Motors building. And it turns out that many Michigan companies want to gain from the DNA of the state's giant and troubled industry; that includes businesses that don't manufacture. Consider an IT company whose key employees held a conference call this week.

Unidentified Man #1: Sanjivi from Bhopal; Gary is in Warren; Sandeep down in Miami; and Imiperai(ph) in Toronto.

AMAROCK(ph): (Unintelligible) from India as well.

Unidentified Man #1: Ah, Amarock, thanks for joining from India as well.

INSKEEP: They talked over business opportunities, including a sale they'd like to make to GM.

Unidentified Man #2: You know, General Motors has its own issues right now, so…

INSKEEP: That deal has to wait. This company is going after defense and government work. The company called Netlink manages information. For example, it can rework the way that a factory buys raw materials. The co-founder is an Indian immigrant named Dilip Dubey, whose firm has been expanding.

Mr. DILIP DUBEY: Our biggest challenge is when you are in a high-growth mode…

INSKEEP: You said high-growth mode. Is that an accurate description of your company now in 2009?

Mr. DUBEY: I think everyone of our national partners tell us today that flat is new growth. Right? But of course we are not buying into that.

INSKEEP: Rather than let flat be the new growth, Netlink is seeking more business with its workforce of 1,200 employees.

As with many tech firms, hundreds were hired offshore, in Bhopal, India. Yet he's also added jobs in Michigan, where salaries are several times higher.

INSKEEP: Maybe that leads to the next question, of why isn't your whole workforce in India?

Mr. DUBEY: The majority of our workforce is in the U.S. And the question you asked is the question when I go to financial investors, they ask me and say this makes no sense, what is wrong with you? And the answer there is the Michigan workforce, which has significant experience in automotive and manufacturing industry, understands how things work.

INSKEEP: Former auto employees know the American industries that Dubey wants to serve.

That same auto industry DNA is part of the strategy of a venture capital firm. David Morris raised $20 million to invest in minority-owned companies, which he knew he'd find when he moved to Detroit.

Mr. DAVID MORRIS: Thanks to the Big Three, which often gets - receives a lot of negative press at this point in time, but they cultivate a lot of minority management teams that we're looking to start and form their own businesses.

INSKEEP: Morris is backing a startup firm. Its first product lets business people study security cameras. If you own a restaurant, say, you can pull out a handheld device and watch your employees from home, or the beach.

Can we watch something right now?

Mr. MORRIS: Sure. This is actually a view of one of our restaurant clients right now. This is what's going on in the store behind the counters. You see the managers talking to the sales folks. This is happening right as we sit here.

INSKEEP: Does anybody ever tell you this is kind of creepy?

The idea for this product came from a lifelong Detroit resident. Marquis Coleman says he mortgaged his own home to finance the business.

Mr. MARQUIS COLEMAN (Venture Capitalist): Ah, you know, dreams are, you know, recession-proof. You've got to pursue your dream, you know. You feel you have a chance to do it and you take it.

INSKEEP: I hate to ask, but what if you fail?

Mr. COLEMAN: That's a chance you take, you know, that's a chance you take. Most people don't think they'll fail though.

INSKEEP: And you really believe in this product?

Mr. COLEMAN: Absolutely, absolutely.

INSKEEP: Marquis Coleman's product launch comes in a few weeks, and his company president is a former auto subcontractor. His success or failure may depend on the skills that the Big Three automakers once grew.

The same might be true for Michigan itself.

We're reporting this week on the effort to retool Detroit. And tomorrow we'll meet a man willing to pay for homes that seem worthless. We want to know how your city or state is adapting to tough times and we have a live Web chat, noon Eastern today, at

(Soundbite of music)

INSKEEP: And from Detroit, it's MORNING EDITION from NPR News.

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