Stringer Bell, one of the iconic characters on the HBO series
The Wire, once said the drug game is all about
product. The legendary businessman/gangster knew that maximizing profits and gaining market share came down to who could buy the best drugs for the cheapest price.
Kurt Riegger thinks otherwise. The life sciences exec sums up the key to success for Ann Arbor's emerging entrepreneurial ecosystem in one word:
Talent.
A well-known local business man and early stage investor (who has no similarities to
Stringer Bell beyond the business savvy), Riegger knows a talented executive team backed up by experienced investors breeds
big success for startups in Ann Arbor.
"There isn't a shortage of ideas," Riegger says. "There is a shortage of teams that can execute."
Kurt Riegger is one of those talents, working to execute on one of Ann Arbor's more promising startups,
OcuSciences. The 49-year-old Ann Arbor native is the COO of the University of Michigan spin-out. OcuSciences is commercializing a non-invasive eye test that can detect and monitor retinal mitochondrial dysfunction. That test should allow doctors to diagnose diseases like diabetes through the functional status of the eye's retinal tissue.
OcuSciences is perfecting the third generation of its technology and expects to receive FDA approval for it later this year. It is currently selling an early version but Riegger's eight-person team expects to ramp up sales by the end of this year.
"We can sell a research version of it, which we are doing today," Riegger says. "This will be a lower-cost version that can go into the marketplace for early clinic use at research centers."
Riegger is also a standing member of Ann Arbor's angel investing and venture capital communities. The father of two teens recently served as a venture partner with
North Coast Technology investors, a $100 million fund in Ann Arbor. He has also been the COO of
Intelliseek, which was sold to AC Nielsen. Riegger has launched, funded, and advised 26 companies, including four medical device startups. And he's nowhere near the end of his serial entrepreneur run.
Riegger recently invited
Concentrate's Jon Zemke to OcuSciences' offices on the south side of Ann Arbor to talk about talent, investing and the city's town-gown divide.
The conventional wisdom on building Ann Arbor's entrepreneurial ecosystem seems to focus heavily on serial entrepreneurship. Would the area be better served if there was more emphasis on building startups for local ownership over the long-term rather than acquisitions over the short-term?
You want management talent that is able to grow a big company in Michigan. Usually what is missing there is some of the sales and marketing talent, senior management and capital. All of those things have to be in the same place and same proportions to build big companies. Our challenge here is to grow companies big enough with the limited, homegrown talent we have here and then bring in the additional talent that we need.
I am always in favor of investors getting exits because it allows them to invest again. The people from
Accuri Cytometers are recycling capital into new projects. Our challenge is building a talent base big enough so you can build a $100-$500 million company.
You would think we would be able to draw upon auto industry talent, especially with all of the recent downsizing?
The auto industry has long product cycles, and you need rapid product cycles in start-ups. You really have to have people who have gone through that experience instead of people of have gone through really long product cycles. Sometimes you get a very narrow focus working for a big company whereas someone with a start-up wears multiple hats. Another thing is a risk-taking culture here. We have very few companies where people have gone that full cycle so people are appropriately cautious about the risk they are taking.
So the corporate boardroom experience is that far apart from the start-up experience?
Not exactly.
Bob Lutz is on the board of
Current Motor Company helping them out. But it is very hard to have that range of experience to make the hard calls.
Ann Arbor has seen a lot of big acquisitions in recent years, largely thanks to University of Michigan spin-outs. Should we expect to see even more now that the university has continued to focus on turning more of its technology into start-ups?
Are we short of ideas and technologies or are we short of paths to commercialize that technology? Some people will tell you an idea is worth a penny and a patent is worth maybe a buck. The things that are valuable are the team that has a vision, a path, the drive and the ambition to commercialize it. That's more scarce.
So it's not the size of the pipeline that matters as much as the people who are handling it?
Yes. Both the
tech transfer office and the start-up teams.
Ken Nisbet and his team have done a tremendous job of getting the technology ready for the marketplace.
There have been a number of new venture capital funds launching out of Ann Arbor over the last year or two. What do we need to do to sustain the area's new and existing funds?
You need big exits. You need startups like
HealthMedia that caught fire and went to the moon. The biggest challenge is to pick your projects carefully. Some people would say there are six good deals to do in Michigan per year. As the ecosystem gets better, people will come with ideas that get appropriate sizes of capital so there are more good deals in Michigan.
Detroit Venture Partners has attracted a couple of promising startups from Ann Arbor, including Are You a Human and OWN POS, and its vice president is Ann Arbor serial entrepreneur Jacob Cohen. What's your take on what DVP is doing for downtown Detroit and how will it impact Ann Arbor?
Is Ann Arbor feeding Detroit? Ultimately, you need the software talent to follow you there, too. Downtown is a vibrant area but you need, say, 20 software engineers that want to grow and raise a family there. I'd love to see Detroit revitalized, but there are still some challenges that must be faced. Companies would love to be there because there is so much going on, but you have to be able to grow to a 20- to 40-person company.
What do you think of some of the larger corporations, like Compuware and GM, starting their own VC arms?
It can be helpful. But they have to be careful that they are investing for return on investment. If they are investing because it's a strategic fit with the corporation to the point that it compromises return on investment, it's very hard to keep investing there when corporate coffers get tight.
You went to high school at Pioneer, college at U-M, and live/work/play in Ann Arbor today. This is exactly what many of our region's leaders would like to see happen more often when they talk about talent retention. When we talk about talent retention, should we be focusing on keeping homegrown talent or attracting talented people in general?
You have to have viable companies young people can go to work for. Otherwise people prudently go to someplace to work. You need jobs and vibrant places for people to work. If there aren't viable, big strong companies, people will almost by definition leave. The fundamental question is how do we make companies successful here so they hire.
A lot of people in Ann Arbor talk about the town/gown divide, but it's something that is difficult to measure. Is this a real problem or something locals like to blow out of proportion?
The town-gown divide I see is how do you pay for services when one of your largest users doesn't pay taxes. If your dominant employers, the University of Michigan and U-M Hospital, aren't tax-paying entities, how to pay for all of those services it takes? It's a challenge.
Jon Zemke is the Innovation and Jobs News Editor for
Concentrate and the Managing Editor for
SEMichiganStartup.com. He conducted and condensed this interview. His last feature was
Are You Satisfied? A Conversation with ForeSee Result's Larry Freed .
All photos by Doug Coombe