Alexis C. Madrigal

The big opportunity of robocars isn't the cars themselves; it's how they could create a far more efficient transportation system.

When I've thought about driverless cars, which if you believe Sergey Brin, will be available within "several years," I've tended to think of them as a drop-in replacement for our current automobiles. So, you'd buy a VW Automaton and it would sit in your driveway until you wanted to go somewhere. Then, you'd hop in, say, "Take me to Lake Merritt," and then just sit back and pop in the latest Animal Collective while the computer drove. 

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But maybe that's not what would happen at all. Changes in transportation technology have tended to be accompanied by changes to transportation systems, too. Long-time technologist Brad Templeton argues that this will, in fact, be the case. And he's even got an idea of what the big shift might be. We could enter the age of the "whistlecar." If one can hire a cheap specialized 'robotaxi' (or whistlecar) on demand when one has a special automotive need," Templeton writes, "car users can elect to purchase a vehicle only for their most common needs, rather than trying to meet almost all of them -- or to not purchase at all."

This vision is kind of stunning: imagine the Kiva Systems logistics robots that now speed around major warehouses, but for people. Transportation-as-a-service models could really take off in a world of hyperoptimized robotaxis. Not only would the robotaxis be built differently from normal cars, but people's private vehicles (if they had one) would change as they realized how they could use the new system more effectively.

That is to say: right now, people buy big old SUVs and cars that drive 400 miles on a tank because they are buying for the maximum number of use cases. Really, most people drive their cars a few dozen miles at most and they do it alone. People have WAY more car than they need. So, Templeton's conceit is that if we had roaming driverless vehicles that would show up at your door when you called one, you might be inclined to buy "less car" because you'd get the rest on-demand. 

My own thought: perhaps when you bought a small, electric vehicle, you'd get a "service plan" that came with X number of trips in a driverless vehicle of your choosing; your bundle would be the small, energy efficient daily car and access to self-driving vans, trucks, station wagons, and sports cars.

Templeton's theorizing could also answer some of the critiques from transit-oriented environmentalists who see driverless cars as perpetuating the doomed auto-heavy American system. Don't think about the driverless car as a fossil-fuel powered car replacement; think of it as one mode of a radically more efficient system: what could you do now within a system that now has free-floating semi-autonomous people transporters? 

Let's say the tech opens up the system to change. Templeton's main argument is that the new system would bounce back on the tech. The design of cars would change because they'd have a new set of uses, possibilities, and constraints. I'll just provide the bullet list here of what might happen to cars in the auto-automobile era. You can check out his post for the details. 

Range is much less important

Battery problems are considerably reduced

Refueling is not usually done while humans travel

Single passenger vehicles will be much more common

Reverse and face to face seating

Windshield requirements are different

Cargo space is not necessary in all vehicles

Acceleration is not a big requirement

Speed may not be that important

Cars may be much lighter

Suspensions can be super-soft

In time, safety concerns change considerably

The in-car environment changes considerably

Sleeper cars

Robo-RV

Parking is not a problem for the humans (or society)

Many car owners may rent out their cars

Phobos hanging in the sky

If there's one thing about space travel that's always enchanted me, it's the idea of looking up into a different sky. Not to reveal too much about my inner nerd, but I may or may not have watched a few hundred episodes of Star Trek: TNG in the lazy Sunday hours after the football games ended. (Oh, Channel 12! The mysteries of your programming choices! Was Weird Al secretly selecting your programs?) The best part, for me, was when they beamed down to a new planet and you'd see two suns in the sky, or a huge planet close by, or ... an unfamiliar moon.

This photograph taken by the Mars Curiosity Rover shows the Martian moon, Phobos, in the upper right quadrant above. A faint crescent hanging in the sky. (That black speck to its left is a bad pixel, FYI.) I know Curiosity's job is to do science, but I just want it to explore on our behalf, to be our eyes, to look up.

The price of these unmanned aerial vehicles is plummeting from two sides. On the one hand, you've got the toys like the $70 iHelicopter you control with an iPhone. This little guy even has two plastic missiles you can fire!

There are already pretty good surveillance drones, too. Like this $300 Parrot AR.Drone.2.0, which can shoot HD video. You control it with an iPad. That quadcopter's users are already submitting video that looks like this:

And don't even get me started about these nanobot swarms.

At the other end of the spectrum, you've got the military-grade drones, which come with real missiles. These ones are still expensive and obviously procuring the bombs and missiles is still hard.

But the fancy, long-range drones have now left the Pentagon costing and production ecosystem. Hobbyists like Wired's Chris Anderson are working on high-capability DIY drones. Here's a chart showing the relationship between "drone/autopilot production volume and price."

Chris Anderson

The upshot of all this is that it's not going to take much to procure a drone and do anything you want with it. And if you try to outlaw them, then, well, only the outlaws (and government) will have drones.

A reflection on what happens when only the rich have a place in the world.

It changed the authority figure. Crack cocaine was done so openly, and the people who were addicted to it, the fiends, had very little self-respect. It was so highly addictive that they didn't care how they obtained it and they carried that out in front of children, who were dealing at the time. So the relationship of that respect, 'I have to respect my elders' ... that dynamic shifted and it broke forever. It just changed everything from that point on.

"I was very aware of the dangers involved because there were people dying [and] there were people going to jail and it wasn't a one-off. It wasn't an occurrence where everyone was shocked. It wouldn't be a shock like, 'How could that happen in this neighborhood?' It was really a weekly or monthly occurrence."

Pittsburgh has proven fertile soil for new companies, but the startup mentality may meet its match in a real town's legacy problems. 

The Hot Metal Bridge (flickr/kordite).

I have a tip for coastal-dwellers traveling to the brick-and-steel cities of the Rust Belt. It is a lame trick, and I am ashamed to admit that I used it. But it is useful and it is my duty as your faithful correspondent in the field to share it with you. 

If you find yourself in Pittsburgh, say, on a Saturday morning, and you want to get a quick tour of the neighborhoods in which you might find some interesting things, here's the shortcut: Go to Yelp. Type "hipster coffee" into the search box. Up comes a map of places that other Yelpers have helpfully labeled "hipster," which tends to mean places where dudes in funny t-shirts bring their laptops to work. These are the unofficial co-working spaces of the town. 

The last stop on a tour of Rust Belt startups.
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In a city like Pittsburgh, this data probe also tends to highlight neighborhoods where these people tend to live. This simple search pinpointed the Strip (historic district), Lawrenceville (the New York Times' "go-to destination"), the North Side (home of The Mattress Factory Art Museum), the South Side (the dense home of the accelerator AlphaLab), Squirrel Hill (east of Carnegie Mellon), and Garfield (home to sundry art galleries, Awesome Books, and the Center for PostNatural History). 

It's important to note that you don't even have to like hipster coffee to deploy this glowing tracer for MacBook Airs. It is just a sign that where startups go, a very particular kind of culture goes with them. You get fancy coffee from individual coffee plantations. You get an Apple store. You get Belgian beer places. You get vintage shops where you can buy many different things made of teak. 

But can start-up culture change a city?

Pittsburgh is a great place to investigate the possibilities of a start-up led urban resurgence because of all the cities between the coast and Chicago, it's the one that's farthest along the path towards techdom. It's got a world-leading research institution that focuses on artificial intelligence. Because the steel mills collapsed so quickly and so thoroughly, its leaders were forced to put together a long-term plan for the city's future. Here's how the New York Times summarized the situation in 2009:

"If people are looking for hope, it's here," said Sabina Deitrick, an urban studies expert at the University of Pittsburgh. "You can have a decent economy over a long period of restructuring."

Pittsburgh's transition has been proceeding for decades in fits and starts, benefiting some areas much more than others. A development plan begun in the 1980s successfully used the local universities to pour state funds into technology research.

And much of this story is real. Pittsburgh is a vibrant, fun place with cool neighborhoods, lots of young people, excellent universities, beautiful housing stock, strong tech companies. It seems like a great place to be an entrepreneur.

But can these entrepreneurs become the backbone of this city? Can they own its problems, not just its advantages?

Startups all over the country tend to be very white. And Pittsburgh, like many other major cities, has even more acute black unemployment problems than it does general ones. Unemployment data isn't broken out by city and race, but nationally, black unemployment was almost twice that of whites in 2011, peaking at 16.7 percent (!) in August, according to the Bureau of Labor Statistics. 

So, as long as we're thinking about scale, the biggest challenge facing Pittsburgh isn't how to make a vibrant startup scene (though that's not easy either) but how do you make one whose benefits extend beyond the edges of the start-up bubble?

I'm outside StartUptown, a 10,000-square-foot co-working facility run by Dale McNutt, who lives here, too. This is ground zero for where Pittsburgh problems meet its new solutions. McNutt's been renovating the place since 2002, and it shows. The brick buildings are now set in a wonderful garden, and the whole place just sparkles with DIY flourishes. 

Around me, the streets are mostly deserted. Most of the houses seem occupied, but in poor condition. There are few businesses. Kitty corner from StartUptown, there is a mental health facility and the Jubilee Soup Kitchen. 

This area, which McNutt calls Uptown, might fairly be termed the lower reaches of The Hill, which was, in essence, the Harlem of Pittsburgh. The story of The Hill is sad. The community was leveled by an ill-considered redevelopment plan in the 1950s that displaced 8,000 families. It had a "devastating" impact on the community, one from which it still has not recovered. 

On the other side of Uptown is the Bluff, where steel mills once lined the banks of the river. There's not a steel mill left in Pittsburgh proper, but the old sites are now home to economic development groups like the Pittsburgh Technology Council and Innovation Works, in addition to companies and university facilities they've helped bring to town. They even named the street running adjacent to the river "Technology Drive." 

Downtown is precisely a mile to the west, and Oakland, home of the University of Pittsburgh and Carnegie Mellon, lies a couple miles to the east. The street names around here sound aspirational to an outsider: Forbes runs east, Fifth Avenue runs west. 

Dale McNutt in StartUptown (Alexis Madrigal).

Inside, StartUptown is a cross between a traditional co-working space and something with more soul. The walls are held together by clamps. There's a crazy chandelier made from industrial supplies hanging from the ceiling, which has the punched tin roof of an artisan cocktail place. Southern exposure sends daylight streaming in all day long. And McNutt's poodle will happily nuzzle any passersby. 

It would be hard not to like this place or Dale McNutt. He clearly used to be/is an artist at heart -- he knows the sculptors in town and recalls the art program at Carnegie Mellon with appropriate nostalgia -- but now he's taken to tending entrepreneurs. Plenty of people move to rough neighborhoods thinking they're going to fix up a place; only tough optimists like McNutt can manage to stay. 

He's arranged for a couple of companies to meet with me. Both companies are growing and interesting. 

AllPoint lets you take 3D images and transform them into architectural renderings with its software. "We do really rapid 3D survey and data capture," founder Aaron Morris tells me. "A lot of it is going into digital capture for retrofit design for manufacturing facilities that want to put new equipment in." Morris got a PhD from CMU and worked on "an autonomous robot program that mapped underground spaces with 3D LiDAR."

The other founder I met was Robb Meyer, whose company created the NoWait app, which helps restaurants that don't take reservations to manage their wait times. It's in use at some of the country's hottest restaurants, like David Chang's Momofuku in New York.

They are two very impressive entrepreneurs, as good as I've seen on this trip. We take a quick trip into the basement to meet Harold Lessure, a former CMU physics researcher who has spun out the company Lechtzer to make ultra-sensitive natural gas detectors. His work space is a crazy lab filled with doodads for making stuff and prototypes in various states of assembly. With the boom in natural gas across the United States, it is a good time to be in the methane-detection business, Lessure tells me. 

Lessure is just one of many people I met in Pittsburgh who remind you why having a premier research university is so important to a city that wants startups. They can just do and make things that other people can't. They might not hit on something like Google's "backrub" algorithm, but they can make best-in-class products that businesses will want to buy with American dollars, not Klout points. 

Strada Architects

Our next stop is Google Pittsburgh.

Google obviously isn't a startup. But having Google put down some roots in your city is like having Warren Buffett invest in your company. It's a mark of distinction. It's a mark of value. Not only that, the offices are growing. There are hundreds of Googlers in Pittsburgh now.

The company's offices in Pittsburgh are stone-cold beautiful. Set-up in an old Nabisco factory, the office is actually better looking than the Mountain View buildings. There are bee hives on the roof, and a chicken coop awaiting tenants. There's a trapeze net hanging above a corner of the office that you can have meetings in. (I jumped in. It's harder to walk on a net than it looks.) The cafes and event spaces are nice. As office manager Cathy Serventi and product manager/native Pittsburgher Mike Capsambelis showed us around, you could feel that this office was a proof point that tech was changing Pittsburgh. For the good. 

Carolina Pais-Barreto Beyers, a VP at Urban Innovation 21, who is driving me around, wants to make sure that I see the part of the city that has not been transformed, just half a mile away. Her organization has a fascinating mission. They want to connect startup hubs with the broader community. "We want to make sure everybody does well," Beyers told me. They want to find ways for startups to create jobs not just for people with CS degrees from Carnegie Mellon and Stanford, but people who thought they'd work in steel mills, people who didn't finish high school, people who have grown up watching their communities ripped apart by dumb development decisions, drugs, and the decline of the industrial economy.

A half a mile from Google's gorgeous building, just across East Busway, you find corners that look like this.

Even in Silicon Valley, the hub of startup activity, you can cross the border from Stanford's home town into East Palo Alto, a community where 96 percent of kids qualify for free or reduced lunches, a measure that indicates the high level of poverty in the community. It's actually hard to find the levels of poverty and misery that you'll find in San Francisco's Tenderloin anywhere else in America. And along the route that many drive, bus, or train from San Francisco to the valley, you can find the homeless camped under the freeway and wandering along its stretches. 

Perhaps it is too much to ask of a single industry that it create stability for an entire region. And that's fair. But in city after city, we've found that entrepreneurship has become a central tenet of local economic policy. And yet the literature on how startups can grow a local economy is skimpy. I'm not saying that it doesn't happen, but simply that there aren't a lot of good studies showing precisely how this is all supposed to work. 

On the other hand, what else are you going to do? Build arenas? Recruit companies from neighboring regions by promising them huge tax breaks? If there is a proven strategy for lifting large numbers of people out of poverty in an urban area, cities sure don't seem to be deploying it at the scale of the problem.

The main policy vehicle for Urban Innovation 21's work is the Pittsburgh Central Keystone Innovation Zone that surrounds StartupTown and pieces of The Hill and the North Side. They describe it like this: 

PCKIZ orchestrates a combination of tax incentives, entrepreneurial resources, educational and internship programs, networking events, and technology showcases. Its goal is to multiply technology and economic development activities, creating economic sustainability and transforming central Pittsburgh into a vibrant community.

This method of development--economic gardening, people call it sometimes--sure seems like a better idea than the ones we've had in the past about how to help underserved populations. But you know what they say about good intentions. 

The one thing you hear over and over from entrepreneurs is that the idea hardly matters. Winning or losing is in the execution, day after day, challenge after challenge. Perhaps there are hundreds of ways to connect ghettos and Google. But who wants to put that effort in when there is no exit, no acquisition, no IPO? The reward is just a thriving, safe, equitable city. And where are the legions who are actually willing to work that hard for the noble, capital-inefficient goal? 

The mentality that dominates startup culture is all about efficiency. Finding better, cheaper, faster ways of doing things. There's nothing lean, though, about providing mental health services or soup kitchens for starving people. I wonder how well such a worldview can deal with the legacy problems of big cities. I think the jury is out. But judging from the sheer magnitude of startup experiments across the whole Rust Belt, we're going to have a lot more data soon. I'm rooting for Pittsburgh to become that model of development. Because if they can't do it, I'm not sure anybody can. 

"We had more information on where to go to dinner... than we did for my cousin's funeral."

eFuneral's offices are located on the 21st floor of a downtown Cleveland office building. Running late, I stepped into the elevator and noted with consternation that the elevator buttons only went up to 20. I rode up to that floor, looked briefly around, texted the company's CEO Mike Belsito, and rode back down.

"I'm looking for a place called eFuneral," I said to the security guard I found in the lobby.

"They're putting that 'e' on everything now, aren't they?" he said. "They used to actually bury the bodies."

He thinks this joke is so funny that when Mike Belsito, the CEO of eFuneral comes down to get me, he repeats it to him. Judging from his polite, restrained reaction, Belsito has heard more than a few jokes about his business. Reinventing the way people shop for funeral homes "is not the sexiest thing," he admitted. 

We headed back up the elevator to the 20th floor and into a set of offices that are half Being John Malkovitch, half Hudsucker Proxy. There are windows looking out on all sides at Cleveland and the lake that made it. Each one is a perfect half moon. It was here that Belsito spun out the story of their founding.

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"For us, the big question wasn't, 'Where is there a funeral home?'" Belsito said. "It was, How are we supposed to know which of these is going to provide us good service? And what is it going to cost?'"

"I remember my dad was saying, 'I've used Angie's List for contractors. Is there something like that for funeral homes?' And I said, of course, yes, there had to be... But it turned out there wasn't," he continued. "There are dozens of directories. Funeralhome.com. Or TheFuneralHomePlace.com. They weren't going to give us information to make a decision. They were just phone numbers."

They eventually picked a spot and had the funeral. Later that night, he was out at dinner with his wife at a restaurant they'd picked with help from Yelp, when he realized something weird.

"We had more information on where to go to dinner, where we're spending 40 bucks, than we did for my cousin's funeral," he said.

"After doing some research, it turns out that [a funeral] is one of the highest ticket items that someone pays for in their life after a house and a car," added eFuneral co-founder and lead developer Bryan Chaikin.

Yet it's precisely the kind of industry that a room full of 24-year-olds is unlikely to choose to work on. Why help grieving families when there are more fun apps to build? Plus, you have to spend months dealing with funeral home directors, who are not all as fun as the cast of Six Feet Under.

Funeral homes are subject to certain regulations, including that they have to reveal their prices if someone asks. But there's publicly available and there's publicly available on the Internet. So eFuneral has had to do some heavy data-acquisition lifting to populate the site with pricing and service information. The other big problem is, as always, getting the word out.

They've found recently that hospice care facilities are turning out to be helpful partners. Hospice social workers can't recommend individual funeral homes, but they can recommend an impartial service like eFuneral. "It's morbid to say, but where people are dying, we're trying to go to those groups and say, 'Hey, this can actually help the families you're working with," Belsito said.

They plan to make money in two ways. One, funeral homes can spruce up their profiles. And two, they can offer coupons (Groupon for funeral services!) for ancillary funeral services like flowers.

Think of all the places trying to help you buy a car or a house. Turns out there was no one trying to help you buy funeral services. Yet it's precisely the kind of experience where online shopping could be helpful. I mean, who wants to turn down upsells from a funeral home director? Who wants to be the one who cheaps out on the funeral of a loved one?

"We're passionate about transparency for the consumer," Chaikin said. "This is an industry that isn't transparent and hasn't been innovative for hundreds of years."

Or, the most awesomely nerdy conference table ever.

You know those framed dollar bills you see in some businesses that commemorate the first money they ever made? Well, this is sort of an update to that concept for the Internet era. 

Above we see Cleveland-based SparkBase's conference table. The components of their first servers were built into the wood of the table by the founder of the company, Douglas Hardman, and his brother. Hell of a way to commemorate the start that you got in digital biz.

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SparkBase is a nice success story. They've been hiring like crazy in Cleveland, particularly in the last year and a half and are up to 50 people working out of their new offices. They're one of several middleware vendors in the retail space that are emerging to collect and analyze retail data.

"If you have a loyalty, gift, or reward card in your pocket, there are 4 or 5 networks that process those transactions. We're one of them," said Hardman. 

They can offer sophisticated analytics on merchants' customers retail spending habits, which can then be used to fine-tune promotions.

"I can say about [a customer], our research and all the other programs he's listed in say that he actions more often on a percent-off offer. And we can say that his average purchase is $5. So, instead of sending him a $1 off coupon, I can send him a 20 percent off coupon. He's more likely to use that, even though it's the same monetary value," Hardman said said. "It's all about data analytics and getting people to shop at the stores that they're shopping at more often and merchants rewarding their customer base."

They're now building what he calls "a transaction engine" by integrating their network with merchants. They expect to be up and running with 500,000 businesses by next year.

All those thousands of apartment buildings? They all need a social-media presence now. And this company wants to build them.

Renter's Boom founder Lindsay Sims

For many young people, searching for an apartment is a completely online affair. They search for listings on Craigslist, ask their friends about places on Facebook, and Google for specific apartment complexes and neighborhoods. Several Internet startups are trying to aggregate the renters' side of that marketplace, but Lindsay Sims' Renter's Boom is trying to organize the property-management companies who own the buildings.

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"We work with rental-management companies to turn their social media pages into leasing hubs," summarized Sims. They call it "socially integrated leasing."

They set up Facebook pages for these companies and help them build apps so that people can check out apartments, make appointments, and send referrals within the social network. They also work to help the companies integrate Google's various products that renters may use. "We're integrating Ads with Local and Pages, so that when someone Googles your apartment complex, they get everything they need to know about it," Sims explained.

This isn't your next Path or Tumblr. This is a company that has found a real inefficiency in the market -- property-management companies that are lacking in-house Internet savvy -- and has figured out a smart way to fill that gap.

She responded, "We work with companies that have 250 to 5000 units and it's really difficult for them because they are not in the business of the Internet. At all."

Sims' company has benefitted from Cleveland's emergent startup ecosystem. She received initial funding from Cleveland's Bizdom, a cousin to Dan Gilbert's accelerator of the same name in Detroit.

She moved from there into a new co-working spot, the Manufacturing and Advocacy Growth Network (MAGNET), BetaSpace. MAGNET has helped hundreds of manufacturing and engineering companies build better products and companies. They opened BetaSpace up earlier this year to help young entrepreneurs with offices and legal, marketing, and finance training. It may turn into a "soft place to land," for local student entrepreneurs looking to build companies in the area.

An abandoned car dealership has been transformed into a lively space for Cleveland's nerds and entrepreneurs alike.

Dar Caldwell (blue sweatshirt) in BABL Media's office at Shaker LaunchHouse.

One thing that makes the New York and San Francisco startup scenes especially vibrant is the connections the tech companies have to the more general creative ferment. If you look at who ends up at O'Reilly's FooCamp (or TED or PopTech or Social Media week for that matter), it's not just developers and business guys, but a diverse mix of people trying to do new things in the arts, news, science, and other fields too new to be named.

At many incubators and accelerators, the nuts-and-bolts of putting a company together dominate the thinking and the space. While some have beautiful buildings, inside, they're still mostly cubicles set into bare-brick rooms.

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That's not the case at Cleveland's Shaker LaunchHouse, where I put in a too-brief visit this week. Run by native Clevelander Dar Caldwell, LaunchHouse takes a bunch of the weird and geeky things going on in the Bay and compresses them into one glorious space filled with entrepreneurs, developers, designers, and (I use this word lovingly) nerds.

"This is an invention and prototyping space. So, the Cleveland Hacker Space runs out of here," Caldwell says. "We invest in high-growth-potential technology companies, but in terms of the types of people that are out here, it's everything from food, inventors, hackers, urban agriculture, musicians, rappers, artists. A fucking awesome community."

Dar Caldwell at LaunchHouse.

"I'm obsessed with Cleveland, but I wouldn't be here if it weren't for this space," Caldwell admits. "We watched all of our friends -- the best and brightest we knew -- leaving town, and everyone on the news was preaching brain drain, but no one was actually taking action on it. So, we just sunk in and started investing some of our own money into it. The first couple ones were flops and from that, we saw what we needed to put in place: the community, but also just a space to be an entrepreneur and not feel like you have leprosy here in Cleveland where other people are just punching the clock. We needed to increase the sense of urgency by getting everyone together, giving them plenty of caffeine, and letting them go."

The LaunchHouse sits on the border between a fairly poor area of Cleveland -- Mt. Pleasant -- and a quite fancy independent city (that is still basically Cleveland) called Shaker Heights. In Mt. Pleasant, the median home price is less than $50,000.  As you drive down Union to Kinsman, it's clear that Mt. Pleasant still has its residents, but its lost almost all the businesses that used to line its main thoroughfares. When you cross 154th, Kinsman turns into Chagrin Boulevard and you're in Shaker Heights, where the median house costs almost $190,000.

Housed in an old car dealership, the LaunchHouse uses the front showspace for the more standard companies, cramming them into every corner of the humming location. But out back in a massive, high-ceilinged garage, Caldwell's stocked the place with a bunch of people doing fun stuff. He says that they occasionally have events there with 500 or even 1000 people.

Perhaps my favorite part of the whole Start-Up Nation trip was standing with some of the members of the Makers Alliance, a Cleveland hackerspace, as they showed off their various pieces of equipment. The sheer joy they took in technology, in extending human capabilities with machines and electronics just because you can, reminded me why I've always loved tech. These are nerds. They love plasma torches the way normal people love Olympic torches. They love milling machines. They love anything with a circuit board they might be able to scavenge.

From left to right, Sam Harmon, Crowin Harris, and Joe Gorse of the Makers Alliance.

"Corwin's been working with our X,Y, Z plus A milling machine," Sam Harmon said.
"It's a four-axis MaxNC 10," Corwin Harris responded.
"And what do you make with it?" I asked.
"We don't know yet," Harmon said.
"Basically, it's an automatic carver for soft plastics and soft metals. It can do acrylic, aluminum and light steel if you go really slow and have a cooling fluid," Harris said. "But we don't know what we're going to use it for. That's part of the challenge."

Next they show me a "filament-based rapid prototyping machine." ("It's a 3D printer," Joe Gorse, another Makers Alliance member offers helpfully.) "It's of an open-source design available online," Harmon continues. "We formed a partnership with an in-town group that makes these and we're waiting for a replacement extruder."

We passed by a few other odds and ends when Harris called out from behind us: "How can you skip the laser cutter?! How many hacker spaces have a CO2 laser cutter?"

The laser cutter as awaiting a new part as well; someone had taken it to Case Western for repairs. (But still! They've got a laser cutter.)

I note that it must be great to have Case Western so close by, popping out engineers and hackers. Harris noted, almost solemnly, "We're trying to capture them on the way out."

"I have to point out the thing that is near and dear to my heart," Harmon said. "The plasma cutter. It does three-quarter inch steel decently well."

I'm not sure I could explain to an economic development officer or even some venture capitalists why these guys are so important in the formation of new companies, why you need them drinking beer with the entrepreneurs, or why their love for the sheer thingness of things is so exhilarating. But I'll put it like this: these guys are the wizards, even if they aren't the kings or the knights. They're the soul of a tech scene, even if they may never sign a term sheet, trademark a name, or raise seed capital. And where they are, there is magic. 

And I don't mean Magic: The Gathering (TM), although yes, MTG, too.

The Motor City is for hardcore entrepreneurs.

flickr/gilgamesh

Where I live in the Bay Area, there's a certain glamour to Detroit. It's the heart of what Bruce Sterling termed "dark euphoria." "Dark Euphoria is what the twenty-teens feels like," Sterling said. "Things are just falling apart, you can't believe the possibilities, it's like anything is possible, but you never realized you're going to have to dread it so much."

Detroit is the place where Bay Area types imagine an urban tabula rasa, a place where enough has gone away that the problems of stuffing millions of people into a small region can be reimagined, redesigned, remade.

So, when we arrived in Detroit, I was excited to see what was actually happening on the ground, to see what was there outside the square frames of Instagram.

Rebuilding the Rust Belt. 
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Anywhere you go in Michigan, people tell you about the Madison Building. Down by the Tigers' new stadium and the Detroit Opera House, extremely successful local businessman Dan Gilbert bought and rehabbed a gorgeous old building. The roof is so nice and fancy that you can rent it out for a wedding reception and relax in chairs that cost more than many houses in the metro area.

But the real attraction of the building, for us, was that it's the home of Detroit Venture Partners, the startup hub of the area. DVP is run by Josh Linkner, a Detroit native who founded and eventually sold ePrize, an online promotions platform. It's on the same floor as the formerly futuristic Detroit People Mover, a monorail which loops endlessly around the still mostly deserted downtown.

Linkner's office space contains his own portfolio companies as well as those of Bizdom, an accelerator that's also funded by Dan Gilbert. There's no doubt about it, as Linkner put it, "We're the dominant early stage tech VC in this region."

DVP is a traditional venture firm in the sense that they invest in digital-only companies that are trying to make something big out of what a few kids in a room can build. An old friend of mine from college, Jay Gierak, is one of them. HIs company Stik is like an Angie's List for lawyers, realtors, and other professional services. He and his cofounder Nathan Labenz recently moved their company from the Bay to Detroit, where Gierak grew up, and received $2.5 million from DVP. In press coverage of the funding, the company's move to Motown got more attention than the money did.

People want to be excited for Detroit. They want Clint Eastwood and Eminem to be right. They want grit to count for something in today's economy. Linkner, for his part, is sure that it does. "I'll put a Detroit entrepreneur up against anyone from the coasts and I think we'd kick their ass," he tell us. He quotes the Chrysler commercial, "The hottest fire makes the strongest steel." 

It's easy, conceptually, to get excited about all of this. You almost get giddy looking out at all the old buildings of downtown Detroit and imagining that you could buy one for the same amount as a nice house goes for in Noe Valley, let alone Atherton. 

But, at least for me, that vision requires thousands of other people committed to building the same kind of city. People like Linker and Gilbert or Gierak and Labenz are here, but what about the other few thousand that are needed to make the city feel vibrant? Not to detour into a ruin-porny segment about the state of the city, but the number of abandoned buildings in Detroit -- and the feeling they toss into the air -- is truly unfathomable to someone raised on the west coast.

Linkner, who is a self-proclaimed booster for his city, admits that the lack of density is a--if not the--problem. 

"Things tend to be spread out," he said. "Something on one block and something else four blocks later. We don't have a place you can stroll around for 8 square blocks."

But he also argued Detroit needs to tell its own story in "a better and more cohesive" way. And that I'm not so sure about. For me, the narrative of Detroit has outstripped at least what I could see of Detroit. Good things are clearly happening, but the lack of connective tissue is a bigger problem than you might imagine. Between downtown and an area like Corktown, which has an excellent coffee shop, the oft-applauded Slow's BBQ, Honor + Folly*, and a couple other bars, there's just nothing. When we left Slow's on a Thursday night at 9pm to drive the couple miles to our hotel, we got about halfway when I looked in my rearview mirror and realized that there wasn't a single other car behind us, nor approaching. There were no bikes or pedestrians, either. 

If I was filled with dark euphoria, I might say that this is a fascinating thing: this is a design problem that can be fixed! Put in inflatable architecture between the cool stuff. More bike lanes! Create lighting and safety corridors. Plant trees. Hell, put in the world's longest water slide during the summer. Something, anything, that might end up connecting this place to itself. 

But I do not know that I have that sense of euphoria. The story requires a fairy tale ending. And the reality is so daunting. I can practically hear Linkner reading this and saying, "He's soft. He's not made for Detroit." And that's probably true. 

* Correction: I initially misremembered the name of Honor and Folly as 'Arbor and Folly,' which would probably be more of a central Michigan thing. 

These are kids who probably first heard Start Me Up on a Microsoft commercial.

The second I started to mill around TechArb, the University of Michigan's student start-up accelerator, I was approached by three students who were the very picture of youthful energy. Nancy Xiao, Shiva Kilaru, and Mitch Adler are all involved with various start-up promotion schemes on campus, from Startup Weekend Ann Arbor to MPowered, a student entrepreneurship organization; to a career fair they created for local startups to find talent at the university. They talk in lock-step. They know the successful University of Michigan grads (Dick Costolo*, Larry Page). And they say things like, "We're not the next Silicon Valley. We're Detroit. We're Ann Arbor. We've got something special." (That was Xiao talking, but all three agreed on the basic principle.

Xiao's even gotten former University of Michigan and NFL football player Dhani Jones to help her buy a house on campus for student entrepreneurs. "It's going to be like General Assembly gone crazy," Xiao says.

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What I couldn't help thinking, while talking to these brilliant students, was how deeply start-up culture has penetrated general culture. The idea that building a business is something exciting and rewarding rather than a way to pay the bills is startling. "You ever been to a U of M football game?" Kilaru asks me. "That's the energy we bring to entrepreneurship." 

I mean, I'm not even in Generation X and I find it easy to be cynical about this kind of excitement for putting one's shoulder to the capitalist wheel. At the same time, their excitement is infectious. I spent the rest of my time at TechArb excitedly talking with students about the companies they're trying to build and before I knew it, two hours had gone by and I was still not quite ready to leave. These are kids who probably first heard "Start Me Up" on a Microsoft commercial. You say you want a revolution? Well, you know, we all want to change the world.

Meet Ricardo Rodriguez and Shamik Ganguly, the co-founders of YouTrivia, a game now in alpha testing that uses YouTube videos as fodder for a trivia game. Apparently there's a market, as a music-only Facebook trivia game called Songpop has already reached 24 million unique users. Stay tuned for more from these two.

This is Omeid Seirafi-Pour, founder of MyFab5, which is trying to solve some of the problems with local restaurant reviews that Yelp introduced through its success. Yelp, Seirafi-Pour contends (and I agree) has become "a platform for complaining." So, his company lets users rank their five favorite things in any given restaurant category. So, five favorite dessert places for ice cream, five favorite pizza places for deep dish pizza, five favorite Mexican places for tacos al pastor, etc. It's faster, he says, and provides more structured data to reveal interesting things about local restaurant scenes. MyFab5 is about to launch locally in Ann Arbor and begin looking for investment.

I also spoke with Grace Hsia, CEO of Warmilu, which is attempting to commercialize heating blankets for infants who are born preterm. Infant hypothermia, she told me, kills thousands of infants each year, particularly in places within the developing world that lack access to electricity. Hsia herself was born preterm and is passionate about her cause and business. She's a student in a new one-year master's degree in entrepreneurship that's a collaboration between University of Michigan's engineering and business schools.

* In a previous version of this story written quite late at night, perhaps while listening to Elvis Costello, I typo'd Twitter CEO Dick Costolo's name as Dick Costello. Sorry, Mr. Costolo, though I'd still like to hear you sing, "Welcome to the Working Week."

A new company uses big-data capabilities to decode the inner-workings of the modern Internet.

Deep Field's Naim Falandino at TechBrewery in Ann Arbor, Michigan (Alexis Madrigal).

What is the Internet?

It used to be simple. If you were a regular Internet user, you used a modem to commandeer your telephone line and you called into a service provider. Once connected, you'd enter the Netscape address and Netscape's servers would send you information over the network of networks.

Nowadays, things are much more complicated. Every time you load a web page, it calls out to dozens of other servers, which often dynamically send content to that original page. Meanwhile, service providers like Akamai and Edgecast hold copies of many websites' content close to users to speed up the delivery of that information. Add it all up and you are a far cry from the relatively simple architecture of yesteryear. It's hard even for the big bandwidth providers to tell what's going on.

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Today, we met a company that can map out this new world of the Internet; Deep Field can decode the tangled web. 

"We're in the second era of the Internet as we're seeing this massive influx of money and new services," said Deep Field's CEO Craig Labovitz. "Most of it is happening underneath the hood, but we're literally watching the Internet be rebuilt. It looks completely different than it did four years ago."

This is not hyperbole. Labovitz has been working, thinking, and writing about the Internet backbone for 20 years. 

"I started my career working on the precursor to the commercial Internet," Labovitz told us. "I was one of the first backbone engineers on what was then the NSFNet, the National Science Foundation Networking, predating the launch of the commercial Internet. Even back then, we had problems. In fact, I broke the Internet on a couple of occasions. But back circa 1993, no one really noticed." 

The NSFNet backbone actually grew out of a Michigan project called the Merit Network, which, incidentally, has one of those Wikipedia pages that makes you go, "Dang, how did I not know about this immensely important piece of Internet history?" It wasn't until 1995 that the University of Michigan stopped being the hub of Internet backbone engineering. 

All that to say, these Michigan guys know what a network backbone looks like, so when they tell you the subterranean architecture of the Internet is changing, it's worth listening. Venture capitalists have. The lead investor on their first round of funding was Silicon Valley heavyweight DFJ, but local VC RPM also got in on the round. 

So, what does Deep Field do, exactly? They help the big network players understand their traffic. An obvious example is Netflix. People watching Netflix suck up a lot of bandwidth, but Netflix servers aren't the ones serving that stuff up directly to consumers. Akamai and other companies are the ones actually sending your computer the packets that make up 30 Rock. Why's that matter? Well, if you're building out a half a billion dollars of network infrastructure, you should probably know how people are using what you've already got in place. Without Deep Field, you might not know how much people watching Netflix is really costing you.

Deep Field provides their maps of the deep Internet by crawling the web, like a kind of SuperGoogle. They say they're "applying big data to the Internet itself." The man in charge of making sense of it all is Chief Data Scientist Naim Falandino, a graduate of both Michigan State (undergrad, computer science) and University of Michigan (School of Information). He grew up near Detroit and is precisely the kind of young, talented, trained person that mayors' economic-development officers want to stick around. 

Why'd he put down roots in Ann Arbor? Part of it is clearly the challenge of understanding this new era of the Internet. But there's also something we've noticed all over this state: people from Michigan have a ton of state pride. You see it on billboards and you see it on t-shirts. You see it on Falandino's face when he says, "I don't want to be one of those young people who left." 

A business incubator with an unconventional corporate structure is out to build local tech companies in the Michigan's capital.

On a quiet, leafy street in Lansing, Michigan, just off one of the town's main drags, we found The Center for New Enterprise Opportunity (NEO for short), a new start-up incubator in Lansing. Bootstrapped for $10,000 with the help of local builder Kincaid Henry Building Group and the Ingham County Land Bank, their recently renovated building is home to 18 companies that NEO hopes mature into sustainable companies that stick around the city. 

After all, that is what Tom Stewart, one of the managing partners of NEO and our main tour guide, did. He's a local guy who really wants to help the community he was raised in. Let's just say that helping the city of Menlo Park is not what is on the minds of most Silicon Valley tech types. 

That's why NEO incorporated as an unconventional organization type, the L3C, or low-profit corporation. L3Cs can only exist in Illinois, Louisiana, Maine, Michigan, North Carolina, Rhode Island, Utah, Vermont, and Wyoming. Practically, they provide the legal structure for companies to accept some donations from foundations tax-free, while also making some money. More conceptually, L3Cs are a legal vehicle for officially enshrining social good into a corporation's charter. It's fair to say that they are at the cutting edge of socially responsible business practices.

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It's an impressively forward-looking approach to making Lansing better. Despite its role as the state capital and the presence of Michigan State University next door in East Lansing, Lansing proper has had a falling population since about 1970, though not nearly as precipitously as Detroit to the east. Though the outflow of people has slowed, the city continues to struggle with an image problem.

What is most impressive about NEO is the long view its founders take. They want to build businesses that are going to last, not to line their pockets, but to build their city. 

And man, if you're a Bay Area resident, you can't help but see the possibilities of the town. Right near a major research university, you can buy a fixer-upper for less than $15,000. Yes, you read that correctly. Not $1,500,000 or even $150,000, but $15,000. I'm pretty sure that's about three months of rent in the Mission these days. 

They fund two ideas each week. They choose one, we/you choose the other.

Grand Rapids is not a place that people associate with excitement. In complimenting the city's (incredible) local coffee roaster, MadCap, GQ managed to slip in this zinger, "Grand Rapids, Michigan, [was] a town once commonly referred to as 'Bland Rapids,' as if the official nickname, 'the Furniture City,' didn't convey a sufficient sense of white-breaditude."

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And yet, today, there we were standing in the brand-new offices of StartGarden, a local seed fund with the wildest model I've ever heard of. Every two weeks, the $15 million fund gives $5,000 to two new ideas. Here's the crazy part: while the StartGarden team picks one idea, you, that is to say, the community, pick the other one.

They've already funded dozens of companies and several outfits have received additional funding from the StartGarden coffer. To keep everyone honest, StartGarden seeds a little reputation capital, too, making the recipients of funds come back a few months later to present a public progress update. As of just a few days ago, those presentations take place in the fund's new downtown headquarters--a high-ceilinged corner gallery with exposed brick archways framing huge, street-level windows.

The rapidfire nature of the funding model means that ideas pour in constantly. There are 41 more ideas currently posted to the site, waiting to see if they'll get funded one way or the other. And obviously, there is still a lot more money to play with.

How's all this possible? 

Chalk it up to Rick DeVos, StartGarden's founder. He's the grandson of Richard DeVos, the multibillionaire founder of Amway, a company that's been known to be about as conservative as San Francisco is liberal. But when you think about it, is it really that many steps between Amway's "multi-level marketing" and the social media marketing that you see just about everywhere these days? Amway hit on the power of selling through networks, and now, just about everybody else agrees. 

Not that Rick DeVos is all that interested in the family business. He's fascinated, instead, by how he could get a city like Grand Rapids to be a place where new businesses germinate and grow. 

"Groupon was a huge huge success and potentially a huge huge failure. That neither made Chicago nor does it need to break Chicago."

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You know, Chicago, maybe you had it right all along.

A graphic representation of Chicago's tech ecosystem by Chicago Magazine, October 2012

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At the end of a very thorough examination of the corporate, governmental, and cultural factors that have combined to give Chicago a shot at becoming a start-up powerhouse, Lepeska concludes with a passage on the "Midwest mentality," a supposed weakness in the area:

More vexing than the talent shortage may be what critics call the Midwest mentality: an alleged predilection among local tech entrepreneurs and investors to play it safe. Even Chicago veterans concede there's some truth to it. "There are, in general, less risks taken on speculation about mass-market consumer products here," admits [OK Cupid co-founder Sam] Yagan, who has worked in New York, Boston, and Palo Alto. "What is our Google or Facebook or Twitter? I can't think of any."

Those three companies were revolutionary; the typical Chicago tech startup isn't. Instead, it uses technology to enable more practical nuts-and-bolts services, like delivering food (GrubHub), finding jobs (CareerBuilder), or booking travel (Orbitz).

But I'd like to suggest, as the Web 2.0 fad fades, that perhaps Chicago has had the right idea all along. Google, after all, wasn't really a business-to-consumer play, though it looks like one; their customers have always been businesses who wanted to market things to customers with purchase intent. They're a corporate middle man, a nuts-and-bolts provider of more efficient advertising.

Chicago's focus on businesses that aren't sexy may be exactly what investors are looking for after seeing hundreds of social networks and social media marketing companies fizzle. From an outsider to an insider, I'd just say: Maybe it's smart *not* to speculate about "mass-market consumer products." After all, as Chicago's TechNexus's Terry Howerton noted to me, corporations have record amounts of capital on their balance sheets and are desperate for innovation. Meanwhile, you may have heard that your median consumer hasn't had his or her income rise for quite a while now. If you follow the money, it leads to profitable businesses not to teenagers looking for the next cool thing after Tumblr and Facebook. 

(Editor's note: More on the rise of startup-corporate partnerships and Howerton coming soon.)

Meet SpotHero, a Chicago startup that wants to make finding parking simpler and easier.

Chicagoland (and yes, people really do use this term around here) stretches nearly 11,000 square miles and is home to almost 10 million people. Many of these people have cars and many of the places they want to go are near downtown. Too many cars in too small a space looking for too few parking spots is a problem endemic in many cities, but Chicago's scale and spread make it particularly acute here.

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So, meet SpotHero, a classic startup that's trying to make your life a little bit easier by letting you buy daily or monthly parking ahead of time. Their pitch is simple, "Reserve a parking spot in Chicago ahead of time. Save up to 80%." Your spot assured, you'll simply drive to the parking garage, scan your phone, and the gate will open for you.

It's a simple idea that requires a real company to execute. SpotHero's gotten some help along the way. They started out at TechNexus, an incubator that's been a fixture in the Chicago scene for years, and then got into the Excelerate Labs program, which is run out of 1871, the city's shiny new startup space. We met them at the latter spot, where Jared McKiernan (right) and Zack Martin (left) were hard at work, while the co-founders of the company were out in the field. Luckily, as you can see in the photograph, one founder, Mark Lawrence, was spontaneously asked by a friend to serve as a model for a painting class. He happened to be wearing his company t-shirt, and the result was a dozen portraits of him, a couple of which have made their way into his team's hands.

SpotHero's big challenge is ingesting all the data about the parking rate structures at dozens of garages. They all work differently and they all have to be accurately reflected in the company's database. 

Beyond that, they just need to get the word out about the company. Acquiring customers online requires knowing what people preparing to drive into the city might search for. It's not quite as simple as  buying ads for "Chicago + parking" on Google. "Events drive some serious search [for parking]," McKiernan said. "The Bruce Springsteen concert was a big one." So, they buy search ads around major events, and hope that they can scoop up continuing users each time. 

SpotHero's launched in Chicago and Milwaukee. DC is next.

Alan Matthew has, by his own count, invested in 14 companies in Chicago during 2012. He's a mostly lone-wolf angel investor who hasn't shacked up with a group like the Hyde Park, Cornerstone, or Wildcat angels. A commodities trader for decades, he's got an independent take on the companies and entrepreneurs he likes. We talked with approach to investing, his current theses, and what he learned about angel investing from shaman ceremonies in the Amazon. 

Start-up culture -- this idea that you want to start a company before or simultaneously with having an idea for a company -- is a weird thing, and Matthew approaches it with appropriate skepticism.

Nonetheless, young entrepreneurs are catching on to what calling yourself a startup can do for your investment prospects.

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"There are some young kids who don't have IP and imagine that their company is worth five and 10 million dollars. It's literally morphed into that within a year or two," Matthew told me. "Two years ago, they imagined their company was a million or million and half. The more money that they get, their imagination goes to the upside."

Talking to Matthew, it seemed like angel investing is a hassle-filled and annoying way to invest your money in a very risky way. "Sometimes you do run up against what some of the adults refer to as a sense of entitlement," he said. "[The entrepreneurs] have an idea and they want a lot of money for their idea. But the idea is five percent or less of what makes the company. The idea is nothing. The thing that makes a company successful is execution."

So why do it? Why put the time and energy in so that you can do 14 deals in a year?

For Matthew, it seems he wants to help young entrepreneurs, to bring them into the broader world. "It's all about connecting (entrepreneurs) with a network that can help them," Matthew told Crain's Chicago Business earlier this year. But I sensed a deeper purpose, too. 

"I work with the shamans in the Amazon and we do ceremony," he offered. "When we do ceremony, you can't lie to each other because we're very open with the medicines we take," he said. "You develop relationships based on truth. And I really think that should be the role model for the way people do business." (The medicine is probably the hallucinogen ayuahuasca.)

Matthew wants to make the Chicago startup scene more honest both within and between companies. "At the Chicago Board of Trade, we were a self-regulated body, so if there was an egregious error, or theft or scumbag, it was pointed out by the community," he said. "What I've observed in the startup world is that they say, "That person's good..." and they are not. Everybody is liking each other, which is great, but you need to dig down a little bit deeper."

And that seems to be Matthew's competitive advantage. He believes he can spot the fakes and frauds better than anyone else.

But of course among the people he trusts to run businesses, Matthew does have a few areas that he's looking to over the near-term. "I don't think it's any secret that games are going to become the way of life or a huge part of the way of life," he said. "The physical and electronic worlds are going to start interfacing more and more. And that's not going to feel uncomfortable. It's going to feel natural and because it feels natural, it will perpetuate itself."

A comparative map to help lost Bay Area residents find their bearings

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For you Bay Area types who may be wondering about the scale of Chicago's startup scene, here's a quick comparison. Using this map of the Windy City's startup ecosystem, I cut out the section that's the heart of the industry here. It encompasses the 600 West Chicago (i.e. Groupon HQ) area to the north all the way down to TechNexus in the south. Then, I rotated it along the axis of Market Street in San Francisco so you could get a sense of its relative size. 

As you can see, the tech corridor extends about the width of SOMA from Embarcadero to 8th Street, with the Merchandise Mart's 1871 co-working space smack in the middle near what would be 4th in San Francisco. (Which is where we're headed now.)

Oh, and here's the Photoshop file, if you want to play with the layers yourself.