Crain's Detroit Business, Jan. 7, 2019 issue by Crain's Detroit Business

JANUARY 7 - 13, 2019 | crainsdetroit.com

Newsmakers of the year For leading a mammoth vision to reimagine a renowned eyesore and transform a Detroit neighborhood, Ford Motor Co. Chairman Bill Ford Jr. is Crain’s Newsmaker of the Year. He and our other top newsmakers of 2018 showed the kind of leadership in business and civic life that is remaking Detroit. Ford will be featured at a luncheon saluting the Newsmakers on Feb. 25 at MotorCity Soundboard. For tickets, go to crainsdetroit.com/newsmakerevent.

Bill Ford Jr.

Meet the Newsmakers, Pages 8-15 David Cotton, M.D.

Patti Poppe

Gerry Anderson

Dan Gilbert

Bharat Desai

Warren Evans

Matthew Moroun

Gretchen Whitmer

Jon Oberheide

Dug Song

Illustrations by Robert Carter for Crain’s

INSIDE

NORTH AMERICAN INTERNATIONAL AUTO SHOW

Family Video’s destiny Detroit companies depends on its real head west to Vegas estate holdings Page 3 and CES Pages 18-21 crainsdetroit.com

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NEWSPAPER

Final winter auto show ends an era but also forges a path to the future By Dustin Walsh dwalsh@crain.com

This year’s North American International Auto Show is the end of an era, but it also reflects a transition that’s already starting to happen. Among the changes? More movement on the show floor. An industry in flux from technological advancements — from engineering vehicles to how those vehi-

NAIAS 2019

What: North American International Auto Show When: Media Days, Jan. 14-15; Industry Preview, Jan. 16-17; Charity Preview, Jan. 18; Public Show, Jan. 19-27. Where: Cobo Center

cles are marketed and sold — caused the organizers of the North Ameri-

can International Auto Show to move the storied industry showcase to June in 2020. The move was primarily driven by local automakers, but also by the organizers at the Detroit Auto Dealers Association, in an attempt to progress with the changes in mobility technology and use Detroit’s early summer splendor to its advantage. SEE NAIAS, PAGE 24

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

Michigan building contractors expect more labor woes Michigan’s construction community continues to feel the pinch of a long-running shortage of skilled trades workers, a survey by the Associated General Contractors of America released last week shows. Of the 42 total responses from Michigan members, 74 percent expect their company’s head count to increase despite 79 percent saying that they are facing challenges in filling all or some salaried and hourly trade positions. And a total of 66 percent say it will continue to be hard to hire (45 percent) or harder to hire (21 percent) in 2019, the survey found. As a result, firms have increased base pays (62 percent), provided incentives or bonuses (45 percent) or increased benefit contributions or improved benefits (14 percent) to attract new workers, according to the survey. That’s still proving difficult. “They can’t find somebody with the skill set they prefer, so they are finding ways to train in-house, employing technology to replace workers where possible, or turning to prefabrication methods to get some things made off-site,” said Ken Simonson, chief economist for the AGC of America. Sixty-five percent of

Michigan respondents said they plan to increase training and development investment. Skilled trades have been battered for years as the 2008 recession ground construction to a halt, causing workers to seek employment elsewhere or in different fields. In addition, emphasis on two- and fouryear college degrees has caused a decreased awareness of the benefits of a skilled-trades career for some students. The result of the labor shortage has been increased construction costs, 38 percent of respondents said. Twenty-nine percent said projects are taking longer to complete. Statewide, contractors expected a decrease in available projects by 17 percent for multifamily, 9 percent for higher education and 6 percent for manufacturing. Contractors were most optimistic about increases in hospital construction work (42 percent), water and sewer work (26 percent), power (25 percent) and highway work (16 percent). Damian Hill, president of AGC of Michigan, said the survey results matched up with informal conversations he had with members about their outlooks for 2019. “It’s right about where I figured it would be,” he said. Nationwide, none of the 13 project sectors showed the respondents expecting a decrease in project volume.

Christmas for $2.5 million, Crain’s Chicago Business reported. The 81-acre property in Berrien Springs that Ali bought in 1975 was sold Dec. 21 by Ali’s widow, Lonnie Ali, who put it on the market in June,

KNOW SOMEONE WHO FITS THE BILL? Submit a nomination today by visiting crainsdetroit.com/nominate

NOMINATIONS CLOSE: FEB. 15 PUBLISH DATE: MAY 6

returns comb ined with about the social impa feeling good ct of your vestments in— wasn’t enou got a bad name. There gh good on end. the financial “It used to be you’d weed alcohol, out the gambling and tobac stocks, and co then your would suffer performan ce ,” of screening he said. “Now, instea d do your dueout the bad actors, you diligence best-in-cla to find out ss that do good stocks in companies it wasn’t possithings. People thoug ht achieve mark ble to do that and still proving you et-rate returns. We’re can.” Rogers serve Stanley calls s on what Morg an Champions its Impact Investing board to coach other . “I’ve been asked advisers speak with millennial on how to s and instit tional client us values with about aligning their their inves said. tments,” he He also sits on the Coun Michigan cil Foundatio ns’ impact of vesting task inthat coord force, a working group inates impa ct investing such found at ations as the W.K. Kellogg Foun dation, the Kresge Foun dation, and Fisher Foun the Max and Marjo rie dation. — son Tom Hend er-

NOMINATIONS CLOSE: APRIL 22 Stella Sa fari, 26 PUBLISH DATE: SEPT. 2 Detroit Dire and Owner ctor, gBETA , Safari Bea uty

gone on to raise over $400,0 and include The Lip Bar, 00 in capital Bogobrush and Detroit Cellular EMT, Ento. In between, Safari runs hair servic a natural es from her decis company that grew cals and go ion to skip the chem inatural. “It’s sion and I get a to connect huge pason a very perso with nal level,” she women She’s into yoga and medit said. “it’s helpe ation d me,” she — said. She also coaches a girls cheer leading group and in the school entresummer, runs a high preneurship program

“I lived a feminist I even kne life before feminism w what the word was.”

that bring s together young peopl from Detro it e entreprene and Cranbrook to solve urial “She was excepproblems. tional talent to blend in … able really well with the community,” said Martin Dobe vice presid r, senior ent with Inves t Detroit. In the future , Safari hopes to grow the company capital fund and develop a ventu re that may focus products. Or on beauty on “I’m kind of women. driven by and passio ns around the mission beauty and women and technology ,” she said. Vickie Elmer —

4 0 under 40

DEALS & DETAILS

23 6

OPINION

PEOPLE

RUMBLINGS

WEEK ON THE WEB

PER

“I needed to prove myself, which is why I wanted to bring thi s investme nt approach to the firm .”

Detroit Partnership received the assignment of planning and launching Beacon Park, he met it with a mix of

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 7 , 2 0 1 8

project he had ever taken on. But the opportunity to experiment and create something new overrode any initial apprehensions with excitement. After only three months of planning, DTE Energy-sponsored Beacon Park launched with a highly successful fourday grand opening in July 2017. The space continues to draw crowds, according to Cowan, with unique events like “Impulse” — an installation of light-up seesaws — as well as Detroit’s first Night Market series, outdoor spin classes, a “silent disco” and a large heated tent for screening movies. Beyond that, Cowan said, the park, a 1.5-acre green space at Cass and Grand River avenues, has acted as a catalyst for local development, bringing new life and vibrancy to the area — the new restaurant Lumen, for example, which opened in April and

unica

69 a ye ar.

tiowho ns Inc As a native Detroiter grew. up All in the Green Acres and Midtown rights res erved neighborhoods and on Grosse Ile, making the city more beautiful, fun and active is both a professional and personal goal for Cowan. “Downtown is a place for9all to enjoy and access,” said Cowan, who plans over 1,000 events and programs annually, hosting over 2 million people. “Ninety-five percent of our events and programs have been designed to be free and open to all, which has resulted in a vibrant cultural life across the downtown.” In his position, Cowan manages more than 400,000 square feet of downtown public space — including Campus Martius Park, Capitol Park, Cadillac Square, Grand Circus Park, The Woodward Esplanade, and Spirit of Detroit Plaza — and a multi-million dollar budget which combines earned and contributed revenue made up of over 40 local and national corporate sponsors and media partners. — Laura Cassar

Monica Rodriguez, 28

Manager, Detroit Promise Path, Detroit Regional Chamber of Commerce When Monica Rodriguez hires staff ers tuition and fees for full-time colfor Nippon Sushi Bar, the Bloomfield lege and university students from Hills restaurant she owns and runs, Detroit. As the manager of the Deshe is reminded of the importance of troit Promise Path, her job is to make her other job, encouraging and sup- sure those students attain their deporting Detroit students to complete grees. She manages five coaches who “Hacking community college degrees. help students manage issues, comWindso cross-bor“Almost Det neverr is a degree roitearned” and their mindset. The Deis the plications der cha onlyPromise Path has expanded pte Americans by applicants who rlist community troit wh ere we hav and classes. “Any Can of the people at fromean initial cohort of 400 students together.college adi ans woone Hac the restaurant rkintogmore than 1,500 students, and an have been kingcould really proof is so my kids.” mo impacts analysis by research tes innova successfuearly l and Rodriguez works at the tio Detroit n.” Re- firm MDRC shows significant ingional Chamber of Commerce on the creases in enrollment and perDetroit Promise, a program that cov- sistence.

Zain Ism

ail, 27

Senior Con Services, sultant, Strategic Sup Henry For d Health Sys port Zain Ismail, tem a senior consu strate ltant

Grace Hsia, 28

gic support with Winds services or before Ford Health comin System, alway at Henry Henry Ford in Decem g “home” to work in the s wanted to hospitality ber 2016. Ismail works growing up industry. But in the system in prise proje ’s entercross-borde Windsor as the son of r nurse and a has worke ct management office former obstet rics unit direct - the oncol d on specialty initiat . He heard daily or at HenryAfter Ford, hemissing ogy,targets, revenue theinU.S. and abroad — a chalorthopedicacrossives also and storie s and heart vascu medicHsia It was nearly s about lar servic Grace had to be ine. honest with lenging feat made more complex by es lines. , he helpeof ago, shortly with ample ter Henry Ford 10 yearsherself ex-and health and safety regthe direction d to her strictFor FDA af afestablish opened its West and medic a sports ine field hospi walkstartupBloom venture tal, LLC. in clinic inulations. - Warmilu is being expan Novi thatIt has subsisted mostly on van Grinsven, that Ismail met Gerar ded “I learned d thatBut you or acros die s the grants, as Hsia and her team of four system one live and forme president of the hospi of the . r executivebased on talyourof profitability,” interetransition Hsia Ismail’s work most sting parts the company from a bootRitz-Carlton with the is as a volun hotel compsaid. “We had to humble four ourselves.” strapping organization teer with startup to a sustainable opIsmail’s mothe any, through s that help r, Rebecca. Hsia, 28, resou founded eration. rces andWarmilu Ismail, then build conne to bridge 17, asked (“warm” and “Itween love you”) 2011 as ctions After coming up short of the Detroitinand for advice about a careervan Grinsven Rise Windsor. They beainmaterials Assetengineering industry. Van are sales goal for last year, Hsia the hotel science and Developme $100,000 Health Hacki student at how health Grinsven told Windsor University ofDetro Michi-nt; was forced ng to re-strategize. The chief care and hospi him about thesor it; Detroit Wind MedH similar skills tality gan. The ealth company manoperating - officer, president of busirequire Fast designs and Innov — ation Cluste Forwainfant a commitmen primarily empa r; and rd Medicwarmufactures thy andnonelectric ness development and two medical al Innovation. t to Ismail is the Ismail went service. ing blankets and found heating doctors on staff were cut. er branchreusable the University to hospitality of RISE Asset of the Windsor school at Instead of folding under pressure, of Windsor packs. Developme which provid a business es mento took course with and also Warmilu’s mission is to manufacHsia nt, was determined to pinpoint the rship to disabl Ann Snowden, people to help chair of the ed World Health ture start and distribute products problems ness throu itsthem and lift the business back Network, who busiInnov gh low-interesta small busi repeated the ation grams or loan health care pro proconne advice: leader ctions with and business s to suppo the same cloth. hospitality are made rt of efforts . He would their employment It was an aha like to open moment. “I chapter. a Detroit could take realized everything “Hacking Winds I have learne I with hospi tality or d take it to health and innovation and cross-border chapt Detroit is the only er where care,” said Ismai Amer graduation, l. After gethe icans and Canadians we have he worki r,” said Ismai sistant with worked as a research asl, who is one ng toSnow national Centr den at the Ivey Inter- organizers. “Hack of the ing and then spente for Health Innovation and really promotes is so successful innovation.” ton District four years at Leaming- Windsor Detroit chapt The Memorial er is co-spo Hospital in sored by TechTown Detroit & WEtecnAlliance in Windsor. — h Jay Greene

Founder, Warmilu

By Cha

David Cowan,

feelings. In terms of size, scope, visibilS S // M AY 7, 2 ity and0stakeholders, 18 it was the biggest

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28 crainsde troit.cPublic Spaces, Director, Programming, om Vo contents 34 No. copyrighDetroit l. Downtown Partnership 35 $5 t 2018 by a co Crain Co When David Cowan of Downtown now employs mm over 50 people. py. $1

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Pay-to-p adds to la P Genera o l wo

Flint wat legal bills could top $34.5 mil

’S DET RO

’ Page 4

GOVE

TWENTY IN THEIR 20S

CRAIN

other buildings including three barns Ali built to use as a gym and offices, a guest house and a five-car SEPTE MBER The property has a mile of garage. 3 - 9, 2 018 | c ra insdetr river frontage, and coho salmon oit .com and steelhead run in it, Mitchell said.

builders.

Their ra w mater ials steel an d concret may be e, er cable s, or scra or powp met Some use spreadsh al. sensitive eets, or neg simple sw otiations, or eat. They’re building the actual build in define D gs that will etroit’s sk yline for decades to building come. They’re their ow n businesses, or build ing up th busines e ses they ’v e hired to been lead. Th ey’re building durable , suppor ive com tmu they put nities. And as people ba ck to work, ge t them in to homes and help , the next generation grow an d thrive they’re bu , ilding m etro Detroit’s future. We thin k you sh ould kn who they ow ar stories st e. Read their arting on Page 8 8.

NEWSPA

Financial Adv Rogers Fin iser, The Jbara and anc Morgan Sta ial Management Group, nley

John Roge

rs, 28

told Crain’s Chicago Business in June. The buyers wanted to keep that homage up, offering to pay $37 on top of the listing agent SP$2.5 ECmillion, L REPOofIACressy Tim Mitchell & Everett

They’re

20S

2019

Real Estate said, but in the end the deal was for a flat $2.5 million. Mitchell said the buyer is New York-based Turken Foundation. According to its website, it was launched in 2014 by two foundations in Turkey “to assist eligible students by means of housing, scholarship and other cultural programs to improve their educational experience in the United States.” The foundation did not respond to Crain’s email asking about its plan for the site. The listed phone number does BLOOMBERG not answer. A construction industry labor shortage has caused increased building costs and The property is set in a U-shaped delays in projects, a survey shows. bend of the St. Joseph River, 90 miles from Chicago’s Kenwood neighbortwo years after he died. Muhammad Ali's widow Her asking price was about $2.9 hood, where Ali lived when he sells Berrien Springs bought it. million, or more Aspecifi estate for $2.5 million ronsocally n: ‘I property has a The southwest Michigan estate $2,895,037. The last two digits were awouldTh doeanygated thing to k3,900-square-foot boxing great Muhammad Ali owned nod to the 37 knockouts Ali had three-bedroom, eep it in F rnda le for four decades sold just before during his career, the listing agent house, a swimming pool and eseveral

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“It’s good work,” she said. “I do bebe lieve education is the tipping point — the difference to these students.” The sushi restaurant, she says, is a recent addition, providing a new challenge and it’s “really profitable.” She acquired it from her ex-husband and works there mainly when her two children, Eva, 3, and Marco, 1½, are in bed. “I can’t imagine a world where you raise young kids without a family around,” she said. Her help comes from aunts and uncles, a nanny and a babysitter too.

Private health di attorneys repres en re taxpayers ctor Nick Lyon ha fend a hi more than $1.6 m illi gh-rankin Rick Sn g member yd tary man er’s cabinet fac ing i slaughter from Fli charges nt date hasn ’s water crisis — ste and h ’t ev That nu en been set ye amount mber is only a t. sm th ter crisi e state has spen all p t on Flin s-r mid-Aug elated legal bi lls us million, t, the state had . Thr wh spent $ have cu ile three state departm rrent ca pacity in co to make ntracts Need th top $34.5 at total to kno w accordin million,  State g ha lic reco to pub- $26.5 mi s spe rds com llion on - private piled by law firms Crain’s. Flint wate Three da a Genese ys after civil and r crisis criminal e County judge cases or de re d Lyon to sta  $1. 6 million last mon nd trial th for th sp ent on sta e suspected te wa- health chief Ni ter-related ck of two deaths Lyon's criminal Flint-are elderly defense a men ,  $3.55 the state’ s million istrative Admin- budget ed for Board in - Lyon's creased de th tract fo e con- manslau fense in r Lyon ghter case ’s primary defense attMorAne Ra 14 CRAIN’S DETR O pi I Tds B U S I N E S S // Y 7ys , 2018 firm at $1 million Willey & Cham the Grand to $2.75 be rlain by milli The state TWENTY IN THEIR 20S Departm on. Human ent of He Se alth and in charge rvices, which “That Lyon re told us Laura Grannemann, 25 main has addi of while facingthat direct prosecut s tional ion, Vice President, Strategic Investments, Quicken Loans each withInc.o contractsoutreach of $400 and other law works, ,00we to keep leadstw 0 the Detroit compaLaura Grannemann has approached works, and we should be doing more Grannemann fi rm hi m should be s working outotkeep ny’sw philanthropic efforts blight in Detroit like health officials ap- of this,” she said. La oflongpr doing PLLC in more of in homes and boostison Devising strategies to stabilize and time Detroiters proach an epidemic — by knocking on — Bu Caled onia and home that are critical to creating turn around neighborhoods marred by Ny doors to find the problem. amvalues this.” rsch fu sales dzdata Chartier for lenders in a Grannemann uses that analogy to disinvestment, abandonment, foreclo- comparableku a PL C in & Th La residential mortgages werensin describe the program she has crafted sure and poverty is the focus of city where e $3 .55 a few g. years ago. to fight the spread of Detroit’s foreclo- Grannemann’s work at Quicken Loans.onvirtually nonexistentm illi “Ninety-five “When on ’sIncrNovember budgete iminal2017, the Quicken sure-induced blight, by reaching out to on Grannemann has risen rapidly inpercent I came d for Ly fenseFund Loans Community de Investment homeowners before they lose their side Dan Gilbert’s mortgage companyand in of our politicatollyscale board here, foreclo- a hi homes over an unpaid tax bill. in four years since she came to Detroit spent $500,000 tintheproject events and was told ged bycrim gh-stakes sure-prevention The East Lansing native’sIstrategy is forI an alternative spring break while br a ou ght by outreach inal case programs had to work hiring 450 Detroiters 35 comstarting to yield promising results. student studying international develAtthrough torney Schu ettegroups haveGrannemann, munity to canvass the city and vice president stra- opment at Georgetown University. been Ge sixofmonths is seen neral Bi on the doors of 65,000 properby tegic investments Loans obseknock designed ll to for Quicken here and “Laura is the kind of person people lon rv thats are behindgti in me La organized summer not only follow, but the kind of leader ties er aschronically be Inc., free and a canvass last an un figure ns it out. pensproperty tax payments. They reached of 5,000 homeowners to find out why who receives loyalty because trustworpr e tax ecedented ing open My main thiness role is in her DNA. She sets the bar the of 65,000thpa home April. they to wereall, behind on taxes and educate yeinrearly mon exwhich has is to monitor ey. In a few weeks before the mid-Dethem on how to keep their homes. high for the team around her — a true

VISIT T HE NEW AND IM P R CRAIN SDETR OVED O

resulted in The hands-on approach helped natural born leader,” Gilbert wrote in a the project letter nominating Grannemann for a 2,500 homeowners get onbudget payment and a vibrant plans — and foreclo- Crain’s Twenty in their 20s recognition. cultural lifeoff the county’s schedule and As co-founder of the Quicken Loans sure auction list, Grannemann said. across the sure Community Investment Fund, “That told us that directmake outreach downtown.” everyone is on the same page.”

cember deadline, the SE canvassers got E a propLLS, 1,000 Detroiters signed up forBI erty tax exemption for individuals living below the poverty line, she said. — Chad Livengood

IT.COM

PAGE 33

Meagan Ward, 27

Victo

Co-Owner, Femology Detroit; Owner, Creatively Flawless

Vice Pres Real Esta

Meagan Ward settled on potato stir-fry and raspberry smoothies. The entrepreneur rushed home on a Monday night after a full day at Femology, Detroit’s first women’s co-working space. She hurriedly picked a recipe off Pinterest an hour Herentre before two younger women entreother side gig fills her “creative “It’s good buckets.” Rodriguez photographs bapreneurs showed up to talk careers work. I do bies who are just a few hours old and and relationships over dinner. usually still believe “That’s key — mixing personal andat the hospital. She manages everything by being professional,” who quit education issaid Ward, 27, really organized, prioritizing people day job in 2015 to start wom- her children and her wom theher tipping and aespecially en-centric branding company called team. “I really regulate my own conpoint — the Creatively Flawless. “Youtributions know how and my own give and my difference take,” she said. “Am I meeting my they say youto can’t mix personal and these own standards? Is this filling me up business? It’s not true for women.” in a way that is meaningful?” students.” Ward founded Femology to con conShe attended University of Southern nect the sorts of women and clients California as a first-generation college with whom she chats about scaling, student. “I didn’t know what a major building strategy and visual is,”branding. she recalled. She earned a master’s She and co-founderdegree Ashleigh in education in urban pedagoBrock have had 50 members andUniversity aim gy from of Michigan in 2013. an incredible motivator of to grow to 75 by July, their “She’s one-year young people,” mark. They plan to move within a said Jim Jacobs, reyear from 350 square tired feetpresident to a of Macomb CommuCollege. — Vickie Elmer 2,000-square-foot space nity that’s more open and allows them to add features their members want: A computer lab or designated photoshoot room, for example. Femology provides the usual shared workspace amenities. But it’s I had to do better,” Hsia said. also an extension of Ward’s longtime “How do you Then came a breakthrough. Late in in business identify themission to pull women March, Warmilu received FDA cleartoward each other, from ance hosting to market and sell its warming problem, how do lunches while at Western Michigan packs in the U.S., clearing a critical you identifyUniversity the to creating support orga hurdle itorgadidn’t expect for at least anmetrics andnization how do other year. Those credentials make it The Powerful Women and far in easier for the company to distribyou do better? speaking on empowerment Tbilisi, ute in different countries now. The That’s whatGeorgia, I hadfor the U.S. Embassy. company also won a $50,000 grant on an offi offito do better.” Her name now appearsfrom the Atlantic Pediatric Device cial list of expert speakers on whom Consortium. embassies across the globeHsia can call. said the FDA clearance will know how But there’s still empowering change to thebe course “You for Warmilu as it done in Detroit. Ward met onetoward of thesustainability. looks saidyou can’t they She say up. She realized there needed toshe be hosted she working with Doctors Without mentees for is stir-fry, mixdevice personal and more of an emphasis 22-year-old on developing a to try the heating and Alexis Wilson,Borders after Wilson sales strategy and building a pipeline talks with several health care It’s not business? sought space at Femology is lastinsummer. of customers. companies. The company is also “Ever since then, (Ward) would true for for women.” “How do you identify the problem, looking to hire consultants sales, randomly send me opportunities” how do you identify the metrics and business development and producand got her a major newtion. client, Wil-Nagl how do you do better? — That’s what — Kurt PORTRAITS BY JACOB LEWKOW FOR CRAIN’S

“It’s a b a curse a Obvious more ex having t same tim son said. “I got this huge, amazing company (as a client) because of Meagan ... “I texted her and asked if she would mentor me. Whatever time she had, I was willing to take. She was like, ‘Absolutely. We can totally do this.’” — Annalise Frank

Tori Manix g real estate fam her own path in The 26-yearSouthfield-base Estate Investme front lines of the Detroit efforts a

PORTRAITS BY JACO

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NONPROFITS

RETAIL

DPTV looks to play bigger role in school readiness

Video rentails on display at a Family Video location in Warren.

By Sherri Welch swelch@crain.com

KIRK PINHO/CRAIN’S DETROIT BUSINESS

Detroit Public Television is coming out from behind the camera to take a bigger role in getting children ready for school. Through a pilot launched in Detroit’s Brightmoor neighborhood last fall, the station is aiming for bigger impact in early childhood education. It’s bringing caregivers together to discuss best practices, sharing its Pre-School-U curriculum to educate teachers, caregivers and parents on the developmental stages of young children, bringing its programming and apps directly to children and parents and exploring ways to use them to increase school readiness.

Why Family Video stores still dot metro Detroit

By Kirk Pinho

Family Video locations in metro Detroit

kpinho@crain.com

You can still rent DVDs and video games from Family Video, and its stores still dot metro Detroit, years after its competition evaporated. The key has little to do with stocking the right mix of movies to win back Netflix watc hers. It does have to do with a real estate strategy its competitors couldn’t match that has resulted in sizable local holdings. The suburban Chicago-based company, which has 19 stores in metro Detroit and more than 700 across the country, leases very little

3 WATERFORD TOWNSHIP

5 TROY

15 16 FARMINGTON HILLS

696

21 ST. CLAIR SHORES 20

LIVONIA

ANN ARBOR

DEARBORN HEIGHTS 11 CANTON 275 10 WESTLAND TOWNSHIP

 Forbes estimated company brought in $400 million in 2016

There are 21 metro Detroit properties owned by Highland Ventures Ltd., parent company of Family Video. 1: 846 East Grand River Avenue, Howell

4: 4678 Elizabeth Lake Road, Waterford Township 5: 1187 West Huron Street, Waterford Township 6: 34414 West Eight Mile Road, Farmington Hills 7: 6425 North Canton Center Road, Canton Township

10: 38900-38970 Cherry Hill Road, Westland

11: 146 South Venoy Road, Westland 12: 21533 Ecorse Road, Taylor 14: 2571 Coolidge Highway, Berkley

3: 5480 Sashabaw Road, Clarkston

9: 27320 Ann Arbor Trail, Dearborn Heights

13: 22610 Northline Road, Taylor

2: 23200 Pontiac Trail, South Lyon

8: 37405 Ann Arbor Trail, Livonia

12 TAYLOR

SEE VIDEO, PAGE 25

DETROIT



of its space, unlike its former competitors like Blockbuster, which ceased operations in 2013. The result, said the company’s head of real estate, is an ability to control its own destiny. As those competitors were facing challenges that included rent increases and an inability to shrink their leased footprints as the streaming television and movie revolution led by Netflix and others began to take hold, Family Video was sitting pretty in property that it owned. That gave it needed flexibility. It could shrink the Family Video footprint and install other related tenants, such as Marco’s Pizza, of

WARREN

SOUTH LYON



Targets locations in smaller towns in more rural areas where Internet speeds may be slower

Need to know Suburban Chicago-based company has 19 stores in metro Detroit, more than 700 across the country

Need to know

STERLING HEIGHTS

15: 39042 Dequindre Road, Sterling Heights 16: 30950 Dequindre Road, Warren 17.:4910 East Nine Mile Road, Warren 18: 27950 Hoover Road, Warren 19: 29949 Utica Road, Roseville 20: 18645 East 10 Mile Road, Roseville 21: 27710 Little Mack Avenue, St. Clair Shores Source: Highland Ventures Ltd.

 Detroit Public Television has launched a five-year plan to help prepare children for school  Among the things DPTV is contemplating: virtual preschool  Station is piloting efforts in Brightmoor neighborhood

Among the things DPTV is contemplating: virtual preschool. The moves are the latest in the station’s decade-long bid to create a niche for itself as an early childhood educational resource and part of its new, five-year plan to engage with early childhood caregivers Rich Homberg: and parents Goal to be in across Detroit partnership. and the region. Public television was built on the idea that there ought to be a station that serves community needs, such as putting the symphony on TV and preparing kids for school, said DPTV President and CEO Rich Homberg. Over the past decade, DPTV has scaled up its programs and services for kids and families. Now it’s taking those and other supports to in-home and center-based early childhood teachers and caregivers. SEE DPTV, PAGE 25

POLITICS

Former Gov. Snyder laying groundwork for his next act

By Chad Livengood clivengood@crain.com

Former Gov. Rick Snyder appears to be laying the groundwork for his next act. In mid-December, the businessman-turned-governor quietly incorporated a new entity called RPAction LLC at the downtown Ann Arbor office of his former business partner, state records show. After Snyder officially left office on New Year’s Day, he changed his LinkedIn profile, listing himself as

“Helper” at RPAction, a name that plays off his mantra of “relentless positive action” or RPA. “Hope to still help people, just on a smaller scale,” Snyder said in a LinkedIn message to Crain’s. Snyder, 60, said he’s considering opportunities to work on public policy issues, teach, serve on boards “both large and small” and unspecified consulting. “Looking at a portfolio of activities vs. a full time position,” Snyder wrote. “Beginning the dialogue with

several parties since I told everyone that I wouldn’t commit to anything until I was out of office.” RPAction is registered at the Rick Snyder: Left Ann Arbor office of Renaissance governor’s office Venture Capital on Jan. 1 Fund, which is run by Chris Rizik, who previously

co-founded with Snyder two other venture capital firms, Ardesta LLC and Avalon Investments Inc. The limited liability corporation will keep Snyder’s longtime executive assistant Allison Scott employed, said Rich Baird, a top adviser and confidant to Snyder in the governor’s office. The LLC also could be used for consulting and working with Rizik on future projects, Baird said. Baird is staying in the Snyder orbit. He has rented an apartment in

Ann Arbor and is serving on the boards of the American Center for Mobility and Eastern Michigan University, to which Snyder appointed him. Snyder wants to find a way to inject his “relentless positive action” philosophy and civility into public discourse, Baird said. “I think a portion of his next chapter is going to be devoted to trying to influence a behavioral revolution in the public arena,” Baird told Crain’s.

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JOAN MARCUS/HAMILTON NATIONAL TOUR

The national tour of the musical “Hamilton” is coming to Detroit March 12-April 21. A Detroit nonprofit, L!FE Leaders Inc., will be hosting a gala March 28 that includes tickets to that night’s performance.

‘Hamilton’ musical hypes Detroit nonprofit’s first gala Investor & Shareholder Litigation Michigan Morganti & Co., P.L.C. (Litigation in the United States) 1001 Woodward Avenue, Suite 500, Detroit, Michigan 48226

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By Annalise Frank afrank@crain.com

A Detroit youth development nonprofit has roped in the producer of hit Broadway musical “Hamilton.” L!FE Leaders Inc. centered its first gala on the popular rap musical as part of a new round of fundraising efforts. The nonprofit, created in 2016, teaches middle- and high-school students in Detroit leadership, determination and other skills through workshops, training and life experiences. The Fisher Theatre event on March 28 starts with a strolling dinner. Attendees will then sit for a performance of “Hamilton” — it’s running at the Fisher March 12-April 21 — and an exclusive conversation session with cast members to be moderated by Tony Award-winning producer Jeffrey Seller, who is an Oak Park native. It ends with a champagne and dessert reception, according to a news release. Founder Amy Nederlander hopes to take in $500,000 from the gala and has a total fundraising goal of around $1 million for programming this summer and continued operations, she said. The metro Detroit native comes to philanthropy from a childhood steeped in theater — her grandfather, David Nederlander, managed the Detroit Opera Theatre starting in 1912. David and his sons went on to manage theaters nationwide, including the Fisher Theatre. The Nederlander Organization now operates internationally under a dozen brands, producing events and operating more than 20 venues across the U.S. and in London. The Fisher Theatre and Nederlander family members are among financial contributors to the gala, she said. Other sponsors so far are Crain’s Detroit Business, Sachse Construction, Wallside Windows, Bedrock LLC, Emagine Entertainment, Plante Moran, The Platform and Dykema Gossett. L!FE Leaders declined to disclose the amount donated.

'Embodies our mission' L!FE Leaders has a focus on engagement, arts and voice that fits with “Hamilton’s” legacy, Neder-

Need to know  L!FE Leaders event includes strolling dinner in Detroit’s Fisher Building, performance of popular musical  Nonprofit’s focus on engagement, arts and voice fits well with Hamilton’s legacy, founder says  Seeks to net $500,000 from gala lander said. “It’s very special because ‘Hamilton’ is a musical where education has been central to their mission since opening on Broadway,” Nederlander said. “And it really embodies our mission to empower our youth to empower their future. And the importance of articulating what you care about and what you want to achieve and working to make that happen.” “Hamilton,” which premiered in New York City in 2015, tells the story of founding father Alexander Hamilton and blends musical influences in hip-hop, jazz, blues, R&B and other genres. It has garnered press and adoration for its storytelling, music, racially diverse cast and, arguably, its politically charged nature. “The story of Alexander Hamilton, an orphan from St. Croix with incredible potential and drive who went on to change the world, is a great lesson about the ways in which we can improve the country and the world when we invest in our promising students,” Seller said in the release. U.S. Sen. Debbie Stabenow, Detroit Mayor Mike Duggan and his wife, Lori Maher, are “honorary hosts” for the event, meaning they are “lending their name” and are expected to attend, Nederlander said. Gala attendees won’t be the only ones there, either, Nederlander said. The Fisher Theatre is sponsoring attendance for the 21 students and their teachers from L!FE Leaders’ summer 2018 programming. Prices to attend the gala start at $1,250, and tickets to just the performance are available through L!FE Leaders for $500. General tickets to “Hamilton” in Detroit haven’t yet gone on sale and a date has yet to be announced. L!FE Leaders is among four groups authorized by Hamilton’s producers and Broadway in Detroit to sell tickets for specific perfor-

mances. The others are the Mosaic Youth Theatre, to which Seller recently gifted $1 million; Hillel of Metro Detroit; and the sponsors of the musical’s March 12 Detroit premiere night, the Congregation Shir Tikvah, Upland Hills School and Congregation Beth Shalom.

Beginning of L!FE Nederlander grew up in Huntington Woods and Franklin, and now lives in New York. She has worked in investment banking, produced theater and advised entrepreneurs and companies on strategic business development. Her trajectory and frequent visits back to the Detroit area led her to found L!FE Leaders with Michaela Murphy, who is also director of education at Buck’s County Playhouse in New Hope, Pa. It started with a boot camp in Detroit in summer 2016 called Entrepreneur-ISM and one in summer 2018 called Excellence Corps. They enrolled 10 and 21 students, respectively, and aimed to immerse students in Detroit’s history while teaching them life skills. Students visited Mayor Mike Duggan’s office, talked with passers-by in Campus Martius in downtown Detroit, learned about the city’s neighborhoods and visited the Detroit Historical Museum. Nederlander is seeking about $1 million in funding to make the organization sustainable and train staff. They’re planning to run another round of both programs this coming summer with a total of 110 students. L!FE Leaders employs two staffers in Detroit and more during the summer. It also has eight students doing community outreach and marketing who are paid through Detroit Employment Solutions Corp. “Working in Detroit has been an incredible experience,” Nederlander said. “The support from the entire community, the different sectors, be it business or politically or community-based, when you want to get something done people really want you to succeed.” Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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behavioral decisions to feel better emotionally. Burns: Why is the TRAILS program school-based? Koschmann: Every day we have kids that are bringing emotional well-being challenges to school professionals. TRAILS is designed to improve care by training the people that kids access already. Burns: Tell us about the Children’s Hospital of Michigan Foundation partnership and other partners as it relates to advancing the mission of TRAILS. Koschmann: We were fortunate to partner with the Ethel and James Flinn Foundation, where we work to embed the TRAILS program to provide suicide risk identification and reduction programming in our middle and high schools. The Children’s Hospital of Michigan Foundation helped us connect with the Detroit Public Schools Community District and we are in our first year of a partnership to assist with a behavioral healthcare program. TRAILS wants to design a full array of services that would help students arrive at school emotionally and behaviorally ready to benefit from their academic program.

Gail Urso, vice president and co-founder, and Leo Nouhan, executive board member, Kevin’s Song

Anthony Grupido, magician, keynote speaker and ambassador for Children’s Hospital of Michigan Foundation

Larry Burns: Tell us about Kevin’s Song. Gail Urso: We lost our son, Kevin, to suicide in 2013. He was 41. His death was a complete shock, although he had suffered from depression. After Kevin’s death, we were surprised to find out that there are many nonprofit organizations that work to prevent suicide. We wanted to do something positive so we formed Kevin’s Song as a way to educate and empower the community to prevent suicides. We decided to create a film and have a conference. Our first conference was in April of 2016. Most national conferences are very expensive. We wanted to bring experts here that people in this area generally don’t get to hear. The first film we executive produced was called “Death is Not the Answer.” It’s an hour-long film that aired on PBS and was screened around the city. Burns: Leo, tell us about your role as the conference coordinator. Leo Nouhan: Shortly after Kevin’s Song was founded, Gail and John approached me. We had worked together on a number of community activities and fundraisers when our kids were at Grosse Pointe South High School. I was moved by their story and inspired by what they wanted to do. Burns: What do you hope Kevin’s Song evolves into? Urso: Our conference will continue to be our main focus. We also hope to do specific trainings for groups, for instance, clergy, teachers, first responders, etc. We have

Larry Burns: Tell us your story and how magic has become a tool for you to do good things. Anthony Grupido: In high school, when I went through a tough time dealing with mental illness and suicidal thoughts, I used magic as a way to reconnect with people. I ended up building a show that would educate people about mental health and suicide prevention. Burns: What were some of those personal experiences that you’d like to share? Grupido: I struggled a lot with self-harm in high school. Cutting was a way to cope with all my stress. Burns: How did the magic part start evolving? Grupido: I started doing magic when I was five years old, and I never stopped. The original goal was to go to college, get a degree and then become a magician, but what happened is that I just became a magician instead. I realized I could use magic as an educational presentation tool around age 18. Burns: Tell us about this new partnership that you and the Foundation are working on. Grupido: It’s been an amazing partnership. We have done a lot of fundraising and entertainment at different events. In the future, we will be sending the presentation, “The Magic of Hope,” to schools to educate kids about mental health and suicide.

found that very few people are trained to know the signs of suicide and what to do. Burns: Is there any advice you have in navigating mental health resources? Nouhan: You have to be tenacious, you have to be steadfast in your pursuit of insurance coverage. Try to understand how your policy works and pursue those avenues because a lot of times criteria is used that may not be appropriate for a given situation. Burns: How can people learn more about Kevin’s Song? Urso: Go to our website, kevinssong.org, or our dynamic Facebook page. We also have Twitter and Instagram accounts.

Burns: What kind of reaction are you getting from students? Grupido: I always get a student or two after that talk to me about similar things. I hear kids as young as sixth grade, seventh grade talking about self-harm and suicide issues. I’ve met middle schoolers and high schoolers around the country who are homeless due to their parents being taken away for drug abuse and things like that. I’m not a psychiatrist and I’m not a therapist. The first thing I’m going to do is put you in the school counseling office. That’s the whole point, to connect them. Burns: What do you hope to accomplish both in your magician career as well as this new role of being an ambassador? Grupido: I want to see a lot of change, especially in the school districts, with mental health. I think what we need is people to say, “Hey, it’s okay not to be okay.”

12/19/18 5:46 PM

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OPINION COMMENTARY

EDITORIAL

Veto threat hint of what’s to come Order may have unintended effects B

little over a week in, and we have some questions for Gov. Gretchen Whitmer. Late last week, Whitmer issued an executive order creating preferences for state contracts for “geographically disadvantaged” businesses. The stated goal is to offer a contract preference to help job providers and strengthen the state’s workforce. And to the extent that it pushes employment opportunities to areas that can benefit most from them, it’s a good goal. But it seems likely to come with unintended consequences. Part of the problem is how “geographically disadvantaged” is defined. One way a business can qualify is by being located in a federally designated OpporPart of the problem tunity Zone, which were crehere is that the ated under the 2017 tax overzones as defined in haul to offer tax breaks to the order aren’t encourage redevelopment. necessarily the In Detroit, for example, Opareas that need the portunity Zones cover much most help. For a of downtown and Midtown. So would that mean when company, being buying fleet vehicles, the state located in a lowincome area doesn’t would pick Chevy Silverados (General Motors Co. is headmean the company quartered in an Opportunity has inherent Zone) rather than Ford F-150s disadvantages. (Ford Motor Co. isn’t)? And what of Blue Cross? Also in an Opportunity Zone, and an enormous company that insures about half the state’s population, including lucrative deals to cover the state government’s massive workforce. Part of the problem here is that the zones as defined in the order aren’t necessarily the areas that need the most help. For a company, being located in a low-income area doesn’t mean the company has inherent disadvantages. It remains to be seen whether the preference will have a net effect. The order does specify that the preference should come into play when other factors are equal — which they never are in the real world. But there does appear to be the danger that an effort to create a more level playing field might tip scales in some unanticipated ways.

uried deep in the second-to-last line of an otherwise mundane executive directive from Democratic Gov. Gretchen Whitmer was one of the first signs of the tone of the newly divided government in Lansing. “I intend to veto legislation that circumvents the right to a referendum,” Whitmer wrote Thursday, hardly 48 hours into her tenure, in a directive titled “Coordinating Departmental and Autonomous Agency Legislative Activity.” In laying out legislative procedures for state department directors, Whitmer — who spent 14 years in the Legislature — seems bent on ending a practice that has allowed lawmakers to immunize their most controversial laws from the will of the people. “I think Gov. Whitmer wants an orderly appropriations process that is open and understandable and where the numbers are well-known in the appropriations bills,” said Joe Schwarz, a former Republican state senator who served on Whitmer’s transition committee. “She is old school in that way — and I think that’s a good thing.” During former Republican Gov. Rick Snyder’s eight years in office, the GOP-dominated Legislature regularly strapped appropriations of varying dollar amounts onto the most controversial legislation to make the bills immune to voter referendum. The Michigan Supreme Court has ruled that appropriations bills funding state government agencies are not subject to being overturned by voters at the ballot box. Before the advent of voter-imposed term limits that pushed veteran legislators like Schwarz out of office, embedding spending measures in policy bills almost “never” occurred, Schwarz said. “The reason that’s in the constitution is to avoid referendums on budget bills,” said state Sen. Curtis Hertel Jr., an East Lansing Democrat whose late father was a pre-term-limits speaker in the House in the mid1990s. “It was not there to protect policy measures.”

CHAD LIVENGOOD clivengood@crain.com

LARRY PEPLIN FOR CRAIN’S

Michigan Gov. Gretchen Whitmer.

But the legislative maneuver of turning a public policy bill into an appropriations bill became routine after voters repealed Snyder’s emergency manager law in the November 2012 election. The Legislature and Snyder responded the next month during a lame-duck session with a new emergency manager law — this time coated with a layer of constitutional Teflon to protect the law from another voter revolt. That EM law was the legal vehicle Snyder used to declare a financial emergency in Detroit, appoint Emergency Manager Kevyn Orr in March 2013 and shepherd the city into bankruptcy court in July 2013. Referendum-proofing the EM law arguably created the orderly, business-like environment for Detroit’s reorganization in a matter of less than 17 months.

But over the past eight years, the Legislature has referendum-proofed such controversial measures as their own redistricting maps, the 2012 right-to-work law, taxing pensions, eliminating straight-party voting, repealing the prevailing wage law, overhauling the no-fault auto insurance law and even a wolf-hunting bill — just to name a few. On Thursday, new Senate Majority Leader Mike Shirkey’s spokeswoman was noncommittal when asked if Shirkey would continue the practice of adding appropriations to policy bills. “The Senate will continue to draft legislation with the language it views as necessary to properly implement policy,” said Amber McCann, spokeswoman for Shirkey. Lawmakers have justified these appropriations as necessary to fund implementation of new laws instead of waiting for the next appropriations bill to roll through the Legislature. “Sometimes an appropriation makes sense to fund the new program or requirement, and sometimes it doesn’t,” said Gideon D’Assandro, spokesman for incoming House Speaker Lee Chatfield. “Speaker-elect Chatfield will make those determinations based on need.” But sometimes the “nefarious” money is not even spent or is appropriated before the law actually takes effect, Hertel said. “The absolute intent of putting an appropriation in a policy bill is to avoid public input,” Hertel said. “Nobody tries to hide it.” This could turn into an interesting test in the still-developing relationship between Whitmer and the Republican leaders of the Legislature. As the Senate Democratic leader from 2011 through 2014, Whitmer often protested these appropriations. Now Whitmer has the veto pen to nix legislation that crosses this red line she has drawn in her first week in office. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Happy Newsy Year, everybody

or me as an editor at Crain's Detroit Business, this week’s issue is always one of the most gratifying of 50-plus we do each year. It’s also one that kicks off the year in a way that tells you what we’re all about. This week is our annual Newsmakers issue. That list of noteworthy folks is the culmination of a long process that involves every member of Crain’s newsroom. We cull nominations from every member of the staff, which typically results in a list of 60-some potential candidates. Then we make spreadsheets, debate, and sometimes argue in multiple meetings.

This week’s issue is always a treat to produce because it recognizes people for good works, for success. MICHAEL LEE malee@crain.com

Which results in the list of Newsmakers — and the Newsmaker of the Year. Then the editors take a step back and look at the big picture and that everything we’ve done makes sense.

The process is a fair amount of work and involves far more than a quick conversation. But it consistently results in a list that represents the most luminary accomplishments among Southeast Michigan businesses and leadership. This year we toast Bill Ford Jr. as our Newsmaker of the Year. We’ll

leave his automotive accomplishments to our fellow Crain publication Automotive News, but felt compelled to salute the impact on Detroit’s future that the revitalization of Michigan Central Station will have. If you want inspiration as you start your year, though, you could do worse than reading all 10 profiles starting on Page 8. If you want goals, if you want to think big, those stories are in there. (Which isn’t to say that, on occasion, a Newsmaker is on the list because they made important news for nefarious reasons. That isn’t the case this year or for the vast majority of the people picked over the years.)

This week’s issue is always a treat to produce because it recognizes people for good works, for success. That exemplifies our goal every day: to bring you the news first, and to think of readers and their success first. Which is what we’ll keep doing, and finding new ways to do, in the year ahead. We wish you a happy and successful new year. Michael Lee is managing editor of Crain's Detroit Business. You can hear him and Group Publisher Mary Kramer at 6:15 a.m. Mondays on WJR 760 AM.

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

LETTERS

'Bad-news' cycle starts with negative media focus

To the editor: Just read the Dec. 18 story about “Gloom sets in for suppliers even with strong sales” that concerns automotive suppliers. Well, what else would you expect with the totally biased bad news cycles coming from 99 percent of the media for the last two years aimed at the Trump administration? If there is good news on the economy, from GDP numbers to unemployment and everything else in between, it is not reported as they put out only those things that they can spin in a negative light. Unless you watch Fox Business channel, which I do, you get only negative and hysterically bad news concerning the Trump administration, and everyone knows it. So why are suppliers and the public so “gloomy”? I would tell all those in the media from on-air personalities, writers, production people and those in charge of the networks to look into the nearest mirror and ask that question and then see what you CRAIN’S DETROIT BUSINESS

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see staring back at you. Then you will know who is responsible. Jeffrey M. Scott President Allan Tool & Machine Co. Troy

Fairer school funding approach needed To the Editor: I read with great interest the recent Crain’s story about Consumers Energy CEO Patti Poppe’s assessment of Michigan’s public schools (“Education overhead doesn’t add up, Consumers Energy CEO says,” Nov. 18). Improving Michigan’s schools will re-

quire the input of business leaders like Poppe, educators, community stakeholders and the public at large. As a Detroit area businessman, I recognize all students must have the same opportunity to get a high-quality education and compete for jobs. Yet our students continue to fall behind, leaving us in dire need of a new, fairer school funding system that meets the unique, individual learning needs of all students, whether they attend a district or charter school. The School Finance Research Collaborative, which I’m proud to serve on, has completed Michigan’s first comprehensive school adequacy study using multiple methodologies that determined the true cost of educating all students, regardless of ZIP

code, learning challenges or other circumstances. The School Finance Research Collaborative is a statewide, diverse group of business leaders and education experts who agree it’s time to change the way Michigan’s schools are funded. Michigan’s school funding system is broken and continues to fail our students. A new, fairer approach is needed that meets the wide-ranging needs of all students, whether they attend school in Detroit, West Michigan or the upper reaches of the Western U.P. There is no one-size-fits-all approach to educating our kids. Funding our schools fairly will ensure students go on to college, technical school or an apprenticeship program and get

good-paying jobs right here in Michigan. Without a new school funding approach, our kids will only continue to fall behind their peers around the globe in a fiercely competitive economy that demands a skilled workforce. Sincerely, Jim Stapleton Detroit area businessman, School Finance Research Collaborative member Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: malee@crain.com

Crain’s Newsmakers of the Year dominated headlines in 2018 and are fixtures in the business community and beyond. Join us along with 400 other leaders from the region as we recognize them at our annual luncheon.

THE BIGGEST NAMES IN NEWS IN ONE ROOM

Learn how they made news and kickoff your New Year by networking with an affluent audience. You’ll also hear from Bill Ford Jr., executive chairman of Ford Motor Co. and 2018 Newsmaker of the Year, as he has a fireside conversation with KC Crain, publisher of Crain’s Detroit Business and President of Crain Communications.

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NEWSMAKERS OF THE YEAR

THE NEWSMAKER OF THE YEAR: BILL FORD JR.

Executive Chairman, Ford Motor Co.

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ILLUSTRATIONS BY ROBERT CARTER FOR CRAIN’S

By Chad Livengood clivengood@crain.com

ill Ford Jr. shocked the Blue Oval’s closest observers in 2018 when he engineered Ford Motor Co.’s purchase of Detroit’s ramshackle 105-year-old train station. The executive chairman of the Dearborn-based automaker set the course for Ford’s return to the city where Henry Ford founded the company 115 years ago with the $90 million purchase of the Michigan Central Station from the Moroun family and a $350 million rehabilitation of an iconic symbol of Detroit’s 20th Century rise and decline. Bill Ford Jr.’s play for the train station and Corktown is an ambitious, if not audacious, bid to build an urban campus to compete with Silicon Valley for top minds to reinvent the industry his great-grandfather revolutionized over a century ago. Ford Motor’s purchase of other properties in Corktown to build out a 1.2 million-square-foot campus for the development of autonomous and electric vehicles of the future was seen as a legacy-building move by Bill Ford Jr., whose uncle Henry Ford II built the Renaissance Center in the 1970s in his own bid to revitalize Detroit. But the 61-year-old scion of the Ford family sees the depot project as a strategic move in the “war for talent.” “When we develop this Corktown campus, there will be nothing else

“When we develop this Corktown campus, there will be nothing else like it in the country. ... There’s nothing that will have not only the historic value and the coolness factor of Corktown, but frankly the practical application of creating an (autonomous vehicle) corridor from Detroit all the way out to (Ann Arbor).” — Bill Ford Jr., on the Michigan Central Station project

like it in the country,” Bill Ford Jr. said in an interview with Crain’s. “Silicon Valley is literally spending billions to create these campuses — and they’re lovely, some of them. There’s nothing that will have not only the historic value and the coolness factor of Corktown, but frankly the practical application of creating an (autonomous vehicle) corridor from Detroit all the way out to (Ann Arbor).” The $740 million real estate development project shifts money Ford Motor intended to spend on office space and facilities in Dearborn to Detroit instead. State and local officials raced to give Ford nearly $240 million in tax breaks over 30 years to secure the project. Now the automaker’s structural engineers, architects and construction managers are developing a master plan for bringing the depot back to life in what’s expected to be a complicated rehabilitation of a building that sat vacant for 30 years. Bill Ford Jr. is confident the project won’t get mired in cost overruns. “We think we have a pretty good handle of what we’re getting into,” he said. “But we also — both in the budget and time line — made sure that we accounted for the unknown. The reality is when you do start stripping a building down, you will find things that you hadn’t expected.” With the opening of Ford’s first Corktown building — The Factory at Michigan Avenue and Rosa Parks Boulevard — the automaker has

planted about 200 employees working on the deployment of autonomous and electric vehicles inside a one-time hosiery factory. They’re the first of 2,500 employees Ford has committed to locating in Corktown once the train station and former Detroit schools book depository building are renovated. Ford also is planning to build a new 500,000-square-foot building on Michigan Avenue, adjacent to The Factory. Bill Ford said the company is using The Factory to recruit computer engineers and employees with other highly coveted talents to develop the artificial intelligence that will propel AVs up and down Michigan Avenue. At the same time, Ford’s train station rehab project is attracting interest from suppliers and potential partners for mobility technology that want to set up shop in Corktown, according to the company chairman. “We’ve been holding them all a little bit at bay because ... we have to figure out our own needs,” Ford said. “To say we have been overwhelmed I think would be an understatement.” While Bill Ford has been immersed in the Corktown project, the automaker announced in April it is dumping much of its lineup of fourdoor sedans, keeping just the iconic Mustang muscle car in its North American production. Bill Ford Jr. is quick to defend the move in the face of criticism that a

company that put the world on wheels is killing off the American car. “We are a company that listens to its customers — and our customers have been telling us that the demand for a different silhouette is higher,” Ford said. “We’re building upon what customers are telling us that they want.” Compact and sub-compact SUVs sit higher off the ground and have more usable interior space, but often have similar powertrains and engines as sedans, Ford said. “The underpinnings are still the same, it’s just that we’re giving more practicality to what’s built on the underpinning,” Ford said. “And if for some reason tastes were to change back (to sedans), we could respond to that.” Entering the new year, 2019 marks Bill Ford Jr.’s 20th anniversary as chairman of the company, his 31st year on the company’s board of directors and 40th year working in the family business. Ford CEO Jim Hackett is expected to detail his massive overhaul of the company’s operations to shed $11 billion in costs over several years. “We are going to be making a lot of news,” Bill Ford Jr. said. “This is a very dynamic business. And you would expect us to have a very active news-making year next year — and we will.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NEWSMAKERS OF THE YEAR

DAN GILBERT Founder and Chairman, Quicken Loans Inc. By Kirk Pinho kpinho@crain.com

an Gilbert rang out 2018 much in the same way he did 2017: with a big, thunderous groundbreaking ceremony. Almost a year to the day after kicking off construction for the J.L. Hudson’s site skyscraper, which will be the tallest in the state at potentially 912 feet tall, Gilbert and his Bedrock LLC real estate company held a splashy event to mark the beginning of the $830 million Monroe Blocks project just east of his Quicken Loans Inc. headquarters in the One Campus Martius building downtown. It’s the latest eye-catching project for the billionaire founder and chairman of Quicken Loans and Rock Ventures LLC, who continues to dominate the Detroit business landscape with major real estate development and corporate attraction, emerging companies like StockX, philanthropy, and exploring advocacy on car insurance reform. (And yes, even buying Dictionary.com and Thesaurus.com, announcing the acquisition with a playful back-andforth on Twitter.) Gilbert, who turns 57 on Jan. 17, is also on the verge of building a new criminal justice complex for Wayne County and announced he is selling his Greektown Casino-Hotel for $1 billion to Wyomissing, Pa.-based Penn National Gaming Inc. and New

York City-based Vici Properties Inc. in November. (“We are analyzing strategically what to do going forward” with the rest of his gaming interests in other states, Gilbert said.) In addition, he is pursuing a redevelopment of the large site of the former Brewster-Douglass housing projects near Brush Park. “These years start to merge, man,” he said with a laugh during an inter-

centers, New York and Washington, D.C. And one of Gilbert’s companies, Amrock, formerly Title Source Inc., was hit with a $739.7 million judgment in March in a case that said Gilbert’s company misappropriated software from San Francisco-based real estate startup HouseCanary. An appeal seeking a new trial was filed last month, with Amrock alleging fraud and collusion. Still, his streak of Detroit development shows no sign of slowing down. The Hudson’s tower, which could be a combination of residential and hotel space, has grown several times since its original scale was unveiled in February 2017. An underground parking garage was demolished and removed over the course of 2018. “It’s been a hell of a hole in the ground for a year,” Gilbert said. The 15-acre site that formerly held the half-built Wayne County Consolidated Jail has been cleared of that eyesore, with details of a redevelopment expected in the next three months, Gilbert said. And the Shinola Hotel, under construction since January 2017, is taking reservations for its 130 rooms and will open to the public Jan. 2 — a little less than two years since the project formally began.

His streak of Detroit development shows no sign of slowing down.

view following the Monroe Blocks groundbreaking. The year hasn’t been without its setbacks for Gilbert, who Forbes estimates is worth $6.4 billion. In January, Gilbert, who spearheaded the joint Detroit-Windsor bid to land Amazon.com Inc.’s so-called “second headquarters,” or HQ2, found out the international bid didn’t make the Seattle-based online behemoth’s shortlist of 20 final contenders. The project ultimately primarily went to the nation’s banking and political power

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

MATTHEW MOROUN Vice Chairman, Crown Enterprises Inc. By Kirk Pinho kpinho@crain.com

t took only about seven months for one of the most transformational real estate deals so far this century to come together. At one end of the table was Ford Motor Co., run by Executive Chairman Bill Ford Jr. and CEO Jim Hackett. At the other end was Warren-based Crown Enterprises Inc., run by Matthew Moroun, son of the controversial trucking and logistics mogul Manuel “Matty” Moroun.

Ford’s vision was the “grand development” Moroun sought for the train station.

And in the middle of the blockbuster sale of Michigan Central Station and other nearby property to the Dearborn-based automaker for nearly $100 million, his company worked on another regional icon of decay: the 186-acre former McLouth Steel Products Corp. site in Trenton along the Detroit River. Ford’s vision for an autonomous vehicle and electric vehicle campus in Corktown with the train station at its heart was “the grand development I was looking for,” Moroun, who declined to be interviewed for this story, said on June 11 in public remarks confirming the depot’s sale. The first meeting with Ford representatives took place Oct. 13, 2017, Moroun said in the summer, and culminated in the $90 million sale of the 600,000-square-foot former train station and the $8 million sale of a former Detroit Public Schools book depository on Dalzelle Street next door in May, according to public records later filed with the city. Moroun, a 1995 Dickinson College (Pennsylvania) graduate who is vice chairman of Crown Enterprises Inc., called Ford, as “the next steward of the building,” the “right one for its future.” The family has long been criticized for its lack of upkeep of the historic depot, which is 104 years old

and sits in many Detroiters’ emotional craw. In all, Ford plans a 1.2 millionsquare-foot campus costing $740 million that when complete would monumentally transform Corktown, the neighborhood west of the central business district. The deal was so monumental that its formal, splashy June 19 announcement drew 4,500 people — nearly as many as are expected to be employed in the sprawling campus anchored by the depot. While the deal for the McLouth property was struck in September 2017, it wasn’t until November that the title for the 183-acre complex covering 1.25 million square feet across 45 buildings was transferred. Crown paid $4 million for the site on the condition that they invest at least $20 million within six years cleaning it up and redeveloping it. If the company fails to meet that deadline, a $1 million fine will be imposed. Crown Enterprises officials have said the combined 260 acres could be redeveloped into a logistics hub with access to rail, a port along the Trenton Channel of the Detroit River and nearby connections to I-75 and Detroit Metropolitan Airport.

ILLUSTRATIONS BY ROBERT CARTER FOR CRAIN’S

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NEWSMAKERS OF THE YEAR

DUG SONG AND JON OBERHEIDE Co-founders, Duo Security

By Bill Shea bshea@crain.com

By Annalise Frank afrank@crain.com

nn Arbor-based Duo Security Inc. was preparing for a future as a public company. In stepped Cisco Systems Inc., the West Coast networking giant. Plans changed amid a speedy courtship. San Jose, Calif.-based Cisco (NASDAQ: CSCO) acquired Duo Security for $2.35 billion after a whirlwind 12 months for the fast-climbing cybersecurity firm. The deal, announced in August and finalized in October, is believed to be the biggest acquisition of a venture capital-backed startup in Michigan history. And it came about a year after a VC funding round valued the enterprise at $1.17 billion. Duo Security’s co-founders expected a slight slowdown in work as the company integrated after the acquisition. But in the more than two months since closing, progress is “smooth” and business has accelerated, Dug Song and Jon Oberheide said. They’ve both stayed on under Cisco’s security unit — Song as general manager of Duo Security and Oberheide as its CTO. Song joins Crain’s Newsmakers of the Year for the second time in a row. He was also a Crain’s 2017 Michigan Change Maker. The company declined to disclose 2018 revenue; it reported more than $100 million in annual recurring revenue for 2017, up from $73 million in 2016. Cisco reported $49.3 billion in rev-

SONG

“We had every intention to build a public company and an independent company and that was the path we were on.” — Dug Song

BUILDING THE NEXT GENERATION OF NEWSMAKERS At Wayne State University, we believe that success is a journey. This year, more freshman Warriors began their journey here than ever before. Our own journey started 150 years ago, but what might seem old is actually very advanced. You’ll see it in our new buildings, two of which just opened: the Mike Ilitch School of Business in The District Detroit and the Anthony Wayne Drive Apartments, which adds 800 beds to our growing on-campus living options. You’ll sense it in our experienced teaching. And when you graduate, you’ll know it in the exceptional potential it provides. Begin your journey here and see why more than 250,000 alumni made the same choice. And know that while success doesn’t just “happen,” it has great potential to happen—when you’re Warrior Strong.

W AY N E STAT E U N I V E R S I T Y

ilitchbusiness.wayne.edu

agreed to pay more than enue for fiscal 2018, a 3 perdouble that valuation. cent increase from $48 billion Cisco approached Duo in fiscal 2017. Security in mid-2017, The global firm first Song said, and “came on showed serious interest in pretty strong.” Duo Security when it joined “We had every intenthe latter’s Series D funding round last fall. That $70 miltion to build a public company and an indelion VC round was the largpendent company and est in Michigan’s history. that was the path we were It valued the quickly Oberheide growing cybersecurity company as a on,” he said. “ ... Cisco had worked “unicorn” — worth more than $1 bil- hard to get our attention. They were lion. And less than a year later, Cisco very serious about a partnership or a merger. It took us a second to realize what they were saying.” In Cisco, there was a chance to partner, get what both wanted and accelerate growth with the global company’s vast client base. The 74,200-employee Cisco is pivoting toward software, cloud use and its rapidly growing cybersecurity segment. It has called Duo Security a “leading provider” of cloudbased security products and a simple-to-use two-factor authentication system. The morning of Duo Security’s Aug. 2 takeover announcement, business development nonprofit Ann Arbor Spark hosted a different California-based company — a high-tech equipment manufacturer considering a location in the area. “(The Cisco acquisition) is a great proof point to be able to have for the maturity of Ann Arbor’s tech and startup scene,” said Phil Santer, senior vice president and chief of staff for Ann Arbor Spark. “We all had goosebumps.” That project became the plan that KLA-Tencor Corp. announced in October for a $71.1 million, 500-job investment in the area, Santer said. The deal’s ripple effects are widely foretold in the Washtenaw County city. But they’re spreading across the Midwest, too, said venture capital and entrepreneurship expert Emily Heintz. She also owns Ann Arbor-based company EntryPoint. “It’s drawn a lot of attention for the Midwest outside the region,” Heintz said.

Lauren McCree, M.B.A. student Sport and Entertainment Management program

Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

arren Evans would pass the hulking unfinished Wayne County jail site on his way home from work and be reminded of the job ahead. “I’d ride past that building and think ‘Oh, hell, we still have this mess,’” he said. Evans, the brassy tough-on-crime sheriff elected county executive in 2014, inherited the boondoggle that had cost taxpayers $150 million by the time it was halted in 2013 because of massive cost overruns. Alongside fixing Wayne County’s dire finances and keeping it from running out of cash, Evans oversaw years of negotiations on the downtown Detroit jail site that culminated in a landmark deal approved earlier this year that turns the site over to billionaire developer Dan Gilbert in return for his promise of $153 million toward a $533 million criminal justice complex that will open by 2022 a few miles away. Gilbert, who originally planned to build a soccer stadium at the “fail jail” site, is expected to build some sort of mixed-use project of retail, commercial and residential. The county will issue $380 million in bonds to build a justice complex of 2,280 inmate beds, 25 courtrooms, five hearing rooms, sheriff’s and prosecutor department offices and a 160-bed juvenile detention facility on land at East Warren Avenue near the I-75 service drive. It

By Jay Greene jgreene@crain.com

onsumers Energy CEO Pattie Poppe took a leadership role in Michigan in eliminating coal as an energy source, approving a strong policy on renewable energy production, adopting electric charging stations and autonomous vehicles as a major growth strategy and committing the company to a more diverse and inclusive workplace. Poppe, 49, is in her third year heading up the state’s largest utility in terms of customers with 6.6 million. Born in Jackson, the daughter of a nuclear engineer, Poppe joined Consumers in 2010 after working for General Motors for 15 years as an industrial engineer. Earlier this year, Poppe led somewhat of a reversal of Consumer’s energy policy when the company announced it would eliminate coal as an energy source, close its seven remaining coal plants, reduce carbon emissions by 80 percent and boost renewable energy production to 43 percent, all by 2040. Previously, Consumers, like many public utilities, fought against efforts to mandate greater use of renewable energy. In 2008, a state law mandated utilities produce 10 percent of electric generation from renewable energy by 2015. It was renewed in 2016 to increase the mandate to 15 percent by 2021. “Our senior leadership team in our company really took some time

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NEWSMAKERS OF THE YEAR

WARREN EVANS Wayne County Executive

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swapped the old American Motors Corp. site on the west side at 14250 Plymouth Road with the city in exchange for the new jail site. If there are any cost overruns on the new jail complex — and public works projects are notorious for failing to come in on budget — Gilbert must pick up the cost. That caveat was especially important to Evans.

“Any deal had to be less onerous or have less negative impact tax-wise on Wayne County residents because they’d already been taken advantage of,” he said. “Without a doubt, it was the most complex deal and most significant deal — from making it happen, but getting rid of the albatross that had been around the neck of the county for years.” While Evans credits county corporate counsel Zenna Elhasan (who left

“I could see the change orders in my sleep.” — Warren Evans, on the possibility of finishing the Wayne County jail.

PATTI POPPE CEO, Consumers Energy

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“Environmental stewardship is what our team cared about.” — Patti Poppe

to focus on the future and what legacy we wanted,” Poppe said. “Environmental stewardship is what our team cared about. Not sufficient was just compliance with a standard.” Poppe said top executives believed the company should not only adopt the lowest cost model, but the cleanest energy at the lowest cost model. Consumers has since adopted the triple bottom line goal of people, planet and prosperity.

“To serve Michigan, we need to grow, and if we grow, Michigan grows, and growth helps performance,” Poppe said. As a reward for closing five coal plants, the global research firm Sustainalytics recently recognized Consumers as in the top 6 percent of utilities across the world for having “sustainable environmental, social and economic practices.” “We are ranked the No. 1 U.S. utility by international investors” beILLUSTRATIONS BY ROBERT CARTER FOR CRAIN’S

for the Troy-based Kresge Foundation in 2018) and deputy county executive Richard Kaufman as being instrumental in getting the deal done, it was his job to negotiate when impasses arose. “When we would hit a wall and had to make a significant decision, I’d get ahold of Dan Gilbert to get it back online,” he said. “Everybody has their own interests they needed to watch. Rock didn’t want to be in a position of dealing with significant cost overruns. It’s always a give-and-take process. Everyone has to make concessions here or there.” During the jail talks, the county seriously considered finishing the project. But that would have meant new companies would have to navigate work already partially done — and that would be costly. “I could see the change orders in my sleep,” Evans said. Evans finessed the fail jail deal while masterminding the county’s financial recovery. When he took office, Wayne County was averaging a $52 million structural deficit and an $82 million accumulated deficit. Evans deployed an austerity plan, restructured spending, cut pay and modified pensions and benefits. Subsequently, the deficits have been replaced with budget surpluses and $2 billion in unfunded retiree health care obligations have been reduced to about $600 million, he said Additionally, the county’s pension system is funded in the “high 50 percent” range with the goal of reaching

80 percent. It was 45 percent when he took office. “I won’t rest until we’re at 80 percent,” he said. Wayne County spent 14 months under a consent agreement with the state over its finances, emerging in October 2016. The brighter budget outlook has improved the county’s ability to borrow money at cheaper rates. In June, S&P Global Inc. gave Wayne County’s bond rating a two-notch boost to investment grade BBB+ and said the county is reaching a “more normal” operating environment. Evans said his no-nonsense analysis of the budget situation after he took office meant that stakeholders understood the grim fiscal reality and staved off major fights. “If there was one thing we did extremely well, it was to do a deep-dive in the beginning and commit to whatever the reality is,” Evans said. “We were able to convince folks it was in dire straights. That set the tone for people to be agreeable to the changes that needed to occur.” He was honored with the 2016 County Executive of the Year award by the National Organization of Black County Officials, and easily re-elected in November for a second term after facing no opposition in the primary. The 69-year-old Democrat — he turns 70 on Dec. 30 — began his career as a county jail officer in 1970.

cause of Consumers efforts toward coal reduction and renewable energy goals, Poppe said. “We are very appealing to international investors ... because we closed coal plants.” Some believe that Consumers was pushed earlier this year by billionaire renewable energy advocate Tom Steyer into adopting a stronger renewable energy portfolio. In May, Consumers and DTE Energy Co. pledged 25 percent renewable energy by 2030 if Steyer dropped his ballot initiative campaign seeking a 30 percent renewable energy mandate by 2030. But Poppe said Consumers had already decided internally to zero out coal and increase renewable energy production before Steyer targeted Michigan. Consumers expects to hit 37 percent renewable by 2030 and 43 percent by 2040. “I think Tom was unaware how much progress was being made here in Michigan,” Poppe said. “I had met him in Washington, D.C., and we hadn't published our integrated resource plan, so I couldn’t tell him the details of what we were planning.” It helped Consumers that in the 18 months before presenting its IRP in June to the Michigan Public Service Commission, solar energy production prices had dropped more than 20 percent. “It makes it very viable in Michigan and surprised a lot of people. Michigan is not Arizona or Florida, but solar works on the hottest days of the year when demand is highest, during the summer peak,

which makes solar very viable.” Another emerging technology that will benefit Consumers’ renewable energy approach is growth of electric and autonomous vehicles. There are approximately 14,000 electric vehicles motoring around Michigan with only about 1,000 charging stations. Projections call for those numbers to increase dramatically over the next decade. In early 2018, GM and Consumers agreed to “smart charging” technology for owners of electric vehicles. Consumers will buy or lease more than 100 GM electric vehicles and the two partners will test new charging technology. “Electric and autonomous vehicles fit perfectly with our plans. GM will develop the cars and we expect to fuel those vehicles with clean power,” Poppe said. “When electric vehicles are charging off peak hours (at night) they more fully utilize (electric) infrastructure and that lowers unit costs.” During the next decade, Poppe said the average customer will start to see rates moderate because of greater use of the power grid by electric cars. In August, Poppe received the Bridge Builder Award from Equality Michigan for the company’s commitment to diversity, inclusion and LGBTQ equality in the workplace. “If I remain anchored around the triple bottom line, people include my coworkers. It is important they feel cared for and loved in company,” Poppe said.

Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

MICHIGAN’S 49th GOVERNOR: BUILDING A PLAYBOOK FOR SUCCESS

Leaders to Gov. Whitmer: We stand a Deloitte Michigan Managing Partner Mark Davidoff and Crain Communications President KC Crain gathered a group of diverse business and her administration and pathways to sustainable success for Michigan. This essay summarizes the collective perspectives from the As newly elected leaders are being sworn in across the country, the citizens of Michigan welcome a new Governor, a new Senate Majority Leader and a new Speaker of the House. As community leaders and stakeholders in Michigan’s economy and future, the timing was right to take stock in the strengths and opportunities imbedded in the great state of Michigan. The leaders at the gathering expressed sincere gratitude for Governor Snyder’s leadership over the last eight years and are excited to welcome Governor Whitmer. While the perspectives from the roundtable discussion about the future are shared here, there is a hope that the aspirations expressed will ring true. The goal across the table is clear: support our state’s leadership in setting a path that ensures sustainable success for Michigan today and for the future. Michigan heads into 2019 in a stronger fiscal and economic position than eight years ago. There is a sense of pride of our new innovations in automotive, engineering and mobility and growth in emerging sectors such as energy, food, health and IT. Detroit is rising again. Unemployment sits at an amazing low of 3.9 percent and the higher education system continues to attract the best and brightest. And thankfully these successes give Michigan the opportunity to

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tackle some of the most challenging issues. However, one cannot overlook the underachievement in K-12 education, a widening gap of economic and social equity and an underfunded infrastructure system, from roads to water. While our roundtable participants did not always agree on a single strategy to fix each of these tough challenges, there was consensus that Governor Whitmer and the Michigan Legislature would benefit from support and engagement from corporate and community leaders. Here are the principle pillars expressed to make this happen.

Pillar 1: Put Us In, Coach A common agenda and a cohesive narrative that tells the story of where we want to go is a critical starting point for continued success. With several lifetimes of experience around the table moving complex organizations and differing visions through processes that create unifying agendas, there was consensus that collective leadership from across Michigan needs to work together to set the tone. Our participants, with their deep passion for Michigan and its future, stand ready to help drive Michigan’s continued progress. Put us to work.

Pillar 2: Insist on One Michigan “Rough and tumble” has always been a good descriptor for politics, but technology and social media have amplified it to a point where incivility seems to be the order of the day. As one roundtable participant said, “the enemy here is the extreme polarization in both parties.” So, the question is how can the political rhetoric be dialed down? The first step is clear focus on an agenda that serves all the people of Michigan. Not just what is good for one company or one industry or one constituency. The litmus test for accountability on legislation and policy direction might be, “Is this

“Time is not our friend. If we don’t get this done in our generation, it may never get done. My hope is we’ll have the will to make it happen. My fear is we’ll miss the opportunity that we have earned. Our legacy must be that generations from now they will look back and applaud the fact that the leaders of our time put a flag down on One Michigan and made it happen.”

good for all Michiganians?” There is confidence that this mindset can yield success. It is

not necessary to look very far, or very far back in time, for proof positive that collaboration – across party lines and geographic borders, with a spirit of joint public - private endeavors — can work wonders, as it did with the Grand Bargain and Detroit’s rise from Chapter 9 bankruptcy. As one of our roundtable participants pointed out, “We have an opportunity here at the beginning of a new era where the lions and the lambs can lie down together.”

Pillar 3: Champion the Hard Causes Throughout our roundtable discussion, two priorities quickly rose to the top: education and

ROUNDTABLE PARTICIPANTS

Mark Davidoff

KC Crain

Tonya Allen

John Carter

Michigan Managing Partner

President

President and CEO

Crain Communications

The Skillman Foundation

President, Michigan Middle Market Banking

Deloitte

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JPMorgan Chase

Maura Corrigan

Dr. Darienne Driver

Ron Hall

Ronia Kruse

President and CEO

Founder and CEO

Pre

Counsel

CEO

Bridgewater Interiors

OpTech

Butzel Long

United Way for Southeastern Michigan

Bar Com

SPONSORED BY:

Bishop Edgar Vann II

Evan Weiner

Senior Pastor

Edw. C. Levy Co.

Second Ebenezer Church

President and CEO

Dr. M. Roy Wilson President Wayne State University

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NEWSMAKERS OF THE YEAR

GRETCHEN WHITMER Governor, State of Michigan

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By Chad Livengood clivengood@crain.com

retchen Whitmer launched her campaign for governor in January 2017 amid doubts within the Democratic Party that she could win a statewide election. Over the ensuing 22 months, she repeatedly proved her skeptics wrong, fending off two Democratic primary challengers and sailing to a 10-percentage-point victory over Republican Attorney General Bill Schuette, a two-term statewide official who had spent years plotting his pathway to the governor’s office. Whitmer, 47, took the oath of office Jan. 1 on the steps of the state Capitol, becoming Michigan’s 49th chief executive. Along the way to overcoming what she called Schuette’s “superficial, sexist barbs,” Whitmer honed a “fix the damn roads” campaign message about the condition of the state’s crumbling infrastructure that echoed what she was hearing on the campaign trail. “It sounds really simple, but the fact of the matter is the best leaders are the ones setting an agenda that matters to people,” Whitmer said in an interview with Crain’s. “And you only know what that is if you listen.”

“It sounds really simple, but the fact of the matter is the best leaders are the ones setting an agenda that matters to people. And you only know what that is if you listen.” — Gretchen Whitmer, on her “fix the damn roads” campaign slogan

In her travels across the state, the attorney and mother of two from East Lansing found Michiganians cursing the roads. “When you’re actually in Gogebic County and they’re talking about the roads, you know that it’s not just people in metropolitan Detroit that are paying the most, that we’re all feeling the pain with … our infrastructure in Michigan,” Whitmer said. “Voters want us to fix the damn roads — that’s become very clear,” she added. But how Whitmer delivers on her campaign promise to repair the roads stands to be her biggest challenge as governor as she’ll be sharing power the next two years with a Republican-controlled Legislature that controls the purse strings. Whitmer campaigned on an agenda of raising additional revenue for roads through higher user fees. She said if the Legislature “isn’t strong enough” to raise taxes, she’ll seek voter approval in 2020 for a multi-billion-dollar infrastructure investment plan. Incoming House Speaker Lee Chatfield and new Senate Majority Leader Mike Shirkey have already signaled they differ with Whitmer on the source — or, in Shirkey’s case, the

need — for additional money for roads. The new governor intends to counter their arguments with the message she honed on the campaign trail: “Potholes are not partisan.” “They’re not Republican or Democrat,” she said. “They don’t just rip up … one group’s cars or the other’s (cars). We’re all paying a price for it.” Whitmer also is focusing on the winds of change blowing in Michigan’s auto industry as General Motors Co. and Ford Motor Co. get ready to shed thousands of workers and several four-door sedans, even while the economy is still seen as strong. Whitmer, who has spent most of her political career in the Legislature and was a leader of the Democratic Party’s early resistance to Republican Gov. Rick Snyder, has been trying to position herself as a business-friendly Democrat. “I think that we’ve got to do whatever we can to make sure people know Michigan is open for business, that we draw investment here and that we keep people in the workforce and actually grow our workforce,” Whitmer said. “On all of those fronts, that’s always going to be a critical need and focus of my administration.” Whitmer enters the governor’s of-

fice as just the second woman to hold the state’s top job. And having served in the Legislature during Democratic Gov. Jennifer Granholm’s tenure, Whitmer is mindful of the struggle Granholm faced with a Republican-dominated Senate and pair of majority leaders who sparred with Granholm often between 2003 and 2010. “The last time we had a divided government like this, we had a Legislature that was determined to undermine and to make a governor’s life very difficult,” Whitmer said. “None of us can afford that now. The business community can’t afford to see that happen.” Pragmatic and eager to strike deals, Whitmer is mindful that there are limits to the change she alone can affect from the governor’s office. “I don’t have every answer to every problem that every Michigander is confronting,” she said. “But understanding and taking time to listen and then building an organization and bringing in talented people to help solve those problems, that’s what I’ve focused all of my attention on in this short 55 days of the transition.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

BHARAT DESAI

ILLUSTRATIONS BY ROBERT CARTER FOR CRAIN’S

Founder and Chairman, Syntel Inc. By Dustin Walsh dwalsh@crain.com

Bharat Desai is an unlikely billionaire. The Kenyan-born electrical engineer immigrated to the U.S. in 1976, working as a temporary programmer for engineering and consulting firm Tata Technologies. The assignment was expected to last six months. Now, 42 years later, Desai remains in the U.S. and is among the wealthiest Indian-Americans in the world after selling his company in a $3.4 billion deal this year. Desai, 66, declined to participate in an interview about his rise to the upper echelons of metro Detroit entrepreneurship. He founded Syntel Inc. in 1980 with his wife, Neerja Sethi, from their Troy apartment while completing his MBA from the University of Michigan. Desai learned what worked and what didn’t at Tata and quickly grew his information technology and outsourcing company as the internet age blossomed. The first year of Syntel’s operation amounted to just $30,000 in revenue, but soon it scored a major client in General Motors Co. in 1982. In the late 1980s, Syntel was early to capitalize on outsourcing information-technology work to India, taking advantage of the low labor costs and educated workforce as U.S. companies sought new ways to control costs while expanding globally in the information age. Syntel went public on the NASDAQ in 1997. Forbes ranked Syntel second on its “200 Best Small Companies in America” the same year of its initial public offering. Desai became a U.S. citizen in 1985. “I always wanted to run a business of my own,” The Times of India reported Desai saying at an entrepre-

“I always wanted to run a business of my own. I was a horrible employee and could not live by anybody else’s rule. So, the best way was to start my own company. My wife is the toughest board member.” — Bharat Desai, at an entrepreneur event in Delhi, India, in 2013, as reported by The Times of India

neur event in Delhi, India, in 2013. “I was a horrible employee and could not live by anybody else’s rule. So, the best way was to start my own company. My wife is the toughest board member.” While other similar firms went belly-up in the dot-com bust of the late 1990s, Desai’s discipline — and apparently his wife’s toughness — stabilized the company through industry trends as it maintained a client list dominated by global conglomerates. Last year, American Express, State Street Bank and FedEx Corp. accounted for 45 percent of its $924 million in revenue, ranking 27th on Crain’s list of largest publicly traded companies in Southeast Michigan. Syntel, still based in Troy with global development centers in India, Scotland, Poland and the Philippines, and 76 percent of its billable workforce located in India, according to Syntel’s annual report, became an acquisition target for French IT firm Atos SE in 2018. Atos agreed in July to acquire Syntel for $3.4 billion in a cash deal. Desai and his wife controlled a 57 percent stake in Syntel, according to The Times of India, which means they walked away with upward of $2 billion when the deal closed Oct. 10. Desai ranked 1,999th on Forbes’ Richest list before the close of the Atos deal with a net worth of $1.6 billion. The couple live on Fisher Island, a barrier island near Miami, the wealthiest ZIP code in the U.S., where the average annual income is $2.5 million, according to an April 2018 Bloomberg report. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

NEWSMAKERS OF THE YEAR

GERRY ANDERSON Chairman and CEO, DTE Energy By Sherri Welch swelch@crain.com

erry Anderson, chairman and CEO of DTE Energy Co., made news throughout 2018 on several fronts. At DTE, he faced down a signature campaign that would have increased renewables requirements on the company, led DTE in making a new commitment of its own to renewables and secured approval to move forward with a new natural gas plant in St. Clair County. He also led a CEO group that emerged last year as a force on transit, economic development and other regional issues. At Anderson’s invitation, a group of roughly 20 corporate and foundation leaders, whose companies collectively employ half of the region’s workforce, began meeting quarterly late in the fall of 2016 to discuss regional issues. Smaller than more formal groups like Detroit Renaissance before its shift to a statewide focus, the noname CEO group provides an opportunity for “trust-based, quiet conversations rather than an institutional approach,” Anderson said. The group had been working quietly for a year and a half on issues including youth employment, career and technical education offerings in Detroit, workforce development and benchmarking of other regional, economic development efforts. But it didn’t make its presence known until

this past April when it came out in support of putting a regional transit initiative on the November ballot in a public letter, with a few other sympathetic CEOs coming along for the ride by signing on to it. Regional transit was different from the earlier issues the group had been working on because it required advocacy to move it, Anderson said. “We were willing on that one to step out and advocate, ultimately, in a very public fashion.” It’s an issue the region hasn’t found consensus on, yet, but needs to, he said. “We’ll be looking for the next window where there may be a chance to get regional leadership.” With the opportunity to bring Amazon to the region in the rear view mirror, in June the group talked to the Detroit Regional Chamber about its plans to create a new regional economic development nonprofit. It spent much of 2018 focused on securing nonprofit status for the group, seating its board with Anderson as chair, finalizing its location at the chamber’s offices and hiring Barry Matherly, president and CEO of a peer organization near Richmond, Va., to lead it come January. The CEO group also launched efforts to raise $6 million in annual operating funds to support the new nonprofit in its first few years. The drive is off to a good start with heavy foundation investment for the early years, Anderson said. He expects op-

DAVID COTTON, M.D. CEO, Meridian Health By Jay Greene jgreene@crain.com

hile former CEO David Cotton, M.D., of Meridian Health stepped back from the limelight in recent years to give his three sons more responsibilities with the company, the two-time Crain’s Newsmaker called the shots as he guided the state’s largest Medicaid health plan toward a $2.5 billion sale in 2018 to WellCare Health Plans of Tampa. Cotton, an obstetrician-gynecologist who practiced at Detroit Medical Center, and his wife, Shery, founded Health Plan of Michigan in 1997 along with former chief information officer Tom Lauzon. Renamed Meridian Health in 2012, the Medicaid HMO became the largest managed care company in Michigan with more than 500,000 members. It also operated businesses in Illinois, Indiana and Ohio. As he has done the past several years, David Cotton declined to be interviewed for the Newsmakers profile. “My dad is the most competitive person I know. He was adamant that Meridian had to be the best health plan,” said Jon Cotton, a former Newsmaker in 2015 who was president of Meridian and now heads up ApexHealth, a Grosse Pointe Farmsbased managed care startup that will enter the Medicare Advantage market in 2020.

“Being the best didn’t mean the largest, the most profitable, or the most well-known. It meant providing the highest quality health care to our members. From the minute he woke up in the morning until he went to bed, he was obsessed with providing the best care. He probably even dreamed about it. It wasn’t a goal or a company mandate — he literally made it a part of our DNA.” At one time, Meridian was one of the largest family-owned, for-profit managed-care companies in the nation. It ranked fourth on Crain’s Private 200 list of largest privately held companies in metro Detroit with 1,200 employees and projected $4.3 billion in revenue in 2018 in its Medicaid, Medicare and pharmacy management business lines. “My father’s greatest asset he had in business and in life was my mother,” Jon Cotton said. “She supported him without question. She ran the company while he went out and built it. I asked her once if she was ever scared when he started the company. She immediately replied with, ‘No. This man has never failed at anything in his life.’ ” In early 2018, the family decided to sell the company when it became clear Meridian needed additional financing to continue to grow and manage an ever-expanding Medicare and financially risky Medicaid patient population.

“By and large, this isn’t a business agenda” for the CEO group. “It’s really focused on key priorities for (Detroit) and the region to get right in order for it to be a great American city.” — Gerry Anderson, on the CEO group he founded

“My dad is the most competitive person I know. He was adamant that Meridian had to be the best health plan. Being the best didn’t mean the largest, the most profitable, or the most well-known. It meant providing the highest quality health care to our members.” — Jon Cotton, former president of Meridian; now heads up ApexHealth

ILLU

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Spurred by a successful ballot signature drive led by billionaire environmentalist Tom Steyer, DTE stepped up its move to renewables with a commitment this year to produce 25 percent renewable energy by 2030, as part of a move to 50-percent clean energy. “I was surprised when that ballot initiative came up because we were a company (and state) that had taken the lead on 80-percent carbon reduction. Consumers (Energy) came out with the same,” Anderson said. “That led me to reach out to (Steyer) and enter conversations … we ended up where we did because of those conversations.” As part of its 2017 commitment to reduce carbon emissions by more than 80 percent by 2050, DTE said it would retire aging coal plants and replace them with renewable energy and add gas-fired generation to provide power reliability. It secured the approval it needed this year to build a $1 billion natural gas plant in East China Township in 2019. Building on that investment, Anderson said DTE recently filed plans with the Michigan Public Service Commission for its next traunch of renewable investments, $1.7 billion between now and 2022 or 2023 to double its renewable resources. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

2019 ELEVATED.

erating funds to be in place by late first or early second quarter. “Over time, the stated goal is to phase the foundations down and phase the corporations and public sector up,” Anderson said. The CEO group has also been working with other public, private and nonprofit stakeholders this year to look at existing public spaces in Detroit and the region to identify what exists and has been proposed and the financial viability of sustaining those spaces. “Many of the issues we’re taking on are not one-year issues,” Anderson said. “They require persistence over longer time frames to get right.” In the coming year, the CEO group — whose absence of a name shows where its priorities have been, Anderson said — plans to begin working to renovate and strengthen its third technical academy in Detroit, Golightly Career and Technical Center on the city’s east side. It’s also stepping back to review its efforts and agenda so far, Anderson said. “Are we happy with our current agenda? Is there anything we’d like to take on or take off?” “By and large, this isn’t a business agenda” for the CEO group, he said. “It’s really focused on key priorities for (Detroit) and the region to get right in order for it to be a great American city.” Through it all, Anderson was busy with his “day job.”

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Despite keeping a low public profile, David Cotton plans to stay involved in charitable activities in Southeast Michigan. The Cottons will create a family foundation for health care projects at St. John and Beaumont hospitals and continue to invest in development activities in Grosse Pointe Park. Since 2011, the Cotton family has purchased a number of businesses and buildings along Kercheval Street in Grosse Pointe Park for a retail, dining and entertainment district they hope will eventually rival Royal Oak or Birmingham. The Cotton family also are major Detroit Zoo supporters. In 2015, the zoo opened the Cotton Family Wolf Wilderness, which is the new home to two Canadian-born gray wolves. Shery is a board member of the Detroit Zoological Society. Because of David Cotton’s longtime affinity for wolves and his love for the direwolves of George R.R. Martin’s Game of Thrones series, plus a $20,000 donation in 2014 by Shery as a Father’s Day gift to a Martin charity, Martin has said he will name a character in a future book after David. The elder Cotton has often referred to himself as a “lone wolf.” So far, however, a David Cotton character hasn’t been written.Sometime soon Martin is expected to complete his sixth book, “The Winds of

Winter.” The Cotton family is patiently waiting for the book to come out because all Martin promised is the Cotton character would meet a “grisly death.” On the life-saving side, as major hospital donors, the Cottons funded in 2008 the creation of the Cotton Family Medical Library in the medical office building of St. John Providence Park Hospital in Novi. In 2011, the Shery L. & David B. Cotton M.D. Family Birth Center opened at Beaumont Hospital in Grosse Pointe. “I will never be able thank this man enough for the opportunity he gave my brothers and me” to be part of building Meridian, Jon Cotton said. “It was an honor and a privilege to build something special alongside him.” Jon Cotton remembered when he first came to work for his father in the late 1990s when he was still a student at DePaul University in Chicago. “I worked and traveled with my dad. ... We went door-to-door to make pitches to primary care physician offices,” said Jon Cotton, adding that one of his father’s greatest desires was to treat physicians well and help them provide quality care to their patients. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Contact Nina Thekdi at nathekdi@varnumlaw.com

Nonimmigrant visa petitions Family and employment-based permanent residence petitions 2019

Tier 1 Metropolitan Ranking in Labor Law – Management and Employment Law – Management

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

FOCUS CES 2019

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What’s next, mobility and more Metro Detroit companies to debut wares at annual Las Vegas show the world over scramble for a piece of the trillion-dollar industry. his week, Detroit heads west. As such, CES has become as much about toOver 40 companies based in the region morrow’s automotive tech as it has life-raftor with a large footprint here will be in sized TVs and internet-connected cat-litter Las Vegas to debut their latest wares at the an- boxes. There are still “what if?” concepts, but nual CES 2019 Jan. 8-11. The conference has now there’s a heavy focus on “what’s next,” too. always offered a glimpse at what’s around the For local firms, automotive and otherwise, CES corner, but lately the trade show has become represents a unique opportunity to survey the increasingly mobility-focused as firms from technology landscape and meet potential West

By Timothy Seppala

Special to Crain’s Detroit Business

AutoPets Auburn Hills-based AutoPets is approaching CES a little differently in 2019. Rather than revealing a brand new entry in its Litter Robot product line, the company will instead use the conference to reach a different audience for its pricey self-cleaning cat boxes. Namely, men. According to content marketing manager Lori Bates, more women tend to call in and buy the Litter Robots ($449-$499), which presents a huge opportunity. “There’s that stigma where it’s more women who are lovey-dovey about their cats,” Bates said. “At CES, [men will] get introduced to a product that makes them think about their cat differently.” Auto Pets toyed with the idea of having actual felines in its booth this year for a cat cafe/rest area for at-

tendees as a means of grabbing attention, but the logistics didn’t pan out. Similarly, the firm has an entirely new model in the works, but development wasn’t far enough along to take a prototype into the desert. In lieu of those, the company will focus on its technical bent — CES is an electronics show, after all — and highlight the futuristic aspects of its flagship Litter Robot 3 Connect product: an app-connected “robot” that makes life easier by doing our dirty work. While you’ll still have to empty out a carbon-filtered waste tray, Litter Robot automates daily scooping. Via the Litter Robot Connect app, you can control the device from anywhere you have an internet connection and monitor how full the waste tray is. Now that the app is on the two biggest mobile platforms (Android and iOS), what’s next? Integration with home automation platforms like Amazon’s Alexa and Google

Litter Robot automates daily scooping with an app that can be controlled from anywhere there is an internet connection. AUTOPETS

Coast business partners. “Say what you will about Silicon Valley, but they’ve been a very positive disruptor in a 120-year-old industry,” said Kody Klindt, project development director at IAV Automotive Engineering, referring to the automotive sector. “We can’t sit on our laurels anymore in Detroit.” Here, we profile a small selection of metro Detroit companies headed to Las Vegas with technology that could define “what’s next.”

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SPECIAL REPORT: CES 2019 IAV

The new SISU Sense has an embedded six-month battery and impact sensor.

Akervall Technologies Inc. Akervall Technologies Inc’s latest athletic mouth guard can’t prevent concussions, but it will accurately measure impacts an athlete’s head takes over the course of a season. The new SISU Sense is a lot like the Saline company’s other mouth guards, except it has an embedded six-month battery and impact sensor. Those work in concert with a Bluetooth chip that connects to a mobile app, giving wearers an instant view of how much they’ve been shaken around. There’s no shortage of competition

Aptiv Last CES, Aptiv PLC offered anyone with the Lyft app the chance to ride in an autonomous BMW 5-series sedan. Since then, Aptiv and Lyft have launched a fleet of 30 autonomous cars in Sin City and have racked up over a million miles driven and some 25,000 paid consumer rides, all the while accruing a 4.95/5 user rating. Now, Aptiv is cementing its presence in the region with the Las Vegas Technical Center. It will serve as the command center for Aptiv’s “autonomous mobility on demand” operations. There, the company will monitor its cars, ensure they’re maintained appropriately and apply passenger feedback to the platform. A big reason for last year’s pilot program was listening to riders about what would make them feel more comfortable in an autonomous ride-hailing situation. It turned out that passengers were more relaxed when there was a

in the area, but CEO Sassa Akervall thinks the Sense stands out given the reputation of ATI’s traditional products. Amazon reviews don’t tell the entire story; however, over 80 percent of reviews for ATI’s most popular model are four-and-five starred. The $25 base ATI guards fit “like gloves” according to Akervall, and that enables data precision others can’t match. Because the Sense is entirely static when properly used, the only data that’s recorded is from actual impacts, including smaller ones that can accumulate over time. That’s a bit different from bulkier mouth guards or helmets with embedded shock sensors.

While the guard itself is largely the same as others from ATI, the company had to decide between a rechargeable version or disposable model and needed to source a Bluetooth chip before going into production. The SISU Sense has been in development in parallel alongside other offerings for roughly two years and will be available direct from ATI by month’s end. Akervall is realistic about early sales. She knows the roughly $100 price will narrow the Sense’s already niche market, but she’s bullish that once people find it, they’ll love it. “It’s not going to be one of our biggest sellers, but it’s going to be one of the most prestigious,” she said.

driver up front communicating what the car was doing, what to expect and why to expect it. With a bigger fleet in play during one of the city’s busiest weeks, this year Aptiv is asking slightly different questions. “It’s not just about gathering information on how we can make our technology better, but also how can we make this more [welcoming] to customers?” Jada Smith, VP of advanced engineering, said. That means figuring out which types of data to show passengers in addition to how and where it’s displayed. Aptiv will also demonstrate its full technology suite at an invite-only booth. We’re still a ways off from seeing an Aptiv/Lyft autonomous fleet in every city with a major airport, though. Predicting when that will happen is tough, because at a subjective level, each city behaves very differently. “The fundamental technology, that transfers,” Smith said, “but there’s still work that has to be done based on that individual city’s heartbeat.”

IAV Automotive Engineering has a foot in the present and an eye toward the future with its showing at this year’s CES. Of the five technologies on display this week, three could be implemented relatively quickly — a vehicle occupant sensor, digital service assistant and a privacy-minded data anonymizer. The first uses in-cabin cameras and facial-recognition software to facilitate no-touch engine starting, and cabin customizations like favorite radio stations or climate control settings. The second takes vehicle data from existing sensors and uses it to make day-to-day activities a little easier. For example, if the service engine indicator lights up your dashboard, IAV’s Digital Service Assistant can remotely diagnose the issue and schedule a maintenance appointment. “It’s using existing information in the vehicle to make smarter decisions and help you as the overall driver and passenger of the vehicle,”

Kody Klindt, IAV’s project development director, said. Then there’s Maskin, an AI-based method of anonymizing facial data that won’t impede camera-based driver-assist features. It was developed with Europe’s GDPR privacy framework in mind, but Klindt could “definitely” see it scaled for worldwide use. He said that OEMs have shown a lot of interest in the digital occupant sensors so far, and that these three systems could come online between 2022 and 2024. The rest of the company’s CES portfolio likely won’t come to pass for at least seven years. That’s depending on how autonomous technology matures and if we’re yet living in a world rife with self-driving shuttles and ride-hailing services. Specifically the Coquille, a personalized seat offering productivity and entertainment options. Same goes for side windows that double as interactive augmented-reality displays, which would require glass with embedded OLED screens. “It’s a little more scheduled and looking forward at the future,” Klindt said.

Maskin is an AI-based method of anonymizing facial data that won’t impede camera-based driver-assist features.

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The Las Vegas Technical Center will serve as the command center for Aptiv’s “autonomous mobility on demand” operations.

Detroit, MI

Wilmington, DE

Charlotte, NC

Shanghai, China

Cologne, Germany

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SPECIAL REPORT: CES 2019 Magna This week Magna will debut a concept for a vehicle cabin with an entirely reconfigurable seating arrangement. During a recent press demo at its Roseville seating division, the company showed a concept where seats glide along tracks in a vehicle cabin and rotate 360 degrees to serve a variety of situations. The idea is that the seats conform to how you want to use the car, not the other way around. One demo had all eight seats lining the cabin perimeter, facing each other in a boardroom scenario for rehearsing a business presentation. Another kept the driver’s seat in

place, shifted other seat positions and raised their bottom cushions to accommodate cargo loading and carriage. The third showcased a familiar situation: keeping the family safe and comfortable on a long road trip via in-seat entertainment options, with creature comforts like built-in massagers and four-way adjustable headrests. In addition to a physical wall with the aforementioned moving seats, Magna is using virtual reality — a growing trend among automakers — for interactive demonstrations. That’s important considering Magna doesn’t foresee portions of the technology being implemented until 2022 at the earliest.

Magna is using virtual reality — a growing trend among automakers — for interactive demonstrations. TIMOTHY J. SEPPALA

“[CES] is a way to find out what our competition and our customers are thinking for the future. This is coming into a brave new world, and we want as much feedback on that, and also to look at future technology potentials.” Ian Simmons

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The concept is one part of its vision for tomorrow’s car, be it a vehicle you own, or one you summon on demand. Because it’s still in the early phases, the company is actively listening for reactions in Las Vegas so it can tailor the system to its customers’ needs, especially when it comes to mobility-as-a-service. “[CES] is a way to find out what our competition and our customers are thinking for the future,” vice president of business development Ian Simmons said. “This is coming into a brave new world, and we want as much feedback on that, and also to look at future technology potentials.”

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Backyard Brains At CES, Ann Arbor’s Backyard Brains will give attendees a chance to control another person’s brain. Slip on a few electrodes, move your arm, and the team’s neuroscience kits will record the bioelectric signals that trigger movement. From there, another person dons the electrodes and the tech recruits the second person’s neurons to perform what the first did. “People can’t believe that it works,” president and co-founder Greg Gage said. The reason it seems so science-fiction is because most of us don’t have a basic understanding of how the brain and bioelectricity function. That it’s so jaw-dropping when folks see it is evidence enough for Gage that his 10-year-old startup’s work isn’t finished. “We have a long way to go as far as our mission of trying to get people understanding how the brain works.” In addition to the “mind control” device, Backyard Brains will also have experiments people can perform to see how body signals work in relation to muscle activity, heart activity and eye positioning. It will also showcase a simple video game con-

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

SPECIAL REPORT: CES 2019 Bosch Bosch is showcasing the “full depth and breadth” of its brand at CES this year. That means a booth in Central Hall showcasing its product catalog, from connected appliances and mobility applications to energy and building technology. It will also have an installation outside the main hall demonstrating a smartphone-based entry system for cars, Perfectly Keyless. The biggest focus will be on a concept that distills the firm’s vision of futuristic mass transit — one where it supplies every sensor for the ecosystem — into a relatively compact package. Bosch is calling it the “IoT Shuttle.” The German supplier is throwing a lot of resources behind autonomous public transit, and the shuttle is packed with use cases for Bosch’s various sensor packages, all of which communicate with one another. The firm’s in-vehicle sensing technology, for example, can detect if you leave your bag or laptop behind while tiny devices can sniff out if a previous passenger smoked in a given vehicle. The IoT Shuttle will also feature Bosch’s electric powertrain components. President Mike Mansuetti said we could see a self-driving shuttle outfitted with these sensors on the streets of Detroit within the next decade. This will be Bosch’s seventh CES, and over the years, how the company has approached the show has changed considerably. At the outset, Bosch viewed it as a brand-positioning opportunity and high-profile product exhibition. That’s since morphed into a “solutions-based cross-domain” showcase, where Bosch uses CES as a platform to announce new partnerships and advances. Mansuetti described it as a fairly safe place to gather feedback and debut new concepts. Unlike an auto show, he said, “It’s something that if [your product] doesn’t make it to market in the next two years, nobody’s coming back saying, ‘You introduced it, why isn’t it here yet?’”

Bosch will focus on a futuristic mass transit concept called the “IoT Shuttle.” Below, the interior. BOSCH

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troller (i.e. a Nintendo gamepad) that’s controllable via actions like eye blinks. And, for the first time, Backyard Brains will demo a handheld neuro-prosthetic “claw” that’s controllable via output from the brain’s motor cortex. Gage described it,

laughing, as a third appendage for picking up objects. Gage loves seeing people’s faces light up when they’re experimenting, but admitted his team isn’t great at marketing the inexpensive neuroscience kits. Receiving a grant from the

state of Michigan to attend CES helps. The company plans to launch nine new products in 2019, and expects growth to continue its upward trend, finishing 2018 with close to a million dollars in revenue and a 20 percent growth rate year over year.

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

SPOTLIGHT Calley joins SBAM

Former Lt. Gov. Brian Calley has joined the Small Business Association of Michigan to be the trade group’s president and principal lobbyist. Rob Fowler, president and CEO of the 26,000-member organization representing small Calley

businesses, said he will retain the position of CEO while shifting his lobbying and advocacy duties to Calley. Calley started the new job last Tuesday. He steps into the role of being the small-business group’s chief government relations officer responsible for lobbying some of the same state senators and representatives he served with as lieutenant governor — and the new governor’s administration.

GM names new president

General Motors Co. said last week that product chief Mark Reuss will succeed Dan Ammann as the automaker’s president, Automotive News reported. Reuss, 55, will assume responsibility for GM’s quality organization in Reuss

addition to leading its Global Product Group and Cadillac. The appointment is effective immediately, according to GM. GM last month said Ammann, 46, would step down from the role to lead the company’s Cruise autonomous vehicle unit, effective Jan. 1. A replacement was not immediately named.

Hello West Michigan selects leader

Hello West Michigan, a Grand Rapids-based talent attraction organization

for the state's west side, has selected Rachel Bartels to lead the nonprofit as its new executive director. She replaces Cindy Brown, who is exiting her post to serve full time as vice president of Bartels Talent Initiatives at The Right Place, a Grand Rapids-based economic development agency.

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainsdetroit.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. ACCOUNTING

ARCHITECTURE

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KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@ crain.com

SISTER PIE

Sister Pie owner Lisa Ludwinski sits outside her bakery in Detroit’s West Village neighborhood holding her cookbook, which came out Oct. 2.

New year, new options for growing Sister Pie By Annalise Frank afrank@crain.com

As 2019 unfolds, Lisa Ludwinski will be thinking seriously about how to grow her Detroit bakery, Sister Pie — and even where it should be. It was a packed fall, with the Oct. 2 release of Ludwinski’s cookbook and changes in her business’ structure. The West Village bakery alone sold more than 1,000 copies of her book, said Ludwinski, founder and owner of Sister Pie. “Sister Pie: The Recipes and Stories of a Big-hearted Bakery in Detroit” is also for sale on Amazon.com and through publisher Penguin Random House. It’s sold more than 20,000 copies so far, exceeding expectations, she told Crain’s. It topped the New York Times’ list of the year’s best baking books. And Sister Pie’s October-November sales were up 63 percent over last year. “The cookbook came out and that helped, not only selling books, but getting more people into the shop,” she said. Productivity has also increased as Ludwinski shakes up how she runs the business. They’re making more batches in bulk to meet demand, and in September she eliminated her staff’s hierarchy to foster teamwork and divvy up less-desirable tasks, she said. “Once the new year starts, the pressure will be on to figure out what’s next, so we’ll have to get into that tough work,” she told Crain’s in December. Ludwinski plans to hire a kitchen operations manager and revamp her own role, possibly focusing more on business structure and writing. Another change could come in 2020 when

Sister Pie’s lease is up. One option is keeping the popular bakery’s current storefront and expanding into a second location that could be used for classes and/or more kitchen space, Ludwinski said. “That feels like a cool opportunity to think about what would we do with more space than we originally thought we needed,” she said. But she’s also considering moving out of the small, recognizable corner shop at 8066 Kercheval Ave. and into somewhere new. There will be “heavy thinking” about both options this year, Ludwinski said. “I look at ... this front space ... and it’s so representative of us and it’s now so rooted in what the business is,” she said. “To lose that would be really sad, I think, for both our staff and community.” She’s begun discussions on possible opportunities for new space. An expansion or outright move wouldn’t necessarily require buying a building — she may lease, as long as the right accommodations could be found, she said. Last year Ludwinski discussed wanting to buy her bakery’s 2,070-square-foot building at Parker Street and Kercheval Avenue, but she said in early December that option is no longer available. Sister Pie is in the front half of the building. The back half was recently occupied by a Metropolis Cycles pop-up and then a holiday decoration retailer. City property records list the owner as William Haska. Haska’s broker didn’t respond to a request for comment. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

DEALS & DETAILS MERGERS & ACQUISITIONS  Rehmann, Troy, a financial services firm, has combined with Lamn, Krielow, Dytrych & Co., Jupiter, Fla., an accounting firm. Websites: rehmann.com, lkdcpa.com  Agree Realty Corp., Bloomfield Hills, has acquired more than 100 retail properties in connection with a sale-leaseback transaction with The Sherwin-Williams Company, Cleveland, Ohio, a paint and coating manufacturing company, through its subsidiary, Agree Development LLC, for a purchase price of over $150 million. Website: agreerealty. com, sherwin.com  O2 Investment Partners, Bloomfield Hills, a private equity firm, sold its portfolio company, NTI Connect LLC, West Chicago, Ill., provider of network implementation services for networking and data infrastructure companies, to ORIX Capital Partners, New York, N.Y., a private

equity firm. Websites: o2investment. com, orixcapitalpartners.com, nti-connect.com  Alliance Franchise Brands LLC, Plymouth Township, a marketing and communications firm, has acquired RSVP Publications Inc., Tampa, Fla., a direct mail advertising company, by its wholly-owned subsidiary, Allegra Holdings LLC. Websites: alliancefranchisebrands.com, rsvpadvertising.com

CONTRACTS Cooper Standard Automotive Inc., Novi, an automotive supplier, has licensed its Fortrex material platform to PolyOne Corp., Avon Lake, Ohio, a provider of specialized polymer materials. PolyOne can now sell Fortrex-based formulations into select markets, including applications in electrical/electronics, health care and industrial products. Websites: cooperstandard.com, polyone.com

TUESDAY, JAN. 8

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THURSDAY, JAN. 10 Introduction to Angel Investing — Is It for Me? 8-9:30 a.m. Jan. 10. Great Lakes Angel Fund. An overview on who are angels, what angel investing is all about, how they fit in the financing of startups and a panel for Q&A. Panel members are Michael Gibson, attorney at Kerr, Russell, Weber, and Jeff M. Brogley, tax principal and head of Family Office Practice at Rehmann Group. Other speakers: Doron York, City Side Ventures, and David Weaver, Great Lakes Angels Fund. Automation Alley. Free. Contact: David Weaver, email: dweaver@ glangels.org; website: glangels.org

UPCOMING EVENTS Global Business Outlook for 2019 and Beyond. 8-11 a.m. Jan. 17. Automation Alley. A discussion on the shifting dynamics of the global economy and how companies can best position themselves to take advantage of the opportunities and challenges of doing business in the U.S. and overseas. Speakers: Paul Traub, senior business economist, Detroit Branch, Federal Reserve Bank of Chicago; Scott Sneckenberger, partner, Plante Moran; John Caldwell, executive director, Invest-

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NAIAS FROM PAGE 1

“There will be moving vehicles on the show floor for press and public days for the first time,” said Rod Alberts, executive director of the Detroit Auto Dealers Association, which puts on the show. “This is the beginning of where things are headed.” But, first, automakers, suppliers, dealers, the show organizers and attendees must get through the 2019 North American International Auto Show in January. The show, starting on Jan. 14, marks the 30th anniversary since becoming an international expo, and it’s undoubtedly one of the more pared-down shows in recent memory — German brands Mercedes-Benz, Audi and BMW bowed out of the show. Detroit is becoming victim of a newfound realization from automakers that auto shows are not a must-attend annual event, said Stephanie Brinley, principal automotive analyst of the Americas for Southfield-based IHSMarkit. “They’ve learned that while it’s important to be at an auto show, if

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9 they’re not there every year, it’s not the end of the world,” Brinley said. “Product cadence plays into it. Automakers are changing the way they unveil vehicles to get them on the road faster, to get the engineering done sooner. Consumers don’t care how many cars were launched at an auto show. They may not even know whether the car they are looking at a show was introduced last year or two years ago.” And in recent years, automakers have moved the reveal of new models to the periphery of the auto show, choosing locations away from Cobo Center and on dates not directly coinciding with the press preview days of the show. On Jan. 13, one day before the press preview begins, General Motors Co. is unveiling its new threerow Cadillac XT6 crossover at the Garden Theater — three miles north of Cobo Center. “Utilizing auto shows as the exclusive location to intro cars; well, we now have a long history of deviating from that,” said Terry Rhadigan, GM’s executive director of product and technology communications. “NAIAS gets to count that as a world debut, and that’s fine. Would they rath-

er have (the reveal) inside Cobo? Probably so, but right now we think it’s a better return on investment to do somewhere where we create and control the environment. We’ve got limited resources and always a lot of vehicles to unveil, so if we can do it for less money with the same or better impact or media coverage, that’s our practice.” This strategy exploits the digital era, where automakers can dominate headlines and social media exclusively for a longer time than if an unveil happened on the auto show floor during press days where unveils are packed into 30-minute press conferences one after the other. As soon as GM unveils a product, that news is quickly swept aside for Toyota’s, or another automaker’s, unveiling. BMW, which will be absent for the 2019 Detroit show, unveiled its sixth-generation M5 in a video game last year before showing the physical car to journalists at the show in Frankfurt, Germany, in September. “We’re reviewing the auto show footprint to say, ‘Where does it really make sense, which formats make sense, to get journalists, to get customers, to show and display your vehicles?’” Bernhard Kuhnt, CEO of

BMW of North America, told Automotive News. “We’re definitely going to invest into other formats as well. The auto show is not the right format only.” The use of off-site venues is a major reason the auto show is moving to June in 2020. Show organizers hope to make use of Hart Plaza near Cobo Center and other close-by venues to expand the show’s footprint and offer automakers the exclusivity they desire, Alberts said. “You’re going to see dynamic displays inside and outside of Cobo,” Alberts said. “We’re building this to engage the city and customers wherever automakers want to be in the city. The outside displays will be a complement to what’s happening inside, which will be similar to what’s always happened inside, increasing the ROI for automakers.” Alberts said the 2019 show, while missing the German automakers, is designed as a transition point for how the show will be in the future. The more than 100,000-square-feet once inhabited by Mercedes, Audi and BMW will be parceled to other automakers looking to expand, but some of that space will be used by two automakers in modified ride-

and-drive activations, Alberts said. Alberts declined to provide which automakers will operate the displays, but said they will focus on active safety and autonomous systems. For GM, changing the Detroit show’s format and date may save it from irrelevance. “This is a total reimagination; it’s bigger than they went to an international show in 1989,” Rhadigan said. “Over the course of 30 years, things change. We’ve all felt it. The last few years, it felt like there were no surprises. The energy is gone. I think this is a bold move that could be a tremendous transformation of the Detroit show and auto shows around the world.” The risk, of course, is making this year’s show an afterthought during a time of transition. “It’s natural for interest in 2020 to be heightened going into the last January show, I think,” Brinley said. “It’s also true that the 2019 show will have fewer automaker displays and press conferences than in 2018. But I’m certain it is not an afterthought to the automakers presenting.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Russell Street Deli drops plan for second restaurant Need to know

By Annalise Frank afrank@crain.com

The long-planned second diner concept from the owner of popular Russell Street Deli in Detroit’s Eastern Market is no more. Deli owner Ben Hall sold a vacant building he owned on the outskirts of the city’s Corktown neighborhood, he told Crain’s on Wednesday. He’s leaving behind the never-fully-realized restaurant plan amid concerns about the industry in favor of growing Russell Street’s more lucrative wholesale soup business. The building at Ben Hall: Plans to 1551 W. Lafayette invest proceeds in Blvd. sold for $535,000 on Dec. soup line. 18 to an entity affiliated with New York-based Goldmont Realty, according to city property records and Alex Lauer, an agent with Real Estate One who brokered the deal. More details on the buyer’s plans weren't immediately available. A company registered to Hall purchased the building in 2013 for approximately $212,000, according to city records. That year, Hall discussed plans to open a 57-seat restaurant called Lafayette Kitchen and Diner in the former Steak Hut Restaurant building at the intersection of 10th Street and West Lafayette Boulevard. It was to build on the reputation of Russell Street Deli, the small, 30-year-old restaurant in a food-centric corner of Detroit’s greater downtown. The west-side project was delayed over the years, and Hall said he entertained multiple purchase offers on the property. Hall’s Russell Street Deli co-owner, Jason Murphy, left in August. He declined to disclose a reason. Now, with a potential economic downturn looming and with Detroit’s crowded restaurant market making opening another restaurant a riskier and potentially less lucrative venture,

J Owner Ben Hall sold building near Corktown where he’d planned to open Lafayette Kitchen and Diner

Hall plans to invest proceeds in growing Russell Street's packaged soup line

least positive response since October 2016, according to the association.

Growing wholesale

J Sells in 160 Michigan stores, plans to expand to Chicago and Cleveland

RUSSELL STREET DELI

The owner of Russell Street Deli in Eastern Market is investing more into his wholesale soup business.

CRAIN’S DETROIT BUSINESS

The former Steak Hut Restaurant on the edge of Detroit’s Corktown has been sold by the owner of Russell Street Deli, who had been planning a restaurant there called Lafayette Kitchen and Diner.

it seemed time to officially “jump ship” on Lafayette Kitchen and Diner, Hall said. Russell Street Deli is a mainstay in Eastern Market and a recognizable brand, but profit is on the decline there in recent years as more food

options open around downtown, Hall said.

Industry concerns He echoed an underlying feeling of instability in the local industry —

“although everybody is very excited, places have already gone out of business,” he said. The long list of recently announced closings includes Hard Rock Cafe in Detroit, New Parthenon in Greektown and Pasquale’s Restaurant and Andiamo Trattoria in Royal Oak. Those that haven’t folded continue to deal with a skilled labor shortage, rising costs and other restaurant industry difficulties that could contribute to a slowdown in 2019, Detroit Free Press food writer Mark Kurlyandchik recently reported in an analysis of the coming year. “If we’re feeling the pinch and we’ve been there for 30 years, and there’s 200 restaurants, then how does a new restaurant survive in this constantly expanding landscape?” Hall said. Nationally, restaurants have seen sales and customer growth in recent months, but operators are less optimistic about the direction of the economy and their expectations for the next six months are slightly lowered, according to the National Restaurant Association’s November 2018 restaurant performance index report. About 60 percent of reporting operators said they saw sales increase between November last year and this year, up from 53 percent in October. Eighteen percent reported a sales decline. Thirty-five percent said they expect to report a year-on-year sales increase in six months, while around 60 percent said they expect about the same and 6 percent said the expected lower sales. But only 15 percent said they think the overall economy will improve in six months — their

Amid industry concerns, Hall said it’s time to invest in soup. The Russell Street Deli restaurant takes up around 80 percent of Hall’s energy and the wholesale soup business — run under the same brand name, out of the same location — takes up 20 percent, he said. But he estimated that wholesale has accounted for 90 percent of Russell Street’s recent growth and returns. And so, the approximately quarter-million profit from the Lafayette building sale will go toward expanding soup production for retail. Russell Street’s arguably lesser-known revenue stream has grown from a Whole Foods Market contract in 2013 to its soup being sold at 160 stores in Michigan today. Customers are fans of the line that includes chowders, Italian tomato vegetable and interesting vegetarian and vegan options. To expand distribution this year, the team needs more space. It will outfit rented kitchen space at Avalon International Breads’ Detroit outlet location on Bellevue Street, aiming to start production there around Feb. 1. Russell Street makes an average of 3,000 gallons of soup a week in the winter and 1,000 a week in the summer, Hall said. He expects to start distributing in Chicago starting in March and then Cleveland later in the year, aiming to triple its current production in 2019. Other soup clients are Busch’s Fresh Food Market, Zerbo’s Health Foods, Westborn Market and Detroit and Hamtramck public schools, among others. Hall projects recording $1.6 million in revenue for 2018, up from $1.3 million in 2017, including wholesale and the restaurant. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

VIDEO

Family Video’s portfolio JJStores (statewide): 109

FROM PAGE 3

which parent company Highland Ventures Ltd. has 140 to 150 locations, or Stay Fit 24, of which it has 15 locations. It also has Highland Pure Water & Ice and a cell phone operation called Total Wireless. “All these businesses go into our owned real estate,” said Sam Stilp, president of real estate for Glenview, Ill.based Legacy Commercial Property, the real estate subsidiary Tjader Gerdom: of Highland VenFamily Video a tures, which is smart company. owned by Keith Hoogland. “When the video stores were built 20 or 30 years ago, they were 6,000 or 7,000 square feet for video. Now we can be in 3,000 or 4,000 feet, and we’ve tried 2,500 feet.” Its strategy appears to be working: Forbes estimated that the company brought in $400 million in 2016. Family Video has moved some of its locations, like in South Lyon, and

JJOwned properties (statewide): 91 JJSquare footage (statewide): 511,270 JJEstimated value of real estate (statewide): $91 million JJStores (metro Detroit): 19 JJOwned properties (metro Detroit): 22 JJSquare footage (metro Detroit): 138,057

KIRK PINHO/CRAIN’S DETROIT BUSINESS

Family Video owns most of the locations of its video stores.

leased out to health systems like McLaren Healthcare or salons, like in Canton Township. In addition, it has little debt, unlike the obligations that sunk its rivals. When it builds a new store, it siphons all profits to the construction loan debt service so it is paid off in five years or less, Stilp said. “Very low debt and we control our destiny because we don’t have the landlord to answer to.” For the most part. In the spaces it does lease, it enters into largely flexible agreements — say, a two-year lease with eight one-year options to renew, making them less attractive to land-

DPTV FROM PAGE 3

“Our goal is to be right there in partnership ... how do we get to the early childhood table in a way we’ve never been?” Homberg said. “It’s establishing the station’s role at a higher level so we’re not just seen as a media organization but an organization that convenes parents, educators and children, with trusted content, resources, solutions and a real sense of partnership.”

Reading crisis in Michigan DPTV’s push to expand the role it’s playing in school readiness comes as Michigan faces a crisis in third-grade reading proficiency. According to the Education Trust-Midwest 2018 State of Michigan Education Report released in March, Michigan ranked last among states, with just 44 percent of all third-graders being proficient in reading in the 20162017 school year — down from 50 percent proficient in 2014-2015. The report noted that test scores in 2017 were even worse for students of color and low-income students, with just 29 percent of low-income students scoring proficient in third-grade reading and only about one-third of Latino and a fifth of African American students. In Detroit, just 9 percent of third-graders from low-income families in Detroit Public Schools Community District tested proficient in reading in 2016-17. A new state law requiring grade-level reading proficiency by the third grade will take effect beginning with the 20192020 academic year. Third-grade students who aren’t reading at grade level by the end of that school year will be held back a grade. And that is going to bring the issue of school readiness even more to the forefront, Homberg said. As a trusted resource for curriculum-based children’s programming and apps, DPTV sees an opportunity to play a larger role there, he said. The nonprofit station has been broadcasting children’s programming for more than 50 years, but other educational offerings are mushrooming underneath that most people don’t

Georgeann Herbert: Bringing ‘quivers.’

Sasha Ferrell: Parents more aware of value.

know about, said Georgeann Herbert, DPTV's senior vice president for strategy and community engagement. Over the past decade, it’s launched a number of children’s programs and free apps, all based on tested, vetted materials. "Daniel Tiger’s Neighborhood," for example, a spinoff of "Mr. Roger’s Neighborhood," teaches children social and emotional learning and self-regulation, Herbert said. There’s an app to help parents and children with potty training, going to the doctor or dentist and welcoming a new brother or sister. A fishing game app resets to rework on areas children haven’t yet mastered. DPTV provides links to download the apps through Google Play, the Amazon App Store and iTunes store on its website. PBSparents.org provides parents with resources such as benchmarks for different ages, and teachers can find resources and professional development opportunities on the PBS website. And DPTV’s Pre-School-U program helps educators and parents deal with age-specific issues like biting and separation anxiety. Launched two years ago, Detroit PBS Kids is streaming 24/7 children’s programming through digital channel 56.2, accessible through cable or with a digital antenna on regular broadcast television, its website and the PBS Kids video app. Detroit PBS Kids consistently ranks among the top five PBS 24/7 kids stations across the U.S. for viewership and frequently is the top-rated, Herbert said, pointing to September when 7.4 million viewers tuned in.

Brightmoor pilot To build on that, DPTV is bringing all of its “quivers” to Brightmoor in

JJEstimated value of real estate (metro Detroit): $22 million

lords. “We say we don’t know if this store is going to be open in 18, 24 or 36 months,” Stilp said. “The first ones to close are typically the rentals as landlords get less interested.” He also said the company likes locations in smaller towns in more rural areas where internet speeds may be slower and where “there is a definitely a school of people who like to go into the store than get it online.” Tjader Gerdom, owner of Novibased brokerage firm Gerdom Realty & Investment, helped Family Video acquire real estate in the early 2000s, helping the company open about 15

Source: Legacy Commercial Property

northwest Detroit, Herbert said. It hosted PBS EdCamp, a daylong professional development conference for 75 early childhood educators/caregivers from Wendy Lewis in Jackson: Need all Brightmoor August, starting hands on deck. the conversation then leaving attendees to break into workshops focused on the areas they wanted to discuss, like how to keep a 4-year-old from biting others, how to help with potty training and how to break the news to parents that their child might have an issue and should be seen by a social services therapist. DPTV also hosted a head start enrollment fair, bringing opossums and other animals to engage children and families. And before Christmas, it hosted a T-shirt and sock giveaway. ”We wanted to have a strong presence there, as we were introducing ourselves to the families and neighborhood, to say, ‘You’re going to be seeing a lot of us here,’ ” Herbert said. In December, it trained 25 early child educators from Brightmoor and other parts of Detroit and also Ypsilanti providers it had established relationships with, in its Pre-School-U curriculum, preparing them to hold their own parent workshops early this year. During a series of community workshops focused on PBS KIDS ScratchJr, a visual programming language designed to introduce coding skills to children ages 5–7, children were challenged to put pieces together to get a character to move and dictate how she’d move, creating their own cartoons, of sorts, said Sasha Ferrell, 31, a mentor coach to the early Head Start staff at New St. Paul Tabernacle Head Start Agency Inc. in Detroit. As an incentive to boost attendance, families attending all four workshops received a tablet to take home; others received a story book related to the concepts being taught, she said. “Parents had no idea what to expect, but as the days went on, they were getting more and more interested,” working on the app at home and asking

when the next DPTV sessions would be held, Ferrell said. Where many parents previously saw DPTV’s programs primarily as cartoons, they are now becoming aware of their value in helping prepare children for school, Ferrell said. With DPTV’s support, educators are showing parents different ways they can help their children learn, she said. The station is funding its efforts in Brightmoor with funding including U.S. Department of Education grant dollars as a contractor with the Corporation for Public Broadcasting, a $100,000 grant from the Max M. and Marjorie S. Fisher Foundation and a $300,000 grant from the Kresge Foundation made in December as part of the $50 million Hope Starts Here initiative launched last year with the W.K. Kellogg Foundation to strengthen early childhood education in Detroit. “We need all hands on deck to make Detroit a city that truly supports its children. It’s a challenge that goes beyond those who’ve traditionally thought of themselves as frontline educators and providers,” said Wendy Lewis Jackson, managing director for Kresge's Detroit Program, in an emailed statement. “It’s only fitting that a station that brings us ‘Sesame Street’ over the air is using its expertise in delivering high-quality programming to increasingly work with parents and educators on the ground, giving them the tools and techniques to nurture young minds ... day in and day out,” Jackson said. About $3.5 million of the station’s current $18 million budget is allocated for children’s programming and efforts to help increase school readiness. Homberg said the goal is to double that. “The goal is to expand the on-theground efforts we’re doing in Brighmoor to more communities in need and second, to bring it back to the 24/7 channel and create the opportunity for who knows, a virtual preschool or some sort of guided learning,” Herbert said. “There’s all kinds of things we’re kind of kicking around and learning. They’re teaching us: How do you come into a community and understand what’s there?”

locations locally. “They are a smart company and have been smart for a very long time” on its real estate decisions, Gerdom said. Part of that is preparing for what will ultimately be the end of video stores, he said. “When video comes to an end, you can lease the space out to another tenant or two and you still have a good retail center on a good corner. Your revenue stream changes from the sale and rental of video games to the rental income from national and regional tenants,” Gerdom said.

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C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 7 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

Beaumont to transfer home health operations to Ohio-based firm

Detroit Athletic Club sues Detroit Athletic Co.

DECEMBER 28-JANUARY 3 | For more, visit crainsdetroit.com

outhfield-based Beaumont Health has confirmed it has sold a majority share and transfer operations of its seven-county home health and hospice agency to Alternate Solutions Health Network, a Kettering, Ohio-based for-profit home health company. Crain's reported last month that the eight-hospital nonprofit health system had reached a deal with Alternate Solutions to form a new company, Beaumont Home Health and Hospice LLC, and transfer a majority of its employees to the new joint venture, effective Jan. 1. At the time, Beaumont officials declined interviews. In a news release last week, Beaumont said “a growing need for home health and hospice services in Southeast Michigan has prompted Beaumont” and Alternate Solutions “to create a joint venture that will expand access to these critical services.” The deal closed last Monday. John Kerndl, Beaumont’s CFO, said that about 12 months ago Beaumont began looking for outside expertise in home health to tap into the expertise of a larger company with more resources. He confirmed Beaumont sold 90 percent of its home health company for an unspecified price, but said Beaumont retains certain “supermajority” reserved powers, two of five board seats and the right to buy back the business if various metrics aren’t achieved. “We looked at how to take our home health agency and really make it into something great and supercharge it,” Kerndl said. “As we get to bundled payments and looked at what others are doing, it led us down this path.” While Alternate has day-to-day operational control, Kerndl said Beaumont views the transfer more as a partnership with a strategic growth plan. “We think we are just as invested on Jan. 2, as we were on Dec. 31,” he said. The new joint venture will not continue pediatric home health services. Currently at least 50 families are receiving pediatric home care. Beaumont officials and employees say they are working diligently on seamlessly transitioning those patients to new providers, but some of the families told Crain’s a lack of communication has left them confused and concerned about what’s next. Founded in 1999, Alternate Solutions specializes in joint ventures and partnerships with health systems like Beaumont. It has formed about 20 similar partnerships that include health systems in Ohio, West Virginia, Virginia and Florida. Some systems include Inova Health System in Virginia and Memorial Health in Savannah, Ga., Beaumont officials said. “We look forward to working with Beaumont to serve patients who need home health or hospice care. Our team is impressed by the compassionate care delivered by the Beaumont team and we are eager to offer home health and hospice services to more patients in Michigan,”

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

The McDonald’s at 10400 Gratiot is one of four fast-food restaurants the city of Detroit is suing for using trademarked Project Green Light signs when the businesses are not part of the crime-monitoring video surveillance system now serving 474 businesses in Detroit.

Detroit digits A numbers-focused look at last week’s headlines:

$50.1M

The Fannie Mae refinancing loan secured by the developer of The Scott at Brush Park apartments in Detroit. They previously put it on the market for sale.

The new hires U.K.-based Elcometer Inc. expects this year as it moves its North American headquarters from Rochester Hills to Warren.

$4M

The cost of renovating the 50-year-old Franklin Athletic Club in Southfield.

Tessie Ganzsarto, Alternate Solutions’ co-founder and co-CEO, said in a statement. Barry Cargill, president of Michigan Home Care and Hospice Association, said payment cuts have forced home health agencies to become more efficient and seek larger size through consolidation for economies of scale. He said Michigan has a moratorium on new home health company startups, so growth through acquisition is the only way to enter the market. “It’s not new that home health agencies are partnering with hospital systems” to improve patients’ postacute care experience and reduce inpatient readmissions, said Cargill, who added it is somewhat unusual that Beaumont is retaining 10 percent ownership in the company instead of an outright sale. “The industry has been changing. Beaumont is being innovative and looking for ways to stay profitable and deliver high-quality services,” he said.

BUSINESS NEWS J Longtime Detroit radio personality Craig Fahle is taking his eponymous podcast talk show to Deadline Detroit, the rejuvenated local news site that has embarked on an expansion. The former host of an influential talk-radio show on WDET 101.9

FM is set to launch the 30-minute “The Craig Fahle Show” on Monday. It will appear on DeadlineDetroit. com at 1 p.m. weekdays and will be available for download as a podcast. J Amazon is teaming with P3 North America, a Southfield-based consulting and technology company, to make it easier for automakers and suppliers to integrate the Alexa assistance tool into their vehicles. P3 will showcase its connected vehicle voice recognition services with Alexa built in at this year’s Detroit auto show. J Detroit Mercantile Co. closed its store in Eastern Market. The move comes around six months after the clothing and home goods shop’s owner, Robert Stanzler, was videotaped angrily spitting on a security guard. The team could open another business in the future, but it won’t be called Detroit Mercantile. The store’s space is expected to go up for sale, as well. It’s a portion of a historic former Detroit Fire Department training facility. J After 35 years in Rochester Hills, Elcometer Inc., a U.K.-based supplier of coating inspection equipment, is relocating its North American headquarters to Warren to accommodate future growth and expand into new product ranges. The supplier sold its Rochester Hills facility for $675,000 and bought the new building for $1 million. Another $1 million has gone into updating it.

GOVERNMENT NEWS J The city of Detroit plans a one-year moratorium on new or expanded auto and salvage yards in response to community concerns over rapid growth in neighborhoods across the city. The city said it will use the moratorium period starting April 1 to review and update zoning and ordinances related to auto facilities to make sure they don’t negatively impact neighborhoods. Existing operators have 90 days to come into compliance before the moratorium starts. J Mayor Mike Duggan’s administration is suing the owner of four McDonald’s franchises in Detroit for trademark infringement over misrepresenting the fast-food restaurants as part of the city’s Project Green Light real-time crime monitoring system when they are not. The city is demanding that the franchisee remove the city’s trademarked Project Green Light logo “or a confusingly similar variation” on signs in the four restaurants.

he Detroit Athletic Club is suing the Detroit Athletic Co. sports apparel retailer in federal court over alleged violations of its trademark for “Detroit Athletic Club” and “DAC.” The lawsuit filed Thursday in U.S. District Court for the Eastern District of Michigan alleges the Detroit Athletic Co., located at 1744 Michigan Ave. in the Corktown neighborhood, is violating the club’s trademarks by continuing to operate its website with what it calls “the infringing” detroitathletic.com domain and using “DAC” in promotional email subject lines, among other things. It says the DAC, which has been at its location at 241 Madison Ave. downtown since 1915, received its “Detroit Athletic Club” and “DAC” trademarks in 2002. When the Detroit Athletic Co. applied to register with the U.S. Patent and Trademark Office in 2015, it was denied “because of a likelihood of confusion” with the “Detroit Athletic Club”

trademark, according to the complaint. “The company has not been served with legal process at this time,” said Dirk Beamer of Farmington Hillsbased law firm Wright Beamer PLC, which is representing Detroit Athletic Co. “As a general rule, the company does not comment on pending litigation. My client has openly operated a retail establishment in the city of Detroit under its current name for 20plus years without incident or complaint.” Ted Gillary, executive manager of the Detroit Athletic Club, declined comment. “There’s nothing more to say at this time.” After appeals with the USPTO, all of which were rejected, Detroit Athletic Co. appealed to the U.S. Court of Appeals for the Federal Circuit, the lawsuit says. A ruling from September upheld the USPTO decision as the “Detroit Athletic Co.” trademark “is likely to be confused with” the Detroit Athletic Club’s.

“Hamilton” producer Jeffrey Seller.

‘Hamilton’ producer’s $1M gift is Mosaic’s largest ever O

ak Park native Jeffrey Seller, producer of the hit Broadway musical “Hamilton,” has made a $1 million gift to Mosaic Youth Theatre of Detroit, the largest one-time grant that Detroit-based organization has ever received. It will help support Mosaic’s summer camp and middle school programs over the next five years as the organization transitions to new leadership following the planned retirement of founder Rick Sperling this fall. Part of the gift will also establish an endowment to support future programs. The gift will come through the Seller-Lehrer Foundation in New York, an organization Seller founded with his partner, photographer and documentarian Josh Lehrer, to support educational, cultural and environmental organizations and initiatives. Sperling “daily demonstrates that theater changes lives,” Seller said. “His work with Mosaic has lifted and enriched the lives of thousands of young people, and we are honored to

help support a strong future for this extraordinary institution.” Sperling’s leadership and the team he’s put in place, Stefanie Worth as executive director and DeLashea Strawder as artistic director, “will ensure that this great organization continues to provide artistic and educational opportunity for Detroit students for another 27 years,” Seller said. Seller, who was an attendee and featured speaker at the 2016 Detroit Homecoming event — produced by Crain’s Detroit Business — to reacquaint successful “expats” with their native city, last year chose Mosaic as one of three charities to sell tickets to Detroit performances of the Broadway production before they go on sale to the public (see story, Page 4). Founded by Sperling in 1992 to address gaps in metro Detroit arts education, Mosaic provides “out of school” programs in theater, vocal music programs and technical stagecraft to more than 500 students from more than 50 metro Detroit schools.

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