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Cybersecurity startup QuadMetrics calculates odds a company will be breached

QuadMetrics Inc. says it can predict with greater than 90 percent accuracy the likelihood that a company will be breached within the next year.

While one customer says the young company’s technology is still maturing, its prediction efforts represent an emerging capability in the fight against cybercrime. QuadMetrics says that chief information security officers are using its product as their primary risk management tool, but admit that it is one tool of many that customers have in their arsenal to fight cybercrime.

Most cybersecurity tools focus on detecting a breach that has already happened, but few, if any, can predict the probability that a specific company will suffer a breach over the following three to 12 months, according to Stewart V. Nelson, senior risk advisor at Kapnick Insurance Group, where he specializes in cybersecurity insurance. The general inability to forecast cyber risk has made it difficult for companies to benchmark their relative risk to their peers, he said. It’s also made it difficult for insurance companies to develop actuarial data to calculate premiums for cyber breach insurance and to determine the relative risk profile of the companies they insure. His company, an early customer, has been using the QuadMetrics service since May.

Some companies such as BitSight Technologies and SecurityScorecard do evaluate the security posture of companies and assign security risk ratings but they don’t predict the probability of a breach, said Jon Oltsik, senior principal analyst at the IT research firm Enterprise Strategy Group, where he covers cybersecurity.

QuadMetrics’ cloud service determines the probability of a breach at a particular company by collecting from its network more than 250 different data points, such as the misconfiguration of servers and routers or whether spam can be seen exiting the network. The technology doesn’t require inside access and instead observes all such characteristics from the outside of the company’s network. That profile is then compared against predictive risk models. QuadMetrics looks for cybersecurity characteristics that share similarities with organizations that have historically reported incidents.

CEO Wesley Huffstutter likens the process to driving by a person’s home and looking at it from the street.

“We can notice that the windows are open, the doors are ajar or you only have one lock instead of two or your garage door is open,” he told CIO Journal.

Other indicators, such as un-mowed grass, chipping paint or a shutter hanging from one hinge can round out the picture.

“These aren’t necessarily security issues but it goes to the fact that this may be a human element of whether you’re paying attention or not to what’s going on in your property,” he added.

Built on research conducted at the University of Michigan in partnership with the Department of Homeland Security, QuadMetrics has been in business for about a year, said Mr. Huffstutter. So far the company has a variety of customers including universities, insurance companies and some Fortune 500 companies. The DHS has given a grant to the University of Michigan to research a global network reputation system. Dr. Mingyan Liu, QuadMetrics’ chief science officer, is also the principal investigator on that project.

“There are other people out there that do things similar to this but there’s nobody to my knowledge that will tell you that you’ve got a 60 percent chance of being breached,” said Kapnick Insurance Group’s Mr. Nelson. Today, for example, a company applying for cyberliability insurance will typically fill out an application of 50 to 75 questions about their security posture, he said. Those questions ask about the company’s firewalls, whether they’ve done any penetration testing, whether there’s a dedicated chief information security officer and other questions about data security hygiene. But they largely rely on self-reporting and it’s very difficult for insurance companies to measure relative risk independently.

In order to assess the probability of a breach, researchers at the University of Michigan and QuadMetrics looked at hundreds of companies that had been breached and determined what their networks looked like just before the breach. From this information, researchers built cyber risk models. The researchers used several sources including the VERIS Community Database, the collection maintained by the Verizon RISK Team and used in the Verizon annual data breach investigations report, to gather data about previous incidents. The company then used machine-earning techniques to develop predictive models of data breaches and cybersecurity incidents.

Michael Donald Bailey, a professor at the University of Illinois at Urbana-Champaign, previously worked with two QuadMetrics executives Manish Karir and Dr. Liu at the University of Michigan. In one scientific paper which he co-wrote, they used the models and gathered data about networks to predict the contents of the Verizon Data Breach Report for the following year and got a 90 percent accuracy rate, he told CIO Journal.

“It’s important to note that we don’t predict the exact time in which a breach will happen,” he said. Rather, a risk score is generated for each corporate network examined and the most risky networks are more likely to be the ones that are experiencing data breaches, he added.

A main challenge involves acquiring high-quality incident data. While machine-learning techniques have the power to make accurate incident forecasts, the data collection is lagging by comparison, the authors said in a research paper.

Through research, QuadMetrics has identified some main symptoms of network mismanagement that are the most important when predicting a breach. Metrics that measure mismanagement or the human element in cybersecurity are some of the most predictive features in QuadMetrics’ machine learning models, according to Mr. Huffstutter.

Of those symptoms, a good predictor of an upcoming breach occurs when a website’s security credentials, known as certificates, are invalid. When a user communicates with a website whose address starts with “https,” the communication is known to be encrypted. Before starting the encrypted communication, the website will present the browser with a certificate to identify itself. This lets the browser know that the site is actually the site it claims to be. When the user gets a warning from the browser, it could mean that a criminal is trying to spoof the site in order to get financial or other data from the user.

Other problematic symptoms include corporate domain name system servers that are left open, allowing outsiders to use them to launch denial of service attacks against other companies, said Mr. Huffstutter. A third sign of misconfiguration is when certain settings on corporate email servers are left open and can be enlisted by people on the outside to send spam to other people.

An assessment of whether malicious activity is coming from a specific corporate network also is added into the cyber risk profile of a company. Suspicious activity is matched to many different external data sets that keep track of spam, malicious software, phishing and other schemes.

Fidelis Cybersecurity, which responds to data breaches, is starting to use QuadMetrics with its clients. Ryan Vela, regional director at Fidelis Cybersecurity, said he has worked in the industry for 15 years, previously at General Dynamics . Mr. Vela went to Ann Arbor to meet with QuadMetrics and said he got chills during the meeting.

“They were identifying organizations that had a high probability of being breached and there were organizations that I knew had been breached but they were not public,” he said, adding that due to non-disclosure agreements, he couldn’t tell QuadMetrics that the company was right.

The risk prediction level that QuadMetrics’ service generates is not yet good enough yet to take to the board of directors risk subcommittee, Mr. Vela said. “What it is good for is to start a discussion that organizations are having right now [about cybersecurity] in their risk departments.”

Mr. Huffstutter said that since this type of forecasting has never been done before, the company has faced questions about its accuracy. Still, he said that the research underpinning the product is sound and has been peer-reviewed. In fact, he said that some companies are using this service as their primary risk management tool.

This article originally published in the Wall Street Journal.

Ann Arbor tech company Duo Security triples revenue for third consecutive year

For the third consecutive year, Ann Arbor-based security provider Duo Security tripled revenue in 2015, as it now has more than one million users.

That announcement was made Wednesday morning via a press release issued by the company.

The cloud-based security access provider protects some of the world's largest and fastest growing companies including Etsy, Facebook, NASA, Palantir, Paramount Pictures, Toyota, Twitter, Yelp and Zillow.

2015 was a tremendous year of growth for the company as Duo doubles its customer base to add new clients American Public Media, Virginia Tech, Fireeye, Duke University, DraftKings, Bolton NHS Foundation Trust, Citizen's Union Bank and King.com the creators of popular mobile game Candy Crush.

Duo also opened offices in San Francisco area and in London.

"It's all about ease of use and keeping our customers happy," said Dug Song, CEO and co-founder of Duo Security in a press release. "We're passionate about continuing to be the most loved company in security. People are feeling the pain of the cumbersome security products and we're here to make it painless for them."

By the end of 2015, Duo analyzed nearly 2 million devices with 1 million users, and handled nearly 2 million authentication events per day.

Duo also secured $30 million in funding in April to help expand efforts into London, while at the same time launching its Platform Edition.

With the Platform Edition, users are able to address issues with Android Stagefright and Flash vulnerabilities while reducing the risk of data breaches.

This article originally published on MLive.com.

Downtown Ann Arbor office space vacancy at historic low

Finding office space in downtown Ann Arbor is harder now than ever before, according to an annual report released by Swisher Commercial Real Estate that tracks office vacancies in the city.Space in downtown Ann Arbor is once again the tightest. Just 2.1 percent of downtown office space -- 35,370 square feet -- is vacant, down from 3.6 percent last year.

"I've been in the market since '85 and I don't ever remember it being this tight," said Mike Giraud, a vice president at Swisher.
The Ann Arbor-based commercial real estate firm began tracking vacancy rates in 1993 and issues the yearly report to help clients and residents understand the trends in the Ann Arbor marketplace.

This year, the report found total availability decreased by .7 percent in 2015 as only 8.5 percent of office space -- totaling just more than 1 million square feet -- is available in the city.

As with last year's findings, Swisher indicates the shrinking supply in downtown is caused in large part because of the growing number of tech firms. Swisher found that 11 downtown buildings that had vacancies in 2014 are now 100 percent filled.

The 2.1 percent vacancy in downtown is the lowest Swisher has reported since it started tracking the rates.

"It seems to be anytime space comes onto the market of any significance, it's almost a competition at that point to see who gets in," Giraud said.

That competition is not only making it tougher to find space downtown, but it's also driving prices up. Office space in downtown is somewhere around $30-35 per square foot in most cases.

Several tech companies have signed leases for large spaces, including Deepfield Networks, which moved into a new space at 111 N. Ashley. Several law firms have also made a run at space in downtown.

Two significantly large spaces will become available in 2016, the Swisher report notes. Google will leave the McKinley Towne Centre this spring, creating a vacancy of more than 86,000 square feet in downtown.

Ann Arbor commercial property owner First Martin is also advertising 28,000 square feet of space will be available in October at 130 S. First St.

Swisher also indicates that a lack of new construction of office space in downtown is hurting the vacancy rates. Because a developer would need to a significant portion of a building leased before construction could begin, it makes building new spaces more difficult.

It also means modified gross square foot lease rates would likely be above $40. As a comparison, the space that Google currently occupies is being marketed for $35 a square foot and is available in a matter of months, not years, as would be the case with new construction.

Because downtown is becoming less of an option, other areas in the city are becoming more attractive to businesses.

"Right now the economy is churning very well, and as long as that continues there will be demand for that space," Giraud said.

The sector with the lowest rate is in the city's north side, where vacancy was 3.5 percent.

The south corridor of the city -- near I-94 and State Street -- has the most available office/flex space with 690,209 square feet available of the six million in the market. However, the east side of the city -- which is centered around the Packard and Carpenter Road area -- has the largest percentage vacant, with 18.7 percent of the 639,092 square feet in the area available for lease.

Office vacancy on the south side remained at 10.3 percent, but that number could change next year as Truven -- the largest tenant in the sector -- is moving into new space in the city this year. However, Truven's lease at 777 E. Eisenhower Parkway extends into 2016, so it's not reflected as a vacancy, even though the 170,000 square feet will not be occupied.

Bart Wise, another vice president at Swisher, said that while the markets outside of downtown may experience some increase because there's no vacancy, it doesn't mean those markets are white hot.

"I think that there have been some larger transactions, there's been tremendous demand in low-vacancy downtown, but there are still spaces out there that have been sitting for a long time now," Wise said. "This recent recession, which we're clearly not in the recession anymore, it dug a pretty deep hole and there are still some vacancies out there."

Wise did say he felt like 2015 was a strong leasing market and he expects that to continue in 2016, especially on the east side.

"I would think that the east side will rebound in the coming year," Wise said. "As downtown at 2 percent (vacancy) becomes a non-option and the rental rates of Class A buildings continue to go up, there will be tenants who choose more moderate rental rates in the east market."

Over the last seven years, the east side has traditionally fluctuated somewhere between 10 and 18 percent. That difference is largely caused by businesses reducing in size and need for space and by businesses moving from Class B buildings in the east side to Class A offices in other markets, according to Wise.

The report focuses on buildings in Ann Arbor that are at least 5,000 square feet and used for office or flex space. Swisher defines flex space as "high-bay type buildings, often combining office, high-tech, research, warehouse & similar," in the report.

Swisher surveyed 305 buildings in the area, totaling more than 12 million square feet of space. The report focuses on vacancy rates in eight sub-markets of the city while also charting the vacancy trends over the last 23 years.

Despite the decreasing amount of space available in the market, Swisher also points out it does not consider this to be a strong leasing market. Aside from the downtown area, the report says business growth in Ann Arbor is growing a more modest rate and some businesses are downsizing their spaces.

Swisher also points out that businesses are looking to expand their space more now than they were in the recession, but they are choosing to rent lower-priced suites.

This article was originally published on MLive.com.

Fast-growing tech firm to replace Google as main tenant at McKinley Towne Centre

Three months before Google's 10-year lease expires in downtown Ann Arbor, property owner McKinley announced Monday that a long term lease has been signed with Ann Arbor-based supply chain software company LLamasoft.

LLamasoft has committed to occupying approximately 60,000 square feet covering the entire second and third floors of the McKinley Towne Centre, at 401 E. Liberty in Ann Arbor.

The company will move from its existing office space at the First National Bank Building on Main Street in Ann Arbor where it occupies roughly 24,000 square feet.

"LLamasoft continues to grow at a rapid pace, and we also need a world-class environment to support our team members," said LLamasoft president and CEO Don Hicks in a news release. "McKinley Towne Centre is the highest quality office building in the downtown core, and it gives our employees the opportunity to enjoy all that Ann Arbor has to offer.

"McKinley is a leading corporate citizen as well, and we are excited that our LLamasoft team will have the space they need as we continue our record-setting growth."

The need for more space was necessary because of the growth LLamasoft has experienced in the last few years, which has seen employment numbers jump from 40 in 2010 to more than 300 today. About 200 of those employees work in the Ann Arbor offices.

For McKinley, LLamasoft was the ideal tenant for the space because of the company's long term commitment and ties to Ann Arbor.

"One of the things that was important as we evaluated companies that would come into the space was that we wanted a growing company, but we wanted someone who would contribute positively to Ann Arbor and somebody who would contribute positively to that corridor," McKinley chief real estate officer Ken Polsinelli said.

McKinley fielded inquiries from several interested companies, but said it was important to its leadership that whomever moved in not only be interested in prime office space, but how it benefited the employees and the area surrounding the building.

"We didn't have to pick any tenant for the building, we were able to pick the right tenant for the building," Polsinelli said.

McKinley CEO Albert Berriz said he thinks the addition of LLamasoft to the Liberty Street corridor will be good for the city.

Google's lease expires April 30, and LLamasoft will take over May 1, but won't move in for a few weeks.

"They have to do work on the space, but they are taking over on May 1," Berriz said. "Whatever work needs to be done, they're going for it."

Berriz announced in 2014 that he planned on listing Google's space in his building when the lease ran out. Last May, Google announced it was leaving the space to build a new corporate campus on the north side of Ann Arbor.

Although Berriz couldn't give an exact number for the going rate on space in McKinley Towne Centre, the rental rates in downtown have climbed over the last few years, leaving the company in an advantageous position.

The amount of available space, where it's located physically in Ann Arbor and the simply being in Ann Arbor made the property a hot commodity.

"If you're going to find great talent in the state of Michigan, there are only a few places and Ann Arbor happens to be that hotbed of finding great talent," Polsinelli said.

Google is vacating about 85,000 square feet of space in the McKinley Towne Centre, however Polsinelli says deals are nearly finished to fill the remaining space not being filled by LLamasoft.

"We have 100 percent of that building pre-leased before Google even moves out," Polsinelli said.

An announcement on those tenants is expected in the coming weeks as deals are finalized.

This article originally published on MLive.

The 10 cities that are secretly great for tech grads

Sure, Silicon Valley and New York get attention for being the best places to work in tech. But for new graduates looking for growth and mentorship, hoping to stand out, and facing their first student loan bills, paying $2,000 a month in rent is less than ideal. As college seniors are weighing offers, negotiating salaries and trying to decide where they'll be after graduation, DataFox crunched the numbers to find 10 cities with the networking opportunities, affordability and growth potential that should put them on the radar of any new grad who wants to work in tech.

The big takeaways:
  • Close-knit communities are the foundation of strong networks. For young grads just starting to build their professional networks, a small tech scene can actually be better. Cities with a collaborative rather than cutthroat mentality provide opportunities to find mentors, grow new skills and build a durable network.
  • Affordability can't be overstated. The average four-year university student can expect to graduate with over $26,000 in student loan debt. Between loan payments and the stratospheric cost of living, graduates who go to New York or Silicon Valley will probably struggle to save for retirement or other goals. If you can find a job in an affordable area, you'll get the millstone off your neck that much faster.
  • Partnerships between large and small companies give the best of both worlds. Whether you want the stability and mentorship opportunities of an established company or the fast-paced, hands-on startup experience, there's something to be learned from companies of all sizes. Many of these cities are anchored by large companies who invest in and advise smaller ones, giving new graduates the chance to learn from veteran CEO's and newly minted founders alike.
10 cities that are secretly great for tech grads

1. Reston, VA

Just outside the nation's capital, Reston is home to both established companies and investors looking for the next big thing. Home to five of the DC area's twenty largest venture capital firms as well as blue chips like VeriSign and ComScore, Reston has firmly established its place in Silicon Hill. Most importantly for new graduates, though, the city ranked well above average in all four categories we track: its resident companies are poised to grow and are both influential and financially stable, it's much more affordable than nearby DC, and it's home to strong management teams. In fact, it scored higher in our leadership metric than any other city on this list. Reston's tech scene offers Washington's networking and growth opportunities, without the high cost of living.

2. Indianapolis, IN

Like Reston, Indianapolis offers a vibrant community that's affordable with an entry-level tech salary. The city stands out for two reasons: its low cost of living, and the quality of its business' leadership. Indianapolis' startups have the strong management to develop young talent, and the influence to provide introductions for second and third jobs out of college. The city is fully committed to developing talent, supporting initiatives like the Global Cities Exchange and Plan 2020. With a less congested atmosphere than New York or San Francisco, an ambitious graduate can catch the eye of a mentor who can accelerate her career. Indianapolis offers learning opportunities and clear growth paths for people entering its growing tech scene.

3. Raleigh, NC

The Research Triangle area boasts a fast-paced tech scene, bursting with intellectual as well financial capital, but Raleigh stands out as a great city for young people to make the transition from college to working life. Home to North Carolina State University and others, the city combines a college town vibe with real professional opportunities. With name-brand biotechnology and engineering companies, it's no surprise that Raleigh is well above the national average in its resident companies' influence and recognition; and its strong management teams give graduates the chance to learn from the best. With both mentorship and career growth opportunities, Raleigh offers a chance for young graduates to grow personally and professionally.

4. Portland, OR

Known for promoting work-life balance, Portland offers a thriving tech scene and stands out on our list for its strong mentorship and growth opportunities. Portland companies' brand recognition and management quality are well above the national average, providing young graduates the opportunity to learn quickly and get a name-brand job on their resume. Between new startup opportunities and established companies like Nike, newly minted professionals can put their tech skills to use in Silicon Forest. Portland also has a lot to offer outside of work: a 2014 survey ranked it #23 in the world for quality of life, and its natural beauty, intellectual capital and culture draw young professionals from around the country.

5. Nashville, TN

The Music City is making a name for itself as a tech hub: the Nashville Entrepreneurship Center accelerator graduated more than 200 companies in five years, and is also a Google for Entrepreneurs Tech Hub, with all the resources and connections that implies. New graduates won't be fighting with thousands of other people in their cohort for mentorship or growth opportunities; Nashville's sneaky-great tech scene offers career resources without the frenzy. The city ranked above average in our metrics for finance and mentorship: its low cost of living is a major draw for those paying student loans, and its businesses have the brand recognition to help land second and third jobs. Though we didn't track this metric, Nashville also ranks #24 in the country in startup density; between that and its startup support, it's a great place for tech grads to found new companies as well.

6. Ann Arbor, MI

Though anchored by the University of Michigan, Ann Arbor's tech scene has a lot to offer for any graduate. The city scored above the national average in three of four categories tracked: its companies are financially stable and well-run, and the overall climate offers growth opportunities further down the road. With a close-knit community, it's unsurprising that Ann Arbor's companies have pedigreed, well-connected management teams. Leveraging their coworkers' connections, residents can build the networks that are the foundation of a successful career. And while nearby Detroit is often mentioned as an up-and-coming tech scene, Ann Arbor's college town feel and high-powered companies make it an ideal choice for new graduates.

7. Cincinnati, OH

Cincinnati's tech scene relies on a symbiosis between big corporations and tiny startups. The established companies - including Macy's, Proctor & Gamble and eight others in the Fortune 500 - provide capital and support for entrepreneurs, while new companies offer innovations and talent. For new grads who aren't quite ready to join a three-person startup, Cincinnati offers the chance to interact with companies of any size. Its companies rank above the national average in management team quality, brand recognition and financial stability, three key qualities for those just coming out of college. And for those who want to make the leap to entrepreneurship, the city's accelerators and incubators offer ongoing support as well as funding, which isn't easy to find in highly competitive Silicon Valley.

8. Las Vegas, NV

The Las Vegas tech scene mostly makes headlines for its biggest promoter, Zappos CEO Tony Hsieh, but underneath the hype, there's a strong foundation for tech graduates to build on. The city's low cost of living, combined with no income taxes, can help pay off student loans before it's time to think about buying a home or starting a family. And paradoxically, because the city flies under the radar for many engineering grads, those that do go out to the desert can enjoy being courted rather than competing in an oversaturated talent market. Las Vegas' affordability is a draw, but its companies also stand out with above-average leadership quality and brand recognition. Tech graduates who go to Vegas will have the opportunity to learn from the best, while still building a startup scene from the ground up.

9. Denver, CO

Though the cost of living is slightly higher than in other cities, Denver companies have above-average bank accounts: they're well-funded and stable, providing assurance to graduates who go the startup route. Additionally, it ranks well in company growth, management quality and recognition, offering opportunities for entry-level hires to rise up the ranks and gain new skills. Denver is the number one relocation destination for Americans age 25-44, and it's no wonder: the city's thriving startup scene offers a way to rise quickly up the ranks, while outposts for established companies like Lockheed and Oracle deliver stability and learning opportunities. Between career opportunities, a vibrant culture and a commitment to quality of life, Denver increasingly getting its due as a destination for young people in tech.

10. Minneapolis, MN
Minneapolis stands out in our study for both its growth opportunities and its companies' brand presence. Neither of those should be particularly surprising: its tech community is known for its close-knit support and resource network. Home of Best Buy, Target and other big-box sources of capital, Minneapolis also boasts a thriving startup scene focused on sustainable revenue. That focus is reflected in Minneapolis' above-average finance score: not only is it very affordable, but its startups are more financially stable than most. For new graduates looking to pay off loans, live decently or even - yes - start saving money, Minneapolis provides the intersection of affordability and innovation.

Our metrics:
  • Financial stability: To determine whether a new graduate can afford to live with some degree of certainty, we used two metrics. First, we used the real purchasing power metric from the U.S. Bureau of Economic Analysis (sourced from the Tax Foundation) which measures how much a dollar spent goes in each metro area. Second, we used our proprietary Finance Score, which measures investor quality, revenue, liquidity and other factors to estimate a company's solvency.
  • Mentorship opportunity: To determine if young graduates would have the opportunity to learn from and be managed by quality supervisors, we used our HR Score, which proxies management team quality using factors including number of LinkedIn followers, retention rate and educational prestige.
  • Name recognition. Having a well-known company on your resume can open many doors down the line. We averaged local companies' recognition using our Influence Score, which measures the company's presence through news mentions, conference sponsorship, social media and more.
  • Growth opportunity: To analyze whether a new graduate would be able to grow within his or her company, we used our Growth Score, a measure of whether a company is likely to grow in revenue and headcount. The score includes headcount growth, investor quality, job listings and other factors.
Because of the increasingly heavy burden of student debt and the uncertainty that goes along with joining a startup, we weighted the financial stability metric twice as heavily. We studied metrics of over 11,000 Series A through C companies, which hit the sweet spot of growth and solvency, and included cities with at least 30 such companies in our database. For more information on our Finance, Growth, HR and Influence scores, check out How Do DataFox Scores Work?

This article originally published on DataFox

Ann Arbor middle schools open STEAM labs after $350,000 fundraising campaign

What was once a wood shop is now a 21st century learning lab at Scarlett Middle School in Ann Arbor.

Thanks to a $350,000 fundraising effort by the Ann Arbor Public Schools Educational Foundation, Ann Arbor Public Schools opened new STEAM labs at each of its seven middle schools. Donors included Google, Mckinley, Nutshell and Stridepost of Ann Arbor.

The foundation and district officially opened and dedicated the labs on Tuesday, Nov. 17 at Scarlett Middle School.

Fundraising for the project kicked off in March. McKinley donated $50,000 to the project.

The new science, technology, engineering, arts and math labs include robotics kits, 3D printers, drafting software, saws and tools, among other equipment.

"We are effectively preparing students for the future they will face," said Superintendent Jeanice Swift at the ribbon cutting.

McKinley Chief Executive Officer Albert Berriz told students they have an extraordinary opportunity with the labs.

"The intersection of art and math is creativity," he said. "Seize the opportunity."

The renovations in the lab at Scarlett, room 145, include murals students painted on the floor where heavy-duty tables once sat.

Science teacher Leslie Baugh, who is based in the classroom, said the lab gives students the opportunity to do hands-on work they can be proud of and take ownership in.

All sixth-grade students in Ann Arbor schools will take an exploratory class in the labs, said Tom Pachera, a Skyline High School teacher who heads Project Lead the Way, a STEAM initiative across the district.

Students will use the tools and equipment to learn programming to building and use Google apps to document their work. Ultimately, he said, students will build digital portfolios through middle and high school he hopes they'll be able to use in college applications.

Yanisa Aquino, a 13-year-old eighth-grader at Scarlett, took at 3-D programming class in the new lab this year.

"It was really interesting," she said. "It's so different from last year. It's amazing."

This article originally appeared in MLive.

Black & Veatch grows business with utility customers, universities

Black & Veatch Corp.’s Ann Arbor regional office has hired 25 engineers this year and expects to continue hiring at a 10 percent to 15 percent clip for the next several years to serve its growing client list, said Mike King, the consulting firm’s senior regional general manager in Ann Arbor.

Clients in Michigan include DTE Energy Co., Consumers Energy Co., ITC Holdings, General Motors Co., Ford Motor Co., the University of Michigan and Michigan State University.

Since opening the Ann Arbor office in 1988, Black & Veatch has grown from 25 employees to more than 300 to serve the energy and environmental industries in the U.S. and Canada.

“We hire most new people from Michigan Tech (in Houghton) and focus on energy engineers,” said King, a Detroit native who went to Cass Technical High Schooland has worked for the consulting firm for 27 years.

Black & Veatch also sponsors summer internship programs with UM, MSU and Michigan Tech, King said. The company also recruits from Western Michigan University, he said.

“Some of the other Black & Veatch offices hire from Michigan universities, and then some of these individuals transfer back to our Ann Arbor office” to be closer to home, King said.

Engineers hired range from chemical, electrical, civil and structural specialists to support the $3 billion multinational company’s energy, environmental and construction business.

The majority of assignments in Ann Arbor are focused on power generation, electric substations and transmission lines, King said. Renewable energy projects, primarily wind farms in the Michigan Thumb, have also stimulated growth the past five years, he said.

“We have helped DTE with its integrated resource plan” for its Fermi nuclear power plants, King said. “We’ve been putting on (anti-pollution) equipment on its power plants, working with Barton Malow on that, and partnering with DTE on wind energy development.”

“We have been focusing on helping DTE with its power delivery group as they plan to shut down coal plants and redo the grid. We are doing more in Canada, about 10 percent of our business.”

King said the growth of employees has caused it to undergo remodeling of its corporate office in Ann Arbor. The cafeteria has been moved to the basement to free up some additional work space.

“We designed our own office building 15 years ago and sold it back to the developer,” he said. “Now we lease it and need to expand.”

This article originally appeared in Crain's Detroit Business.

U-M Hospital gets approval for new $175M Brighton health center

The University of Michigan Board of Regents approved its health system's plans to build a new $175 million, 320,000-square-foot facility in Brighton during the board's Thursday, Nov. 19 meeting.

If the plans are approved by the state and granted a certificate of need, the center will be constructed on university-owned land near U-M's Brighton Health Center on Challis Road.

The Brighton facility is the second UMHS health center approved by regents in the past six months. In July, regents approved a new $46 million, 75,000-square-foot medical facility on Little Lake Drive, near Jackson and Wagner roads in Scio Township, called the University of Michigan Hospitals and Health Centers West Ann Arbor Health Center.

UMHS also opened a two story, 100,000-square-foot, $39 million facility on Haggerty Road in Northville in July of 2015.
The new building in Brighton will include adult and pediatric specialty care, infusion, a comprehensive musculoskeletal center, sleep lab, ambulatory diagnostic and treatment center, radiation oncology, operating rooms, medical procedure unit, pharmacy, radiology, and lab  services, documents indicate.

According to documents submitted to the Board of Regents, UMHS said ambulatory care activity in the health system has grown and is approaching 2 million annual visits, increasing the health system's need to expand capacity.

"As part of these efforts, the UMHS proposes the construction of a new and larger health center in the Brighton market. The existing Brighton facilities include a leased ophthalmology clinic of 6,200 square feet located on Whitmore Lake Road and a leased ambulatory clinic of 41,500 square feet on Challis Road," documents said.

The project will be funded by UMHS resources and will create about 125 on-site construction jobs.

Design, which will be done by Northville-based HKS Architects, is scheduled to begin immediately. UMHS will present a construction schedule when it seeks approval of schematic designs from the regents.

This article originally appeared in MLive.

Domino's CEO rides audacity to top leadership award

Since Patrick Doyle became CEO of Domino's Pizza in 2010, the company's stock price has zoomed nearly 12-fold, from  $8.76 on Jan. 5, 2010 to $104.52 last Thursday.

Obviously, Domino's shareholders must like Doyle.

So too do Domino's employees, who gave him such high marks this year on the 2015 Detroit Free Press Top Workplaces survey that Doyle was named the first-ever winner of the Top Workplaces Leadership Award, presented Wednesday by Joyce Jenereaux, president and publisher of the Detroit Free Press and president of Michigan.com.

Not bad for a guy whose first big news-making acts as CEO in 2010 were to change Domino's pizza recipes and then launch a daring ad campaign in which employees read scathing customer comments aloud about the old  pizza, comparing the crust to cardboard and the sauce to ketchup.

Doyle hasn't taken his foot off the gas since.

"I think the vast majority of companies are far too conservative in how they approach risk. They simply spend too much time trying to figure out how to de-risk," Doyle said Wednesday in his keynote speech after accepting his award at the 8th annual Top Workplaces Awards event at the Troy Marriott.

Rather than dwell on avoiding mistakes, he said, its important to customers and employees of a winning organization to "inspire through our action."

"We try to do things a little bit audacious," he said, before rattling off a volley of Domino's ventures that one might not expect from a pizza company, including:
  • Launching a specially designed pizza delivery car last month, based on a Chevrolet Spark platform and engineering help from Livonia-based Roush Industries, which also makes self-driving prototype Google cars and custom Ford Mustangs. 
  • Allowing customers to order pizza by texting an emoji;
  • And deciding to peddle their pizza pies in Italy.  
"We are the only American pizza company that's decided to go to the old country and sell them pizza," Doyle said. "Italians eat a lot of pizza per capita ... We're going in with humility, we're going to probably learn things there that we  bring to other markets around the world."

In surveys conducted by Workplace Dynamics for the Free Press Top Workplaces awards, 61,000 employees at Michigan companies that chose to participate were asked if they "have confidence in the leader" of their companies, and why.
Doyle finished on top for large companies, as employees praised his communications skills and his insistence on high standards for product quality and ethics. One employee wrote in the survey comment section that Doyle "knows how to make people excited about Domino's Pizza and continue to work hard for the company."

One thing he tries to root out is what he calls "omission bias."

"Often people feel far more remorse and guilt about something they do  that doesn't work out well, than something they don't do that causes same amount of damage or lost opportunity," Doyle said, adding,  "I think some of the most damaging words ever written are the Hippocratic Oath,  'First, do no harm.'  It doesn't say , 'go out and heal people.'  It says don't do anything as a doctor that may actually hurt somebody. That slows down the pace of medicine, slows down innovation."

Hiring people with with great attitudes and energy, willing to take risks, is one key to building a winning organization, he said.

Another key, just as important, Doyle added, is "Don't tolerate jerks. Get them out ... If  people don't want to be a part of your organization, the damage that they do, I don't care how highly they perform, I don;'t care how unique their skill set is, if they are a jerk they are toxic, they are going to do far more damage then anything good that they are ever going to do in your organization."

Domino's is selling pizza in 20 more countries than it was five years ago, Doyle said, and is the only major food retailer to increase its same-store sales the past six years in a row.

"If you hire for attitude, if you drive risk in your organization," he said, "it's going to create success -- and success is an awful lot of fun."

This article originally appeared in the Detroit Free Press.

Ann Arbor startups score big wins at Accelerate Michigan

When Steve Schwartz went up to collect the ceremonial $100,000 check for taking second place at the Accelerate Michigan Innovation Competition last week, he was surprised but not shocked. The CTO of Genomenon didn’t expect to win big, but he knew the Ann Arbor-based startup’s team has a lot of potential when it comes to the fight against cancer.

"We all know someone in our lives who has been impacted by cancer," Schwartz says. "We're all passionate about it."

Genomenon is a life sciences company developing a technology platform focused on personalized medicine with simplified genome interpretation software. The University of Michigan spinout's platform tackles the challenges of analyzing DNA sequencing data, including gathering, organizing and interpreting the results. This is process is called tertiary analysis and typically requires extensive manual review that can be frustratingly inefficient and error-prone. Genomenon’s software accelerates tertiary analysis so it can treat patients and publish findings faster.

The 1-year-old startup’s team of seven has built out the product and has begun introducing it to its first paying customers. A larger product roll-out is planned for next year.

"We are now in the process of raising a seed round," Schwartz says. "This (the Accelerate Michigan win for $100,000) is a nice little bump for our seed round."

Five other Ann Arbor-based startups, all of which receive help from Ann Arbor SPARK, also walked away from Accelerate Michigan with $25,000 in prize money. Those include Akervall Technologies (winning the advanced materials category), Arborlight (alternative energy), FlexDex (medical device), Workit Health (IT), and PicoSpray (Advanced manufacturing).

Accelerate Michigan is Michigan's biggest business plan competition. It awards more than $1 million in prizes each year. Ann Arbor-based startups normally dominate the winners circle each year.

This article originally appeared in Concentrate Media.

Arboretum's latest fund is largest in Michigan venture capital history

Ann Arbor-based Arboretum Ventures LLC has finished raising the largest venture capital fund in state history, closing Arboretum Ventures IV LP at $220 million.

On June 18, Arboretum filed a form with the U.S. Securities and Exchange Commission saying it intended to raise $215 million for its fourth fund. In less than three months, the firm surpassed that total.

Its previous fund, raised in 2011, also was oversubscribed. It had been targeted at $125 million and closed at $138 million. The previous largest fund in state history was the $180 million Michigan Growth Capital Partners II, raised in 2013 by Farmington Hills-based Beringea LLC.

Managing Director Tim Petersen said Arboretum will continue to concentrate on medical devices, diagnostics health care IT and health care service companies.

"We'll continue to invest in companies that address the cost of health care, that take costs out of the system," Petersen said. "It's not as if we're running out of opportunities to do that. The landscape is as attractive as it has ever been."
Managing Director Jan Garfinkle added, "We'll stick to our knitting."

Arboretum typically invests between $10 million and $15 million in its portfolio companies over a series of rounds as they hit development milestones, Garfinkle said. That means the company will be able to invest in at least 15 additional companies from this fund. 

Managing Director Paul McCreadie said Arboretum is already in due diligence on six possible investments from the new fund. 

Petersen said the company has invested in 35 companies since being founded in 2002. 

He said the 2003 fund of $24 million and 2007 fund of $73 million both rank in the top quartile of venture capitals funds raised nationally in those years. 

Petersen said new investors include three health care systems that he is not allowed to identify, one of them in Michigan. Returning investors include the Ann Arbor-based Renaissance Venture Capital Fund and the Troy-based Kresge Foundation.

Chris Rizik, CEO and fund manager at Renaissance Venture Capital, said he previously invested in Arboretum's second and third funds: "Arboretum II was our first investment back in 2008. We literally closed on that investment the day after our own first closing." 

Robert Manilla, chief investment officer of the $3.5 billion Kresge Foundation, told Crain's that in 2006, "my team spent considerable time looking for an institutional-quality asset manager in Michigan. After considerable due diligence, we invested in their 2007 fund and have been investors in each of their successive funds.

"I have watched the organization grow from a small Michigan health care venture firm to a nationally recognized health care investor. ... Their 2007 fund is our top-performing U.S. venture fund of that vintage, and their 2011 fund, while still early in its life, is progressing well." 

Other VC experts said Arboretum should be thanked for restoring confidence for investing in Midwest firms. 

Jonathan Murray, who runs the Ann Arbor office of Pittsburgh-based Draper Triangle Ventures, said Arboretum has delivered consistent returns.

"What's really important is they're helping the limited-partner community in Michigan find out it's possible to invest in Midwest companies and make money," Murray said, referring by the term "limited partners" to the institutional investors, including foundations and nonprofits, that some think have been too slow to invest in the state. 

Patti Glaza, vice president of Invest Detroit and managing director of its two investment funds, the Detroit Innovate and First Step funds, said Arboretum's strategy of investing in life sciences firms has proven wise.

Glaza said Arboretum's track record has opened the door for other VC firms by proving that you can have strong returns by investing in Michigan investment firms that have a Midwest focus. 

News that Arboretum has closed on its new fund follows the news last week that Arboretum was part of a $39.5 million funding round in Plymouth Township-based Delphinus Medical Technologies Inc., thought to be the largest single investment in a medical device company in state history.

Arboretum's share of that round came from its third fund. 

This article originally appeared in Crain's Detroit Business.

Nutshell's CEO, founder on building startups in Ann Arbor

When I first sat down last spring to talk with serial entrepreneurs Guy Suter and Joe Malcoun about the companies they’ve launched and their plans to boost Ann Arbor’s startup ecosystem as a whole, it was a fun, freewheeling conversation.

Malcoun and Suter have their hands in a number of local companies and projects. They’re investors as well as entrepreneurs, and they want to help make Ann Arbor a place that does a better job of hanging on to the talent it produces by giving early-stage companies affordable office space and a place to go for funding, networking, brainstorming and moral support.

“Guy and I are an explosive, dangerous mix, because we have a hard time saying no to cool ideas and we love risk,” Malcoun told me.

That risk appears to be paying off on multiple fronts: Notion, the e-mail optimization startup that Suter runs, is currently in beta testing (more on that in a future article); Nutshell, a customer relationship management (CRM) startup led by Malcoun, announced the closing of a multimillion-dollar investment round this week, led by Plymouth Ventures; and a shared downtown co-working and event space in partnership with Coolhouse Labs’ Jordan Breighner is set to begin construction this fall.

Nutshell began as a side-project originally conceived as a “homebrewed” way to tackle CRM at Suter’s previous company, BitLeap. In 2008, BitLeap was acquired by Ann Arbor computer security startup Barracuda Networks. As part of the deal, Suter and two of Nutshell’s co-founders, Lindsay Snider and Ian Berry, were absorbed by Barracuda, so they relocated to Ann Arbor from Pennsylvania.

While at BitLeap, Suter had become frustrated by Sugar and Salesforce, the market leader in CRM software, because he felt they were too labyrinthine for a lean startup.

“They were hard to use and hard to train people to use. Salesforce isn’t even CRM anymore, it’s a platform. Our generation is so used to a rich app experience -- if you show the average 20-something salesforce, they’d probably throw up.”

In 2009, Suter, Snider and Berry recruited Andy Fowler to serve as Nutshell’s chief technical founder.

“Suddenly, what we were working on at Barracuda exploded, and we had no time,” Suter said. “So Andy built the product slowly and without pressure, focusing on the pain points we had at BitLeap.”

Nutshell officially launched in 2010, and with only minimal marketing efforts, it grew to have thousands of users. Nutshell’s co-founders realized the company’s potential was much more exciting -- and CRM in general much more susceptible to disruption -- than they originally expected, so they began to take the business a bit more seriously.

Malcoun, who worked as an executive at DTE Energy before leaving to try his hand at early-stage investing, came aboard as Nutshell’s CEO in 2014.

“Guy and I met at a David Brophy class on a Tuesday night,” Malcoun said. “I knew everyone on the panel except Guy. Then, about a month later, I read an article about Nutshell and thought, ‘Who are these people?’ Guy was so deep inside Barracuda building stuff that he didn’t know anyone. We became fast friends, and our wives and children became friends, and now we spend a lot of personal time together.”

Today, Nutshell is an industry leader when it comes to providing CRM software services to small and mid-size companies, Malcoun said. “We want to be with the scrappy entrepreneurs and the companies that are growing,” he added. “It’s a really beautiful product, too. There are so many CRM products that are hard to use and badly designed.” (The list of CRM software companies is long, indeed, but some other notable players include Close.io, Insightly, Nimble, and HubSpot.)

Under Malcoun’s watch, Nutshell has secured funding -- he declines to say exactly how much -- from investors including CKM Capital Partners, Cahoots Holdings and Plymouth Ventures. The company, which has 24 employees, plans to use the latest investment round to hire about 10 more employees and expand its sales and marketing departments.

Evan Ufer, a partner at Plymouth Ventures who joined Nutshell’s board as part of the new investment round, said the relationship between his firm and Nutshell has been especially collaborative.

Ufer said he got to know Nutshell by being one of its customers, and its technology appealed to Plymouth Ventures because it was built from scratch by engineers to fit the needs of smaller companies.

“It’s easy to integrate into existing platforms, it’s intuitive and easy to understand, and it’s affordable. A lot of CRM is complicated and very expensive. With Nutshell, you can download it and start using it in five minutes.”

From day one, Ufer has felt that Plymouth Ventures is entering into a genuine partnership with Nutshell. “We believe in the same thing: building a great business and keeping it in Ann Arbor,” he said.

That sensibility is something that Malcoun and Suter also share. As they got to know each other, they bonded over what they agreed was going well in Ann Arbor’s startup community, and what wasn’t.

There were a number of things that needed to happen before Ann Arbor could become a haven for startups the way Boulder, Colorado, and Austin, Texas, have, so they made a list of what’s missing. At the top was a “center of gravity,” a physical location that could serve as the nerve center of the ecosystem.

The other problem? Ann Arbor is a thriving, relatively affluent city. As a result, downtown office space costs a fortune.

“If you want to create density, you have to be downtown, but almost nobody can afford the space,” Suter said. “There is no place where startups can create density, no clear path. We spent months talking to people until one day we realized, why are we trying to get other people to do it? Why don’t we just do it ourselves?”

Suter, Malcoun, Berry and Snider decided to pool their resources, and they found neighboring buildings for sale on Huron Street between Fourth and Fifth. Soon, they began the process of buying them. Cabrio Properties will manage the endeavor, and Breighner’s Coolhouse Labs will be an anchor tenant, as will Nutshell and Notion. One they tear down the walls separating the individual buildings, they’ll have a massive, 24,000-square-foot space complete with room to hold events, a rooftop deck and a coffee shop on the ground floor.

“It’s very high-end, inspired tech office space,” Malcoun said. “It’s all-inclusive; we’re not renting it out by the square foot. Plus, our tenants will be mixed up with different companies with varying levels of success.”

As for who will get a spot in the new building, Malcoun said they want to be “careful with curation -- we want there to be some alignment among the companies.” Roughly 200 desks total will be available for non-anchor tenants, and the goal is to complete renovations by Spring. They plan to call the space Coolhouse.

Malcoun’s and Suter’s plans don’t end with Coolhouse’s construction. They want to formalize relationships with Dan Gilbert’s Madison Building in Detroit and Rick DeVos’s Start Garden in Grand Rapids to increase collaboration and cross-pollination.

“We know if we connect these places, we have the chance to build a solid network,” Malcoun said. “It’s actually a terrible idea to tie up a bunch of our capital in a real estate deal, but we’re doing it because we have to -- there’s no billionaire wanting to do cool things in Ann Arbor -- and you can’t build great companies without a great community to support them.”

Ufer, for one, is a fan of Coolhouse and all it might do to enrich Ann Arbor’s startup ecosystem.

“I think it’s a wonderful project,” he said. “We’re big supporters of their efforts, even though we’re not involved financially. It’s a very neat thing to buy much-needed space that young companies can afford, and where they can scale.”

This article originally appeared in Xconomy.

Work begins on downtown Ypsilanti co-working space

A new co-working space called The Back Office Studio is under construction in downtown Ypsilanti and should be open this fall.

Construction workers with JC Beal Construction have begun working on 13 N. Washington with a target of having the space completed in time for a Halloween opening. In the meantime, The Back Office Studio team is recruiting its first patrons.

"We're looking for second stage companies in any industry," says John Newman, general manager of The Back Office Studio. "We're not going to be incubating startups. We ware looking for established companies looking for office space or collaboration space."

The Back Office Studio is also looking for freelancers and other new economy professionals to fill out its space. The plan is to start at the ground floor of the 9,000-square-foot building and go from there.

"We're going to start on the first floor and expand into the second floor," Newman says.

The co-working space will enable users to have 24/7 access to the building through a key card. Memberships are available to $100 a week or $25 a day trial memberships. Regular memberships where people can access a desk on a first-come-first-serve basis are available for $200 per month. A membership where the user has access to a private desk go for $350 per month. Users will also have access to the stereotypical co-working options, like coffee, snacks, conference rooms, and WiFi.

"We're working to have a really robust wifi," Newman says.

Newman and his partners purchased the building earlier this year with the idea of turning it into a new economy hotspot. They want to complement the Ann Arbor SPARK East Incubator in downtown Ypsilanti by creating a space for more mature companies.

"We want to add to the vitality of downtown Ypsilanti," Newman says.

This article originally appeared in Concentrate Media.

DTE Energy opens largest operating solar array in state

In partnership with Domino's Farms, DTE Energy today announced the opening of the state's largest solar array to date, a 1.1-megawatt facility at Domino's Farms in Ann Arbor Township.     

The project comprises more than 4,000 panels -- enough to cover the football field at the University of Michigan's "Big House." The property, north of M-14 and west of Earhart Road, generates enough electricity to power nearly 200 homes at any given time.

"The support from Domino's Farms, Ann Arbor Township officials and the broader business community, has been phenomenal," said David Harwood, DTE Energy's director of renewable energy. 

"DTE is the state's largest investor in solar and wind. The renewable projects we own or contract with represent $2 billion in renewable energy infrastructure," Harwood said. "The Domino's Farms solar array is part of a broader, long-term plan to move us to a cleaner, more diversified energy portfolio, with significant investments in natural gas and renewable energy."  

Harwood noted the Domino's Farms project helped DTE Energy meet the state's requirement of electric utilities supplying 10 percent of their electricity from renewable energy sources by 2015.  
He was joined by Paul Roney, president of Domino's Farms, and Ann Arbor Township Treasurer Della DiPietro to celebrate the collaboration which began more than two years ago.    

Roney said that the Domino's Farms solar installation has been a great partnership with DTE Energy, as well as with Ann Arbor Township which provided site plan approval and permitting.   

"The project is also good for Domino's Farms," Roney said. "Although the energy generated is not going directly to the Domino's Farms Office Park, it represents one-quarter of our energy usage and that fits with other sustainability-type efforts we have undertaken from storm water management to energy-efficiency improvements in the building." 

Roney added that the project allowed Domino's Farms to make productive use of an under-utilized parcel of land. 
DTE Energy constructed the solar array and will operate and maintain the facility for 20 years. 

The Domino's Farms project is part of DTE Energy SolarCurrents, a pilot program launched in 2009. DTE Energy has installed 11 megawatts of solar energy across 23 sites in metro Detroit and in Michigan's "Thumb" area. The company also is constructing a 750-kilowatt array in Romulus and planning an 800-kilowatt installation in Ypsilanti. In addition, several other solar energy projects are in development. 

DTE Energy's entire renewable energy portfolio including wind and biomass is now capable of generating nearly 1,000 megawatts of electricity, enough to power 400,000 homes. The portfolio includes facilities owned and operated by DTE Energy, along with contracts to purchase power from facilities owned and operated by third-party developers in Michigan.

This article originally appeared in PR Newswire. 
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