I am an outsider, but I've seen the inside of this machine.
I came to Ann Arbor from LA in 2009 in order to build stuff in a hacker-friendly and foodie town that is a financially rational place to live.
But I didn't expect to find this community of startupy freaks at UM. They are gung-ho in a lets-go-to-the-football-game sort of way. They are often innocent to technological limits, and at times godawfully ruthless. I also notice a particular affinity for building things quickly and then moving on. But they are doing amazing work at MPowered and have roped in a lot of people who would have otherwise marched into corporate oblivion.
UMich hackathon culture is what germinated my current startup, rapt.fm, in January, 2012. A lot of folks involved in MPowered helped the demo get built on that weekend and put in a lot of hours throughout the buildup since then, (including David, the writer of the article).
As great as it is for Michigan, I do think that most of these folks will head out to the Bay Area. But enough will stick around here where the woods run deep and the people are happy.