We were strolling through the building the Corvette was designed in, but there were no cars in sight. Long, well-lit corridors led to conference rooms, offices and heavy key card-locked doors, out of which occasionally spilled young people in doctor’s scrubs.
“There used to be a road running around the ground floor, and they designed auto show displays here too.” Francine Wunder, director of corporate and public affairs, was giving me a tour of Tech Town.
It’s simple to call Tech Town Detroit’s premier business incubator, but its 250 start-ups make it one of the largest of its kind in the world. And in this ravaged metropolis, which has lost an estimated 25 per cent of its population in the last decade, and where unemployment rates waver near 20 per cent, it could be called a lifesaver.
Located off of Woodward Avenue—the first road in the world to be paved with concrete—Tech Town’s gradually expanding campus is wrapped symbolically in the Detroit story. Tech One, currently the business park’s only populated building, is the birthplace of the Pontiac Corvette. The scheduled expansion, Tech Two, will be housed in the nearby Dalgleish Cadillac building, where the last Cadillac dealership in the city closed last year after over half a century in business. Next door to the campus lies a private elementary school, on the site of one of the first parking garages in the country.
The availability of the property was also classic Detroit. “To put it politely, before we moved in the area was ‘sparse’,” says Wunder. “Let’s just say there was a lot of parking.”
Detroit has suffered enormous hardship from its dependence on the automotive industry. Its reputation as the Motor City—where the Model T first rolled off the assembly line in plentiful numbers, and where the “Big Three” (General Motors, Ford and Chrysler) rose to be the largest automakers in the world—earned it a prosperous population and a place in the history books.
But as the domestic auto industry declined from the 1980s due to high oil prices and the rise of Japanese automakers, the Big Three were increasingly pressed to make cuts. Once full factories and speedy assembly lines were left empty as staff was laid off and operations moved overseas. In 2006, Ford and GM were forced to cut a total of 70,000 jobs. In 2009 GM and Chrysler declared bankruptcy. The Motor City was left with no industry, and as the jobs left, so did the talent.
Operations such as Tech Town are reshaping the city’s prospects for the future, leading Detroit from its blue-collar roots into an era of knowledge-based industry and high-tech glory. Together with resource-rich local institutions like Wayne State University, which has the largest single-campus medical school in the nation, the Henry Ford Health Care System, and the Karmanos Cancer Institute, they look to turn Detroit into a powerhouse city for the IT, bio-tech and health care industries.
Using the resources at hand, Tech Town’s goal is to stem Detroit’s brain drain and attract new talent. One of Tech Town’s signature strategies, the Shifting Gears programme, pinpoints the wealth of highly skilled labour left behind by the auto industry, retraining them for a change in careers. A recent session saw 17 professionals graduate, most ex-auto workers and many of them in their 40s. For the next four-month session of the programme, there were already 47 people enrolled at the time of writing.
Derrin Leppek is part of the new Detroit story. After working 13 years on the assembly line at Ford, Leppek was laid off and left jobless in 2008. “I was doing an MBA, but really didn’t have too much to go on besides that,” he says.
Leppek won and completed a Wayne State University Technology Commercialisation Fellowship that included a position at NextCat, a biodiesel start-up at Tech Town. Here learned the ups and downs of being an entrepreneur. “It’s definitely different than working on the assembly line,” he said. “There’s a lot of hardships, but there’s also a lot of glory.”
Leppek says the most important part of the programme is teaching ex-auto employees, from linesmen to office cowboys, to think like self-ruling businessmen. “They’re not used to an entrepreneurial environment where they have to do everything themselves.”
From October 2010, Leppek joined the Tech Town team as an entrepreneurial champion, coaching people who were once wearing similar shoes. “My job with new entrepreneurs is to give them a funding reality check.” He says many new entrepreneurs assume they can receive loans for their projects, “But in reality, bank loans aren’t a possibility for 99 per cent of our clients.”
Leppek says that, although the state of Michigan provides a number of funding resources, they’re difficult to navigate for those with little experience. That may still be a better bet than the alternatives, however. “It’s difficult to get funding from venture capital here in Michigan,” Leppek says. “We just don’t have the same acclimation to risk as they do on the East or West coast.”
But not everyone agrees. “I think that’s a very exaggerated statement,” says Josh Linker, CEO and managing partner of Detroit Venture Partners. “We’ve always been risk takers—we’re the home of the auto industry. What we need to do is celebrate the boldness that is shown in Detroit.”
Detroit Venture Partners is, as they say it themselves, a venture capital firm on a crazed mission: to rebuild Detroit through “entrepreneurial fire”. Lead by four partners (the most recent addition being basketball legend Earvin “Magic” Johnson), DVP is unique in that they only invest in digital start-ups, and they’re looking to get their hands dirty. “We’re not finger-pointing bureaucrats, we’re entrepreneurs,” says Linker, “We want to work with these companies and ensure they succeed.”
But why stay in Detroit? “We’re looking for people who think out of the box. Those with the herd mentality just flock to the coast.” In reality both Linker and partner Dan Gilbert were born and raised in the area, and it’s no surprise that two entrepreneurs would come seeking fortune in their hometown.
Linker likes Detroit. “Here it’s less about pedigree, more about entrepreneurial fire.” He says that, now, Detroit has “real meat for venture capital”, and DVP is ready to have a barbecue. Having launched last November, the group says they’ve seen over 400 potential opportunities, and made the decision to fund eight thus far. Linkner says they’ll reach 12 before the end of the year.
One of DVP’s recent investments is an online verification system called “Are You a Human?”—a competitor for the often frustrating CAPTCHA, where users are forced to decipher and input a series of mottled letters and numbers before submitting a form on the Web. Are You a Human? gives users a simple game to win instead, which can be branded by an advertiser of choice. The system was developed by an MBA graduate from the nearby University of Michigan, who now plans to move his business to Detroit.
Linker estimates that Detroit will begin to recapture the fire of its heyday sometime within the next 10 years. “We’re going to start to see a tipping point, where things will really take off.” He hopes by that time to have DVP backing up to 100 of the city’s best new entrepreneurs.
We’d be pressed to believe that one venture capital company could save the city, but their secret weapon lies in soldier-for-Detroit partner, Dan Gilbert. Founder and CEO of Quicken Loans, the largest online mortgage lender in the United States, Gilbert has made it his mission to foster a new, liveable Detroit. In 2010, Gilbert consolidated his suburban offices and moved 1,700 members of staff to downtown Detroit. Short of his own building, Gilbert moved his company into the Compuware Word Headquarters, a gleaming glass and steel building that is arguably the city’s newest high-rise.
Gilbert plans to move another 2,000 of his team into the city, but in the mean time he’s doing the groundwork to turn his burgeoning tech hub into a buzzing, liveable metropolis. He picked up four downtown buildings at rock-bottom Detroit real estate prices, and it’s estimated that he’ll spend $100m (£61.1m) on renovating the spaces into residences and retail space. Gilbert is also behind much of the bucks that are to go into what will be the Motor City’s first light rail system, down Woodward Avenue.
Some are sceptical that Gilbert’s migration from the suburbs, bulging pocketbook and can-do spirit are enough to fill out an empty downtown, with over a quarter of office space vacant. After news of Gilbert’s fourth deal rolled in, local journalist Jeff Wattrick wrote, “Sounds great, but haven’t we heard all this before? Detroit’s redevelopment history is the story of civic leaders counting their chickens before the eggs hatch.”
The Detroit Regional Chamber is one organisation that is working to actively promote the city abroad. The chamber of commerce has two staff members that work specifically on global business development, heading missions to Europe and Asia to scout businesses interested in the Detroit region.
Detroit’s got a lot going for it, they say. The team focuses on sectors that play up both what the city knows best, and where it’s heading. “Speaking generally, this means the auto sector and sectors successfully developing in knowledge-based areas from the auto sector, such as advanced manufacturing, aerospace and defence applications,” says Ben Erulkar, senior vice president of economic development at DRC.
“Detroit has probably suffered the most of any city in America,” says Erulkar, “but, as the region with more engineers per capita than any area in the United States, it has the essential resources and the talent to rebuild and prosper.”
There are however, still challenges in turning this infamous American city into a promising business arena. The state of the city’s public schools is a hurdle, says Erulkar, as a history of poor test scores, violence in schools and lack of funding make potential newcomers hesitant to enrol their children.
But perhaps an even bigger challenge is the image Detroit carries, after being ravaged by the declining auto industry and shouldering decades of bad press.
“The image problem is more one of perception,” says Erulkar, “While there remain tremendous challenges to the City’s recovery, people are beginning to vote with their feet.”
Detroit Venture Partners’ Josh Linker agrees. “I think a lot of people are feeling a renewed sense of purpose about Detroit right now,” he says. “I must get four calls a day from people around the country saying they want to be part of the transformation.”
28 July, 2011
Rebranding Detroit: Turning the Motor City into a high tech hub
We were strolling through the building the Corvette was designed in, but there were no cars in sight. Long, well-lit corridors led to conference rooms, offices and heavy key card-locked doors, out of which occasionally spilled young people in doctor’s scrubs.
“There used to be a road running around the ground floor, and they designed auto show displays here too.” Francine Wunder, director of corporate and public affairs, was giving me a tour of Tech Town.
It’s simple to call Tech Town Detroit’s premier business incubator, but its 250 start-ups make it one of the largest of its kind in the world. And in this ravaged metropolis, which has lost an estimated 25 per cent of its population in the last decade, and where unemployment rates waver near 20 per cent, it could be called a lifesaver.
Located off of Woodward Avenue—the first road in the world to be paved with concrete—Tech Town’s gradually expanding campus is wrapped symbolically in the Detroit story. Tech One, currently the business park’s only populated building, is the birthplace of the Pontiac Corvette. The scheduled expansion, Tech Two, will be housed in the nearby Dalgleish Cadillac building, where the last Cadillac dealership in the city closed last year after over half a century in business. Next door to the campus lies a private elementary school, on the site of one of the first parking garages in the country.
The availability of the property was also classic Detroit. “To put it politely, before we moved in the area was ‘sparse’,” says Wunder. “Let’s just say there was a lot of parking.”
Detroit has suffered enormous hardship from its dependence on the automotive industry. Its reputation as the Motor City—where the Model T first rolled off the assembly line in plentiful numbers, and where the “Big Three” (General Motors, Ford and Chrysler) rose to be the largest automakers in the world—earned it a prosperous population and a place in the history books.
But as the domestic auto industry declined from the 1980s due to high oil prices and the rise of Japanese automakers, the Big Three were increasingly pressed to make cuts. Once full factories and speedy assembly lines were left empty as staff was laid off and operations moved overseas. In 2006, Ford and GM were forced to cut a total of 70,000 jobs. In 2009 GM and Chrysler declared bankruptcy. The Motor City was left with no industry, and as the jobs left, so did the talent.
Operations such as Tech Town are reshaping the city’s prospects for the future, leading Detroit from its blue-collar roots into an era of knowledge-based industry and high-tech glory. Together with resource-rich local institutions like Wayne State University, which has the largest single-campus medical school in the nation, the Henry Ford Health Care System, and the Karmanos Cancer Institute, they look to turn Detroit into a powerhouse city for the IT, bio-tech and health care industries.
Using the resources at hand, Tech Town’s goal is to stem Detroit’s brain drain and attract new talent. One of Tech Town’s signature strategies, the Shifting Gears programme, pinpoints the wealth of highly skilled labour left behind by the auto industry, retraining them for a change in careers. A recent session saw 17 professionals graduate, most ex-auto workers and many of them in their 40s. For the next four-month session of the programme, there were already 47 people enrolled at the time of writing.
Derrin Leppek is part of the new Detroit story. After working 13 years on the assembly line at Ford, Leppek was laid off and left jobless in 2008. “I was doing an MBA, but really didn’t have too much to go on besides that,” he says.
Leppek won and completed a Wayne State University Technology Commercialisation Fellowship that included a position at NextCat, a biodiesel start-up at Tech Town. Here learned the ups and downs of being an entrepreneur. “It’s definitely different than working on the assembly line,” he said. “There’s a lot of hardships, but there’s also a lot of glory.”
Leppek says the most important part of the programme is teaching ex-auto employees, from linesmen to office cowboys, to think like self-ruling businessmen. “They’re not used to an entrepreneurial environment where they have to do everything themselves.”
From October 2010, Leppek joined the Tech Town team as an entrepreneurial champion, coaching people who were once wearing similar shoes. “My job with new entrepreneurs is to give them a funding reality check.” He says many new entrepreneurs assume they can receive loans for their projects, “But in reality, bank loans aren’t a possibility for 99 per cent of our clients.”
Leppek says that, although the state of Michigan provides a number of funding resources, they’re difficult to navigate for those with little experience. That may still be a better bet than the alternatives, however. “It’s difficult to get funding from venture capital here in Michigan,” Leppek says. “We just don’t have the same acclimation to risk as they do on the East or West coast.”
But not everyone agrees. “I think that’s a very exaggerated statement,” says Josh Linker, CEO and managing partner of Detroit Venture Partners. “We’ve always been risk takers—we’re the home of the auto industry. What we need to do is celebrate the boldness that is shown in Detroit.”
Detroit Venture Partners is, as they say it themselves, a venture capital firm on a crazed mission: to rebuild Detroit through “entrepreneurial fire”. Lead by four partners (the most recent addition being basketball legend Earvin “Magic” Johnson), DVP is unique in that they only invest in digital start-ups, and they’re looking to get their hands dirty. “We’re not finger-pointing bureaucrats, we’re entrepreneurs,” says Linker, “We want to work with these companies and ensure they succeed.”
But why stay in Detroit? “We’re looking for people who think out of the box. Those with the herd mentality just flock to the coast.” In reality both Linker and partner Dan Gilbert were born and raised in the area, and it’s no surprise that two entrepreneurs would come seeking fortune in their hometown.
Linker likes Detroit. “Here it’s less about pedigree, more about entrepreneurial fire.” He says that, now, Detroit has “real meat for venture capital”, and DVP is ready to have a barbecue. Having launched last November, the group says they’ve seen over 400 potential opportunities, and made the decision to fund eight thus far. Linkner says they’ll reach 12 before the end of the year.
One of DVP’s recent investments is an online verification system called “Are You a Human?”—a competitor for the often frustrating CAPTCHA, where users are forced to decipher and input a series of mottled letters and numbers before submitting a form on the Web. Are You a Human? gives users a simple game to win instead, which can be branded by an advertiser of choice. The system was developed by an MBA graduate from the nearby University of Michigan, who now plans to move his business to Detroit.
Linker estimates that Detroit will begin to recapture the fire of its heyday sometime within the next 10 years. “We’re going to start to see a tipping point, where things will really take off.” He hopes by that time to have DVP backing up to 100 of the city’s best new entrepreneurs.
We’d be pressed to believe that one venture capital company could save the city, but their secret weapon lies in soldier-for-Detroit partner, Dan Gilbert. Founder and CEO of Quicken Loans, the largest online mortgage lender in the United States, Gilbert has made it his mission to foster a new, liveable Detroit. In 2010, Gilbert consolidated his suburban offices and moved 1,700 members of staff to downtown Detroit. Short of his own building, Gilbert moved his company into the Compuware Word Headquarters, a gleaming glass and steel building that is arguably the city’s newest high-rise.
Gilbert plans to move another 2,000 of his team into the city, but in the mean time he’s doing the groundwork to turn his burgeoning tech hub into a buzzing, liveable metropolis. He picked up four downtown buildings at rock-bottom Detroit real estate prices, and it’s estimated that he’ll spend $100m (£61.1m) on renovating the spaces into residences and retail space. Gilbert is also behind much of the bucks that are to go into what will be the Motor City’s first light rail system, down Woodward Avenue.
Some are sceptical that Gilbert’s migration from the suburbs, bulging pocketbook and can-do spirit are enough to fill out an empty downtown, with over a quarter of office space vacant. After news of Gilbert’s fourth deal rolled in, local journalist Jeff Wattrick wrote, “Sounds great, but haven’t we heard all this before? Detroit’s redevelopment history is the story of civic leaders counting their chickens before the eggs hatch.”
The Detroit Regional Chamber is one organisation that is working to actively promote the city abroad. The chamber of commerce has two staff members that work specifically on global business development, heading missions to Europe and Asia to scout businesses interested in the Detroit region.
Detroit’s got a lot going for it, they say. The team focuses on sectors that play up both what the city knows best, and where it’s heading. “Speaking generally, this means the auto sector and sectors successfully developing in knowledge-based areas from the auto sector, such as advanced manufacturing, aerospace and defence applications,” says Ben Erulkar, senior vice president of economic development at DRC.
“Detroit has probably suffered the most of any city in America,” says Erulkar, “but, as the region with more engineers per capita than any area in the United States, it has the essential resources and the talent to rebuild and prosper.”
There are however, still challenges in turning this infamous American city into a promising business arena. The state of the city’s public schools is a hurdle, says Erulkar, as a history of poor test scores, violence in schools and lack of funding make potential newcomers hesitant to enrol their children.
But perhaps an even bigger challenge is the image Detroit carries, after being ravaged by the declining auto industry and shouldering decades of bad press.
“The image problem is more one of perception,” says Erulkar, “While there remain tremendous challenges to the City’s recovery, people are beginning to vote with their feet.”
Detroit Venture Partners’ Josh Linker agrees. “I think a lot of people are feeling a renewed sense of purpose about Detroit right now,” he says. “I must get four calls a day from people around the country saying they want to be part of the transformation.”
28 July, 2011