of the downtown core over the long term. Sure, Quicken Loans can afford this kind of system right now while business is good, but what about its neighbors? What about the startups? And how long will Quicken Loans really be interested in bankrolling the security of Downtown Detroit? What happens if they leave? If the city’s public services are so far gone as to require a private police force, which is what this Quicken Loans system really is, what chance do less well-funded companies have here? When we get to the point that private enterprise feels the need to subsidize its own police force to make its workers feel safe—well, clearly this is a dysfunctional city.
It’s all still a work in progress, though. At the time of my visit, Woodward Avenue was still essentially a ghost town of half-empty office towers, limited retail space, and minimal foot traffic. But a change is happening, if slowly. The chain stores are moving in, there is construction all around, and the sidewalks are legitimately more crowded than those in many other parts of the city. Boarded-up storefronts are noticeably less common.
And Randolph is excited to get the word out.
“One of our interns who was here this past summer went back to U of M [the University of Michigan] and brought 150 of her sorority sisters to Detroit for a visit,” he says. “We broke them up into groups of about twenty to twenty-five girls and, of the group that I had, only one was from Michigan. The rest were from Texas, New Jersey, New York. And they had never been downtown; they had only heard stories of Detroit.”
Needless to say, they were surprised by what they saw, he says. This past summer, Quicken Loans brought some 1,200 interns in to work at its downtown offices.
“The feedback we’ve gotten from the interns has been incredible,” says Randolph. “They love the city, and downtown is not what they expected. That’s what it’s all about.”
For their part, the entrepreneurs on the receiving end of all this development are upbeat when asked about Detroit’s long-term chances for success.
Michigan native Greg Schwartz returned to the city in 2012 to start his company, UpTo, a service that makes appointment calendars shareable on social networks, as part of the DVP portfolio. He and nine employees currently work out of the Madison building.
“For me, trying to do a startup in New York seems crazy,” Schwartz says. “From the office space, to the cost of doing business, and all the different distractions and people trying to do the same thing. Why do it there when I can come back to the Detroit area?”
The key selling point for him was hearing about everything that’s happening downtown and how many other startups are based in Detroit now. The ecosystem is starting to become self-supporting, he says.
“Here’s an opportunity where we can actually make a name for ourselves. It was both a personal decision but also a cost-effective decision in terms of access to resources and access to talent. I had a hunch [that this would be a great place for startups], but I discovered that it was reality.”
Of course, after growing up in the area, Schwartz was hesitant about the downtown location at first.
“I was skeptical,” he says. “I met with DVP and still didn’t believe it. But after kind of a week of being down here and living, I realized that Detroit isn’t what it was twenty years ago. Now restaurants are opening up. Part of it is how much has come up in the past twelve to eighteen months. The thing that really blows me away is not just working down here but living down here. A large chunk of [employees in] this building lives around here and hangs out all the time in Downtown Detroit. And that was never the case growing up.
“It’s cool to be in Detroit. It used to be cool in the suburbs, but now there are cool restaurants, cool bars down here. It’s the thing to do. A really cool sort of cultural shift has sort of happened.”
For app development shop Detroit Labs, its downtown location has turned out to be a significant competitive advantage. Headquartered on the second floor of the Madison (at least it was at the time I visited; the company was set to move into its own space around the corner in summer 2013), the firm is a technology services provider specializing in advanced mobile apps for brand-name clients like Domino’s Pizza, Stryker Corporation Medical, Caesars Entertainment, and General Motors. It has also been on a growth kick of late. Only a year into its existence, Detroit Labs has thirty-two employees, is self-supporting, and has developed a reputation as the go-to mobile development shop for much of the Midwest.
Locating in Detroit has played a large role in this success, explains CEO and cofounder Paul Glomski.
“There is some competition in the metro area,” he says, “but downtown we’re the largest, and that’s given us a lot of press and attention that we wouldn’t otherwise get in just some random city in Silicon Valley where we’d be one of many. The fact that we are the mobile shop that is growing fast and is now very quickly the largest in the city of Detroit has definitely given us an advantage.”
Detroit Labs was also one of the first major tenants in the Madison, giving its founders a front-row seat to the growth of the local scene and the redevelopment of the downtown core.
“Where else do you get the kind of support and attention that we get here?” asks Glomski. “And not from just Josh [Linkner, DVP managing partner] and Dan Gilbert. But you can see that there are a lot of other startups here. We’ve got a community here, a real community, so there are tighter connections and more support than is typical.”
And, according to cofounder Dan Ward, there’s that whole Midwestern work ethic at play as well.
“This might offend folks on the coasts, but I like to say we’re blue-collar technology here,” Ward says. “Automotive was here, the whole blue-collar movement was here. This is where the hardworking part of the country was. And I think it translates really well to technology because creating a startup is hard as hell. It’s glamorized in movies and people think that’s what it’s assumed to be. And here it’s just a little bit different. Not to knock on the coasts, but here they’re willing to put the time in; they’re willing to sweat it out. It’s definitely blue-collar tech here.”
But can this blue-collar vibe extend beyond the walls of the Madison and make waves nationally? It did for Jay Gierak and Nathan Labenz, the cofounders of online business referral platform Stik, who after raising funds and launching their business in Silicon Valley moved it all to Detroit in 2012 in order to work with DVP.
The company has done well since moving home—both Gierak and Labenz, who met in college, grew up in Michigan—adding eleven employees and recently closing a $2.3 million round of fund-raising led by DVP and a group of non-Detroit investors.
The reality, however, is that Detroit is a city torn in two.
It’s the urban core versus the suburbs. The unemployed, largely African American downtown neighborhoods versus the upscale, college-educated suburbs. And neither side is happy with the situation.
But, when speaking about the Detroit suburbs, it is important to be clear about what we mean. The city of Detroit is made up of three major zones: the downtown core, the ring of older neighborhoods just beyond that, and then the true suburbs. The suburban areas are the same as they are in any area across the country—malls, chain restaurants, highways. It’s the older neighborhoods in that mid-outer ring where most of Detroit’s problems lie. That’s where you’ll find the abandoned buildings, the burned-out homes, the empty streets.
DVP’s Ted Serbinski sums it up best when he compares the city and its suburbs to a doughnut.
“The center of the doughnut where we’re at is good and becoming very good,” he says. “The ring is where there’s a lot of abandonment. And then when you get outside of that you get in the ’burbs and it’s nice and it’s fine. It’s the ring and that sprawl that needs to be improved, and once the core is solid that will happen.”
As far as tech startups are concerned, there are still some interesting things happening out in the Detroit suburbs, beyond that “ring.” Sure, the density outside of town isn’t the same as