by Carine Martinez-Gouhier:
“[The] comeback in Detroit started several years ago, outside of municipal government, outside of the public sector . . . The comeback is going on in spite of the way government was operating.”
— Michigan Gov. Rick Snyder, September 2013
“This effort is not centrally-planned, it’s market-driven.”
— Editorial Page Editor of The Detroit News Nolan Finley, July 2014
Detroit was once a proud industrial city, the Automobile Capital of the World. When the situation started to go south for a number of reasons that are beyond the scope of this series of posts, a lot of people were quick to claim that capitalism had failed, that the free market had betrayed Motown, leaving her abused and worn out. In fact, far from a failure of the free market, Detroit had become the epitome of government and unions gone wild.
Today, faced with a bankruptcy that shed light on billions of dollars in outstanding obligations and unfounded liabilities, authorities have given up enforcing some of the hurdles the city initially imposed on Detroit businesses and inhabitants, giving a breath of fresh air to entrepreneurs with a creative sense of how to revive the city. These entrepreneurs were central to our blogger group’s observation of Detroit.
Our first visit took us to the Madison Block, and the Detroit Venture Partners (DVP). The Madison block is so named after the Madison Theater, which reopened after being bought by Dan Gilbert, Detroit’s most important investor today. Our host at DVP told us the number of startups had increased quickly since they opened in 2011; they ran out of space and had to expand to the entire block. The goal is to “create density for startups.”
People are focused on their projects in this “ecosystem to invest.” Offices look like your typical high-tech open space: we are in Detroit, but inside, it could be Austin or the Silicon Valley. Among the logos we saws were those of Grand Circus, Microsoft Ventures, BoostUp, and Twitter. We were introduced to a couple of startups–both what we would call social enterprises.
“It was always about giving back first,” says Lisa Cupp, Chief Marketing Officer at Chalkfly. The startup sells office supplies online. For every order you place, you can choose one teacher (not a school, but specifically a teacher) that receives 5% of your order. She explains that they want to make a difference in education. Chalkfly was named one of the 10 “2014 Brand Innovators Made In America Top Brands To Watch.”
Another social enterprise, BoostUp, helps you finance a project. They partner with companies that match up your savings towards your purchase. Although not originally from Detroit, BoostUp benefits from being close to automakers, with whom the startup has partnered. In both cases, Detroiters are helping Detroiters, privately.
Detroit Venture Partners have an “all-digital strategy” and describe themselves as “risk-taking freedom fighters” and “creative business builders, not money managers.” The expression “change the world” appears a couple of times on their website. But what about Detroit? Are current government policies encouraging entrepreneurship? “Mostly, people and investors are excited by a city that is changing,” says our host.
He takes us to other buildings in the block, to see Detroit Labs, and Bizdom. Detroit Labs is where the Domino’s Pizza ordering app was born. Inside, offices are modern and people are hard at work. I can’t help but notice that each office is accessed using an elevator that is activated with a security card though.
Detroit entrepreneurs may well be incentivized by a changing city, yet I insist: “But how bad are regulations here? You may love a place, but if regulations prevent you from starting a business, you either don’t start it or start it elsewhere.” There is indeed a “feeling of a ‘new frontier’” in Detroit Jake explains, but regulations, red tape, the weight of the government machine could still be an impediment he adds, mentioning a story about having to make 60 trips to city hall to get a permit to sell tacos in a food truck.
As a result of this flourishing environment for startups, Detroit is often referred to as a tech hub. But savvy tech apps are not the only kind of personal initiatives that are moving Detroit these days. That is what we will see later this week in part 2 of this post.
Carine is a French national who immigrated to the United States to pursue her own happiness. She holds a Bachelor’s degree in business administration and a Master’s degree in American Studies (specialized in corporate social responsibility). She is currently a research associate at the Texas Public Policy Foundation.