clbr #272 show notes: detroit revisited
TRANSCRIPT
CLBR #272 Show Notes Detroit Revisited: Is it the Next Startup Hub?
Photo CC BY-SA 4.0Aerial View of Downtown Detroit, Michigan, USA. Looking up Grand River AveRobert Thompson
2015: Dave Maraniss, “Once in a Great City: A Detroit Story”Link
2016: Amy Haimerl, “Detroit Hustle: A Memoir of Love, Life & Home”Link
Aug. 4, 2017: Kathryn Bigelow’s film “Detroit” released
Detroit Timeline
• 1950: Population peaks at 1,849,568 (5th
largest city)
• 1963: Detroit loses bid for 1968 Games
• 1967, 1968: Riots
• 1979: Chrysler Bailout
• 2009: GM Bankruptcy
• 2013: Detroit Bankruptcy (largest municipal bankruptcy)
• 2016: US Automakers sell record 17.55 million vehicles
Detroit Population falls to 672,795 (23rd largest city)
DETROIT• TechCrunch:
#3 Startup City in Midwest#2 Institutional Startup Investors
• Forbes:America’s Newest Tech Hub
• Through mobility, Detroit may have found the economic niche that transforms its fortunes, and does so in the same way other major metros have -- by taking an already existing asset to another level.
• Not Just Motor City, the following also have offices in Detroit:
• Alphabet
• Amazon
• Peter Faricy of Amazon explained that “Michigan is a rapidly growing technology corridor and we're eager to bring the incredible local Detroit talent to Amazon.
• Detroit native Dan Gilbert, founder of Quicken Loans, has invested heavily in the local startup scene in an effort to rebuild Detroit’s blight into a trendy, bustling movement.
Ted Serbinski
on Detroit
• Detroit, too, has immense resources at an entrepreneur’s disposal, but to build and scale in Detroit is to build and scale Detroit itself – something you can no longer do in the Valley.
• And this is the reason I packed up and left San Francisco for Detroit in October of 2011. I wanted to take part in the emerging entrepreneurial gold rush in Detroit. I wanted to help fuel the startup renaissance and create a legacy.
• The biggest challenge of the Detroit region is the perception. People who have never been here before say anything from ‘It’s unsafe,’ to ‘No one lives here.’ Until they visit and see everything that is going on. Then they usually say they can see themselves living here.”
Serbinski on Why Tech Is Bullish on Detroit
Women 2.0
• Two of Detroit's biggest strengths right now are the entrepreneurial ecosystem and the energy surrounding it. When it comes to what’s happening in Detroit with mobility, we say it’s not Silicon Valley versus Detroit, it’s Silicon Valley plus Detroit. Because if you’re in the mobility space, you need to have a presence in Southeast Michigan,” he said. “We’ve had one company come through the program that was from Michigan. The rest are from other cities and countries. We have test tracks here and other industry-focused resources you can’t find in other areas of the country. Our founders also have access to our eight corporate innovation partners, which include Ford, Verizon, Honda, Next 47 (a division of Siemens), Bosch, Munich Re, Dana, and Michelin,” he said.
• And the automotive and technology space is taking notice. “Our demos days attract thousands of people from all over the world. A good 40-50 percent of people at demo days are not from the area,” said Serbinski.
The New
Silicon Valley?
• There’s a hidden diamond in the Midwest that contains an economy larger than California. Chicago to Detroit, down through Cleveland to Pittsburgh, bending through Columbus to Cincinnati, and coming full circle through Indianapolis back to Chicago.Withinthis map, there is a significant intersection of talent and business:
• 8 of the country’s top 25 entrepreneurial colleges, according to Entrepreneur Magazine
• 6 of the top 20 engineering schools including Chicago, Michigan, Carnegie Mellon, Illinois, as ranked by US News and World Report
• 15 percent of the Fortune 500. Zoom out an extra ~100 miles around the diamond and you’ll get a staggering 45 percent of the Fortune 500
• And if Drive Capital’s Chris Olson is right, in five years, the Midwest will have more startups than Silicon Valley.
TECHSTARS MOBILITY
ACCELERATOR
• Three years ago, TechstarsMobility launched in Detroit. Since then, we’ve seen many startups relocate or open up shop in Detroit to tap into the automotive dominance of the region. SPLT and Lunar, part of the 2015 class of TechstarsMobility, both relocated from NYC to Detroit. Together they now employ over 40 individuals in the city’s downtown.
• And Oblong, PolySync, and Mapbox all opened offices operating out of the Techstarsoffice.
How Detroit Could Beat Silicon Valley at
Its Own Game (Seriously)
• In one frontier technology, Detroit may hold several competitive advantages over Silicon Valley. Although predictions range significantly, many research organizations forecast that autonomous cars will be the first place that the public sees true Artificial Intelligence, with widespread adoption by 2030. This has led to a burgeoning war between Silicon Valley and Detroit, with many assuming the city that personifies urban blight can’t compete with the likes of Elon Musk and Larry Page.
• But critics may be missing several distinct advantages that the motor city holds over Silicon Valley. In particular: it’s becoming a highly-attractive location for STEM talent, it has a rapidly expanding (and hungry) tech scene and it has a localized industry cluster that may be difficult for Silicon Valley to replicate.
• First, the Detroit-Ann Arbor area boasts a highly-educated population. According to WalletHub, nearby Ann Arbor is ranked #1 on the list of most educated cities, ahead of both San Jose (#3) and San Francisco (#7).
• Second, the cost of living in the area is below the national average and significantly below Silicon Valley.
• Finally, Detroit is becoming much more attractive for STEM talent. Not only has STEM job growth outpaced traditional by 6x, the city is midst of the kind of cultural revival that serves as catnip for millennial technologists.
Link
• When you go back about one hundred years to the early part of the twentieth century, this was the Silicon Valley of that time,” says Gabe Karp, partner at Detroit Venture Partners. “The Henry Fords of the world and the auto industry, that was the heart of innovation, so that’s deeply rooted in the DNA.”
• Perhaps the most obvious factor that has catalyzed the city’s regrowth is the automobile industry, the piece of Detroit lore that rivals the bankruptcy in recent cultural consciousness. The city has become a prominent hub not only for car companies, but also original equipment manufacturers, suppliers, technology companies, and advanced manufacturing. As vehicles continue to be more connected to technology, the demand for highly capable tech professionals in Detroit and the surrounding communities continues to grow as well.
• “Detroit is becoming a robust ecosystem of entrepreneurial activity [again],” notes Karp. “You don’t need a Silicon Valley zip code to launch a great tech company.”
• Link
50 Percent Increase
in Detroit-Based
Startups Since 2014• There are currently 35 active venture-backed startups in Detroit.
• Venture-backed startups in Detroit represent 25 percent of the startup companies growing in Michigan.
• There are five venture firms headquartered or with an office in the Detroit area. These venture firms represent 15 percent of the firms in Michigan.
• In the last year, 14 startups in Detroit received more than $62,000,000 from venture capital firms.
• Currently, 43 percent of the startup companies that have received venture capital funding in Detroit are information technology companies, while 23 percent are life science companies.
• Over 50 percent of the startup companies in the Detroit area are in the startup/early stage.
• Detroit’s evolution toward becoming a premier hub for entrepreneurial and investment activity in Michigan has been a long time coming,” said Gab Karp, Partner at Detroit Venture Partners. “The talent and networking opportunities in the city provide new startups a strong base to grow and make an immediate impact on Detroit’s economic resurgence. We’ve already seen the positive impact made by the influx of entrepreneurs investing in the future, and it’s only going to accelerate going forward. We expect the startup landscape to continue to grow and define Detroit as a nationally recognized startup destination.”
• Link
MCVA Study
(con’t)
• Hot sectors include fintech (e.g., Benzinga in Detroit), life science/healthcare (e.g., Millendo Therapeutics in Ann Arbor), and security (Duo Security also in Ann Arbor).
• Higher growth startups include Rocket Fiber that provides gigabit internet and Shinola that is bringing back manufacturing to Detroit.
• STARTUP AS MEME: Dandelion founder Jason Lorimer, who moved from Philadelphia, to join Detroit’s future, was pillored for embodying the image of “the white male entrepreneur and self-styled savior.”
• HARD TRUTHS: For all the optimism, it must be muted. Detroit is still the biggest poor city in the country. Only Philly rivals Detroit’s abandoned property crisis. Forget the stories of Bay Area expats flocking here. Detroit is still more Milwaukee than San Francisco.
• The attention paid to Detroit’s startup community surely outpaces its maturity but that’s likely because the excitement is more for its future than its past. Whatever comes next will be a result of where Detroit is now.
• Link
DETROIT BY THE NUMBERS (Data from Bestplaces.net)
NETFLIX DOCUMENTARY
• GENERATION STARTUP captures the struggles and triumphs of six recent college graduates who put everything on the line to build startups in Detroit. Shot over 17 months, it’s an honest, in-the-trenches look at what it takes to launch a startup as the film's young entrepreneurs learn to fail and redefine success.
• Directed by Academy Award winner Cynthia Wade and award-winning filmmaker Cheryl Miller Houser, the film celebrates risk-taking, urban revitalization, and diversity while delivering a vital call-to-action—with entrepreneurship at a record low, the country’s economic future is at stake.
• Now available on Netflix! http://nflx.it/2nu4mjw