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 it is at the Madison and the downtown core, but there is enough going on outside to justify a visit anyway.
So, one morning I drove north on Woodward Avenue, through the historic neighborhoods of Highland Park (home to Ford’s original Model T factory), the funky and young Ferndale, and then Royal Oak, to the upscale suburb of Birmingham. It’s about twenty-five minutes outside of the city limits, with tree-lined residential streets, a low-rise commercial district, and even some light industrial space.
But for Jeff Epstein, who founded Ambassador—a company that helps corporations create, track, and manage their custom referral programs—in 2010, setting up shop in Birmingham just made sense. He had grown up nearby in West Broomfield and wanted to be close enough to the city for meetings, but didn’t want to sign on for “the big gamble” before the downtown tech community really got established.
“Birmingham is a cool place and there are a lot of young people here,” he says, in Ambassador’s small office space off of a residential street. “The whole Woodward Avenue corridor from about 9 Mile to about here is all where the young people who are staying in the area live, so I wanted to be close to that. It’s a really great spot. It’s easy access to downtown and you can get to pretty much anywhere in southeast Michigan pretty quickly.”
What’s happening in Downtown Detroit is “awesome,” Epstein says, but it’s still too early for him to consider moving down there full time.
“In the past year it’s gotten more interesting to move down there and a lot of people are doing that,” he says, “but a lot of people still don’t live down there and it can be sort of challenging, especially when you’re working twelve to fourteen hours a day. What they’ve done downtown is amazing, and it’s nothing about what they’re doing, but the infrastructure just isn’t there. It’s tough. In the past six months there’s been a lot more to do down there, and Gilbert’s been buying buildings, and I think in five years it’s going to be great, and you’ll be able to walk around at night and not be nervous. It’s definitely getting there; it’s pretty exciting.”
For Epstein, however, picking up and moving his company downtown just doesn’t make sense yet. He and his employees all live out in the suburbs anyway and, for a scrappy startup like Ambassador, it’s easier for them to be located near everyone’s homes. An hour-long commute over the course of a week can be an extra day of work that’s not getting done otherwise.
But,
