At the center of this effort is Detroit-born billionaire Dan Gilbert, the founder of Quicken Loans and majority owner of the Cleveland Cavaliers. Since moving his company’s headquarters from the suburbs to downtown in 2010, the Michigan native has made it his personal mission to transform the core of Downtown Detroit back into the vibrant, successful, functional place that it once was. The first step was overhauling his company’s workspaces, which are scattered across half a dozen downtown properties and feature bright, colorful offices and hip, worker-friendly amenities. Now, he’s trying to bring the rest of the city up to these modern standards.
And he’s doing it the old-fashioned way: by buying up empty or otherwise available properties throughout downtown, rehabbing them, and then renting them out to new tenants. The idea is to attract the kind of high-growth, high-potential companies to Downtown Detroit that would otherwise be working out of office space in the suburbs by reinventing what life in Downtown Detroit is really like.
Needless to say, this is no small undertaking. If he hopes to be successful, there needs to be capital to fund new businesses, jobs to attract high-tech workers, and workspaces and housing to support them as they grow. So Gilbert and company decided to start the process by creating a tech accelerator program in January 2012. The resulting nonprofit organization, Bizdom, is housed in the Madison, a historic theatre that Gilbert gutted and renovated, creating the downtown area’s first startup coworking space and one of Michigan’s leading tech incubators.
But Bizdom is not alone. The Madison is also home to DVP, Gilbert’s for-profit venture capital firm, and a number of its portfolio companies, including Detroit Labs, design firm Skidmore Studios, and more than a dozen in-progress new startups.
It is, to put it mildly, a very busy, very unique place.
As for the five-story structure itself, it at one time housed offices for the long-ago demolished Madison Theatre, which was razed to make room for a parking lot in 2000. Now that the remaining structure has been overhauled, there’s a street-level coffee shop that, unusual for Downtown Detroit, is actually bustling at midday. Access to the upper floors is well secured (a key card is needed to even take the elevator from floor to floor), and, once there, visitors are treated to exposed brickwork, open rafters, and a number of floor-to-ceiling murals. Large windows dominate the space on the south and east sides, offering sweeping views of the Detroit River and the east side of town, including Comerica Park. The loftlike warehouse space—which includes three floors of offices, an auditorium, meeting rooms, and an open-air party deck on the roof—is unlike anything else in Detroit.
And it’s packed. The day I visited, workers were crowded into cubes and offices, with many even working at tables in the hall. DVP and its associated companies take up about half of the third floor, with Bizdom and its entrepreneurs crammed together on the other side. Where there aren’t startups at work, there are sport-jacketed executives waiting for meetings. In the middle of the space, a stairway leads down to the second floor, with hardwood accent walls giving the stairs an organic, natural feel.
It’s a cool space, for sure, but the importance of the Madison goes beyond the smoothie machine and the city views. There is serious work being done here, and it is work that many in the city believe would not be happening locally if the forces behind this space did not exist.
“The whole idea is to help reinvent the urban core,” explains Ross Sanders, CEO of Bizdom, in the Madison’s glass-enclosed conference room. “You look at other startup ecosystems—we studied Boulder, we studied Boston, we studied Silicon Valley—they all have these accelerators that are doing the real heavy lifting. Detroit didn’t have an accelerator, so we’ve lost a lot of great talent to these other cities.”
The short-term goal, he explains, is to help entrepreneurs get their ideas off the ground and start generating revenue, thereby creating jobs and eventually contributing some legitimate economic growth for the city.
At Bizdom, this is being done through a nonprofit model that includes a lot of hands-on business training and mentorship. Many of the entrepreneurs that enter the Bizdom program—six potential companies are accepted into the program per session, Sanders says, with three sessions per year—come with little more than a good idea and a business plan. These aren’t experienced entrepreneurs. Bizdom kicks in up to $25,000 in seed funding and, with the support of Gilbert’s family of companies, helps the entrepreneurs get their companies set up and running. They come from all over the country—two founders even recently came to town from Silicon Valley, Sanders says proudly—and are required to keep their company headquartered in Detroit once they complete the program.
“Most people know Dan Gilbert because he’s the majority owner of the Cavs; he’s the founder of Quicken Loans,” Sanders says. “But most people don’t know he also has this network of sixty businesses that he’s associated with. So we heavily leverage this network. So not only do we have full-time trainers out here to work with the businesses, but we pull in experts from this family of companies. For example, the woman who does SEO over at Quicken Loans does a whole thing on SEO [for our companies]. Josh Linkner over at DVP does a whole thing on how to pitch to investors. Rock Ventures, which is Dan’s private equity firm, does a whole thing on business valuation.”
In exchange for all this support and training, Bizdom takes an 8 percent stake in each business. All proceeds from its various startups are then funneled back into the nonprofit fund for use in other business funding efforts, and as of 2013, two Bizdom companies were making payments back into the fund. Sanders expects the program to be self-sustaining in this way within the next several years.
“If you can go and produce a startup and create a couple of jobs, you’re a hero in my opinion, because that’s pretty hard to do,” he says. “And if you can make a great business out of it, that’s even better; that’s a huge accomplishment. But if you can do that in Detroit? I think the appeal of Detroit for some startups is that in Detroit you get to affect the outcome. We truly believe that the next five to ten years is going to be a period that historians will write about, about how Detroit came out of this whole tailspin with manufacturing. And there will be certain businesses that they write about that are going to be startups.”
Go to Silicon Valley and start a business; that’s great and more power to you. But doing the same thing in southeastern Michigan is about more than just your own startup and your own personal goals. “Here you’re really affecting a whole city and a region. With Detroit’s success goes the region’s success,” says Sanders.
DVP’s Ted Serbinski agrees, singing the Madison’s praises and calling the building one of the best locations in Detroit for what he and the others are trying to achieve.
“The startup ecosystem was very fragmented in Michigan,” he says. “There was a lot of stuff going on around Ann Arbor, some stuff in Birmingham, which is one of the nicer suburbs. But Detroit was really in disarray. Dan Gilbert’s whole premise is what he calls the ‘big bang theory.’ It’s that we need everything at once. We need high-tech jobs, we need residential units, and we need commercial spaces. And the impetus for a lot of that is the fact that startups create the most change. We have to build a brain economy, and we need tech jobs.”
It’s all about connectivity, between companies, between entrepreneurs, and between investors. The physical space of the Madison and the community it has nurtured has, many in the city believe, raised the probability that this will all pay off in the end.
Most of Downtown Detroit still consists of vintage steel and concrete office towers—including a collection of beautiful gothic skyscrapers—and a handful of parking garages. Street-level activity is all but nonexistent (though I’m told it is quite a bit better now than it was just a few years ago), and unless you’re walking to a Red Wings or Tigers game, it’s unlikely you’ll spend much time on the sidewalks, especially after dark. This is a block-by-block city. Near Comerica