None of this is anything new, of course. According to the Bay Area Council Economic Institute, since 2004, employment growth in the tech sector has outpaced growth in the private sector as a whole by a ratio of 3:1, and this trend is on track to continue until at least the end of the decade. All this while employment for the country overall is expected to grow by just 13.3 percent. What’s more, the average tech industry worker earns between 17 and 27 percent more than a comparable worker in another field, meaning tech jobs are more valuable to the economy than those in other industries.
“A strong and vibrant technology industry is critical to supporting an economic recovery, and while the tech industry has weathered the downturn better than most, we can’t take its strength for granted,” says former TechAmerica Foundation president Jennifer Kerber in response to the BLS job growth numbers. “Global economic and market forces continue to put the technology industry in a position of intense competition—a competition for innovation, where labor and intellectual property provide the foundation for growth. America can only realize the full promise of an innovation economy with smarter public policies focused on developing and attracting the best talent, investing in research and development, and growing and securing our information infrastructure.”
Despite the title, this book is not intended to be an indictment of Silicon Valley culture or success. Nor is it intended to question or otherwise shed doubt on the economic forces that have been working quite effectively in the Bay Area for the better part of a half century. The fact is, the Silicon Valley region is home to the most vibrant and effective technology ecosystem in the world, bar none. There’s no taking away from that achievement or the innovations that still come out of the Bay Area on a daily basis.
Rather, the idea here is to shine a light on all of the interesting things that are happening everywhere else—away from the spotlight, away from the big money, and away from the unique cultural advantages that have made the Valley what it is. It’s one thing to build a multimillion-dollar company in Mountain View, but it’s another thing entirely to do that in a place like Downtown Detroit, or Central Texas, or off the Las Vegas Strip. These are cities without the built-in advantages that come with a Bay Area address, and, as a result, exiting in one of these off-the-beaten-path markets is a lot more difficult.
Those that are able to pull it off say it’s a get-your-name-in-the-paper, your-photo-on-the-news, cement-your-position-as-a-pillar-of-the-local-startup-ecosystem kind of a big deal, and with good reason. Sure, the exits are usually (but not always) smaller than the eye-popping deals that happen in Silicon Valley, and they happen less often, but the economic impact on these cities is very real. A $100 million startup in Durham, North Carolina, that employs fifty people? That’s an important part of the local economy, not to mention a pretty important part of the lives of those fifty employees.
This isn’t happening everywhere yet, though that is likely coming sooner rather than later, but a number of US cities have emerged as startup hubs in recent years, each with their own unique challenges and advantages. Over a period of about ten months in 2013, I visited seven of them—Boulder, Colorado; Kansas City, Missouri; Detroit, Michigan; Las Vegas, Nevada; Raleigh, North Carolina; New York, New York; and Austin, Texas—talking with entrepreneurs, meeting with investors, touring incubators and accelerators, and generally getting a hands-on feel for what being a startup founder or employee in each city was really like. This book is the result of what I found to be a universal truth among all of these startup ecosystems: Sometimes it’s about money, sometimes it’s about community, sometimes it’s about individual leaders, but the driving force behind every startup ecosystem comes down to one thing—a city’s culture.
CHAPTER
2
“Detroit still has assets that appeal to investors. The resources in terms of the people, the businesses, the history, and the culture are all here to have a great city in the future.”
—Warren Buffett, November 2013
MARCH ROLLS IN COLD in southeastern Michigan. And breezy. It isn’t necessarily a snowy time of year, though that depends on how tight the Midwestern deep freeze holds on through the winter, but what snow there is tends to linger, piling up in parking lots, along highways, and tucked into out-of-the-way places. The sky is steel gray and overcast.
But when I arrive at the monthly Grow Detroit meetup inside Mango Languages in Farmington Hills, Detroit, in March 2013, the scene is anything but chilly. The open-floor plan of the office is packed with at least 100 of the region’s most promising entrepreneurs and technology boosters, mingling over pizza and “fancy” beers in the home of one of metro Detroit’s more notable recent tech success stories.
Up the elevator and through the glass entry doors, we may as well be stepping out of the Midwest “spring” and into Startup-land, USA. Overhead, the exposed gray ductwork is interwoven with random ceiling tiles, open space, and orange accents, with a touch-screen panel wall on one side of the room and a slick kitchen and workspace, complete with bar and bistro seating, on the other. About two dozen low-walled workstations, arranged into pod-like units, are scattered around the rest of the space.
Ignore the view out the window and it would be easy to mistake the scene for an office park in San Jose or Sunnyvale. But the fact is, this office is just twenty minutes outside of Downtown Detroit in a modern, two-story office building off of a frontage road that could be located in just about any suburb in America.
But that’s where the similarities end.
“Things are really happening in Detroit,” says Mango co-founder and COO Mike Goulas, his eyes wide like an evangelist preacher, before regaling me with details about the ins and outs of Michigan’s startup culture and how things are improving for entrepreneurs in and around the city (the same city that declared bankruptcy in July 2013). The company itself, which creates and manages a library of Web- and mobile-based language learning software programs, has been around since 2007, and when I visit is in the process of outgrowing its suburban workspace. The solution, according to Goulas, may in fact be a move to Downtown Detroit.
That’s right, Detroit. The city that’s called America’s forgotten city and is generally considered one of the most dangerous cities in the country. “There’s just so much going on down there now,” Goulas says, “even more now than just a year ago. And downtown is just so much more exciting; the spaces are amazing.”
The attraction now, he explains, is the large number of technology startups that are moving into what the locals call Detroit’s urban core—the downtown area bordered by I-75 to the north and the Detroit River to the south, near the General Motors headquarters and the Detroit Tigers’ Comerica Park. Essentially, this is the area’s new “innovation district.” Money is flowing, companies are opening, and the market for technology talent in the Motor City has never been hotter.
Again, this is Detroit we’re talking about.
“It’s an old city,” says Jason Teshuba, Mango’s cofounder and CEO, “but now Detroit is itself a startup, and I love being part of a startup. You know New York, if you look at it in terms of companies, New York is a stable blue chip. Chicago, same thing. Atlanta is probably a medium-sized company that’s kind of had its growth spurt. But I see Detroit, especially the ‘new’ Detroit if you will, as really this amazing startup story in terms of the city. I think we’d like to be part of that.”
For Mango Languages, a move downtown would make perfect sense. The forty-six-employee company—which is self-funded and self-sustaining—has reached the point where it can benefit from proximity to other companies in the software space. Although similar-minded operations are spread out in Farmington Hills—the rest of the Mango building is filled with law offices, bankers, and private medical practices—Downtown Detroit is where the real action is at this point. With a space along Woodward Avenue, for example, Teshuba would have convenient access to neighbors like Quicken Loans, app developer Detroit Labs, and