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Can Tech Entrepreneurship Rebuild Detroit?


Stashed in: @lizgannes, Awesome, Michigan, Ford

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Last year I visited the Thomas Edison national historical park, and realized with a shock that he was obsessed with many of the same technical problems that Elon Musk still thinks about today: how to move people around with efficiency and enjoyment, how to improve life and leisure, how to fill needs that people didn't even know they had. Liz Gannes had a similar epiphany about Henry Ford and the city of automakers, which was the original "Silicon Valley" center of mass technical innovation -- and is trying to fan the flames of a new way of life centered on an urban core, Millennial workforce, and... drones?

Yes, drones! Or cars.

In 2014, some 248 new technology companies were started in Michigan, and private investment in tech startups totaled $770 million.

...

In June 2014, Silicon Valley venture capitalist Marc Andreessen wrote an op-ed with the headline, “Turn Detroit into Drone Valley.”

His point: Instead of becoming yet another Silicon Valley wannabe, up-and-coming regions should narrow their focus to a particular new domain, then remove local regulatory hurdles around it, and ultimately benefit from proximity to other people working on similar ideas.

“People here were offended by that,” says Jake Cohen, a partner at Detroit Venture Partners. “I wasn’t offended, but it was kind of like, ‘Detroit’s fucked, you guys should do something different, why not be the drone capital of the world.’”

The truth is, for the last century, Detroit has been defined by the automotive industry. It’s the Motor City. So it stands to reason that the city is well-positioned for working on what’s next in cars and transportation: Autonomous vehicles, connected apps, cyber security. Sure, drones, too. Meanwhile, just about every app maker in the world is trying to figure out how to get on new platforms. You’d think carmakers would be good partners.

Even as startups are cropping up as the new hotness in Detroit, the new technology scene is distinctly disconnected from the region’s signature strength.

It’s not just tech that’s coming to cars, it’s cars that are coming to tech. For the past few years, large swaths of the technology industry’s annual gathering, International CES in Las Vegas, have been taken over by automotive companies and concept cars. This year at CES, carmakers took up more exhibitor space than ever, both Ford and Mercedes-Benz keynoted, and Mercedes’ bull-terrier-shaped autonomous concept car was one of the most memorable gadgets of the week. “CES is now a glorified auto show,” says Chris Thomas, partner at the transportation-focused venture capital firm Fontinalis Partners.

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Venture capital is starting to flow into cars and mobility. The investment lust over Uber has helped rekindle the attraction to transportation. In San Francisco, where I live, the latest venture-backed crops are valet-parking startups and public-bus alternatives that can be hailed with an app (the city has approximately four of each). Venture capitalists are now seeking more places to make bets. A new fund called AutoTech Ventures, based in Palo Alto, Calif., just raised $100 million from strategic partners to invest exclusively in transportation.

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Though TechStars already has programs in a dozen cities, this is seen as a major validation for Detroit. And, fittingly, the TechStars companies will explicitly work on projects in the space of mobility, as defined by Bill Ford’s TED Talk. In June, 10 companies will receive $120,000 in funding and a three-month mentorship program. And the whole thing will take place in downtown Detroit.

The goal is to uncover something about mobility and transportation that consumers don’t know they want yet. There’s a Henry Ford quote that has been cited by Steve Jobs and many others, and still resonates after all these years:

“If I had asked people what they wanted, they would have said faster horses.”

I didn't realize Liz has a family business there: "My father was born and raised in Detroit, and my family has been running a steel-cutting plant in Detroit since 1959."

More Silicon Valley connections:

Silicon Valley has taken notice. TechCrunch founder Michael Arrington announced that he will hold a Detroit startup conference in May. The elite Y Combinator startup program recently admitted Detroit startup Cribspot, a search engine for college housing. Elon Musk in January showed up at the Automotive News World Congress to voice support for other automakers building electric vehicles. He said he’d maybe think about setting up a factory in Michigan — but first perhaps the state could pull back its protective ban on selling Tesla cars.

A generation ago, entrepreneurial people left Detroit and the surrounding areas for more supportive environments — namely, Silicon Valley, with a dash of Seattle. Twitter CEO Dick Costolo, Nest CEO and Google executive Tony Fadell, former Microsoft CEO Steve Ballmer, Sun co-founders Scott McNealy and Bill Joy, and Google CEO Larry Page are all natives.

“When you went back [to Detroit] as recently as three years ago or so, you didn’t hear or see any of this. You heard all the negative stuff instead,” says Costolo.

Costolo grew up in Troy, Michigan, in an automotive family. His dad worked at Pontiac; his uncle worked at Ford, his other uncle ran a dealership. He returns to Detroit often. Twitter now has a sales office in one of Gilbert’s buildings in downtown Detroit.

“It’s awesome to see the city really starting to come back,” Costolo says. “I would definitely place a bet on it being a vibrant entrepreneurial community in pretty short order.”

Detroit was founded in 1701.

Some 1.9 million people lived within the city limits in 1950. Now fewer than 700,000 people fill the same space.

It was named Detroit Rock City by Kiss in the 1970s.

The patron saint of Detroit now is the guy who owns Quicken Loans, the Cleveland Cavaliers, and a portion of Rap Genius:

In Detroit, the patron is Dan Gilbert, the 53-year-old billionaire, who, after buying Quicken Loans back from Intuit, relocated the company to the city. Beyond his online loans business, the native Detroiter has spent more than $1.6 billion fixing up his hometown. Gilbert now owns or controls more than 70 buildings. To the rest of the country, he is more widely known for his investments in Cleveland, where he recruited four-time NBA MVP LeBron James to rejoin his Cavaliers this season.

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In person, Gilbert is at once full of Midwestern “aw shucks” charm and tightly wound. This is the man who threw an epic public tantrum over losing LeBron James to the Miami Heat in 2010, accusing the player of “cowardly betrayal” in asurreal and infamous rant, only to woo James back four years later. When Gilbert wants something, he gets it.

Maybe techies can buy Shinola (Made in Detroit) watches and ride Shinola bikes !!  Love my Shinola watch.  Would have been great to see the TESLA gigafactory utilizing old factory space in Detroit rather than virgin ground in Reno.

Tesla chose Nevada because Nevada paid a lot of money to Tesla in incentives:

http://www.npr.org/2014/12/29/373729936/nevadas-tesla-battery-factory-triggers-wave-of-follow-up-business

It does seem like there's positive momentum in Detroit attracting other tech companies.

So yes, hopefully the workers at those companies will buy Shinola products.

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