
Motor City Mojo: The Startup Renaissance In Detroit - pitdesi
http://techcrunch.com/2011/09/23/motor-city-mojo-the-startup-renaissance-in-detroit/
======
sneak
Having grown up there and still having roots there, I can say that indeed, the
burn rate in Detroit is very low.

It could be zero, though, and it wouldn't be worth it to put one's company
there. All the cheap rent in the world doesn't make up for having to choose
between car-required suburbia hell (where all the white people live) or the
crime-ridden, dysfunctional dystopia that is The City Of Detroit proper.

In the 'burbs, cops drive around looking to fuck with people and everything is
boring. In the city, you're looking at 45-60 minute response times from 911
calls, if the police or ambulance arrives at all.

One upside is that Michigan gun laws are relatively permissive, which you'll
be thankful for if you opt not to live in an endless boring grid of white
people in subdivisions (i.e. actually live in Detroit).

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ahi
As others have said, Detroit is a scary place. But I would much rather live in
Detroit than the Valley. The "risk takers" of the Valley have nothing on
living and playing in Detroit. The complete societal collapse of Detroit has
provided amazing opportunities for entrepreneurs, artists, and assorted
weirdos. You don't try to start your next <insert freemium business model
startup> in Detroit. Leave that to the unimaginative valley folk. It would be
a complete waste of the freedom offered by a lack of legal, social and
economic constraints. There just aren't many places where ventures like the
Russell are even considered let alone viable: <http://ricdetroit.org/>

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SwellJoe
I just spent two weeks in Detroit. I don't plan to go back anytime soon.

The first day I got there, chock full of excitement to see the city and get a
feel for the place (really, people were laughing at my extreme enthusiasm
about going to visit Detroit), I biked downtown for the jazz festival and was
nearly mugged, or worse, on the way back around midnight (a bunch of guys in a
van kept trying to get me to stop and approach the van, to help them get
gas...there were gas stations within three blocks in either direction, and the
guys in the van were young and looked perfectly capable of walking a couple of
blocks to get gas...and the van seemed to be running fine and the guys were
giving off seriously nefarious vibes, whispering to each other, etc.). I've
biked through the tenderloin in SF in the middle of the night, walked through
Brooklyn and the Bronx at 1 AM, and spent time in numerous so-called sketchy
places; I travel full-time, so I've been to some interesting places, and I
don't travel like a tourist. I try to see the real side of the places I go.
I've rarely felt threatened in the nearly two years I've been travelling. I
felt threatened in Detroit, on more than one occasion.

Detroit has a reputation for being a scary place because it _is_ a scary
place. And, while I enjoyed some aspect of my visit, like finding a walk-up
outdoor movie theater setup among old abandoned buildings, and seeing little
farms in urban areas (though they seemed to be in a somewhat bedraggled state;
they seemed more like a media ploy that has played out rather than an actual
sustainable community effort in some of the cases I saw), and the music scene
is good, it doesn't make up for the sadness of the place itself.

Also note that those $6000 houses (and even less) will have property tax of
several thousand per year. Detroit is still valuing houses at the rates of 10+
years ago, and the tax rate has climbed drastically in the past several years
to try to keep revenue up to the level required to keep schools running, roads
in decent condition, and police on the streets. Despite all the increases, the
city is still experiencing significant budgetary problems. I looked into
buying a house there, as it's cheap enough to be damned near an impulse
purchase, but the cost of buying, restoring, securing (because you're going to
need bars and cameras if you have a decent house within the city of Detroit),
and paying the taxes on it will make it much more costly. Still incredibly
cheap, but nowhere near $6000. And, you'll be living in Detroit. Not worth it.

Oh, and starting a _tech_ company there? Madness. Notice that only one of
those companies is actually worth more than a few hundred thousand (and it's
not a startup, anymore, and hasn't been in a couple of decades), or maybe a
couple of million, at best. That's not a coincidence. Those would be also-rans
in the valley. I've noticed the same thing about most "look at us, we can be a
startup hub, too!" articles. They mention a half dozen websites no one has
ever heard of, as proof positive that the city can compete with actual startup
hubs for tech companies.

It's cool that Detroit is improving. I'm sure some people will make solid
money on real estate in the coming years in Detroit. And, I'm sure with an
investor making a number of investments in Detroit-based companies, they'll
eventually churn out a few decent-sized businesses, and they may improve the
city further. But, it's not where you go if you want to start a tech company
and you want it to succeed.

~~~
jonbischke
Thanks for this commentary. I'm the author of the article and certainly didn't
mean to gloss over some of the really big problems Detroit has. But I was
impressed with the energy there (I also co-hosted a dinner for education
innovators in the city during my time there and felt a similar energy). I do
think we have two options with cities like Detroit. We can give up on them and
move elsewhere and let them become ghost towns. Or we can fight to keep them
alive, similar to what people did in New Orleans post-Katrina. I'm a believer
that the latter is what we need to do. It's not going to be easy but I'm
really proud of the folks there who are committed to sticking around and doing
whatever they can to help make the city better.

~~~
SwellJoe
That's an admirable position. But, I'll point out that when starting a new
tech company, you have two options. You can do everything you can to make it a
success. Or, you can start it outside of a major tech company startup hub,
such as in Detroit.

If your priority is to help save Detroit, by way of starting a company that
provides jobs in Detroit, that's cool. Good on you. But, odds are very good
it's not going to become a big tech company.

There are a lot of ways to frame the world as "two options". We have two
options with regard to poverty in Africa: Give our savings away to help feed
the poor, or buy a new TV or car or whatever it is we were planning to do with
that money. We have two options with regard to the environment: We can sell
our cars and start biking everywhere, or we can continue doing what we've
always done.

Just because a cause is worthy does not mean I'm the person to take it up.
I'll leave solving Detroit's problems to the people who have reasons to love
Detroit. For people in Detroit who are starting tech companies, and care about
the success of their company more than the recovery of Detroit, the smart
money is on leaving Detroit for greener pastures.

By the way, I'm not really criticizing your article. I think it's an
interesting story; I think a lot of what's happening in Detroit right now is
an interesting story, which is why it was high on my "places in the northeast
to visit" (right below NYC).

------
saturdaysaint
"Detroiter" here (actually just across 8 Mile in Ferndale).

In short, the area is an interesting conundrum - there's actually a
concentration of technical people (engineers and designers), some great
culture (think about how many genres of music started in Michigan), and some
great schools (mostly referring to U of M), and a fair amount of money.
There's also a complete lack of entrepreneurial spirit (except for packaged
foods and restaurants, for some reason). Everyone is the child of a mid-level
engineer/accountant/manager in a faceless corporation. As in large, faceless
corporations, there's a sense of social segregation between the artists,
workaday engineers, and business owners.

But, really, it's not even worth getting into for the same reasons it's barely
worth bringing up anywhere outside of Silicon Valley and New York (which only
enters the conversation by virtue of having all of the money and a lot of the
media industry). The social connections, venture capital system and expertise
in the Valley are too much of an advantage for anyone with a serious product
to stay away. I mean, many regard being in _Chicago_ as a serious liability to
Groupon...

------
reduxredacted
I'd like to speak as the man on the ground and in dire confusion while reading
this article.

The author has fallen into the trap that most of us living here have fallen
into. We all claim to be "from Detroit" but in reality, most of us live 15
miles or greater from Detroit and rarely visit. When we do, it's: The greek
town/Cobo/Downtown area, and the theatre/new football and baseball stadiums.
Not coincidentally, a short distance from the new home of Quicken Loans and
Compuware. When people talk about how bad Detroit is, they are not talking
about these areas. There's plenty of police coverage, it's well lit, it looks
acceptable (sections of Downtown are a wreck, but it's mostly OK).

I've read of a previous Detroit start-up on Hacker News that turned out to be
an Ann Arbor start-up (home of the _local school_ of University of Michigan
which _isn't_ local). Culture and demographics of Ann Arbor couldn't be more
different than that of Detroit. Ann Arbor is home to rich folks or college
students and just about nothing in-between. It's a fantastic city to visit. I
know of an online vitimin retailer that opened up in "Detroit", but they're
located 20 miles from the city limits in an upper class area
(<http://www.evitamins.com/ecommerce-careers>), granted they were a start-up
in 1999. As for the couple of non-automotive companies in Detroit. I've met
the CEO of Compuware and was able to ask him why they up and moved. It was
small talk prior to a meeting so take his response in that context, he summed
it up as he got the property "for a buck" (exact words) and the location is
profitable due to tenants renting portions of it.

As SwellJoe mentioned, _Detroit has a reputation for being a scary place
because it_ is _a scary place_. He is correct. Short of a few small sections,
it's scary. I've witnessed a barred up shop being broken into around noon on a
sunny week day by a gang of four thugs. If you want a thrill ride, take Van
Dyke from the core of the city north at dusk. You'll feel it's safe to stop
running red lights about 7 miles out. You take I-75, the Lodge or some other
highway to get in and out, not the surface streets. When I used to work as
contractual support for a variety of businesses, I invested in a firearm and a
concealed weapons permit (a permit that if you lived _in_ the city at that
time, you'd be denied ... state law has since changed that situation).

A few simple facts about the city of Detroit: There is not one major grocery
chain store in the city limits (Whole Foods is said to be investing in a store
near where Compuware and Quicken Loans is located). There are no real, feature
film movie theatres in the city limits. There is an income tax in the city (I
don't believe there's another city in Michigan that imposes an income tax).
City services are terrible. Every winter the stories on the news are about how
the roads in Detroit aren't cleared for snow. It's a running, very sad, joke.
From the first snowfall most of the neighborhood and the roads that feed the
neighborhoods will be covered in snow. And you'll get to hear about it every
day if you watch any of the local news stations.

The good news for people who were originally "stuck" in Detroit, but working
lower-middle class is that the suburbs, as of 2008, became significantly less
expensive to live in. My neighbors across the street live in a tri-level. One
of the children there beamed at me about how big his house is and how much
nicer it is than the one they used to live in ... in Detroit. All the suburbs,
especially in parts of Warren, are seeing migration of the poor out of the
city and into homes in safer neighborhoods. They want out just like my parents
wanted out when I was a child. This will further isolate and wreck the city.

~~~
rmason
One small fact correction:

Plenty of Michigan cities have city income taxes

[http://www.michigan.gov/taxes/0,4676,7-238-43715-153955--
F,0...](http://www.michigan.gov/taxes/0,4676,7-238-43715-153955--F,00.html)

One addition and this comes from a fifth generation Detroiter living outstate
who visits often. There are lots of young urban homesteaders moving downtown
especially in neighborhoods like Corktown and they've given the city a huge
boost. However what happens when they marry and have children?

There better be another group of young people willing to buy their houses
because no sane couple will put their children in the Detroit schools. If they
fail to fix the schools the boomlet will crash.

But personally I am bullishly optimistic on the city. Detroit has big problems
but it also has grand canyon sized opportunities that exist nowhere else.

~~~
reduxredacted
Thanks for the correction. I was too lazy to look it up :).

Being from the suburban area and not much of a "Michigan tourist", we always
hear of the income tax being the "big detractor" to investment in the city.
There are so many other problems in the neighborhoods that pinning the issue
of investment to income tax is to convenient.

As for the Detroit Schools issue, you're also dead on. It's a big deal. The
folks that I know who have relocated (whether Boston Edison or Brightmoor) of
Detroit have done so because they want to help the city for charitable
reasons. The biggest problem was DPS.

The enabler for all but one of the families is two-fold: Michigan is a very
homeschool friendly state. And even in the good neighborhoods of Detroit, all
of the families were able to buy their homes without a mortgage (5,000 square
feet in the Boston Edison neighborhood for $120,000, though requiring a lot of
TLC). As you put it *no sane couple will put their children in the Detroit
schools". Out of six families that I know of who have relocated, five
homeschool, the sixth sends his two children to Detroit Country Day School (a
good private school in Southfield).

------
Hyena
I love how they mention employing the locals even after noting that about half
are illiterate and presumably even less have a college or even high school
education.

~~~
rmason
What you're not understanding is that Michigan's universities are graduating
thousands of very bright engineers every year. Kids who love the state and
would prefer to find a job in Michigan. Promise to keep them in Michigan and
your recruiters gain what is known as an unfair advantage.

Likewise there are experienced people available that would gladly work for
half what they're paying in the Valley. People can't sell their houses so they
are in effect trapped.

Why more Valley companies don't open Michigan offices baffles me. Easier
recruiting and getting two developers for the price of one? Does Detroit's
reputation handicap it that much?

~~~
jerf
"Why more Valley companies don't open Michigan offices baffles me."

I suspect it's because people don't realize that from a tech company's point
of view, Detroit isn't the center of the world anymore. It may be notionally
the "Greater Metropolitan Detroit" area, but that's just tradition now, not a
reflection of reality. In reality, the "suburbs", many of which would be
cities themselves if they were isolated (not large, world-class cities, but
still definitely "cities" as opposed to "villages"; think Palo Alto vs. San
Francisco) are where the action is, as well as Ann Arbor. You don't locate in
Detroit; at most, a few of your employees may live somewhere that is
theoretically called "Detroit", but that's all the dealing with the city
you'll have. (And if you provide them a stable job, they'll probably move to
be closer to it and further from Detroit.)

Detroit is a sinking non-entity now, but the area itself is carrying on.

------
rickdale
The only businesses booming in Detroit and elsewhere in Michigan is the
medical marijuana business.

