When Detroit Labs co-founder Nathan Hughes recruits employees for his mobile and web app development company, he often faces resistance about the company's location.

"A lot of people have that hesitation," he says. "They're not sure about moving to Detroit."

The city, which has lost half of its population in the wake of the auto industry collapse, has a bad reputation. Many buildings are abandoned, and thousands of residents live in some of the most extreme poverty in the country.

But Hughes, a Michigan native, and his Detroit Labs partners saw the potential of the city as fertile ground for a thriving tech startup--and after visiting, their candidates do, too.

"We bring them down to our office in a beautiful old building," says Hughes. "We show them what's going on in the area, and they change their minds. People are really loving it here."

The city is home to a small, but thriving tech community, with companies including Quicken Loan, Compuware Ventures, and Galaxe Solutions based downtown. And while many storefronts are vacant, the local businesses that do exist are all worth visiting, says Hughes. "There aren't 50 or 100 restaurants to choose from, like you'd see in most cities, but the 10 or 20 that are there are very high quality."

Will McDowell, a recent grad working as a business analyst for Detroit Labs, lives downtown, as do many of the business' younger employees. "I think we have just as much fun here, and just as much to do at a lower price than in any other city," he says.

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