How the Motor City Got Its Groove Back

Home to a burgeoning concentration of tech start-ups and incubators, Detroit's "Webward Avenue" is not just a street--it's also a movement. Can it transform Detroit?

Crumbling cities aren't supposed to be this popular.

For the most recent Startup Weekend in Detroit in mid-February, organizer Brandon Chesnutt cap attendance at 120, and still had people banging down his door.

"We literally just ran out of space," Chesnutt says. "I can't go an hour without getting e-mail from somebody wanting to attend."

The most popular Startup Weekend in the city's history took place inside the M@dison building, a modern five-story start-up Mecca that—as home to several VC firms and many of their portfolio companies—is part of the groundwork for a tech-centered rebirth of Detroit. The building is the brainchild of Dan Gilbert of Quicken Loans, who has been making it his crusade to reignite Detroit's downtown by buying property, seeding ventures, and moving thousands of Quicken employees into the area.

The M@dison is located on a stretch of Woodward Avenue that is poised to become Detroit's own Silicon Alley: Gilbert has dubbed it "Webward Avenue" for its burgeoning concentration of tech businesses and incubators. And with the neighborhood's surge in restaurants, bars, and entertainment options, Webward just might become the movement that is key to transforming Detroit back into a great American city.

"Regardless of what you call it, there is something really special happening," says Paul Glomski, CEO and co-founder of Detroit Labs, a year-old mobile app maker based in the M@dison. "A city that people consider down on its luck in terms of manufacturing, when you come here, you see a vibrant work force driven by innovation and technology. It's something that is exciting to be a part of."

"A Run" at Downtown Detroit

There's no doubt that Gilbert is leading the charge to spark the Webward Avenue movement: Not only is he encouraging downtown revitalization by buying up abandoned or under-used buildings to turn into office space, but he's also connected to several other major players in the neighborhood. He's a general partner in Detroit Venture Partners, the VC group seeding many of the hot prospects in the city.

The M@dison is a $12-million renovation of a century-old building that alone contains a several start-ups that have begun to get some notoriety, including the tech newcomer Detroit Labs, which gained national notoriety for working with Chevrolet on a Super Bowl promotion. In contrast, there's Skidmore Studios, a 53-year old company that started as a Detroit illustration house, moved in to the building after a long exile in the suburbs, and the proximity to the action has already increased business enough to hire more employees.

"If we were going to make a run at the city, we're going to do it downtown," president Tim Smith says. "Moving it back to its roots, where it started, was a big priority of mine. Emotionally, I think there was an uptick in our own personal pride being part of a creative resurgence."

It must be considered that Webward Avenue isn't an entirely new phenomenon. The neighborhood has its own breed of anchors tenants, which have been laying the groundwork for the movement since the first dot-com boom. Compuware built its 1.1 million square-foot headquarters off the southern hub of Woodward Avenue in 2002. Last year, the company started C-Power Compuware Ventures to fund early-stage technology start-ups with a Michigan connection.

According to Paul Czarnik, a Detroit native who is executive vice president and chief technology officer at Compuware and oversees the company's venture arm, one of the first pioneers to try to reclaim downtown was the Ilitch family. It owns the Detroit Red Wings, the Detroit Tigers, and Little Caesar's pizza chain, and which invested heavily in renovating buildings and venues downtown in the '80s and '90s. That ripple of renovation downtown seems to have lured big tech firms to start testing the waters. Compuware's move downtown was a monumental one.

"When they made the decision, we were all kind of floored," Czarnik says. "It was not good times in the area we were moving to. It's been almost nine years and we love it."

After Gilbert relocated 1,700 employees from Southfield into the Compuware building in 2010, he moved 1,500 Quicken employees into the renovated 14-story Chase Tower building on Woodward in October.

The transformation of the area is changing the kinds of talent the city is drawing too: once considered a haven of engineers for its auto-industry connections, Detroit's scrappy vibe is tech-savvy drawing in college graduates who are looking for something fresher than in Chicago or New York.

"A bunch of people that we have talked to are specifically interested in Detroit," says Reid Tatoris, one of the founders of Are You A Human, a game-based authentication system—like a CAPTCHA, but ostensibly fun—also based in the M@dison. "I'm really surprised by it. They've got a reason to try and take a risk and be here. It's really cool to see people from outside who have no ties say 'I want to be in Detroit.'"

Maybe you've heard the joke about being able to buy a house in Detroit for the price of a VCR, but that's not the case around downtown: The residential occupancy rate is higher than 90 percent. Tatoris says he was stuck on seven different waiting lists for apartment complexes before he finally found a place to live.

Brand New Identity on Webward

A few weekends ago, Glomski took his wife and 2-year-old to see Sesame Street Live at the Fox Theater. To get there, he parked in his office's parking lot, passed by Comerica Park, home of the Detroit Tigers, through Grand Circus Park, and through a corridor of restaurants, bars, and coffee shops, including old prohibition style speakeasies, live jazz clubs, and a coffee shop with music venue tucked away in the back.

The area is starting to see the benchmarks of activity that define a creative hub, all which fight the notion that Detroit is economically hopeless.

"People have shifted in their minds," Chesnutt says. "They love spending time—and more importantly, spending money—downtown."

Pedestrian traffic has increased, and more hopeful signs emerge almost every day.

"You are seeing buildings that are vacant and unoccupied for an awful long time that you know just got sold," Smith says.

Entrepreneurs use words like "discoverable," "unlocking," and "scavenger hunt" when describing the best parts of Detroit, which is to say a casual visitor is not as likely to just stumble across something amazing or eye-catching the same way one might while walking down a busy street in New York City.

"There is a lot down here, but it's not as visible," says Nathan Hughes, co-founder of Detroit Labs.

But the things that are happening give Detroiters with the feeling that the city is discovering a brand new identity.

"We Felt a Renewed Energy."

Clumping together in the start-up zone of Webward Avenue means two things to Detroit's entrepreneurs: For one, business is easier to do when you can just pop a few doors over to talk to your graphic designer or engineer.

"There's a lot going on, but it's distributed through miles and miles of suburbs. There's an energy you can't take advantage of when every one of your clients is separated by 20 or 30 miles of driving," Hughes says. "One of the founding principles was to get everyone together. That's not something that necessarily exists normally in Detroit."

But perhaps more crucially, it also means when you're circling the wagons around the center of what is supposed to be a dying American city, you find yourself with a lot more ammo to fight your way out.

"Emotionally, I think there was an uptick in our own personal pride being part of a creative resurgence," Smith says of relocating onto the Avenue. "Everyone upped their game a little bit. We felt a renewed energy. The work we were doing six months ago that was great got better. The days of hanging our head and being ashamed of where we live are over. We're not going to be the punch line any more. We're going to lead that charge back."

Chesnutt says Detroit is catching up to other cities, where start-up energy feeds off itself in bars and social events, on and off the clock.

"Entrepreneurial density and getting everyone in the same spot, that's what leads to success," he says.

You can already see that sense of combatants-in-arms in the popularity of events such as Startup Weekend and tours of the M@dison building, which have drawn capacity crowds. The attendees may be competitors in the business world, but they say their uniting goal is to pick the city up, dust it off and push it back into the ring.

Josh Linkner, a serial entrepreneur who works with Gilbert on Detroit Venture Partners, was born in Detroit in 1970, when the popular conception about the city was already that it was becoming a "wasteland." His parents moved the family to the suburbs shortly after.

"I'm going to be telling my grandkids about this five-year stretch when Detroit got back its mojo," Linkner says. "I don't think social transformation and profit are mutually exclusive. Our philosophy is that you can do well and do good simultaneously."

Click HERE to read the rest of this article by Tim Donnelly on Inc.!
The U.S. auto industry, led by Chrysler Group LLC, reported a second consecutive month of robust sales, suggesting the U.S. economy is continuing to pick up steam. 

Auto makers predicted the annualized new-vehicle sales pace for February will once again surpass 14 million cars and light trucks as it did in January. It would be the first time the industry has seen back-to-back months at that level since April and May of 2008.

Chrysler, which is majority-owned by Fiat SpA of Italy, reported its sales rose 40% in February to 133,521 vehicles. Its truck sales rose 21% from a year earlier, while car sales more than doubled. Ford Motor Co. weighed in with a 14% rise, to 178,644 cars and light trucks, with its Ford brand recording a 14% jump and its Lincoln luxury brand a 16% increase. Sales of the Ford Focus compact doubled.

Sales at General Motors Co. increased 1%, to 209,306 vehicles. Sales of its Chevrolet brand rose 5.8%, helped by its Sonic and Cruze small cars. But GM also saw declines by its Buick and Cadillac divisions. GM said its inventory at U.S. dealers at month’s end stood at 667,096 units, up 7.7% from January.

Click HERE to read the rest of this article on The Wall Street Journal!
Philip Shea
Multi-Housing News

Vacancy is set to decline in Detroit Rock City as the United Auto Workers recently struck a deal with the Big Three that will create 14,000 new jobs through 2014. The deal includes $13 million worth of investments in products and infrastructure and will increase the rate of pay for most assembly-line workers, this according to the Detroit Free Press.

In addition, Detroit-based General Motors is once again the world’s largest automaker. According to the Center for Automotive Research, there are over 1.45 million people working as a direct result of the $80 billion government bailout of the company in 2009. As such, the city is set to see its third straight year of positive job growth in 2012, and rents are expected to increase by 3 percent.

The automaking sector, however, will not be the only driver of increased multifamily residence in the recession-worn city. Various companies and corporations are now offering relocation incentives for professionals to return to the Midtown/West and Downtown submarkets. Marcus & Millichap expects an influx of white-collar workers to reduce vacancy for Class A apartments to 8 percent.

Urban Science, an automotive research firm, recently launched its “Live Detroit” program, which will give employees up to $2,400 allowance toward the first year of renting a Detroit apartment, according to the Detroit Free Press. “As a business owner in the city for the last 34 years, I’m encouraged and excited about the current revitalization I see throughout Detroit,” said Jim Anderson, founder and CEO of Urban Science, in an interview with the city’s newspaper. “It’s critical for companies of all sizes to get behind the momentum and play an active role in generating growth, whether it’s business or residential.”

Tax incentives are also being offered by the local and state governments to revitalize Michigan’s most populous city. A 6 percent state business tax was recently thrown out the window by Gov. Rick Synder, a move that was widely applauded by the Michigan business community. The Tax Foundation, a Washington, D.C.-based think tank devoted to analyzing tax policies’ effect of business, recently revised its ranking of Michigan’s corporate tax climate from 49th in 2011 to 7th in 2012.

Click HERE to read the rest of this article!
Lou Peeples Inside Outside project, Detroit
Lou Peeples/Getty
INSIDE/OUTSIDE: A project by The Detroit Institute of Arts that takes its collection to the streets as part of a celebration of its 125th anniversary.

"Detroit is a blank canvas."

I cringe every time I hear this phrase, even though it's used by people who mean well.

To say something that references "emptiness" regarding a city founded in 1701 is both unfair and inaccurate, as it implies that there's nothing here—or worse—that there's nothing worth talking about here.

By suggesting this, the speaker disregards momentum building around the Detroit 2.0 movement, which is in full swing. Dan Gilbert, my partner in Detroit Venture Partners, has purchased nearly three million square feet of commercial real estate, setting off a trigger reaction for private investment downtown, where sports, business, technology, and the arts converge. Over the next few years, we'll witness the positive effects of our city's revitalization from within, as fallout from this tipping point of innovation.

Rather than refer to Detroit as a blank canvas, perhaps it makes more sense to call it an unfinished one. There are already splatters of paint on the board demonstrating promise, as well as blunders that need to be fixed. However, there is still enough white space left for someone to come in and make a mark, which will leave a lasting impression on the painting. People innovating and using creativity to win are making some of the most impactful brush strokes; the end result is a more beautiful painting for us all to enjoy.

Entrepreneurship requires you to get in the trenches. It's true that Detroit's trenches are more war-torn than others you might find. That being said, there's a strong case to be made for starting a business here, stemming precisely from these long-standing challenges and problems. The following elements are like buckets of paint, a toolkit of brushes, or even a paint-by-number guide: they make it easier for someone to add to the canvas.

Talent: This area is chock full of people who are hungry for an opportunity. New graduates make up the first camp—those born and bred in the region are educated in a local network of world-class universities, leaving ready to enter the business world. The current market has forced many of these graduates to launch their careers elsewhere, causing a "brain drain," but this trend can be stopped by providing jobs locally. Unfortunately for the economy, there's a large group of professionals who are out of work. Engineers, laborers, techies, sales associates, managers, consultants and a whole host of others now need jobs, many of whom have years of business experience under their belt. For a savvy business owner, this second group provides a capable workforce. Why pay more to fight over average talent when you could have your choice of hirable, less expensive A-listers?

Space: With more than 130 square miles and too many vacancies to count within its borders, Detroit boasts land. Lots of it. No other major city would have empty skyscrapers available for purchase, let alone for pennies on the square foot. Similarly, no other major city would have vacant lots, begging for parks, gardens and public art pieces, let alone with herds of new downtown residents awaiting them. Just as a brush needs a painter to bring it into action, so too does this land require someone to make use of it.

"Small" Town: Although Detroit is one of the largest American cities, it retains an attitude of a "big city, small town." When someone starts a business in New York or Los Angeles, it's easy to get lost in the shuffle. Here, new businesses stand out and we take notice, welcoming newbies with open arms and celebrating their entrepreneurial fire. Because of this, it's often easier to get face time with head honchos here than it would be elsewhere, which makes your business's goals more quickly attainable.

Click HERE to read the rest of this article by Josh Linkner on Inc.! 

Slate: How Did Detroit Become Motor City?

A General Motors factory in Flint, Michigan.
A General Motors plant
                                            Photograph by Bill Pugliano/Getty Images

Mitt Romney eked out a win in Michigan’s Republican presidential primary Tuesday, overcoming criticism of his opposition to the automotive industry bailout. Why are all major auto manufacturers headquartered in or near Detroit?

Because Henry Ford lived there. Detroit and its environs had a lot to offer the nascent auto industry around the turn of the 20th century. Iron ore was available from the Mesabi Range in Minnesota, and there was ample timber in Michigan itself. (Early car frames were made of wood.) Rail and water routes made it easy to ship cars to Chicago and New York. And Detroit already hosted heavy industry like machine shops and stove works. Toledo, Cleveland, Milwaukee, and Buffalo could have made similar claims, yet none of them became Motown. Detroit’s eventual dominance probably had more to do with a couple of historical accidents than any geographic advantage. First, innovators like Henry Ford and Ransom Olds happened to live in Michigan. Second, automotive executives in early-20th-century Detroit behaved a lot like Silicon Valley executives today: They regularly switched companies and launched spinoffs and startups. This culture of cross-pollination spread innovative manufacturing and design ideas among the Detroit manufacturers. Distant competitors couldn’t keep up with Motown’s research and development operations and eventually failed or sold themselves to Detroit.

There was no indication that Detroit would come to dominate car making in the industry’s early years. According to economist Steven Klepper of Carnegie Mellon University, none of the 69 companies that entered the auto industry (PDF) between 1895 and 1900 was located in Detroit. Olds Motor Works became the city’s first major carmaker when it relocated from Lansing in 1900. Ransom Olds then made a decision that would shape the course of the industry—rather than creating hundreds of small components in-house for his Curved Dash Runabout, he subcontracted much of the work to companies in Detroit’s flourishing manufacturing sector. The people who built the car’s parts eventually learned so much about automotive manufacturing that they went on to launch their own brands. Olds’ subcontractors included the Briscoe brothers, who helped build Buick, and machinist Henry Leland, who created Cadillac and Lincoln. The Dodge brothers also cut their teeth making parts for both Olds and Henry Ford. Ransom Olds, himself, eventually left Olds Motor Works to found the REO car company. A few other executives from Olds founded Chalmers and Hudson. William Durant, the man behind General Motors, was twice forced out of the company, forming Chevrolet and later Durant Motors while he was away. All of these ventures were based in or near Detroit.

Click HERE to read the rest of this article by Brian Palmer on Slate! 
TechTown, a local incubator

It's been called a start-up renaissance.

Detroit is increasingly flush with young companies, including a few gaining national notoriety, such as year-old Detroit Labs, of Super Bowl fame, and HiredMyWay, a two-year-old online recruiting service that's now expanding nationwide. What's more: Venture capital—once virtually nonexistent in Motor City—has set up shop, too. There are well-known firms, such as Detroit Venture Partners, which counts entrepreneurial celebrities Josh Linker and Dan Gilbert on its team, to smaller seed-stage firms, such as 313 Ventures. A patent office is even on its way in. In other words, it's a buzzing entrepreneurial ecosystem.

"What's really prompting a lot of this growth is our huge pool of talent here," says Jake Cohen, vice president of Detroit Venture Partners.

But where exactly is this talent coming from?

Detroit is far from being celebrated for its traditional education (a recent report found that nearly half of the adults in the city are functionally illiterate), but people knee-deep in this new economy will tell you that the foundation of Detroit's comeback is its growing entrepreneurial education system—a tapestry of universities, incubators, and competitions that foster growth and produce new talent in several industries.

"Over the past decade or so, we've built an incredibly efficient ecosystem to help entrepreneurs get off their feet. There's education and support for nearly every stage of a company," says Tina Bissell, business manager at the Michigan Initiative for Innovation & Entrepreneurship, which aims to foster entrepreneurship in public universities. "If we want this boom to continue, it boils down to making education a priority."

Click HERE to read the rest of this article by Nicole Carter on Inc.! 

Veronika Scott is 22 years old and the Founder of The Empowerment Plan, a nonprofit that hires Detroit’s homeless women to make coats for the homeless.

I met Veronika in August 2011 when she spoke at the event my company powered at the United Nations – The International Year of Youth Culmination Celebration. Veronika wowed hundreds of girls and women who were joining together at the UN to create a global force of positive change. She stood at the UN podium and began telling her story: I started off with a college assignment in early 2010 to design and fulfill a need… I live in Detroit… there are 36,000 homeless individuals and 64,000 abandoned buildings… I didn’t need to look very far to find others with greater needs than my own. 

Veronika graduated from the College of Creative Studies in Detroit and the next day she flew from Detroit to New York to join me at the Forbes Gallery to share her intimate and passionate story about how she started her company, what motivates her, her mistakes and successes. She’s an amazing young woman who is truly changing the world.

Click HERE to read the rest of this story by Denise Restauri on Forbes! 

Hostel Detroit Helps Highlight City's Bright Spots

Ally Levise
The Varsity News

Now that graduation is just around the corner and I've been applying for out-of-state jobs, I'm starting to realize how much I'm actually going to miss Detroit. So, lately I've been trying to get my fill of the city.

This past weekend, I decided to stay at Hostel Detroit, which I've been curious about since it opened almost one year ago.

Hostel Detroit was started by UDM graduate Emily Doerr as a place for travelers seeking an affordable, alternative place to stay in the city. While hostels are a tourist staple in many cities across the world, this is the first of its kind in Detroit.

It's located near Rosa Parks and I-75, and the surrounding neighborhood doesn't look like much. My traveling companion commented that the building directly behind the hostel looked like something "straight out of New Jack City." Several burnt-out buildings contrast sharply with a meticulously cared-for area filled with freshly planted trees and the hostel's brick façade painted with cheerful colors.

The inside is even more inviting.

We were greeted by the hostel's manager, Michel. He gave us a tour, apologizing for the mess he had made in the community kitchen: There were stems strewn about from the fresh flowers he had been arranging for our room.

The interior is charming. Chalkboards line the entrance, advertising upcoming bike tours of Detroit and other events. There are eclectic knick-knacks in the rooms and Michel's freshly cut flowers brightened up the space.

The guest book had enthusiastic and positive entries made by travelers from far-off places like Nepal and the Netherlands, proof that tourism is alive and well in Detroit.

Michel gave us a map of Detroit and kindly told us to call his cell phone if we needed directions or any tips on where to go.

We left our bags in our rooms and went out to explore the lesser-known gems of the city. It seems that people who are not familiar with Detroit always go to the same handful of known, big name places – the casinos, Pizza Papalis and Hockeytown Café – and largely overlook the places with real character.

We started at Atwater Brewery. For lovers of microbrews, this place is a dream. It features a small bar tucked in the corner of the brewery itself. Huge vats tower over the bar, and boxes are stacked to the ceiling. You get to have a glimpse of the process while you sip the final product.

Just a jaunt down the road is Motor City Wine, a casual wine bar that frequently hosts jazz bands and wine tasting events. The space was packed with people of all ages sampling wines and picking from little plates of cheeses and olives. The best part is that most of their bottles fall in the $15-25 range.

Just downstairs and next door to Motor City Wine is Foran's Grand Trunk Pub. The bar, an old train station depot with high ceilings and beautiful exposed brick walls, was bursting with people on a Friday night. I delighted in the vegetarian options in the menu and the selection of Michigan-made beers on tap.

For our last stop.....Click HERE to read the rest of this article on The Varsity News!

Data through December 2011, released today by S&P Indices for its S&P/Case-Shiller[1] Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended 2011 at new index lows. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010. Both the 10- and 20-City Composites fell by 1.1% in December over November, and posted annual returns of -3.9% and -4.0% versus December 2010, respectively. These are worse than the -3.8% respective annual rates both reported for November. With these latest data, all three composites are at their lowest levels since the housing crisis began in mid-2006.

In addition to both Composites, 18 of the 20 MSAs saw monthly declines in December over November. Miami and Phoenix were up 0.2% and 0.8%, respectively. At -12.8% Atlanta continued to post the lowest annual return. Detroit was the only city to post a positive annual return, +0.5% in December versus the same month in 2010. In addition to the three composites, Atlanta, Las Vegas, Seattle and Tampa each saw average home prices hit new lows.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.0% decline in the fourth quarter of 2011 over the fourth quarter of 2010. In December, the 10- and 20-City Composites posted annual rates of decline of 3.9% and 4.0%, respectively.

Sean Rinehart
The Bleacher Report

As the reigning Cy Young award winner and AL Most Valuable Player, Justin Verlander is going to have a difficult time improving on his season from a year ago.

However, if there is any player in the major league that could do just that, it is Verlander. With an unparalleled work ethic and drive, Verlander is on a mission for one thing: a World Series championship. If along the way he is able to improve upon his 2011 as he accomplishes that mission, Verlander and the Tigers, as well as every Tigers fan across the nation, will be ecstatic.

Verlander is not your everyday baseball player. He has freakish athletic ability and drive, which are two important characteristics that are necessary to improve upon such a stellar and impressive 2011 campaign.

CLICK HERE for the five reasons why Verlander will be even better during the 2012 season

Operation Kid Equip always has great success in rallying our community to help kids in need.

The most recent Kids Count report shows that we could be reaching out to more kids in need. Half of our state can’t cover their basic needs without assistance. More than one in every 10 kids in Michigan is living in extremely desperate circumstances.

To help meet the often overlooked, but essential school day needs of children in poverty we need to meet this increased demand locally, and we need to do more work with kids living in extreme poverty.

OKE has a new special project and they are asking for your help in this very important campaign.

There are more than 6,400 identified homeless students in Macomb, Oakland and Wayne counties.

Many people don’t realize that a majority of homeless students still attend school, but they show up empty-handed, and aren’t able to complete their assignments. Completing homework assignments is an issue. They don’t have their own reading books. Proper hygiene can also be an issue. They’re showing up to school hungry.

This is quite a huge burden for a homeless student to bear, on top of the stresses outside of school.

We need to do something about this today.

You can help provide a backpack to each homeless student in the tri-county area. Each backpack will be filled with school supplies, books, hygiene items, clothing or food items.

We have a special purchase offer if we can meet our goal by March 15, 2012.

We need your help!

For each $10 raised, one more homeless student can receive a backpack.

We’re asking you to do two easy things right now:

Make a $10 donation to Operation: Kid Equip AND Tell 10 friends about your commitment to homeless children, and ask each of them to donate $10, too.

Invite just 10 people, or invite everyone you know. Everyone you invite to join in this campaign represents another homeless child who will receive a backpack.

The beauty is that this campaign will be fully-funded through the efforts of our volunteers and supporters.

Having the right school day supplies enable students to soar beyond just basic expectations. New possibilities are created with each student we reach.

This change starts with you, $10 and 10 people you know.

Please join in on this important campaign today.

Click HERE to Donate!