How Detroit Passed Silicon Valley

By Rick Merritt, Silicon Valley Bureau Chief, EE Times

Detroit's progress in diversity is a lesson it can give Silicon Valley in exchange for its example of passion for startups.

Just before the Fourth of July holiday, I got an email pitching a story about progress with the turnaround in Detroit, the city where I was born. I was especially intrigued because the email hit my iPhone just as I was heading to the San Jose airport for a flight to see family in Kalamazoo.

I recently got more details from Pam Lewis, director of the New Economy Initiative, a project of a nonprofit working on the turnaround in southeastern Michigan. Lewis said after the 2008 financial crisis, unemployment rose in Detroit to nearly 25% and poverty peaked at 40%. Even worse, 60% of residents of the Motor City don't own a vehicle, she said.

I’ve heard from friends and relatives for years about the down economy in Michigan generally. I witnessed it first hand the last two years trying to sell my aunt’s Kalamazoo home. Walking around my old neighborhood, I saw several houses shuttered, some badly in need of repair and selling under foreclosure for less than $40,000.

Silicon Valley entrepreneurs consider that a good down payment on a Tesla. The average San Jose home sells for twenty times that amount.

NEI provides some impressive figures of what it has helped achieve, especially in diversity, an area where Silicon Valley is more of a follower.

In recent years, NEI helped create 1,600 companies, 39% of them minority-owned, compared to a national average of 21%. In high-tech, 28% of the companies are minority and women owned, compared to 3-4% nationally.

In the last nine years, the number of startup accelerators and incubators in Detroit has risen to 50 from less than ten. And the amount of venture capital investment has nearly tripled in five years while the national numbers have declined, the NEI said.

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