What’s Driving the Next Detroit!

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Even after bankruptcy, bailouts, massive population and job loss, nightly arson and widespread decay, Detroit still has plenty going for it. It’s a beautiful old city built on America’s original tech industry cars. In this weeklong Re/code special series, Liz Gannes examines the fast-moving efforts of a hometown billionaire and others to revive Detroit, starting from its center. Sparking this rebirth: Tech startups that draw from the region’s engineering heritage and promise to help restore Detroit’s long-lost claim as a capital of innovation.

When was the last time you thought about Detroit?

You probably think you already know the story of the city — and that it’s over. From the golden age of American invention and productivity to $50 houses and “ruin porn,” in less than 50 years.

And you’d be right. Detroit is not what it once was. Founded in 1701, called the City of Champions in the 1930s (and “Detroit Rock City” by Kiss in the ’70s), it’s a city long in decline, plagued with decay and lack of opportunity.

Some 1.9 million people lived within the city limits in 1950. Now fewer than 700,000 people fill the same space. Detroit went bankrupt. Giant factories have lain stagnant for decades. Arson fires burn every night. There’s only one major grocery store in the entire town.

What killed Detroit? Municipal incompetence, labor conflicts, crime, race tension and global competition. Hubris and innovators’ dilemmas and brain drain.

But Detroit, especially downtown Detroit, is rebounding — and fast. For two centuries, the city’s motto has been “We hope for better things; it will arise from the ashes.”

Today, it might actually live up to the ideal. Near-death experiences like the 2008 automotive crisis (GM and Chrysler went bankrupt and were bailed out, while Ford took a big loan and restructured) and municipal bankruptcy (completed in an efficient year and a half this past December) have effectively wiped the slate for what’s next.

Like elsewhere across America, Detroit fits into the modern narrative of young go-getters with new ideas migrating back to urban centers. Unlike other regions such as San Francisco, the usual barriers to growth and reconstruction are much lower.

Billions of dollars are pouring into real estate, renovation and startups — notably, technology startups. But for Detroit’s resurgence to be sustainable, today’s up-and-comers need to turn good ideas into an actual industry. For the first time in decades, that is not such a crazy long shot.

What better place than Detroit to stage the next wave of innovation? It’s the birthplace of the personal car, the assembly line, Motown and Madonna.

What better place than Detroit to stage the next wave of innovation? It lives at the intersection of arts and invention. It is the birthplace of the personal car, the assembly line, the escalator, the paved road, the urban freeway and the radio news broadcast. It was the epicenter of music innovation: Detroit blues, gospel, jazz, rock, R&B, house music and hip-hop. We’re talking Motown and Madonna.

Today, people mainly go to Detroit because they have business or family there. In my case, it was both. My father was born and raised in Detroit, and my family has been running a steel-cutting plant in Detroit since 1959. I visited Detroit over the past several months to report this Re/code special series about a city in transition.

In 2014, some 248 new technology companies were started in Michigan, and private investment in tech startups totaled $770 million, according to the Michigan Economic Development Commission. In 2014, for the first time ever, there was more venture capital activity in Detroit than Ann Arbor.

In many ways, Detroit’s present has little to do with its past. Those new urban workers are invading the husk of a city built on automotive jobs and the single-family houses they paid for.

The next Detroit is a city of startups, growing like a coral reef built on top of the shipwreck of the last generation.


Pied Pipers

Downtown Detroit has a lot in common with downtown Las Vegas, the site of one of the installments of Re/code’sInnovation Nation series, in which our reporters document how technology innovation is flourishing across the United States. In both places, change is being driven by charismatic billionaires who sold their companies and are pouring money into urban development and recruiting. Both are obsessed with company culture to a cultish degree, and inspire followers to rebuild their lives in new cities.

Silicon Valley veterans are likely more familiar with the story of Las Vegas’s Tony Hsieh, who sold online shoe store Zappos to Amazon, and then funneled $350 million of his money to erect a sort of tech-led colony in a tired neighborhood off of Las Vegas’ main strip.official-dan-gilbert-headshotIn 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.

In just five years, Gilbert has spent nearly five times more than Hsieh’s investment in Las Vegas. His contributions to the city of Detroit are remarkable. And they are easy to see: One of the first stops on the free walking tours he offers visitors of his downtown holdings is a conference room laid out around a scale model of the area. The buildings he controls are lit up and marked with an orange roof.

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 a surreal and infamous rant, only to woo James back four years later. When Gilbert wants something, he gets it.

And unlike downtown Vegas — which exists on the sidelines of Sin City as an oasis in the desert for homesteaders and misfits — downtown Detroit has a different momentum and feel to it: People are returning home to reimagine and rebuild the once-great American city.

Read the full article here; with thanks to recode.net

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