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Detroit’s Burgeoning Entrepreneurial Ecosystem

When most Americans think of Detroit today, they think of the largest municipal bankruptcy in U.S. history, pictures of derelict buildings and houses, and ultimately, a city on the decline.  However, ask a true entrepreneur what they think of Detroit today, and you will most likely be given an answer that can be summed up in one word: opportunity.  The Schumpeter column in The Economist from July 20, 2013 captures this mindset in its review of Daniel Isenberg’s new book Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value.  The column says that Isenberg “presents a new definition of entrepreneurship.  In essence, entrepreneurs are contrarian value creators.  They see economic value where others see heaps of nothing.  And they see business opportunities where others see only dead ends.”1

While much of the U.S. views Detroit as “heaps of nothing” and “dead ends,” there is a community of entrepreneurs who see value and are working against the grain to develop an ecosystem that fosters the Motor City’s revival.  This is not some Girl Scouts effort to plant flowers in front of vacated buildings, but an all out attack plan on building Detroit into its fullest potential.  Two solid indicators of Detroit’s potential are the investments made by Dan Gilbert, founder and chairman of Quicken Loans and the majority owner of the Cleveland Cavaliers, and its proximity to the University of Michigan, one of America’s best universities.

Detroit Rock (Ventures) City

Dan Gilbert has erected an empire in Detroit under his firm, Rock Ventures, which “now owns or controls more than 40 buildings spanning almost 8 million square feet of space in downtown Detroit.”2  Besides the king, Quicken Loans, Rock Ventures’ family of companies includes Bizdom, a start-up accelerator, Detroit Venture Partners, a venture capital firm that backs seed and early-stage technology companies, Detroit Labs, a development studio for mobile apps, Grand Circus, a technology training institute, and over 75 more companies that provide employment for thousands of people.3  With over a billion dollars of skin in the game, Gilbert is making all the right investments with his focus on innovation.  After all, Detroit was built on the innovation of the automobile, and now, he can rebuild it on the innovation of . . . who knows?  That is the exciting part about having so many creative minds in one downtown setting.

Detroit has become somewhat of a Mecca for a counter-culture of young, hip entrepreneurs, who were attracted by the low rents and Wild West feel that the City provides.  California’s Gold Rush of 1849 is long gone, and many young entrepreneurs today feel that Silicon Valley is too well established for them to make their mark, so why go West, when the “new” frontier lies 2,500 miles away in America’s most bankrupt city?  Venture For America, a non-profit, similar to Teach For America, that links college graduate entrepreneurs with emerging companies, sends more of its fellows to Detroit each year than any other city in the U.S.4  Google, arguably the world’s most innovative company, has caught wind of the blossoming entrepreneurial ecosystem in Detroit, and has since established one of its seven North American Google For Entrepreneurs hot spots in the M@dison Building downtown.5  All that is taking place downtown serves as a sign of the City’s potential to rebound, but it is also what takes place 45 minutes west in Ann Arbor that should really manifest the future of Detroit.

Ann Arbor’s Maize & Blue Innovation Machine

According to US News & World Report, the University of Michigan ranks in the top ten best graduate schools for engineering, medicine, and law.6  Only one other university can claim the same, and that is Stanford, which is very influential in Silicon Valley’s entrepreneurial ecosystem.  On top of the US News rankings, Entrepreneur ranks Michigan the number one graduate entrepreneurial college for 2013.7  Combine the nation’s top budding engineers, doctors, lawyers, and entrepreneurs in one town, and you will surely be at the forefront of ideas that will move the 21st century.  Already, the University has produced big names that are shaping the way we live: Larry Page, co-founder of Google, Dick Costolo, CEO of Twitter, Brad Keywell and Eric Lefkofsky, co-founders of Groupon, Tony Fadell, inventor of the iPod, and Sanjay Gupta, chief medical correspondent for CNN, to name a few.  While Michigan has been able to boast such high accolades for decades, the post-financial meltdown climate has created a unique opportunity for Detroit.

With the major job markets on the coasts looking bleak and graduates finding it difficult to secure the jobs they went to school for, many University of Michigan Wolverines are looking to Detroit as the place to play out their dreams.  They get to be a part of something that is at rock bottom, yet has the prospect of growing into the major U.S. city it once was.  Critics will be quick to point out that Detroit does not have the capital to sustain those ambitions, but that is short sighted.  Dan Primack of Fortune is aware of the movement, which he covers in an article on Mark Kvamme, a former Sequoia Capital partner who left behind his position in Silicon Valley to move to the Midwest.  Kvamme explains, “[a]s more and more technology moves to the cloud, a fundamental geographic shift is coming . . . [a]t the end of the day I’m an investor, and I wouldn’t have stayed if I didn’t think there wasn’t a great investment opportunity here.”8

The Midwest is far behind the major entrepreneurial ecosystems in Silicon Valley, Los Angeles, New York, and Boston, but with the opportunities that Detroit offers young entrepreneurs today, venture capitalists should be careful not to be too late to the party.  As much as people are entertained to see the mighty fall, they also love to see a comeback, and with the history behind Detroit, people will be there for the Motor City as it strives to put America out in front again.  The automobile has been Detroit’s biggest contribution to human history up to this point, but it is Detroit’s next big contribution that should have the future Tom Perkinses bursting out of the silicon(e) implant out West.


  1. Schumpeter, Crazy diamonds, The Economist (July 20, 2013), available at http://www.economist.com/news/business/21581965-true-entrepreneurs-find-worth-worthless-and-possibility-impossible-crazy-diamonds

  2. David Muller, Dan Gilbert and others welcome Google to town as Rock Ventures’ downtown Detroit empire continues to grow, MLive (last updated Oct. 1, 2013, 10:09 AM), http://www.mlive.com/business/detroit/index.ssf/2013/10/gilbert_and_others_welcome_goo.html

  3. Id. 

  4. Venture For America, http://ventureforamerica.org (last visited November 14, 2013). 

  5. Jeff Wattrick, ‘Google For Entrepreneurs’ Brings Adjectives, Maybe Other Stuff To Detroit, Deadline Detroit (Oct. 1, 2013, 8:09 AM), http://www.deadlinedetroit.com/articles/6602/google_for_entrepreneurs_brings_adjectives_maybe_other_stuff_to_detroit

  6. US News & World Report, http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools (last visited November 14, 2013). 

  7. Entrepreneur, http://www.entrepreneur.com/topcolleges/grad/0.html (last visited November 14, 2013). 

  8. Dan Primack, Bringing Silicon Valley VC to the Midwest, Fortune (August 9, 2013, 5:00 AM), available at http://finance.fortune.cnn.com/2013/08/09/silicon-valley-vc-midwest/

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Marcus Hoffman

Vol. 3 Associate Editor
University of Michigan JD Candidate, 2015 San Diego State University BS in Finance, 2008