The Detroit Startup Scene, and why I'm saying farewell to the Motor City [[for now)

[michimoby]

Note: this is a bit long-winded, and somewhat stream-of-consciousness, but I hope it provides some space for dialogue. It's not meant as an all-out assault on Detroit, rather a reflective piece from someone that came to Detroit with the purpose of making a difference - and is now leaving.

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I've been spending a good 8-10 months attempting to transition from a Detroit-based consulting role to working with a technology startup - after all, guys like Josh Linkner and Dan Gilbert are promoting this "Detroit 2.0" pitch like this is going to be the next place to launch a startup.

And from the outside, it makes a lot of sense: low cost of living, fairly abundant technology talent, resilience, and focus -- these are all core aspects of a living, breathing ecosystem like Silicon Valley.

...but after months and months of trying, I can no longer ignore the dozens of weekly emails I'm getting from startups in New York, Chicago, and Boulder, all offering different options to get me embedded into the entrepreneurial community in those cities. I tried to temper the flow, really: I wanted my idealism and gung-ho Detroit cheerleading to win out at the end of the day, because I moved to Detroit to apply my skills in a tangible and effective way.

But I'm getting the cold shoulder, and it's certainly not due to a lack of effort: I just don't know if Detroit has a damn clue what to do with people like me.

I've discovered that it takes one of several core attributes in order to justify a long-term presence in Detroit: deep connections within the primary industries; family connections; an unbridled attachment or loyalty to your neighborhood; steady and gainful employment. I came in from out of state to attend school, stuck around while all my classmates departed, and made the city my own by participating in numerous non-profits, serving on boards of schools and charities, etc. So, from the start, the deck was somewhat stacked against me. I've spent a good three years cutting through, making connections, and carving a trail that provided multiple opportunities to contribute some degree of effort to making the city more livable.

But throughout it all, while building rapport, I've found the controllers of financial and political resources to be extremely insular: even if you have the skills to contribute, the road to gain access to the resources that empower your contribution is bumpy and tumultuous. And Detroit, simply put, doesn't have the margins to absorb such selfishness. It cannot continue to let good talent slip through the cracks, and my story isn't uncommon: most of my consulting colleagues that have left the firm have departed for other cities. The ones that have stayed have either deep roots or families that would be better off served by staying put. Granted, all of them are in the suburbs.

So, I'm slipping through. "Running away" from Detroit doesn't seem to sum up my decision -- I'm running toward a technology community that welcomes my talent and desire to create a livable city, with the degree of stability and authenticity that brings comfort.

I realize that many people will view my decision as "giving up" on Detroit. My only response is that I'm leaving the equivalent of a broken relationship, one in which I've poured an incredible amount of time, energy, and affection to receive very little in return - at least, not enough to justify staying attached to it.

I will, however, be taking with me several friendships that will last for many years to come, and I do have the city to thank for that. The strain of distance may cause tension, and that will need to be kept in focus.

From a distance, I'll be rooting for Detroit, hoping that it will eventually find a way to draw in people because of its heaving lungs, and not reactively spit it back out. When it can keep its food down, letting the deep roots of talent seep through its bloodstream, then perhaps I'll return.

[313WX]

Well you've successfully completed the old-fashioned Detroit cycle.

Now that you've satisfied your urban pioneer desire [[trying to be part of this long-awaited come back as a big fish in a small pond), you're now seeing Detroit for what it really is, a dying major city that some are still trying to keep propped up in hopes that it will miraculously return back to good health from its coma.

I wish you the best of luck on your developments in whatever city you choose to move to.

[wolverine]

I wouldn't count packing up for another city a total loss on Detroit. Your presence and work in the city at least left something. For everyone that puts in a few years or a lifetime to transitioning Detroit to a more modern future, leaves it a better place for the next person.

But in all fairness to you, what can be 1 year of improvements in another city will take 10 years in Detroit. I thought the city was beginning to make a major turning point in 2003 with the completion of new stadiums, but it's now 2013 and alot of things have happened, but certainly not fast enough.

I have somewhat of a similar perspective from your dialogue regarding the support and individuals around you. I've found far more random encounters of similar professional background in other cities. By that I mean sitting in a coffee shop or even on the train and you're suddenly talking about your business, or strategies for marketing to environmental sustainability.

Ever since I've moved to Chicago, I've generally found this city far more conducive to socializing about my interests and ideas whereas back in Michigan you had to know someone or have some pre-established network to build on niche pursuits. It really makes your experiences much more comfortable. And even better when the city has your back to help make running and operating your startup much easier. I was impressed finding out just how comprehensive the city's plan is to foster new startups in almost every way possible. Not just having a place to work, but considering entrepreneur's streamline lifestyle with this gem from the mayor quite interesting:

“Now I think it’s self-evident that I am a competitive, let alone an impatient person,” Emanuel quipped. “So when my staff gave me this headline from Portland, it did bring a smile. The editorial from a magazine in Portland [the blog BikePortland.org] read, ‘Talk in Portland, Action in Chicago,’ as it reflected on Dearborn Street. The Seattle Bike Blog wrote, ‘Seattle can’t wait longer. We’re suddenly in a place where we’re envious of Chicago bike lanes.’ So I want them to be envious because I expect not only to take all of their bikers but I also want all the jobs that come with this.”

And after that statement, hundreds of millions more will be spent

Detroit needs to get on this and have a very competitive mindset. Now that Detroit has made the big talk of attracting more startups and retaining smart graduates, what will they start doing tomorrow on Thursday morning to make some positive changes?

[Det_ard]

I'm sorry it didn't work out for you. Just curious, what's your background? What's your skill set?

[corktownyuppie]

I'm sorry it didn't work out for you. Just curious, what's your background? What's your skill set?

From the weekend paper...

http://www.freep.com/article/2013031...eas-and-talent

"Silicon Valley is out of A players. Don't start your company here," Blank said March 6 at the Weather Underground Startup Trek, an annual two-day tour of the San Francisco Bay area technology scene by students for U-M's Center for Entrepreneurship.

"Start it in Ann Arbor," Blank added. "You won't find the talent you need here; it's in Ann Arbor."

Including Washtenaw in RTA along with increased Downtown presence with U-Mich [[and MSU) are the seeds that will help "bridge the gap". Combine that with Snyder's big push and campaign to retain talent, we are making the changes necessary at strategic level.

We're talking about a process that will take another 5-10 years, and we need to keep up the political momentum, but the growing relationship between U-Mich and Detroit [[specifically Downtown Detroit) are taking the necessary roots to transform the entrepreneur culture in the city.

I have a lot of undergrads expressing interest about living in the city, and that simply didn't exist 5 years ago. But I always tell them, "It's a marathon, not a sprint", which is frustrating, but true.

Of course, being a new entrepreneur is also an exercise in frustration, too...so I can get not wanting to be fighting 2 battles at once.

[michimoby]

I'm sorry it didn't work out for you. Just curious, what's your background? What's your skill set?

I'm a former engineer with an MBA and MPP, with experience working at a globally-recognized strategy consulting firm.

[Det_ard]

Funny, that's my background as well, minus the MPP. I worked for a consulting firm in their Detroit office for a couple years and left to start my own company. That was 15 years ago. It can be done here.

[Gannon]

I like the marathon analogy.

It can be used in so many ways...individual interest and enthusiasm, then THE decision to participate, leading hopefully to the preparation and training [[which takes many months and is the TRUE work of any marathon), and finally the morning of the start...with an entire lifetime stretched between that gun-pop and hearing your name over the PA when you finally see that finish line.

Books can be written on the discoveries during that 'dark night of the soul' that everyone hits somewhere between mile 12 and 18...the 'wall' you might've heard about. This is where most people drop out...and I understand fully as Michimoby explains their plight...but I've seen many quit when they were just a few steps away from their greatest personal victory.

That said, I've never run a marathon that hadn't already had the real work done, though, with course planning, charting, and securing...and to be totall frank and earnest, I don't think anyone would finish a single one if not for the volunteers who insure everyone is hydrated and medically sound...and simply fill the course and cheer, even when they think the runners are all out-of-their-minds [[which is necessary to do anything novel, imho).


So yeah, the support of the community is required. We're getting closer, as the density of doers approaches the density of survivors in this city. They may sound similar, but each takes a different skillset. Survivors can certainly take the steam out many doers' momentum...although doers can spark survivors to action, it seems oddly symbiotic.


Damn, another band name...the Oddly Symbiotics.


Cheers, sorry to lose ya, Moby. Luckily with tech, you can be virtually here anytime you'd like.

[iheartthed]

I have somewhat of a similar perspective from your dialogue regarding the support and individuals around you. I've found far more random encounters of similar professional background in other cities. By that I mean sitting in a coffee shop or even on the train and you're suddenly talking about your business, or strategies for marketing to environmental sustainability.

I have had a similar experience. A major selling point to living in places like NYC or Chicago -- that you don't get so much living in Detroit or Cleveland -- are the chance encounters. Your future business partner may be some random person you happen to meet at a coffee shop or networking event.

[michimoby]

From the weekend paper...

http://www.freep.com/article/2013031...eas-and-talent



Including Washtenaw in RTA along with increased Downtown presence with U-Mich [[and MSU) are the seeds that will help "bridge the gap". Combine that with Snyder's big push and campaign to retain talent, we are making the changes necessary at strategic level.

I have a lot of undergrads expressing interest about living in the city, and that simply didn't exist 5 years ago. But I always tell them, "It's a marathon, not a sprint", which is frustrating, but true.

Of course, being a new entrepreneur is also an exercise in frustration, too...so I can get not wanting to be fighting 2 battles at once.

There's multiple elements to creating a successful startup community: strategy is important, I agree, but there's a few other elements that are absent in an incredibly massive way [[and I"m referring to Detroit specifically):

Deal flow: Making a business work requires either bootstrapping or fundraising. And understanding how much capital is flowing through VCs is always a useful sign. There's considerable talk about Detroit being the "next Silicon Valley" due to all this positive momentum.

But let's offer up a comparison point: A lion's share of Q4 2012 VC deal flow was in California, to the tune of $3.2 billion - about half of all flow. Not surprising. But of the remaining $3.2 billion, Michigan accounted for less than two percent of that. Their $46 million in flow was 17th in the country; Boston had fifteen times that, New York about ten times. Ohio had more. For a supposed technology hub, that doesn't speak confidence into an entrepreneur that doesn't have a trust fund or friends in high places.


Business Talent: When Snyder talks about young talent, he's mostly referring to the tech-oriented students that are getting nabbed by the Googles and Facebooks of the world. That developer talent is absolutely crucial.

What's also crucial, however, is a solid base of business professionals that know how to build good technology companies. And you'd think that having a top-10 business school down the street in Ann Arbor would provide a pipeline of talent. But most people I know that are taking on business roles simply don't have the risk-loving attitude to launch a startup in Detroit, nor are they all too impressed by that deal flow number I brought up previously. Any wise, talented businessperson is going to go where the money is to launch their business. Right now, it's not here.


Traction: Take a look at the DVP portfolio [[or, shall I say, really the only portfolio in the city when it comes to early-stage startups): some are out of cash, others don't have truly viable business models, none have exited or gotten acquired. Yes, it's only been two years, but...you know what else started two years ago? Instagram. You know how much it got acquired for? $1 BILLION. And the greatest irony of all: the woman that crafted the whole deal is a Michigan State grad living in San Francisco after finishing up her MBA at Stanford.

There's no superstar company that really has blazed the trail and shown that a startup can be successfully incubated here in Detroit, at least in current form. The proof is, as they say, in the pudding.


Unfortunately, a train from Ann Arbor and lip service from the governor will not usher in the essential elements for creating a viable startup community in the near future. Even Silicon Valley took fifty years to get where they are today, and they had an incredibly focused effort about the whole thing.

[michimoby]

I like the marathon analogy.

It can be used in so many ways...individual interest and enthusiasm, then THE decision to participate, leading hopefully to the preparation and training [[which takes many months and is the TRUE work of any marathon), and finally the morning of the start...with an entire lifetime stretched between that gun-pop and hearing your name over the PA when you finally see that finish line.

Books can be written on the discoveries during that 'dark night of the soul' that everyone hits somewhere between mile 12 and 18...the 'wall' you might've heard about. This is where most people drop out...and I understand fully as Michimoby explains their plight...but I've seen many quit when they were just a few steps away from their greatest personal victory.

That said, I've never run a marathon that hadn't already had the real work done, though, with course planning, charting, and securing...and to be totall frank and earnest, I don't think anyone would finish a single one if not for the volunteers who insure everyone is hydrated and medically sound...and simply fill the course and cheer, even when they think the runners are all out-of-their-minds [[which is necessary to do anything novel, imho).


So yeah, the support of the community is required. We're getting closer, as the density of doers approaches the density of survivors in this city. They may sound similar, but each takes a different skillset. Survivors can certainly take the steam out many doers' momentum...although doers can spark survivors to action, it seems oddly symbiotic.


Damn, another band name...the Oddly Symbiotics.


Cheers, sorry to lose ya, Moby. Luckily with tech, you can be virtually here anytime you'd like.

Great analogy. And as a marathon runner myself, you explain the analogy incredibly, incredibly well.

The way I'd describe my experience is this: I'm at mile 18, hitting my wall, and instead of the Detroit water station volunteers eagerly thrusting water at me, encouraging me to press forward, they hold the cup closely to their chest with a cocked head...not quite sure whether or not to actually give me the damn cup of water.

The Silicon Valley water station is for their cronies only. Running friends and family of volunteers are allowed to drink up.

The NYC and Chicago water stations are thrusting water, Gatorade, babies, powerbars, and all other sorts of goodies at runners. They excitedly say "hey! We won't be able to run the race for you, but hopefully this helps you out."

[nain rouge]

But throughout it all, while building rapport, I've found the controllers of financial and political resources to be extremely insular: even if you have the skills to contribute, the road to gain access to the resources that empower your contribution is bumpy and tumultuous.

This is so true. The people that do hold the resources here really think they're something special, because it can be so tough to establish yourself in the Motor City. They love putting up needless gates and barriers so they can prop up their own sense of importance. Throw in this delusion many here hold that Metro Detroit is still a big deal - the we aren't in a slow, terminal decline - and it's a recipe for aggravation. Sports fan are always complaining that Detroit gets ignored by the media, but that's because from a market we've fallen out of the top 10 and aren't growing. We need to take more chances, but the people in power are desperately clutching whatever is left and are fearful of change.

[WaCoTS]

i like the marathon analogy as well.

in order to succeed in Detroit, [[or rather, in order to not be beaten into submission by the hopelessness permeating it), you need to possess a masochistic willingness to fail and be sunk or defeated or told "no" at every single turn. for the rest of your natural life.

there is no glamor in being a Detroiter, which is why i have to kind of chuckle at the droves of enthusiastic new young kids swarming into Midtown to "save" the city because Johnny Knoxville told them "it's like a blank slate" and if you have your Palladium boots on, you're all set to succeed. theyll all learn the lesson sooner or later.

it's like being on the sinking Titanic. some of the men bravely chose to stay behind so that women & children could get on the lifeboats. but i wonder how many of them suddenly had a change of heart when they felt the icy water creeping up their pant legs...

[Honky Tonk]

i wonder how many of them suddenly had a change of heart when they felt the icy water creeping up their pant legs...

Or peed in their pants. But seriously, money is tight in Detroit. The Big 3 no longer shell out funds like they did even 10 years ago. I remember when they climbed all over themselves to sponsor things for recognition. With their humbling, other businesses tightened their belts and pocket books as well. Other places in the country seem to have gotten the ball rolling, and have a little more breathing room. Here it's just this constant monetary struggle.

[gvidas]

in order to succeed in Detroit, [[or rather, in order to not be beaten into submission by the hopelessness permeating it), you need to possess a masochistic willingness to fail and be sunk or defeated or told "no" at every single turn. for the rest of your natural life.

That's pretty resonant.

Two years in, I sometimes wonder whether there will be long long-term effects from categorically ignoring skeptical and negative responses to the life choices I make. I can imagine in a few years walking over a bridge with someone and casually remarking, "hey, a bridge; I could theoretically jump off this" and the other person would say, "you shouldn't do that," to which I respond by jumping.

Hyperbolic, maybe. But sometimes it seems like the only two responses to simply trying to make a living in Detroit are baseless negativity and baseless optimism. It's easy to imagine becoming tone-deaf.

[p69rrh51]

I'm a former engineer with an MBA and MPP, with experience working at a globally-recognized strategy consulting firm.

Maybe how you portray yourself does not jibe with the locals. Your statement about what you do[[except for a little background on your education) did not say anything as to what you really do.

[Islandman]

Maybe how you portray yourself does not jibe with the locals. Your statement about what you do[[except for a little background on your education) did not say anything as to what you really do.

You could almost be a garbageman in this town and nothing he said in the original post would be any different or incorrect. But yes, it's a bit vague.

[SWMAP]

I agree that the original post is really hard to understand. Start-up what?

[michimoby]

Maybe how you portray yourself does not jibe with the locals. Your statement about what you do[[except for a little background on your education) did not say anything as to what you really do.

I didn't want to provide much detail, frankly, because I wanted to ensure that the focus of my post was on the ecosystem, and not myself.

But I can divulge a bit more just to clarify: After a four-year career as a design engineer in the aerospace industry, I launched a startup in graduate school - in Ann Arbor. We gained some traction, but the technology wasn't at a point where we were quite ready to go full-bore with it.

Over the past three years, I've worked with Fortune 500 companies, startups, and non-profit organizations advising them on their strategic challenges [[examples: "we want to lower our per-item cost of materials; how do we do that?" or "we're thinking of opening a charter school in Detroit. Which neighborhoods should we target and what would be the risks involved?" or "we want to expand our business by acquiring a few technology leaders in our sector. who should we target, and roughly how much should we pay for them?") Answering these questions usually involves a heavy amount of analytics, research, and general insight on how to operate a business effectively.

This is information available publicly to anyone that wants it, and I offer up a very brief explanation in the proper settings. The other consultant in the group [[Det_ard, is it?) understands, probably, that just mentioning the name of the firm I worked at for a few years provides an indication of the type of work I do, roughly [[although, Detroit is the only major market in the country where mentioning my previous firm is usually met with a confused look until I say "Oh, we're like McKinsey.")

[Det_ard]

And the McKinseyites would say "No one is like us". Well, if you were at BCG or Bain or such that's great experience. I'm still not clear on what you were trying to get, funding, JV partners, hired with stock options or ...? Or what you specifically brought to the party besides obviously being smart and hard working.

Nevertheless, it sounds like you didn't have an easy time of it. That's too bad. On the other hand I know a number of entrepreneurs who have thrived here, some with all the handicaps you mentioned. I'm heading out to a meeting tonight where I've met people that I've done deals with after knowing for a year or two. It's possible, at least for the types of things I'm doing. We're probably doing different things however.

[canuck]

I think the OP said something about trying to start up cars, maybe pumping gas at a Marathon station, then quit, I dunno. [[?) [[) [[?)

[michimoby]

And the McKinseyites would say "No one is like us". Well, if you were at BCG or Bain or such that's great experience. I'm still not clear on what you were trying to get, funding, JV partners, hired with stock options or ...? Or what you specifically brought to the party besides obviously being smart and hard working.

Nevertheless, it sounds like you didn't have an easy time of it. That's too bad. On the other hand I know a number of entrepreneurs who have thrived here, some with all the handicaps you mentioned. I'm heading out to a meeting tonight where I've met people that I've done deals with after knowing for a year or two. It's possible, at least for the types of things I'm doing. We're probably doing different things however.

You read McKinsey all too well.

I'm sure that cases like yours, where there's some angel funds lying about, are present in Metro Detroit. I think I simply got myself caught up in the aura of "Webward" and the PR machine supporting it, believing that a combination of hard work and previous, battle-tested experience would provide a way to be a part of it. The challenge I had in doing so is the lens I'm applying to this situation.

If I were in a different stage of life, where I had more capital to flow through the system - and a family here - my decision would likely differ.

And I think that's an important distinction: men and women like you are in fortunate positions where you can control your deal flow pretty effectively. But most of the young talent, like myself, seeks a more robust overall startup environment -- where they can eventually become leaders in one of the cogs of the entrepreneurial space. In general, Detroit is claiming to be that place with a shallow pond of resources backing up the talk.

A good example of this is the state of accelerators within Detroit; you really have two of them: Bizdom and TechTown's new initiative. The former is on the radar screen, but as one of my compatriots told me at SXSW, "Bizdom is the Junior Varsity team" in terms of mentorship offerings and robust startup support compared to the TechStars/YCom/500 Startups crew. And the latter is just....yeah. Even as I was discussing the potential of incubating a startup with a few friends of mine from Cleveland, we all agreed that Bizdom was not an option; we would gain far more traction by bootstrapping and moving to Chicago or NYC, and if we were REALLY fortunate, TechStars would snag us.

Just as an aside, I've not been coming in looking for VC funds, more the latter of the scenarios [[brought on to help run an early-stage with equity options).

[northendmatt]

I just don't know if Detroit has a damn clue what to do with people like me.

When you say "Detroit", do you mean the government, the economy, or society, or some combination? Because I don't know if the government of any place really has a clue what to do with anyone. Attracting talented people to NYC, for example, is easy. Bloomberg doesn't have to do anything. The size and the economy of the city are such that people want to move there. Same for Chicago to a lesser extent.

Or to put it another way, do we think Bloomberg would be able to do the same things in Detroit, without the pre-existing business community and social network to support him?

[subsidized]

Your story is getting out. Unfortunately though, not everybody understands what exactly you're talking about.

http://www.deadlinedetroit.com/artic...people_like_me

[belleislerunner]

There comes a point in time where you need to stop being a victim and accept responsiblity for your own success. Or lack thereof.

Using the marathon analogy - this rant reminds me of 40,000 runners starting the NYC marathon, and a runner dropping out at mile 22 along Second Ave and blaming it on the weather, the lack of water stations, the crowds, the heat.

We should celebrate successes - the people who took 8 hours to finish, the ones without legs. But to empathize and coddle those who drop out without finishing the race is to enable bad behavior. To borrow a line from TDWP, "I am not interested in the reasons for your incompetence."