Detroit Could Be the Next Big Startup City


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Many have written the Motor City off for dead. But three key figures from, of all things, the world of basketball give me hope that the city will reemerge as a powerhouse for innovation and new high-growth startups.The airport is usually all I ever see of Detroit. I never spend any time there — I just connect. And, though the sleek and modern terminal is brimming with life, all one needs to do is look down at the ground on takeoff before one wonders if there really is life in this city. All you see is miles and miles of empty parking lots.The expansive freeways seem underutilized — a somewhat ironic twist for the city that invented automobile production. The airport is full of nothing but connectors like me — none of the locals are travelling.

I think that’s going to change. Here’s why I think Detroit is poised for an entrepreneurial renaissance, with the help of a basketball superstar, a dedicated owner, and a gutsy coach.

Magic Johnson

flickr / Rafael Amado Deras

The superstar: Earvin “Magic” Johnson, who led the Los Angeles Lakers to five NBA championships, recently announced that he has joined a tech startup venture capital group, Detroit Venture Partners. Plus, the former Michigan State basketball star plans to invest millions of his own fortune into Detroit-based tech startups. “This is a tough time for the state, but we’re going to make a comeback… one investment at a time,” says Johnson, as quoted in Forbes.Why he inspires confidence: A personal and financial commitment from a superstar like Magic is certainly something a city on the rebound could use. He’s got skin in the game, which is always a good sign. But it’s his business savvy that raises my hopes. Unlike many other athletes-turned-investors that have ended up in financial disarray, Johnson has made sound investments in the past, with a portfolio that has included Starbucks, movie theatres, restaurants, and other retail holdings.

Dan Gilbert

Quicken Loans

The owner: Dan Gilbert, the owner of the NBA’s Cleveland Cavaliers, has also invested heavily in the Motor City. Gilbert, the founder of Quicken Loans, moved its headquarters and 1,700 jobs to Detroit last year. In 2007, Gilbert founded Bizdom U, an “entrepreneurship accelerator” that trains, mentors, and funds aspiring entrepreneurs that want to launch high-growth startups in Detroit.Why he inspires confidence: Bizdom offers graduates up to $100,000 in startup cash if they base their company in Detroit. Though relatively new, Bizdom is already scoring points with promising new firms in Detroit. Early successes include Jimmy Kicks, a Web-based retailer that sells limited edition sneakers and t-shirts. As in sports franchises, sometimes the right owner can make all the difference.

Dave Bing

flickr / Dave Hogg

The coach: Dave Bing has been the mayor of Detroit since March of 2009 and has shaken up the political scene since arriving in office. The former Detroit Piston and NBA Rookie of the Year has launched a short-term intervention strategy to guide decisions about where to concentrate city services and investments. The plan, The Detroit Works Project, will realign how some city services are allocated based upon market data, particularly regarding residential real estate. Bing is not afraid to make difficult decisions in order to most efficiently allocate his scarce government resources. Just like every coach has to make tough choices about who should start and who should come in off the bench, Bing has the intestinal fortitude to make the tough calls and do what he thinks it will take to win.Why he inspires confidence: Bing is an entrepreneur himself. He launched Bing Steel in 1980 and grew his company, later re-named The Bing Group, into a multi-million-dollar business, earning him the title of National Minority Small Business Person of the Year in 1984. The Mayor knows what it takes to build a company in Detroit, but most importantly, he provides the stability and predictability required to inspire confidence in people to start new firms and in investors to make investments.

As always, the real difference will depend on execution. Can Detroit put its sordid past behind it and reinvent itself as a lean, mean, startup machine? Perhaps with a little Magic, a Cavalier approach, and a Piston at the helm, great things can happen. (Sorry, I couldn’t resist.)

There is some evidence that the efforts of this Dream Team may already be paying off. Although Detroit’s overall population shrank by 25 per cent in the last decade, according to the U.S. Census Bureau downtown Detroit experienced a 59 per cent increase in the number of college-educated residents under the age of 35. Cheap real estate is also attracing young entrepreneurs, with the city offering myriad subsidies for new arrivals. Add to the mix the influence of local universities like Michigan and Wayne State and you get a climate ripe for entrepreneurs. Companies like Aptemal, H2bid, and Lycera may prove that Detroit is not so dead after all.

This post originally appeared at BNET.