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Inside Detroit’s Rising Startup Culture

Michael Hendrix

Senior Director, U.S. Chamber of Commerce Foundation

Speramus meliora; resurget cineribus

We hope for better things; it will arise from the ashes

– Detroit’s motto.

Detroit can sometimes feel like a city chasing its own shadow. The once mighty city aspires to reclaim some of its former glory, the memories of which, in admittedly depressed times, have sustained its people’s pride and hope for a renaissance.

But the ideal Detroit is a shifting mark. Whether it’s the celebrated economic heyday as the Motor City, the heroic mid-century transformation into the Arsenal of Democracy, or, even now, the people sitting two tables down from me at lunch who miss “2005 Detroit” and lament the rent hikes and the consumer-hipster trappings of a modern city on the mend, you’ll find that agreement about what the Detroit of the future should look like varies widely.

Betting business-minds and sensible local politicians have made their position clear though – they don’t think Detroit should be looking back to find its way forward. The Detroit of 1950, with 1.8 million citizens and a solid industrial manufacturing core, not only doesn’t make sense in Detroit, it doesn’t make sense in America in the year 2015.

And the snarky threesome in the restaurant? The ones cracking wise about gentrification – the $45 men’s haircuts, Downtown mega rents and grass-fed cheese emporiums (this last one a joke, granted). Well, George Jackson Jr., the president and CEO of the Detroit Economic Growth Corporation has this to say: “Bring on more gentrification.” Jackson sees it as “one of the costs of progress” associated with growing the city’s tax base. As cringe-worthy as certain aspects of gentrification can be – especially the displacement of people from neighborhoods – Jackson is defending a coterie of entrepreneurs with big aspirations in fields like design, the arts, entertainment, education and technology who are bringing money and ideas to bear in Detroit. And their word for renaissance might as well be startup.

Let’s define our terms here so we know the difference between a startup and your typical small business. Those who sip from the startup Kool-Aid define it as a culture and mentality of innovating on existing ideas to solve critical problems. In Detroit critical problems are myriad. And while not every startup I met with for this article is doing something to address problems that are unique to Detroit, they want to make their home here and have an impact on the local economy. And the fact that many of the people who work for these startups could be anywhere, but choose to be here, is admirable.

There’s the appeal of being a big fish in a small pond, to be sure, but there’s also the trace of a chip on their shoulder – the desire to prove they can succeed outside mainstream startup pathways in New York or Silicon Valley.

Brian Bosche, one of the founders of Slope, a marketing platform from TernPro Inc. that allows creative teams to store, manage and collaborate on media content, epitomizes the Detroit startup culture when he tells me, “I’m not sure if we will ever move out of [the startup] mindset.” That’s a common sentiment I’ve noticed among several of the startups I met with. Growth and scalability are always top of mind, but an earnest devotion to the product or service they sell is what truly motivates founders and employees alike.

Bosche tells me that “Detroit has a small tech startup community, but it is very tight knit.” He means this quite literally. Many of the investments of Detroit Venture Partners and Bizdom, two startup incubators in town, are located on the Madison Block in Downtown Detroit, a hub for local tech companies.

The cost of overhead and living is relatively low, and the talent pool is growing, along with the national spotlight on Detroit. The local business community, especially the Rock Ventures Family of Companies, has been kind to Slope, helping them identify customer development opportunities. So far Slope has worked with Quicken Loans, MIT Sloan, The Central Bank of Malaysia, the YMCA, Bedrock, Greektown Casino and 4EG.

Bosche does admit a few downsides, though. The tech pool could be stronger, the customer base is small and investment and financing options available to startups is still less than ideal. “I think we’re just in the beginning stages,” Bosche says. “There are infrastructure changes happening now with the city and larger business players are taking interest.”

Fran Westbrook is another startup owner who has lived and worked in Detroit for most of his life. He started his career in advertising as a copywriter twenty years ago with a small multicultural agency that he helped build into a successful firm based in Detroit and New York. Now he’s the owner of BLVD, a strategy, advertising and marketing company located in Detroit’s Harmonie Park. When I asked Fran why he chose to move back to Detroit and start BLVD, his reply was nonchalant: “Why not Detroit?” Like Bosche, Fran sees the cost of entry as low and the need high.

He’s a little less flowery when he talks about financing and startup culture. Though clearly optimistic about Detroit, he’s still realistic about a timeline for recovery. “Financing is coming, but at a snail’s pace compared to the rest of the country. The entrepreneurial itch is here and people are willing to DIY-it and roll up their sleeves, but the return on investment takes longer to see.”

Working in advertising puts BLVD in contact with different industries around town, and Fran sees health care and automotive R&D as two sectors where Detroit startups are making an impact already.

PSI Labs is one of those local health care startups that is trying to make its mark in the emerging medical marijuana industry in Michigan and throughout the Midwestern United States. Medical dispensaries are proliferating across the state but remain largely unregulated, and the matters of quality and consistency are oft overlooked.

“I worked for an attorney who defended Michigan citizens’ right to medical cannabis. I got to know a lot of dispensaries and the law in the state quite intimately. Mandatory testing isn’t here yet, but more people are demanding it as the retail market grows,” explains PSI Labs CEO Ben Rosman.

PSI Labs proposes to test the product sold by growers to medical dispensaries, providing detailed cannabinoid and terpenoid profiling, as well as mold, mildew, fungus and pesticide screening, residual solvent screening and mycotoxin screening. Essentially, they want to ensure that patients are getting safe medicine every time they buy it, instead of a strain of cannabis whose potency changes week-to-week and might be grown with harmful pesticides.

PSI Labs decided to fund itself outside the venture capital and incubator realm. With a very clear idea about how much money they’d need to rent equipment, rent space and begin marketing and branding themselves, Rosman and his partner, Lev Spivak-Birndorf, the science mind behind PSI Labs, decided to raise money from friends, family and people who already knew there was a need for testing services in the inchoate cannabis business. “There’s a stigma surrounding medical cannabis still, but the investors who helped fund us see the tremendous upside to what we’re offering. Especially since the state and local municipalities are talking about mandatory testing and full legalization.”

Michigan has the fifth largest retail cannabis market in the country and only one other cannabis testing facility exists in the state. If PSI Labs can bring lab testing and transparency to an industry that some economists estimate could one day surpass organic food, they will have played an important role in bringing legitimacy to the industry and adding consumer safety controls – not to mention Detroit’s place in the industry.

Jess Daniel, the founder of FoodLab Detroit, is on a mission of consumer safety too – and she’s focused on the food desert issue in the city. FoodLab received guidance from the Green Garage business incubator in Midtown (which I wrote about last spring, if you’re interested). Green Garage prides itself on hosting and supporting local startups whose core mission is the improvement of the city. Jess was offered a scholarship, desk space and, through the collaborative culture Green Garage fosters, connections with other local startups trying to help Detroit.

FoodLab is a community of food entrepreneurs “committed to growing a just, green, healthy and thriving ‘good food’ economy” that combats the lack of food options in Detroit. Like any startup, FoodLab needs money to grow, but what Green Garage offers Jess and other businesses-in-residence is wisdom and support beyond a check. “Profitability is essential to our survival. But the moral support, encouragement and exchange of ideas with likeminded startups here is what makes Green Garage unique,” Jess explains.

Kidpreneur is another startup focused on addressing a specific problem in Detroit: lack of opportunity and technology education. A sort of incubator unto itself, Kidpreneur teaches kids grades K-8 about entrepreneurship through technology classes, workshops and camps. Founded (and funded) by serial entrepreneur Thanh Tran in 2013, Kidpreneur now offers over 30 programs, including 3D printing, robotics, computer programming, entrepreneurship, web design, Minecraft and more. 800+ kids have participated so far, with 70+ attending classes weekly.

The goal is to create a teaching model that can be cloned and transplanted to other communities where students are underserved technology education. “We also want to provide a space where kids can create,” Ben Seidman of Kidpreneur tells me. “A place where they can use their imagination and receive support to grow as young entrepreneurs.”

Brain drain is a phrase you hear tossed around a lot in Michigan. The economy began to show signs of weakness a few years before the financial crash in 2008, with 68,000 young people ages 22 to 34 leaving the state as far back as 2006. Making things worse, most of the Millennials who left had bachelor’s degrees and the talent Michigan badly needs to rebuild a new look economy.

In Detroit that tendency seems to show signs of reversing itself. According to 2011 census data the number of college-educated residents under 35 has increased by 59 percent. If Kidpreneur programs can help children find the technology they love at a young age—whether it’s 3D printing or web design—students will know how to code and even understand what it means to run their own business. And some of those young workers may never leave to begin with, ensuring that Detroit’s budding startup culture brings the vision of the future many are hopeful to live in.

This post originally appeared on the Free Enterprise website; you can view the original article here. The post stems from a recent roundtable discussion with startup leaders and officials in San Francisco. The roundtable was hosted by the U.S. Chamber of Commerce Foundation and Washington, D.C. startup incubator 1776, as part of its Innovation That Matters series. 

Michael Hendrix

Senior Director, U.S. Chamber of Commerce Foundation

As the director for emerging issues and research at the U.S. Chamber of Commerce Foundation, Michael Hendrix manages the Foundation’s research, programming, communications, and publications. He is project director of…