Detroit Hopes To Drive Tech Startups Away From Silicon Valley

Detroit Hopes To Drive Tech Startups Away From Silicon Valley

7:04pm Jun 08, 2015
TechTown Detroit is located in an old General Motors factory built in 1927. About 40 small businesses work out of the building.
TechTown Detroit is located in an old General Motors factory built in 1927. About 40 small businesses work out of the building.
Jason Margolis / NPR
  • TechTown Detroit is located in an old General Motors factory built in 1927. About 40 small businesses work out of the building.

    TechTown Detroit is located in an old General Motors factory built in 1927. About 40 small businesses work out of the building.

    Jason Margolis / NPR

  • TechTown Detroit's logo.

    Jason Margolis / NPR

  • Adam Leeb (left), co-founder of Hemingwrite, and contractor Andrew Ku work in the common space area in TechTown Detroit, a nonprofit business incubator.

    Adam Leeb (left), co-founder of Hemingwrite, and contractor Andrew Ku work in the common space area in TechTown Detroit, a nonprofit business incubator.

    Jason Margolis / NPR

Many University of Michigan business students who have an entrepreneurial streak take Professor Jerry Davis' start-up class. Davis has lived in the Silicon Valley, he has a Ph.D. from Stanford University, and he has advice for young people: Forget the Bay Area.

"You spend a whole lot of your time on freeways. It's expensive, it's annoying. The weather is beautiful, but basically the Bay Area has turned into Los Angeles," Davis says. "All the things that people hate about LA are now true of the Bay Area."

And the home prices are worse. The median price in Silicon Valley now tops $1 million. In Detroit, it's $38,000.

That's appealing to Aaron Mason, a 36-year-old San Franciscan. "Having a yard, having a garden, starting a family, those kinds of things," says Mason, imagining a possible move to Michigan.

The city of Detroit doesn't have a lot of high-tech companies, but it is interested in attracting young tech entrepreneurs like Mason. He's well known among techies — he's helped launch four companies and has 70,000 Twitter followers. It's not just the lifestyle possibilities intriguing him about Michigan — he thinks it might be easier to launch company number five in Detroit.

"Coming from a place like San Francisco, real estate here is really expensive. And so to go to a place like Detroit and see that you have fairly cheap space, and an infrastructure that is already in place, it's a very exciting place to be," Mason says.

He says he likes the scrappy feel of Detroit's emerging tech community, one that is "still sort of getting up and off the ground."

TechTown Detroit is located in an old General Motors factory built in 1927. About 40 small businesses work out of the building.

TechTown Detroit is located in an old General Motors factory built in 1927. About 40 small businesses work out of the building.

Jason Margolis/NPR

Mason has been speaking with Ned Staebler, the CEO of TechTown Detroit, a nonprofit business incubator located in an old General Motors factory, originally built in 1927, in Midtown Detroit. The Corvette was designed at this spot.

Today, about 40 small businesses work out of the five-story building. The incubator gets funding from a stable of outside organizations, including nearby Wayne State University.

Rents at TechTown are about 70 percent cheaper than Silicon Valley. And Staebler says Detroit has other advantages.

"We have more engineers per capita than anywhere in the world. So, if you need to know how to make something, you need to know how to extrude plastic or bend metal, there's no place better in the world to do it," he says.

Designers can think up something here, and they don't have to have it built in China to see what it might look like.

TechTown Detroit's logo.
Jason Margolis/NPR

That's not much help though if you're designing an app.

Let's take a big step back though: Detroit over the Silicon Valley? Really? I asked Aaron Mason if is he has any hesitations about relocating.

His primary concern: "The winters." The average temperature in Detroit this February was 14 degrees.

Adam Leeb endures the winters, working out of TechTown. He co-founded Hemingwrite, typewriters that connect to the cloud — what you type goes straight to a server.

Leeb demonstrated the clicks on the keyboard saying, "It's actually almost meditative to a lot of writers."

The big selling point though is distraction-free writing: No e-mails to fight for your attention.

Leeb is an MIT grad who already has one startup under his belt. He likes the comeback spirit in Detroit. But he is running into barriers.

"It is not easy to raise money," he says.

Leeb is remaining in Detroit because his family's here. And, being honest, he just can't see Silicon Valley's best and brightest joining him.

"If you're coming here just for the cheap office space or the cheap living, then you probably need a better idea," Leeb says.

Then again, if your business fails in Detroit, it's a whole lot easier to recover financially.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

How many times have you read or heard this headline - such and such a city is the next Silicon Valley. Well, what about Detroit? The city says it has a history of being a great place to build things, and, hey, it's a lot cheaper than Silicon Valley. As we'll hear from NPR's Jason Margolis, there are barriers to techies willing to give it a shot. He starts, though, with the positive.

JASON MARGOLIS, BYLINE: Many University of Michigan business students who have an entrepreneurial streak take professor Jerry Davis' start-up class. Davis has lived in the Silicon Valley, and his advice to young people - forget the Bay Area.

JERRY DAVIS: You spend a lot of your time on freeways. It's expensive. It's annoying. The weather's beautiful, but basically, the Bay Area has turned into Los Angeles. All the things that people hate about LA are now true of the Bay Area.

MARGOLIS: And the home prices are worse. The median price in Silicon Valley tops $1 million. In Detroit, it's 38,000. That's appealing to 36-year-old San Franciscan Aaron Mason.

AARON MASON: Having a yard, having a garden, starting a family - those kinds of things.

MARGOLIS: Mason isn't only thinking about Michigan for a lifestyle change. He's well-known among techies. He's helped launch four companies and has 70,000 Twitter followers. He thinks it might be easier to launch company number five in Detroit.

MASON: Coming from a place like San Francisco, real estate here is really expensive. And so to go to a place like Detroit and see that you have fairly cheap space and an infrastructure that is already in place - it's a very exciting place to be, but it's still sort of getting up and off the ground.

MARGOLIS: He says he likes the scrappy feel of Detroit's emerging tech community. Mason has been talking to Ned Staebler. He's the CEO of TechTown Detroit, a nonprofit business incubator located in an old General Motors factory.

NED STAEBLER: So the building was built in 1927. It was originally for Chevrolet. The Corvette was designed upstairs, so...

MARGOLIS: About 40 small businesses work out of the five- story building. Rents are about 70 percent cheaper than Silicon Valley. The incubator gets funding from a stable of outside organizations, including nearby Wayne State University. Stabler says Detroit has other advantages besides cheap rent. You can design something here, and you don't have to build it in China to see what it might look like.

STAEBLER: We have more engineers per capita than anywhere in the world. So if you need to know how to make something, you need to know how to extrude plastic or bend metal, there's no place better in the world to do it.

MARGOLIS: Not much help, though, if you're designing an app. OK. Let's take another step back here. Detroit over the Silicon Valley? Really? I asked Aaron Mason if he has any hesitations about relocating.

MASON: The winters.

MARGOLIS: The average temperature in Detroit this February was 14 degrees. At TechTown, I also met Adam Leeb. He cofounded Hemingwrite - typewriters that connect to the cloud. What you type goes straight to a server.

ADAM LEEB: Typing on a keyboard like this with...

(SOUNDBITE OF KEYBOARD CLICKING)

LEEB: ...The sound - it's actually almost, like, meditative to a lot of writers. And so...

MARGOLIS: The big selling point, though, is distraction-free writing - no emails to fight for your attention. Leeb is an MIT grad who already has one startup under his belt. He likes the comeback spirit in Detroit, but he is running into barriers.

LEEB: It is not easy to raise money.

MARGOLIS: Leeb is in Detroit because his family's here. And being honest, he just can't see Silicon Valley's best and brightest joining him.

LEEB: If you are coming here just for the cheap office space or the cheap living, then, you know, you probably need a better idea.

MARGOLIS: Then again, if your business fails in Detroit, it's a whole lot easier to recover financially. Jason Margolis, NPR News, Detroit. Transcript provided by NPR, Copyright NPR.

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