Six years and 59 days ago, I moved from San Francisco to Detroit. My friends thought I was crazy moving from one of the fastest-growing American cities to one of the most downtrodden. But I saw an opportunity: the potential for Detroit, an iconic American city, to reinvent itself and become a leader once again. At the time I didn’t know what it was. But today it’s clear.
In Detroit, we’re seeing a shift from manufacturing vehicles to creating software and services. This is the future of automotive mobility: freely moving people and goods from point A to point B. It’s the automotive industry adding a layer of software and services to enable new ways to get around, like a car that drives itself or transportation on demand.
The Motor City is becoming the Mobility City.
How the momentum started
Detroit and the automotive industry had two massive crises that forced a hard reset for both. First, Detroit became the largest U.S. municipality to ever file for bankruptcy in July 2013. Then, the automotive industry experienced a global industry crisis from 2008 to 2010.
Both the city and the automotive industry had to go through a hard reset that was like ripping off a Band-Aid. It was painful, but then the healing process could begin.
First, there had to be a restart of Detroit’s entrepreneurial and business resurgence. Dan Gilbert kickstarted this reset by signaling a “buying opportunity in Detroit,” moving Quicken Loans to downtown Detroit in May 2010. Second, the automotive industry sought to change the city’s image with Chrysler’s February 2011 Super Bowl commercial “Imported from Detroit.” Together, these things started to renew interest in the Motor City.
The right foundational strengths
Setting aside the city’s automotive history, Detroit and the surrounding region throughout Michigan are home to other ingredients that have supported this rise in building the future of mobility.
Talent and industry expertise. Over 90,000 engineers are employed in Michigan across 375 automotive R&D centers, 60 of North America’s top 100 automotive suppliers, and 12 assembly plants. Additionally, Michigan is home to 15 universities and colleges with nationally ranked undergraduate engineering programs.
Regional advantages. Detroit is still in the Eastern Time Zone, but it is far enough west to offer reduced travel time to a majority of the United States. Detroit Metro Airport is one of the largest airline hubs in the country, offering 1,100 flights to 4 continents daily. The Ambassador Bridge, connecting Detroit to Canada, is the busiest international border crossing in North America in trade volume. Also, compared to the coasts, Detroit benefits from much less congestion and lower total costs for operating and growing businesses.
Investments from early entrants
When you combine the ingredients above — talent, industry expertise, and regional advantages — the foundation is there for Detroit to position itself as a leader in the future of automotive mobility. But it still took the efforts of a few early entrants to set the stage for Detroit’s resurgence.
Density in downtown Detroit. Fueled by Dan Gilbert’s Bedrock and the Ilitch Family’s “District Detroit,” massive amounts of construction are transforming Detroit. As a result, suburban-based automotive companies like Lear Corporation and Adient are opening offices in downtown Detroit, near GM’s world headquarters. They are joining other high-tech companies that have moved to Detroit including Quicken Loans, Google, Microsoft, Amazon, and Twitter. Joining the commercial boom is the residential boom in downtown Detroit. Young professionals are flocking to Detroit to experience the rebirth of the city and escape the exorbitant costs of the coasts. This demand is driving a boom in residential construction. Curbed Detroit mapped out 41 new residential developments that will bring thousands of new apartments and condos to Detroit in the next few years.
Government support. There have been $13.9 billion in automotive-related investments in Michigan since 2012. In 2016, Governor Rick Snyder passed a bill clearing the way for automotive companies and tech companies like Uber and Lyft to start testing self-driving vehicles on public roads. Michigan also ranks first in the nation for connected and autonomous vehicle projects, as well as in mobility-related patents.
Growing entrepreneurial and VC community around mobility. Fontinalis Partners, a firm started by Bill Ford, was the first VC fund in the world to invest in the future of mobility. Techstars Mobility, of which I am the managing director, was the first startup accelerator in North America to invest in seed-stage mobility startups. Both are headquartered in downtown Detroit. Thirty minutes away you can find RPM Ventures and eLab Ventures and, a little farther, Grand Ventures, all investing in mobility startups as well. Across Michigan, there are 22 venture capital firms and 8 angel groups investing in mobility startups. There are 141 venture-backed startups, a 48 percent increase in the past 5 years. I wrote more about why I love the Detroit startup scene in this post. Some of these startups include Lunar Wireless, May Mobility, Spatial, SPLT, and Ushr.
Collaboration among startups, industry, government, and academia
The most significant driver catapulting Detroit forward, however, is collaboration and the spontaneous collision of ideas and connections across the region.
Techstars Mobility has invested in and brought 33 startups from around the world to Detroit since June 2015. The program has facilitated over 7,000 relationships between mobility startups, Fortune 500 corporations, universities, and government officials leading change in the future of transportation.
In 2015, University of Michigan launched Mcity, the first purpose-built proving ground for testing connected and automated vehicles and technologies in simulated urban and suburban driving environments. Funding partners include BMW, Bosch, Delphi, Ford, GM, Honda, Intel, Toyota, and many others.
There’s also the American Center for Mobility, the only facility like it in the world: It’s on a mission to accelerate development of voluntary standards for connected and automated vehicles through a collaboration of industry and government. This nonprofit is a joint initiative with the State of Michigan, in partnership with the Michigan Department of Transportation, the Michigan Economic Development Corporation, the University of Michigan, and other organizations.
In October, MICHauto, The Detroit Regional Chamber, Michigan Economic Development Corp., and WeWork announced the launch of the PlanetM Landing Zone, which will serve as an environment for connected and automated transportation startups to connect with Detroit’s automotive and economic development network.
Anchoring the region is the North American International Auto Show, annually held in Detroit in early January for the past 30 years. In 2017, the show launched Automobil-D, an expo featuring 180 brands, ranging from automakers to suppliers to tech startups, as well as universities and government organizations. Startups were a key component of the largest mobility startup expo in North America at an auto show.
Detroit’s changing image
One of the more significant challenges Detroit faced was how the world perceived it. Six years ago that image was anything but positive. But today, that has changed. The New York Times named Detroit one of the top 52 places in the world to go in 2017. Lonely Planet named Detroit the No. 2 place in the world to visit in 2018.
Silicon Valley may still be first in the nation in terms of the total number of tech startups. But my friends who thought I was crazy for leaving San Francisco for Detroit are now amazed at my foresight.
I tell them that it wasn’t foresight but belief — a belief that Detroit had the right ingredients to reinvent itself.
Ted Serbinski is the managing director of Techstars Mobility.
The audio problem: Learn how new cloud-based API solutions are solving imperfect, frustrating audio in video conferences. Access here