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News-Entreprenuership

How Detroit's start-up culture encourages, supports entrepreneurs

Detroit has a collaborative culture that helps entrepreneurs navigate the complexities of building a business.

In 2012, Anthony Montalbano and Brian Ritter hung out a shingle for their company AMBR Detroit.

It wasn't an actual shingle. Rather, they rented a desk on the third floor of another company, which also provided all the amenities of a company: a desk, an address and conference rooms they could book for meetings.

"It was the next step from our parents' basements" and from "mooching off of other people," said Montalbano.

There are 1,299 venture-backed companies in Michigan – a 70 percent increase over the past five years.

There is $1.7 billion in capital under management for Michigan-based VC firms – a 45 percent increase in the past five years. 

Michigan has the highest ratio of research spending to venture capital investment in the nation. For every $1 invested in VC in the state, $149 is invested in research. 

But as the partners started to realize their web-based development studio could flourish into a full-fledged business, they went looking for more support.
In the process, they fell hard for Detroit’s start-up culture.

"The level of generosity in the people here is amazing," Montalbano said. "It kind of stems from the fact that everyone wants to succeed, and people understand that to succeed, they have to help not just themselves but each other.

"And that culture is amazing."

PATH TO SUCCESS

Detroit invests in programs that support start-ups and entrepreneurs of all kinds; it does so in a region where startup costs pale compared with those elsewhere in the country.

Programs include the Innovation Warriors entrepreneur training program for Wayne State University alumni and TechTown, a Detroit-based organization that helps Michigan businesses succeed through a network of entrepreneurs, investors and mentors.

The ultimate hallmark of the burgeoning start-up culture, though, is what's happening between the people.

"People are really open to (helping each other)," Montalbano said. "If you do good work, they're going to recommend you." Moreover, he said, there's a true spirit of one-for-all and all-for-one.

"Everyone I've worked with is super passionate about wanting things to succeed here. And when you have everyone wanting the Detroit culture to succeed, there's a lot of change happening. Just in the past roughly five years (since starting AMBR Detroit), we've seen a dramatic change."

The strengthening culture moved AMBR Detroit quickly along the path to success. Montalbano and Ritter spent less than two years in its co-working space. In the fall of 2015, the company, which has more than doubled in workers and experienced more than 80 percent growth in revenue each year, moved into a roughly 2,400-square-foot office space in downtown Detroit, which was recently named one of the best places to live for tech entrepreneurs.

"Everyone I've ever met in trying to start a business has been amazing — open to getting together, to sharing ideas," he said.

LOWER COSTS FOR START-UPS

That's certainly a goal for TechTown — founded in partnership between WSU, Henry Ford Health System and General Motors Co. — and its scope is wider than it sounds. While tech is booming in Detroit, TechTown's host of programs designed to train and help businesses get off the ground are not just about the IT industry.

TechTown president and CEO Ned Staebler points to its Retail Bootcamp program as an example.

"If you were looking to start a restaurant, bakery, shoe store, we can provide you with all of the training, technology and support to get your business up and going," he said. For $500, he said entrepreneurs can get $3,500 to $7,500 worth of services and rent support, including point-of-sale machines and professional services. "It's been really successful."

It doesn't hurt that once a start-up gets off the ground, the cost of doing business here holds mass appeal and multiple benefits. It's "one of the reasons we think Michigan is a great place to do business," Staebler said.

"Your costs are far lower than in the Valley or on the East Coast, but you have access to a lot of risk capital here in the state," he explained, adding tech-backed businesses figuring out how to make money for their investors face a special advantage. "If you’re successful here, you can be bought by a company like Google or Pfizer just as if you were in California or anywhere."

AMBR Detroit's Montalbano agreed.

"I have friends in other cities. Hearing prices in Chicago, New York, San Francisco and Austin…Detroit is amazing," he said. "There are new places to work, new co-working spaces…all these small places for $100 a month for an office to start."

Staebler, who is vice president of economic development at Wayne State University in addition to his roles at TechTown and the Michigan Talent Agenda, joked he's "a lazy Detroiter" by having only two jobs, one side hustle, two kids and a small business.

Joking aside, it's a revealing comment on the start-up culture in a city poised to see a new heyday. Staebler said 170 businesses have opened up in Midtown Detroit in the last three years because of all the "entrepreneurial folks."

And yet, Detroit is not a city in which a start-up gets lost in the noise.

“I have to quote my good friend Jeanette Pierce, who runs the Detroit Experience Factory. She always says 'Detroit is big enough to matter in the world and small enough for you to matter in it,'" he said.

Pierce said that oft-quoted remark is the end line in Detroit Experience Factory Welcome Center's tours, which almost 90,000 people have taken since the company began in 2006. She says the remark was inspired by the enthusiasm of another Detroit booster, Emily Gail (of Say Nice Things About Detroit fame).

Gail "always talked about how great it was that an individual could make a difference in Detroit," said Pierce. "That's certainly how I always felt as a lifelong city of Detroit resident who was able to start something with no money."

Pierce and Montalbano, whose start-up success stories have become part of the fabric of the city, showcase what Staebler refers to as a hustle factor.

"Detroit hustles harder, and we’ve coupled our hustle with access to capital and a good partner in city government," Staebler said, "and you're seeing explosive growth."

Learn more about Michigan's start-up culture here.

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