Detroit's progress in diversity is a lesson it can give Silicon Valley in exchange for its example of passion for startups.
Just before the Fourth of July holiday, I got an email pitching a story about progress with the turnaround in Detroit, the city where I was born. I was especially intrigued because the email hit my iPhone just as I was heading to the San Jose airport for a flight to see family in Kalamazoo.
I recently got more details from Pam Lewis, director of the New Economy Initiative, a project of a nonprofit working on the turnaround in southeastern Michigan. Lewis said after the 2008 financial crisis, unemployment rose in Detroit to nearly 25% and poverty peaked at 40%. Even worse, 60% of residents of the Motor City don't own a vehicle, she said.
I’ve heard from friends and relatives for years about the down economy in Michigan generally. I witnessed it first hand the last two years trying to sell my aunt’s Kalamazoo home. Walking around my old neighborhood, I saw several houses shuttered, some badly in need of repair and selling under foreclosure for less than $40,000.
Silicon Valley entrepreneurs consider that a good down payment on a Tesla. The average San Jose home sells for twenty times that amount.
The good news is employment is rising again in Detroit, particularly in the industrial sector. What’s more, the city’s population might actually grow for the first time in decades, said Lewis.
Part of the progress is no doubt due to the comeback of the U.S. automobile industry since the government bailout. Another part of it is due to efforts by Lewis and others to nurture the kind of entrepreneurialism in Detroit that is part of the fabric of my new home town, San Jose.
NEI provides some impressive figures of what it has helped achieve, especially in diversity, an area where Silicon Valley is more of a follower.
In recent years, NEI helped create 1,600 companies, 39% of them minority-owned, compared to a national average of 21%. In high-tech, 28% of the companies are minority and women owned, compared to 3-4% nationally.
In the last nine years, the number of startup accelerators and incubators in Detroit has risen to 50 from less than ten. And the amount of venture capital investment has nearly tripled in five years while the national numbers have declined, the NEI said.
Lewis points to three examples of tech startups that are part of the new Detroit that’s just starting to emerge. SPLT is a mobile carpooling app run by Anya Babbitt a graduate of TechStars Mobility, one of Detroit’s newer accelerators.
NextEnergy is a nonprofit with labs and offices in downtown Detroit that supports work in a wide variety of areas from energy storage to power electronics. Since it was founded in 2002, it has attracted a whopping $1.5 billion in investments.
Loveland Technologies aims to create a digital real estate map of America, starting with Detroit where the work aims to reduce tax foreclosures and urban blight. The local Wayne County Treasurer’s office has already embraced the service.
Babbitt of SPLT spoke at the recent Global Entrepreneurship Summit at Stanford where President Obama moderated a panel with startup CEOs from around the globe. Obama promoted entrepreneurship as a force to raise living standards and promote diversity.
Silicon Valley is clearly spreading its startup fever to Detroit. In its turn, Detroit may inspire Silicon Valley to embrace greater diversity.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times