The Henry Ford Museum in Dearborn near Detroit. An employee uses an original to show visitors how to assemble a Model T – the legendary “Tin Lizzie”, Ford’s “Tin Liesel”, a worldwide bestseller for decades.
The museum is an ode to the heyday of the American auto industry – which came to an abrupt end at the latest with the economic and financial crisis. And with it the city of Detroit, Motor City, also fell into crisis. In July 2013, Detroit filed for bankruptcy – the largest municipal bankruptcy in United States history.
At that time, the city learned painfully that its great strength had turned into a dependency and thus a weakness. Since then, images of empty factories and run-down houses have defined her image.
“Start-up culture has changed completely in the last ten years”
Detroit has not yet really recovered from the crisis. They still exist, the deserted streets in the widely ramified network of the city, which was once designed for around two million inhabitants and today has fewer than 700,000. The unemployment rate in the metropolitan region is around six percent, in the city itself it is about twice as high. But Detroiters have made it their mission to restore their city’s battered reputation.
The start-up scene should help them with this. Faris Alami has been romping around in it for 13 years now. He estimates that there are about 300 to 500 small tech companies in Detroit. “The tech industry has really evolved. A lot of the companies that you find here today didn’t even exist in 2004, probably not even five years ago. Back then it was: What are you doing and why are you doing it? Today it’s: why not? The whole start-up culture has changed completely in the last ten years.”
Alami is the founder of International Strategic Management. The company offers start-up assistance: finding investors, marketing, protection of intellectual property. With this, Alami and his team are helping the tech founders. The job has gotten easier over the years. Because the number of support programs has multiplied: “When we started a few years ago, we made a list of possible sponsors for the start-ups. The list was one page long. Now it’s a book and it has 27 Pages!” Alami calls this network “ecosystem”.
For Mark Denson, too, the large number of public and private incubators and investors is a key factor in Detroit’s hoped-for success as a new start-up center. The 52-year-old grew up here and now works for the Detroit Economic Growth Corporation – a non-profit organization that has been overseen by the city with economic development tasks. Slightly ironically, he describes what makes Detroit even more attractive: It’s cheap. “What brings startups to Detroit is the low barriers to entry. It’s cheap. A good idea is a good idea. But a bad idea – you can fail with it once in Portland. If you bring it to Detroit, you can afford to fail two or three times!”
The outcome for the industry is uncertain
Denson’s joke has a serious background: The cost of living and real estate prices on the West Coast – in hipster metropolises like Portland and Silicon Valley – have exploded in recent years. In Detroit, attempts are now being made to lure the frustrated start-ups with far lower rents, for example. And gets – and this is no joke – help from the automotive industry of all people. “Ford has placed full-page advertisements for Detroit in Silicon Valley newspapers and set up a website. Other companies have also advertised Detroit.”
Because just like the city, the automotive industry must reinvent itself. They also need: start-ups. The old giants of the auto industry do not develop sensors and algorithms themselves. But they are still the most important employers in Detroit. The city and the car manufacturers – they continue to form a community of destiny. Outcome for both: uncertain.
Editor’s note: Research for this article was made possible in part by a travel grant from the US Department of State.