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M@dison building and the rise of Silicon Valley 2.0

In Detroit, social entrepreneurship and social innovation are getting national attention. The tech sector is leading the charge, and nowhere is that more apparent than at downtown's M@dison building.

If there is a precious jewel in Detroit's entrepreneurial ecosystem, it's the M@dison Building overlooking downtown's Grand Circus Park.

For decades the former Madison Theatre building stood vacant and blighted, the subject of a number of stalled redevelopment efforts. That changed in early 2011 when We're changing the city. This building shows what we're doing to change the city. It's the embodiment of what we're trying to accomplish here.Dan Gilbert's Quicken Loans purchased it and began the process of redeveloping it into the most dynamic hub for entrepreneurs and tech start-ups in Metro Detroit.

"We're changing the city," says Jacob Cohen, vice president of Detroit Venture Partners. "This building shows what we're doing to change the city. It's the embodiment of what we're trying to accomplish here."

Gilbert began creating the M@dison building at about the same time he co-founded Detroit Venture Partners, often shortened to DVP. The M@dison Building and DVP are considered the linchpins for Gilbert's Webward vision of turning the lower Woodward corridor in downtown Detroit into an new economy hot spot. Think Silicon Valley 2.0 in the Motor City.

In its first year DVP has become the most aggressive venture capital firm in Michigan, investing six- to seven-figures in early stage tech start-ups at a rate of almost one per month. DVP calls the third floor of the M@dison Building home, sharing the floor with a handful of other local venture capitalists and angel investors. People step foot into the M@dison and they get a sense of what we're trying to build. They get a sense of the value we add.DVP's portfolio companies, 13 today, are either based in the M@dison Building or have offices there.

The entrepreneurs that work from the M@dison Building enjoy one of the most unique business environments in Michigan. The M@dison Building manages to combine both lavish and edgy design through its loft-style offices and rooftop party deck overlooking Comerica Park. It's not a hard sell.

"People step foot into the M@dison and they get a sense of what we're trying to build," Cohen says. "They get a sense of the value we add."

The M@dison Building isn't just filled with DVP start-ups. The company reached 100 percent occupancy this summer by also recruiting creatively inclined firms, such as TextFromLastNight. If Twitter was looking for an office in Metro Detroit in 2009 would it pick downtown Detroit? Probably not. The M@dison and the start-up culture it's building downtown is something you can't find in the suburbs.What really got the ball rolling was convincing Skidmore Studio to leave downtown Royal Oak to become the M@dison Building's anchor tenant. The biggest coup was scoring Twitter's Detroit office earlier this year.

"If Twitter was looking for an office in Metro Detroit in 2009 would it pick downtown Detroit? Probably not," Cohen says. "The M@dison and the start-up culture it's building downtown is something you can't find in the suburbs."

Henry Balanon found tech start-up success in the Oakland County suburbs before the M@dison Building opened. His start-up, BickBot, created mobile apps when they first started to go mainstream. He says the M@dison Building's success is thanks to creating a critical mass of people like him.

"They took all of the tech power in Detroit and focused it in one area," Balanon says. He adds that "this space works because it's open and collaborative."

It was that sort of openness that led to Balanon becoming a part of the M@dison Building. He was at a coffee shop discussing moving his mobile app start-up when Josh Linkner, founder of ePrize and co-founder of DVP, happened to overhear the conversation. He pitched moving to the M@dison Building. That led to the creation of Detroit Labs, a mobile app super start-up co-founded by local tech entrepreneurs.

After one year, Detroit Labs employs 22 people who make apps for the likes of Chevrolet and Stryker. The Chevy contact came from a chance encounter in downtown Detroit and ended with Detroit Labs handling mobile app work during the Super Bowl.

"People come through here all the time," Balanon says. "There are a lot of chance encounters that begin with, 'Hey, let's grab a beer at Detroit Beer Company?' That's how a lot of deals happen."

And it all begins by taking a lot of like-minded people in the same building to generate excitement. Few companies in Michigan know how to work the hype machine as well as Dan Gilbert's family of companies. They find ways to make Silicon Valley-style splashes through the contemporary design of offices or attracting big names.

Recruiting Twitter generated buzz. Convincing Chrysler to take office space in downtown Detroit made people take notice. Bringing Earvin "Magic" Johnson in as a DVP partner got everyone excited.

"There is a lot of potential for businesses to expand," Balanon says. "There are 20 some companies in the M@dison Building now. If any of those scale a lot of the nearby buildings will fill up with companies. We will see a lot of these buildings along Woodward fill up with a lot of companies."


How place impacts entrepreneurship
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Jacob Cohen
Vice President, Detroit Venture Partners
M@dison Building, Detroit
 
How does visibility and exchanging ideas out in the open impact entrepreneurship?
Solving problems in the open, as a general rule, is better than doing it in a bubble or a silo. Saying things out loud, getting feedback, seeing what other people are doing-- these behaviors lead to better solutions.
 
Henry Balanon at Detroit Labs told me his company got started because of a chance meeting with Josh Linkner at a coffee shop. Do start-ups and early investors need that sort of opportunity for serendipity to thrive?
For a startup, small opportunities often become big opportunities. Adding to that, as a startup you may not know enough to seek out all of the opportunities available to you. Putting yourself in an environment where you can capitalize on opportunities that you are not explicitly seeking out but that might present themselves through serendipity can be a game changer.
 
DVP averages an investment every month or two but the M@dison is at 100 percent occupancy. Where are DVP's future start-up investments going to set up shop?
For now we are busting at the seams here, but in the next six months there will be space up and down Woodward for DVP companies, for Bizdom companies, and for the much broader startup community.
 
How far away are we from seeing profitable exits from M@dison Building start-ups?
For now, we are focused on building great companies, over time the exits will take care of themselves.
 
What do you think the section of downtown Detroit around the M@dison Building will look like three years from now?
The Broderick Town opens in September next door (I'll be moving in, as a matter of fact), with restaurants and bars in the retail space. There are 4 buildings on this block of woodward that Bedrock is in the process of totally transforming, which will be full of retail and small businesses much sooner than three years time. Within three years we will have the Whitney across the street with a hotel, residential, and more restaurants. In short, it's obvious that it will look incredibly different, and those who haven't been paying close attention are going to be pretty blown away by the transformation.