Detroit gets all the press, but Pittsburgh is the Rust Belt’s unsung startup hub

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One day later and the energy on Steve Case’s Rise of the Rest tour has made a 180. He stands in front of a packed warehouse space in Pittsburgh, addressing a rather solemn, serious crowd. “It’s not as bad as Detroit, but you have lost half your population,” Case chastises. “It’s not a good thing. There’s still work to be done.” Heads nod in assent. It’s a far different scene from the raucous cheers and hooting and hollering of the small Detroit gathering the day prior.

Even when Case moved into the motivational portion of his fireside chat about Pittsburgh fighting its way back to prosperity, the audience stayed somber. Eyebrows crinkled and people seemed to consider the rallying cry to be a crucial homework assignment.

The difference in tone between Pittsburgh and Detroit was rather stark and strange, particularly when you take into account the fact that Pittsburgh, by investment capita, is actually doing better than Detroit. According to a report from Ernst & Young LLP and Innovation Works, in 2013 the city had 52.5 venture rounds per million residents, compared to Detroit’s 11.9 venture rounds per million residents. If you don’t go by individual venture rounds and instead look at the dollar amounts, Pittsburgh had $ 74.2 million investment dollars per capita compared to Detroit’s $ 24.6 million.

And yet Pittsburgh has not garnered nearly the amount of attention as its auto industry brother to the north. Detroit has again and again gotten its story in national outlets from The New York Times to Inc. And who doesn’t love a good comeback story? Detroit, down on its times and teetering on the edge of bankruptcy, is attempting a turnaround led by some scrappy startups and the promise of the connected car industry. Local press has been all over covering it too.

In contrast, although the Pittsburgh community certainly seems to be robust — enough to turn out a crowd three times the size of the Detroit event, VP of comms for Revolution, Allyson Burns, told me it was more challenging to convince local press to cover the event. They weren’t as tapped into the startup scene and why it was important.

It may be that Pittsburgh’s big problem is selling itself. Case told the assembled entrepreneurs exactly that. At the lunch at Carnegie Mellon , he said something along the lines of, “Pittsburgh you need to be more braggy!” Even a funny statement like that elicited nary a giggle. People generally nodded in agreement, and later in clusters of groups they brought up the crucial question: How?

When braggadocio and vision selling aren’t in your cultural genetics, how does a society learn how to pull up their britches and project a bigger self? Someone needs to get Pittsburgh a link to The Imposter Syndrome TED Talk, stat. Or like, introduce them to Travis Kalanick or something.

The general consensus from the Revolution crew was that although Detroit pitches were good, Pittsburgh pitches were better. The companies just brought it, from polished presentations to creative ideas. The winner was SolePower LLC which generates solar power from people’s shoes as they walk and stores it in a battery pack that can then be used to charge someone’s phone. As mentioned, investment is starting to pour in. Pittsburgh may not have the press, but its got the beginning sparks of fire power. So why now?

Chatting with entrepreneurs afterwards, the conversation kept coming down to Carnegie Mellon. In 2012, the university has rolled out the Carnegie Mellon Center for Innovation and Entrepreneurship, with the goal of connecting disparate departments and organizations on campus (like business and engineering). The hope? To “accelerate the commercialization of university research and innovative ideas.” Add that to the fact that Carnegie Mellon already houses the world’s leading robotics research institute and Pittsburgh has deep roots in manufacturing steel, that puts the metropolis in a decent position to start exploring hardware and robotics markets. “[Hardware] is right in Pittsburgh’s wheelhouse,” Ilana Diamond, managing director of the AlphaLab Gear hardware accelerator, says. “We’ve always made things.”

Carnegie Mellon grads told me that in the last few years, the computer science and engineering grads out of the school have started sticking around, whereas in prior years most immediately headed for tech jobs on the coast. The cost of living in San Francisco and New York City has gotten too high, while their families are pulling in less income.

Counterintuively, the economic recession in 2008 may have helped trigger this slow, new startup growth. Without being able to afford to move to the coasts, bright young grads chose to stuck around where the cost of living is dirt cheap. And with Carnegie Mellon’s new push for entrepreneurship, some of those grads chose to start companies. And local venture investors have noticed. At the joint AlphaLab and AlphaLab Gear Demo Day a month ago, nine out of twelve companies secured seed investment in the hundreds of thousands range, according to Jim Jen, Executive Director at Alpha Works.

From quantitative data to qualitative stories, Pittsburgh appears to have more going on than its surface reveals.

If Detroit’s problem is that it’s doing a lot of shouting and no one is listening, Pittsburgh’s problem might just be that it’s not shouting at all.

[photo by Brian Donovan]

PandoDaily

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How Startups Can Restart Detroit

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Once upon a time, Detroit was a symbol of the United States’ ability to invent, build and prosper. The American Dream was alive and tangible with a bustling 1.8 million population, 296,000 manufacturing jobs, and the nation’s highest per-capita income in 1950.

On July 18, 2013, Detroit filed for bankruptcy, citing over 18 billion dollars in liabilities, making it the largest municipal bankruptcy in the history of the United States.

What else makes this an interesting situation?

  1. Between December 2000 and December 2010, 48% of  manufacturing jobs in the state of Michigan were lost.
  2. One-third of Detroit’s 140 square miles is either vacant or derelict.
  3. 47% of residents are functionally illiterate and less than half of the residents over the age of 16 are working.
  4. 60% of all children in the city are living in poverty.
  5. The size of the police force in Detroit has been cut by about 40% over the past decade.detroit stats 

The city’s motto is “Speramus Meliora; Resurget, Cineribus” translated, it reads: “We Hope For Better Things; It Shall Rise From The Ashes.”  

Amidst the urban decay, young entrepreneurs fervently believe in Detroit’s ability to thrive again.

Daniel “Dan” Gilbert is the chairman and founder of Quicken Loans Inc. and Detroit’s biggest cheerleader. Gilbert moved 1,700 employees downtown in 2010, and invested over 1 billion dollars in restructuring downtown Detroit to lure entrepreneurs, making him Detroit’s third-largest landowner.

So far, his plan has worked. With hefty backers and eager entrepreneurs, Detroit’s startup and tech scene should not to be underestimated.  

Don’t believe it? Derived from The Huffington Post “Best Detroit Tech Startups” and Fast Company’s “Detroit’s Hardest Hustlers” below are some startups that are gaining real traction. While it may not be easy, Detroit is on the right track.

WDWOT

Why Don’t We Own This?: A website created by Jerry Paffendorf’s startup, Loveland Technologies, WDWOT aims to ameliorate one of Detroit’s biggest problems: abandoned property. By providing property information in an interactive way that is innovate, WDWOT hopes to increase the sense of ownership and power citizens have in their city.
 

picketreport

Picket Report: A web tool for those looking for every possible piece of data on a neighborhood anywhere in the country. Founders, Bryan Kunka and Brian Bandemer, met at Bizdom U, a startup accelerator program that helps entrepreneurs launch, fund, incubate, and grow startups funded by Dan Gilbert.

MOTO

Motown Initiative: Founded by UMich grad, James Norman who also started Ubi Video, Shift Marketing Solutions, F1RST Motoring Apparel, and now Groupflix, Motown Initiative aims impact media, establish a new profitable business and ultimately  revitalize this historic city.

Dc3

Detroit Creative Corridor Center: Designed to support the growth of Detroit’s creative economy by delivering business acceleration and attraction services and developing signature programming tailored specifically to creative professionals’ needs. ”DC3″ established Detroit Design Festival to connect Detroit’s  independent innovators and expose their collective design aesthetic to national and global markets.

jobs

I Am Young America: Detroit : A social venture that promotes entrepreneurship as a means to combat youth unemployment and boost economic impact in cities. Their mission is to help revitalize American cities by empowering young entrepreneurs to launch businesses, and mobilize citizens everywhere to champion them.

 
With the recent equity crowdfunding developments and the current foundation of creatives motivated to jumpstart the city, Detroit is running on a different fuel this time: entrepreneurs.

Featured image courtesy Sam Beebe.

Social Media Week

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