Dan Gilbert on Detroit's Revival: A Billionaire's Vision

Dan Gilbert's Vision for Detroit's Revival

Dan Gilbert, a proud son of Detroit, has dedicated substantial resources to the revitalization of his hometown. The billionaire founder of Quicken Loans has invested a minimum of $2.5 billion in the rehabilitation of buildings within the city’s central district.

Investment Beyond Real Estate

Gilbert’s commitment extends beyond property improvements. He has also made significant investments in numerous companies that now occupy these renovated buildings, alongside the restaurants and retail establishments that have contributed to a more vibrant urban environment.

A Conversation with Dan Gilbert

We recently had the opportunity to speak with Gilbert, a father of five, whose diverse interests include the highly-regarded e-commerce platform StockX, co-founded in 2015, and ownership of the Cleveland Cavaliers NBA team, acquired in 2005 for a reported $375 million, including their downtown Cleveland arena.

He discussed the compelling reasons why Detroit should be a primary consideration for founders across the United States. The conversation also touched upon his passion for sports and the rationale behind choosing a traditional Initial Public Offering (IPO) for Rocket Companies, Quicken’s parent company, which went public in August of the previous year. Key excerpts from that discussion are presented below.

Reflections on Cleveland

TC: As a long-time Cavaliers fan and a native of Cleveland, I’m interested in your connection to the city.

DG: The opportunity to acquire the Cavaliers arose in 2005, or perhaps 2004. The selling banker contacted us because our group had previously pursued the Milwaukee Brewers baseball team, and they believed we might be interested. The seller, Gordon Gund, desired a streamlined, uncomplicated process with a single buyer, leading them to reach out to us, and we ultimately decided to proceed.

The Appeal of Detroit

TC: You successfully brought basketball back to Cleveland, and we are grateful. Now, focusing on Detroit, where you grew up and attended college, what advantages does it offer compared to other Midwestern cities?

DG: A key metric companies consider is the population reachable within a five-hour drive, as this radius typically represents a pool of talent willing to commute or explore the city. Detroit boasts access to approximately 60 million people within this range, encompassing areas like Chicago, Toronto, Michigan, Ohio, Indianapolis, and Pittsburgh.

This accessibility extends to universities as well. Around 30 major universities lie within a five-hour drive, including institutions like the University of Michigan, Michigan State, Wayne State, Carnegie Mellon, and Ohio State. Furthermore, numerous Canadian universities specialize in software development, collectively providing a substantial talent advantage.

Detroit has suffered from decades of negative perception, making it difficult to appreciate its potential without experiencing it firsthand. However, spending just a couple of hours in the city reveals its energy, passion, and the influx of young people.

Detroit and Startup Ecosystems

TC: Do you believe Detroit is more suitable for companies of a specific scale? Cities often have a learning curve when adapting to the unique requirements of startups. Drive Capital in Columbus recently mentioned needing to educate landlords, a role you naturally fulfill as a major Detroit landlord.

DG: That’s a very insightful observation from Drive Capital. Currently, Detroit accommodates both large and small companies. We initially relocated around 1,400 individuals from the suburbs to downtown Detroit in the summer of 2010, and now house over 20,000 employees at our tech company, which Quicken Loans undoubtedly is. This concentration fosters an ecosystem of ideas and individuals attractive to venture capitalists.

We directly manage a couple of million square feet of real estate, with an additional four to five million square feet under development or already acquired. This allows us to accommodate startups and adapt to their growth. Moreover, companies like Pinterest and Snap have utilized our three downtown Detroit locations. Established tech giants such as Amazon, with an engineering office employing over 500 people, and Google, with a 50,000-square-foot office, and Microsoft, also with 50,000 square feet in the same building, also maintain a presence here. It’s not solely a startup environment.

Venture Capital in Detroit

TC: Is there sufficient venture capital available in Detroit to support your ambitious vision? The Drive Capital team highlighted missed opportunities due to limited funding capacity and the need for additional support. Do you share this concern?

DG: Increasingly, venture capitalists are recognizing Detroit’s potential. Ron Conway of SV Angel, for example, became a strong advocate for Detroit a few years ago and has connected us with his extensive network. He has invested in many of our local deals. Others have followed suit, including Google Ventures, Battery Ventures, DST Global, General Atlantic, GGV Capital, Altimeter, and Whale Rock Capital, and Tiger Global, all of whom have invested in Detroit-based startups.

This is relatively new for us. Quicken Loans remained private for 35 years, and we rarely needed to seek venture capital due to our strong cash flow. StockX represents a different scenario, as it experienced rapid growth that necessitated external funding. Every contribution, however small, is valuable.

StockX and the Future of Digital Assets

TC: Regarding StockX, its slogan is the “stock market of things.” Could this include non-fungible tokens (NFTs) in the future? The market for digital items is rapidly expanding.

DG: We are certainly exploring that possibility. Models like NBA Top Shot are appealing to us, and we are currently developing similar concepts. With four out of five of my children being teenagers, I can assure you that NFTs are a significant trend.

StockX's Potential IPO

TC: What are the next steps for StockX? Is an IPO on the horizon?

DG: An IPO is likely the next step for StockX, though the timing remains to be determined. It’s probable sometime in 2022. I’m not making an official announcement, but that is a strong possibility.

Traditional IPOs vs. Alternative Routes

TC: Do you have a preference for traditional IPOs versus other methods of going public? You chose a traditional IPO for Quicken. United Wholesale Mortgage, another Detroit-based mortgage company, recently opted for a SPAC merger.

DG: A StockX offering would likely follow the traditional IPO route, primarily because I lack extensive knowledge of the complexities involved in alternative methods. Our success with Quicken Loans provides a familiar and proven path.