The World We Build- Dan Gilbert & Parag Khanna Zeitgeist Americas 2012


>>Parag Khanna:
Now, Dan, through Detroit Venture Partners and Quicken Loans, you have actually in the
last several years moved 6,000 of your staff into the core of downtown Detroit. You have
taken ownership of some very marquis properties in the city that you have been developing.
By bringing employment back into the city, what kind of a demonstration effect have you
seen? Who has followed your lead in contributing to Detroit 2.0?
>>Dan Gilbert: Before we get going, what I’d like to do is invite Sean Penn to Detroit
at night, because he was talking about Detroit at night.
And, actually, it’s not what you think. Like tonight, for instance, the Tigers are playing
the Yankees, game three, Jason Verlander. Come on to Detroit. A lot going on there.
So I just want to make sure. It was like a softball, so I had to.
You know, there’s — it’s interesting, because, you know, Detroit had to bottom out. It had
to hit bottom. And, really, the bottom happened with the bankruptcy of the automobile companies.
That bottom has sort of given us a new beginning, gave us a new opportunity. We grew our company
in the suburbs for over 20 years. And a couple years ago, we had to make a decision, do we
want to build in some farmland out there or lease some more suburban office space. I was
born in Detroit, my father was born in Detroit, and my grandfather was born in Detroit. And
we just felt we were in a position to really positively impact the outcome. Our people
wanted to do it. And so, over the last two years, we moved 6500 people downtown. They’re
loving it. Definitely other companies have come down
there. We just put Twitter in one of our buildings. There’s lots of discussions going on with
a lot of name technology companies as we try to build the corridor out, technology corridor
out. And Blue Cross Blue Shield just moved 3,000 people downtown, Renaissance Center,
where GM’s headquarters is at, you may notice that if you ever see a skyline picture of
Detroit, it’s the big buildings on the river. They’re full, 100% full, Renaissance Center.
They had a skyscraper sale that we participated in. It was crazy. We were paying per square
foot less than what it goes for annually in New York City on a per-square-foot basis for
the building itself. So, you know, just huge amounts of office space that we filled up.
And, you know, it’s very exciting down there right now.
And the main thing is to keep the great people coming out of our universities, University
of Michigan, Michigan State, all these talented people and entrepreneurs, in the city. And
the way you do that is by having a thriving, hustling and bustling urban core, because
I think it’s pretty much known that this generation overwhelmingly wants to be in an urban core.
So people like Larry Page, for instance, who is from Michigan, and tons of other technology
people, that we don’t want to lose the next ones. We want to keep them in the city. And
I think by having a thriving downtown urban core, that’s how you do it.
>>Parag Khanna: Tell us about that program you launched, the internship program that
is meant to capture that next generation and kind of bring about this brain gain instead
of the brain drain.>>Dan Gilbert: Of all the things we have been
engaged with in the city of Detroit, the buildings and the renovations, which you’ll see some
of the pictures behind me, is we decided to go all out on the internships. The summer
of 2011, we had just a test pilot of it. And then in 2012, without even any advertising
whatsoever, we received 8,700 applications for internships in the city from everywhere.
We can only handle 600 of them. So we had 600 interns this summer from 157 colleges
and universities all around the United States. And they loved it. I mean, they just loved
the fact that they could impact the outcome. You know, we — our sell to them, believe
it or not, it’s a sell, we always say to people, look, you can go to Boston, New York, Chicago,
wherever, and I’m sure you can do well. But where can you also get a good job now and
also positively impact a Great American city? And that sells to this generation. So, you
know, we wish we could have hired more of them. Hopefully, next summer we will.
>>Parag Khanna: With all the college graduates who are living at home, this is at least an
opportunity to get out of the house and do something at the same time.
You mentioned the tech corridor that you’re trying to build in the city. I’d love to hear
more about that, especially because in the context of Detroit, which a half century ago
was a major innovation center in the United States.
>>Dan Gilbert: You know, the closest comparison probably is Silicon Valley today. Detroit
was probably the Silicon Valley of its day, especially from the teens through the ’50s.
And it’s a shape what happened. There are a lot of things that happened. But we didn’t
diversify our economy from the manufacturing economy. And we relied too long on it. We
never really captured the sexiness of the automobile business, either. You know, you
can imagine — some of the questions we ask today is, like, why did Detroit lose auto
racing to the South? How did that happen? Why aren’t there incredible museums in Detroit?
There are a few, actually, that are outside the city, Greenfield Village. But why aren’t
these great exciting things that are connected to automobiles part of the city, too? People
are looking at that as well. I think the future is great. And I think this
technology corridor we’re trying to build here is a three-block corridor. It’s got 2-
or 3 million square feet of office space. Some — you see in that picture right there,
that’s the Madison Building, which is sold out, which is an old theater building. There’s
an auditorium in there. We have 34 startup businesses in there. One of them is Detroit
Venture Partners, which is a venture capital business that Magic Johnson and myself, Josh
Linkner, who you see in that picture, created to fund businesses in the city. And, you know,
people are coming and businesses are coming.>>Parag Khanna: What other cities are you
learning from as you look around the country, you see that places like, you know, Philadelphia,
New York, Washington, a lot of people talk about Las Vegas as places where there’s been
a lot of revitalization going on. Are you learning from some of these examples?
Is there something of a sort of network, you know, brain trust of people that you have
helping you?>>Dan Gilbert: You know, wherever we go, even
here in Scottsdale, Arizona, we drove by, a couple of folks I’m traveling with, we drove
by this garage that we thought was really cool. I don’t even know what street it was
on. We’re always trying to pick up things in cities. Certainly what Mayor Bloomberg
has done in Detroit [sic] in a short period of time that you’ve shown earlier, and Tony
Shay, Zappos in Las Vegas has done a lot of interesting things. There’s definitely — In
Chicago, when we go visit there, we see a lot of great stuff happening. So we try to
pick up bits and pieces. None of them quite had the — almost the clean
white sheet of paper or white board that we had an opportunity to take advantage of in
downtown Detroit. So that was a way to sort of paint the picture and start from scratch,
but at the same time trying to get best practices from every city and place we visit.
>>Parag Khanna: So no one today has used the word “mayor,” interestingly enough. We’re
talking about cities. But in fact we’ve brought you here because you are the person who represents
this effort, and yet you’re a private citizen. And, in fact, you’re part of a consortium,
in a way, a committee of individuals who are basically becoming — you’ve become an authority
unto yourselves in strategizing the redevelopment of the city. Of course, the mayor’s office
is involved. But this is something new in the sense that you’re not relying on the government,
you’re not waiting for the government. Tell us a bit about this structure that is
basically serving as the governing board for Detroit.
>>Dan Gilbert: Well, you know, Detroit, of course, it still has its mayor, Mayor Bing,
who you may recognize that name, Dave Bing, Top 50 NBA Hall of Fame Basketball player
for the Detroit Pistons. And he’s a great guy. And if you recall, there was a scandal
that occurred with the prior mayor that made the national headlines. The text-based scandal,
if you’ll recall. But he took on a very, very big challenge,
and he had to get involved in cleaning up financially — financially are the things
— the finances are the things that he’s really focused on now. There’s a committee that’s
on a consent decree right now that is helping manage the city out of its financial issues.
So it’s sort of the best of times, worst of times.
We’ve got all this great stuff going on in the private sector and private enterprise,
while the public sector is sort of fighting their last battle. And it will be the last
battle — and it will be the last battle — to clean up everything and get the city’s finances
back where they need to be. You know, the biggest statistic, if you want
to look at a crazy statistic for Detroit, is that Detroit peaked, I’m not talking Metro
Detroit, but the city itself, Detroit proper peaked in, like, 1958 of a shade up 2 million
citizens. And today there are 700,000. Now, the Metro area has still grown, but the city.
So you have 144 square miles you’re dealing with, you know, for 700,000 people. That’s
why to me, you have to start at the core, the heartbeat. And then you spread outwards.
You have to create the jobs in downtown.>>Parag Khanna: What you’re doing is actually
right out of the playbook of a new book that has just been published by MIT Professor Brent
Ryan which he talks about — the title of the book is Design After Decline. And he looks
at Philadelphia, Detroit, and a few other cities and what they’re doing to get — to
jump-start infrastructure investment in downtown core areas. And he advocates exactly this:
Focus on the downtown core. Make very big revitalization types of measures with big
influx of capital, and also focus on civic projects that sort of build on that momentum.
So you’re doing exactly that. And one of the signature projects which we haven’t yet seen
the picture of yet up here on the screen, but watch out for it, are the plans for the
M1 light rail corridor. What is the state of that? How is that going?
Because transportation is, of course, the key.
>>Dan Gilbert: So Detroit is the only city, I think, in western civilization that has
zero mass transit. Now, a lot of people — it’s true. You know, a lot of people —
>>Parag Khanna: Someone Google that.>>Dan Gilbert: Just fact check or something.
But, you know, people blame that, there’s a sort of this urban legend that the automobile
companies, because that’s where, you know, you’re building the cars in Detroit and they
just sort of stonewalled any kind of mass transportation that was against their fiber
and their DNA. When I did a little research on that, I don’t think that’s quite true.
What really stopped it was the leaders over the decades just couldn’t get their act together.
What we did, is we, Roger Penske and myself — Roger Penske, who’s a big Detroit advocate
— and several others, Mike Ilitch who owns the Tigers, where Sean Penn is going to attend
the game tonight, and others, you know, had a private effort and have a private effort
going on to put light rail along the main corridor. Actually, it’s street car, not quite
light rail. Curbside, for a three and a half mile stretch on this corridor of the buildings
that you’re looking at here, that really connects the Wayne State Museum area down at the river.
And if we can get that done — and we’ve raised 120 million privately. Each station is being
sponsored by various companies, so Penske, Quicken Loans, General Motors, and so on.
And they’re sponsoring very nice stations. If we can get that going and show the federal
government that we can finally do something privately, then, finally, they may fund the
overall regional system. So that’s it in a nutshell.
But looking at Portland and Minneapolis and Denver and what all those other cities who
have put light rail in has done for those cities, to me, it’s the top two or three biggest
single things you can do to help bring Detroit back.
>>Parag Khanna: In Detroit, it’s linking the hospital sort of center, the arts center,
and the downtown commercial center?>>Dan Gilbert: That’s right. It’s a three
and a half mile stretch. Now, I was talking to somebody the other day.
He said, “Dan, you’re severely underselling this thing. Does the train go both ways?”
I said, “Yes.” He said, “You better say it’s seven miles,
not three and a half.” So I guess it’s seven miles.
>>Parag Khanna: You call this the Big Bang approach, this, again, focusing on the downtown
area, investing a lot. What are some of the other initiatives that are part of the Big
Bang?>>Dan Gilbert: First, just defining Big Bang
for a second. So we would talk and we are talking to tons
of retailers as we try to bring in destination retail into the city that you can’t get in
the suburbs, so, you know, big sort of cool stores that people would have to come into
the city for. We’re talking, and they go, look, we’d love to come. We want to be there.
We need more nighttime residents. We need people to live there. Then we talk to all
the people, we’d love to live in Detroit. We want to live there. It would be the first
thing I’d like to do except I have nowhere to shop.
So, you know, you’re in this Catch-22 thing here so our only solution to this was, look,
we’ve got to do this like a Big Bang. I don’t mean one trillionth of a second or whatever
the Big Bang was. I’m talking about over a two-, three-year period. We went out on a
buying spree and bought a couple million square feet of office space that you’re looking at
here and also secured a bunch of retail along this Woodward Avenue corridor. And, through
master leases and acquisition, what we’re trying to do is really master plan the whole
thing at once, bring in other developers for residential, retail. Most of the offices that
we’ve acquired, believe it or not, is almost full. But others are coming down. So, you
know, Big Bang, do it together. Then you’ve got a big shot at sort of solving this Catch-22
problem.>>Parag Khanna: It said up on the screen no
ruin porn, a lot of people wonder about the sort of abandoned communities or zones of
Detroit where the lights have been sort of switched off. And you’ve also been looking
at those communities and people as well.>>Dan Gilbert: We use this term in Detroit,
we call it — People come from all over the world to take pictures of the ruins, as they
say. So we call it “ruin porn.” It’s pretty obscene. But the ones that come to do that
are obviously specifically targeting, you know, the top — or the worst five or ten
buildings that you can possibly fathom and saying that’s all of Detroit, which clearly
isn’t the case. So, you know, our people, I have to tell you,
I can’t — maybe this sounds crazy with 6,500 people, and maybe I’m sheltered or something,
but I can’t find a single person that has come up and said we’re upset that we moved
downtown. Not only that, they’re engaged, they feel
great about working, there’s some energy in an urban city that you just don’t get in the
suburbs. Now they’re involved, as you were talking about earlier, with the community.
They are involved in so many community things in the neighborhood and in education, everybody’s
taken it on their own, we will support them, match their contributions, but it’s more than
money, it’s involvement. Having those kinds of numbers involved can have some significant
impact in a short period of time>>Parag Khanna: There are cities that like
to use sports teams or bringing in stadiums as a way to revitalize themselves, brand their
identity. But you are already saturated with that.
Now you, as owner, you have done a lot such as the M-1 rail, but what more can one expect
the sports teams as franchises to be doing to contribute to Detroit’s —
>>Dan Gilbert: We could expect the Tigers to win the next two games to go on to the
World Series, number one. [ Laughter ]
>>Dan Gilbert: So you have two newer stadiums down there. You have Comerica Park, which
is about ten years old, beautiful ballpark where the Tigers play, right next door to
Ford Field, also about nine or 10 years old where the Lions play. Then you have the Red
Wings that play on the river that are contemplating a brand new stadium, also right there, not
too far from this building here which we’re in. And Compuware, which is not a technology
company. Peter Karmanos with Compuware moved down first, built that building in 2003 when
there was sort of nothing there. The Pistons do not play in Detroit. In fact, only two
teams in the entire NBA do not play in the urban core, and that’s Sacremento and Detroit.
Trying to persuade them to come down there, too. But certainly, you know, sports, especially
in a town like Detroit, a Midwest town, is a big, big thing, a big, big deal to people.
They live and die by it. Same thing with Cleveland. So, you know, they bring millions of people
into the city. And our thing is we want them not to just
come into the city, but come into the city and stay and go out and entertain themselves
and live there, of course.>>Parag Khanna: Well in the spirit of the
previous session as well where you are in front of such a high-powered audience, what
would be your appeal to everyone here?>>Dan Gilbert: Well, come to Detroit, that’s
number one. And first of all, we’ll show you around. You know, the — you can get in, if
you are looking for a cost type of situation, costs are lower than any urban core that you’re
going to be in. The Midwest work ethic is a true thing. I know that people, you know,
talk about it, sort of cliche or whatever, but it is absolutely a true thing and we know
this from our experience, we do have 500 people here in Scottsdale, actually, they work very,
very hard. A lot of them are from the Midwest. But our —
[ Laughter ]>>Dan Gilbert: I’m going to get myself in
big trouble here. But our people, you know, are hard-working. I mean people in Detroit,
they want to work. They want jobs and they will work their tail off. And the costs are
cheap and there’s a very huge brain — a brain situation, if you will, you know, brain economy
going on and great people coming out of the great university. Michigan, Michigan State,
Ann Arbor where Google has an office is also a thriving tech corridor.
>>Parag Khanna: You mentioned to me some of the brilliant Detroit natives who have become
sort of part of the diaspora on the West Coast. Just remind everyone —
>>Dan Gilbert: You know, this is a thing we talk about a lot. We can’t have the next one
leave. I mean, the reason, yeah, we call it doing well by doing good — yeah, doing well
by doing good. Right? There’s no conflict in that. And if we can
create this thriving, exciting urban core, we won’t lose — like Groupon, for instance,
two of the three guys that started Groupon and went to Chicago are from Detroit. I mentioned
earlier Larry Page I believe is from Lansing or East Lansing.
Steve Ballmer is from Detroit, the guy that runs Sun Microsystems or started it is from
Detroit. You can go on and on and on. Half of the Hollywood
producers are from Detroit. The guys you work with.
So, you know, it’s — it’s got a huge — not only great work ethic, but a great intellectual
talent as well and the costs are cheap and, you know, people want — bring in the big
names or even start-ups that don’t have the names yet, the red carpet will be rolled out
by myself and others. And I think that you would be very, very happy to place some kind
of activity in the city. We have CityLoft, which is a retail effort
through a big regional mall developer in the suburbs, putting in pop-up stores. There’s
just all kinds of activities going on.>>Parag Khanna: Dan, you are a real role model,
really, for all of us who are looking at revitalizing American cities. Thank you so much.
[ Applause ]>>Dan Gilbert: Thank you, appreciate it.

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