Detroit Hopes To Drive Tech Startups Away From Silicon Valley : All Tech Considered It doesn't have a lot of high-tech companies, but the city is interested in attracting young tech entrepreneurs. Detroit's rents are far more affordable, but then there are the brutally cold winters.
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Detroit Hopes To Drive Tech Startups Away From Silicon Valley

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Detroit Hopes To Drive Tech Startups Away From Silicon Valley

Detroit Hopes To Drive Tech Startups Away From Silicon Valley

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MELISSA BLOCK, HOST:

How many times have you read or heard this headline - such and such a city is the next Silicon Valley. Well, what about Detroit? The city says it has a history of being a great place to build things, and, hey, it's a lot cheaper than Silicon Valley. As we'll hear from NPR's Jason Margolis, there are barriers to techies willing to give it a shot. He starts, though, with the positive.

JASON MARGOLIS, BYLINE: Many University of Michigan business students who have an entrepreneurial streak take professor Jerry Davis' start-up class. Davis has lived in the Silicon Valley, and his advice to young people - forget the Bay Area.

JERRY DAVIS: You spend a lot of your time on freeways. It's expensive. It's annoying. The weather's beautiful, but basically, the Bay Area has turned into Los Angeles. All the things that people hate about LA are now true of the Bay Area.

MARGOLIS: And the home prices are worse. The median price in Silicon Valley tops $1 million. In Detroit, it's 38,000. That's appealing to 36-year-old San Franciscan Aaron Mason.

AARON MASON: Having a yard, having a garden, starting a family - those kinds of things.

MARGOLIS: Mason isn't only thinking about Michigan for a lifestyle change. He's well-known among techies. He's helped launch four companies and has 70,000 Twitter followers. He thinks it might be easier to launch company number five in Detroit.

MASON: Coming from a place like San Francisco, real estate here is really expensive. And so to go to a place like Detroit and see that you have fairly cheap space and an infrastructure that is already in place - it's a very exciting place to be, but it's still sort of getting up and off the ground.

MARGOLIS: He says he likes the scrappy feel of Detroit's emerging tech community. Mason has been talking to Ned Staebler. He's the CEO of TechTown Detroit, a nonprofit business incubator located in an old General Motors factory.

NED STAEBLER: So the building was built in 1927. It was originally for Chevrolet. The Corvette was designed upstairs, so...

MARGOLIS: About 40 small businesses work out of the five- story building. Rents are about 70 percent cheaper than Silicon Valley. The incubator gets funding from a stable of outside organizations, including nearby Wayne State University. Stabler says Detroit has other advantages besides cheap rent. You can design something here, and you don't have to build it in China to see what it might look like.

STAEBLER: We have more engineers per capita than anywhere in the world. So if you need to know how to make something, you need to know how to extrude plastic or bend metal, there's no place better in the world to do it.

MARGOLIS: Not much help, though, if you're designing an app. OK. Let's take another step back here. Detroit over the Silicon Valley? Really? I asked Aaron Mason if he has any hesitations about relocating.

MASON: The winters.

MARGOLIS: The average temperature in Detroit this February was 14 degrees. At TechTown, I also met Adam Leeb. He cofounded Hemingwrite - typewriters that connect to the cloud. What you type goes straight to a server.

ADAM LEEB: Typing on a keyboard like this with...

(SOUNDBITE OF KEYBOARD CLICKING)

LEEB: ...The sound - it's actually almost, like, meditative to a lot of writers. And so...

MARGOLIS: The big selling point, though, is distraction-free writing - no emails to fight for your attention. Leeb is an MIT grad who already has one startup under his belt. He likes the comeback spirit in Detroit, but he is running into barriers.

LEEB: It is not easy to raise money.

MARGOLIS: Leeb is in Detroit because his family's here. And being honest, he just can't see Silicon Valley's best and brightest joining him.

LEEB: If you are coming here just for the cheap office space or the cheap living, then, you know, you probably need a better idea.

MARGOLIS: Then again, if your business fails in Detroit, it's a whole lot easier to recover financially. Jason Margolis, NPR News, Detroit.

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