Economically ravaged Detroit hardly conjures images of newly minted tech companies. But a fledgling "entrepreneurship boot camp" hopes to help revitalize Detroit and — eventually — other urban areas that have been overly dependent on manufacturing jobs.
Bizdom U is a non-profit, one-year program that trains and funds would-be business people to start businesses in the Motor City. Created by Quicken Loans Chairman Dan Gilbert, a Detroit native, it is a bold plan to rejuvenate a crumbling downtown. If successful, it could be expanded to other Midwestern cities.
"Entrepreneurs — not government programs — create businesses, jobs and growth for a city," Gilbert says.
The program's inaugural graduating class last year of four men and three women has produced five new Detroit-area businesses in industries that include mobile marketing, online retailing and a shopping rewards program that supports the local economy. The second wave of 20 students, scheduled to graduate this summer, is expected to create 10 companies this year.
Mason Levey, 21, is the first Bizdom grad to tee up a start-up: a mobile marketing agency called Bablur that creates branding campaigns for fashion-, political- and music-based content. "This program inspires and enables," he says.
Three years ago, Gilbert, who is also owner of the NBA's Cleveland Cavaliers, decided to start a boot camp for entrepreneurs — but only if graduates of the program agreed to grow their start-ups in Detroit.
What is happening in Detroit is unique but not unprecedented. There are several non-profit programs in the U.S. that help entrepreneurs develop tech start-ups, yet none requires that companies be based in a specific area and stay there, as Bizdom does.
Whether that works in a city where employment is hovering near 14% and foreclosures are prevalent is the real challenge, some business professors say.
"With all due respect to Detroit, it was at its peak 100 years ago and has been in decline since," says Rob Adams, who teaches in the MBA program at the University of Texas' McCombs Business School. "The real question is, what are the expectations of this program? The danger is to throw money at a problem and expect immediate results."
Bizdom isn't necessarily betting on traditional academic overachievers to transform Detroit.
"We love Ph.D.s, but a specific kind of Ph.D. — poor, hungry and driven," says Gilbert, a graduate of Michigan State University and Wayne State University Law School.
More than 1,000 people have applied in Bizdom's first two years — though only a fraction make the cut after a laborious battery of background checks and interviews.
Students also are recruited from colleges, high schools, local business-plan competitions and entrepreneurship training fairs.
Those who are admitted attend class three days a week, from 9-to-5, in space leased from Wayne State University. There, they are lectured, tested and given practical business tasks to perform.
Gilbert is considering expanding the program to other cities, starting with Cleveland.
"Knowing Bizdom was created by Dan Gilbert gives us confidence that a model like this could accelerate urban entrepreneurship elsewhere," says Bo Fishback, vice president of entrepreneurship at the Ewing Marion Kauffman Foundation, the world's largest foundation devoted to entrepreneurship. "There is no other program like this in the country. It is difficult to replicate its powerful mix of classroom learning and hands-on practical experience at a university."
'Yield great young talent'
The 3-year-old program costs about $1 million a year to run, and is primarily funded by Gilbert, with contributions from the Kauffman foundation and the New Economy Initiative, a non-profit in Detroit. Business professionals teach courses in marketing, business law, finance, real estate and business development plans.
Students receive free tuition, a living stipend, laptops and BlackBerrys. And the guest speakers are head turners — among them, NBA Hall of Famers-turned-entrepreneurs Earvin "Magic" Johnson and Dave Bing.
The challenging program weeds out those who are not up to the task. "Starting a business is hard," says Dan Izzo, a former Chicago attorney who ran a comedy club in Ann Arbor before joining Bizdom as a training leader in 2006.
The curriculum often involves real-world assignments, like something out of NBC's Celebrity Apprentice.
Students were broken up into teams and asked to present an advertising and marketing pitch for a service from ePrize, an interactive promotions company. "There is nothing like giving someone a hands-on, practical experience," says ePrize CEO Josh Linkner, who is also a Bizdom instructor. "It helped me grow as a business person and a person," says Chanell Scott, 25, a partner in Guffly.com, an Internet retailer of eco-friendly products based in midtown Detroit. Imagine her delight, then, when a certain 6-foot-9 guest lecturer sauntered into class one afternoon last year. Magic Johnson spoke for two hours.
"(Magic) and the other speakers taught so many great lessons about starting and maintaining a successful business," says Scott, who, with partner Jordan Contreras, 27, has modeled Guffly after Woot, an online retailer of electronic gadgets. Scott joined Bizdom after earning a bachelor's degree in communications and sociology at the University of Michigan and working at a non-profit for youth arts education.
"The thing I like most about what Dan and his team are doing is supporting the students and their vision to build businesses in Detroit, which is so needed," says Johnson, CEO of Magic Johnson Enterprises, a private company that owns or helps operate companies ranging from more than a dozen 24 Hour Fitness centers, more than 100 Starbucks locations, food service companies, a T.G.I. Friday's in Los Angeles and other businesses across the country.
Graduates are required to develop a plan for a new, Detroit-based venture and — if it catches the fancy of Gilbert and other Bizdom officials — Bizdom helps line up $25,000 to $500,000 in funding. Graduates receive a minority share of ownership in their start-ups, depending on the business idea and financing needs. They have a chance to gain more control later. Salaries come from seed funding.
The non-profit organization, in turn, shares ownership in the new businesses and will funnel proceeds back into its program, in hopes of creating new waves of entrepreneurs and jobs.
Gilbert, whose dad owned a bar in Detroit, late last year announced plans to build a Quicken Loans headquarters in downtown Detroit and bring other companies with him. Gilbert is part of an influx of young, hyper-energetic owners — like Mark Cuban in Dallas and the Maloof brothers in Sacramento — who are making a deep imprint in their communities beyond basketball.
"Dan is an incredible person, and Bizdom is an extension of his vision for a renewed south Michigan," says Michigan state Sen. Gilda Jacobs, whose district borders Detroit. "His program will yield some great young talent locally."
Like fellow college dropouts Bill Gates and Steve Jobs, Bizdom grad Mason Levey wanted to jump into business. "Entrepreneurs are anxious," says Levey, whose company is in a Detroit neighborhood dubbed Tech Town.
"I didn't have the patience to wait until my senior year at Michigan to take an entrepreneurial class," says Levey, who left the University of Michigan to participate in Bizdom. "I want to make things happen now."
So do other Bizdom alumni.
Roger Williams, 33, and Antonella Solomon, 25, are collaborating to form an online training company to aid those seeking insurance licensing.
Tawnya Clark, 38, and John Hughes, 25, meanwhile, are developing a shopping rewards program that supports the local economy.
To be sure, there are other programs for would-be entrepreneurs. However, they tend to be located in business hotbeds.
Silicon Valley Association of Start-up Entrepreneurs provides tech upstarts access to local investors. Last year, its members received more than $76 million in angel and venture funding. Regroup.com, a provider of collaborative software tools for high schools and colleges, recently landed $2.5 million, SVASE President Chris Gill says.
Clean Tech Open, a 3-year-old organization that provides entrepreneurs with training, mentoring and access to funding to start clean tech businesses in the U.S., has been responsible for creating more than 500 "green-collar" jobs at dozens of companies.
Still, Silicon Valley and clean-tech start-ups are one thing; jobs in battered Detroit are another, academics say.
"In replacing manufacturing jobs with knowledge-based jobs, it is important to view this as a long-term investment in the region," says Kevin Holmes, director of the Center for Innovation and Entrepreneurship at Santa Clara University in Silicon Valley. "At the same time, it's a start."
While some would question the wisdom of creating companies in such an economically depressed climate, Bizdom officials insist the time is right.
"These are times when entrepreneurs see opportunities that others do not," says Executive Director Ross Sanders, a former Quicken Loans executive and community organizer in Detroit who runs Bizdom's day-to-day operations. "As companies downsize, this is about creating jobs and wealth in urban areas. We want brain gain, not brain drain."