Dan Gilbert leads remake of downtown Detroit

Posted on March 5, 2013

The local business community is driving a renaissance downtown by buying rundown and abandoned buildings, filling them with employees, attracting new businesses and creating the infrastructure to support startups.

A successful effort will change the trajectory of a city that Forbes.com just named America’s Most Miserable.

The city is Detroit. And one of the business community’s key leaders is Dan Gilbert, chairman of Rock Ventures LLC, developer of the Horseshoe Casino Cincinnati set to open on Monday.

Locally, Gilbert is known for driving the successful 2009 campaign to legalize expanded gambling in Ohio. He sold it on the notion that casinos in Ohio’s largest cities would revitalize tired downtowns and bring back jobs to the urban core.

That promise is still to be fulfilled in Cincinnati. But Gilbert says he’s committed to connecting the casino with downtown and Over-the-Rhine, as opposed to making it a one-stop destination that pulls people from the suburbs and sends them back home.

The Enquirer recently spent a day touring Gilbert’s Detroit properties that illustrate his approach to transforming cities. Gilbert also discussed how he created the kind of corporate culture that led Workplace Dynamics in January to name Quicken Loans Inc., Rock Ventures’ flagship company, America’s Top Workplace. And he hinted he may make other Cincinnati investments in the future.

“I love Cincinnati. I think the people there are tremendous … The business community is great, the community leaders are great. The casino’s our first thing there, but we’re hoping that we can make other investments that connect.”

Cincinnati, Detroit follow similar paths

Gilbert’s Rock Ventures owns 2.6 million square feet of office space in 15 buildings in downtown Detroit. The tour of the buildings illustrates Gilbert’s belief in creating open environments designed to foster innovation internally and collaboration across Detroit’s business community.

It also reflects how Gilbert’s obsessive focus on customer service has evolved in the digital age. A team of employees monitors Twitter, Facebook and other social media tools 24/7 so Gilbert’s managers can immediately address problems across his business interests, which also include a majority ownership stake in the NBA’s Cleveland Cavaliers.

The parallels between Cincinnati and Detroit are surprising. In both cities the business community took the lead, with government support, in re-energizing downtown. Both cities increasingly view supporting entrepreneurs with capital, mentorship and corporate support as a key pillar to economic development. And both cities are betting that a strong urban core will attract and retain the next generation of talent.

That was the business case for moving Quicken Loans’ operations, and approximately 7,000 employees, from the suburbs into downtown two years ago, and encouraging other Detroit companies to do the same, Gilbert said.

“For probably two decades or more, the discussion around the dinner table with parents who have kids that graduate from Michigan, Michigan State and other universities wasn’t, ‘Are you going out of state?’ It was, ‘Are you going to move to Chicago, to New York, to Philadelphia, to Boston or California?’ So that’s a disaster,” Gilbert said.

“They don’t move from the suburbs of Detroit to go to the suburbs of Chicago. They move to urban cores, so we said, ‘Look, if we’re going to first retain great people and then attract great people, we have to be in a cool urban core.’ ”

Local startups key to revitalization

Detroit’s innovative heart beats in downtown’s M@dison Building, a 50,000-square-foot entrepreneurial hub that’s home to Detroit Venture Partners, a venture capital firm that backs seed and early stage companies. The building features event space and houses venture capital firms and a slew of startups, including Detroit Labs, which makes apps for a variety of clients including Fortune 500 companies.

Skidmore Studio, a full service creative agency, also occupies space in the building, as does a team from Twitter.

Gilbert is a general partner in DVP, which has funded 15 companies with a total of $11.45 million. DVP seeks to invest in technology companies and is working to connect them with established Detroit giants like General Motors. In broad strokes, DVP is what Cintrifuse, the Cincinnati business community’s effort to jump-start promising startups and create high-paying jobs, could look like in 2014, when it opens its Over-the-Rhine campus.

There are some differences – most notably Cintrifuse’s fund of funds will not make direct investments into startups – but the general concept is the same: Increase the amount of early stage capital in the area; connect startups with relevant, established businesses to help hone the startups’ business models; and leverage the region’s existing assets via a physical hub that encourages collaboration.

Each aspect is important, but corporate engagement is a key difference from efforts in other cities, Gilbert said.

“That’s where (corporations) really can make an impact, and frankly we’re just getting some response there. We need to get more. It just kills me when I hear of GM or somebody else, and they did some technology piece and used some company in California, instead of somebody right here in their backyards,” Gilbert said.

“P&G and Kroger and all these companies, their technology needs are just huge, so with your downtown Cincinnati startups, at least give them a crack. You should always go where’s best for your company, but you should at least give them an at-bat.”

Gilbert said it’s the startups that will bring back Detroit, and not recruiting other companies to relocate. That’s the same bet local business leaders are making through their support of entrepreneurship.

“Name a company or a city that was built on recruiting other companies. I don’t care who you are, New York or anywhere else. Ninety-eight percent of your business core is organic,” he said. Customer service the top priority

Gilbert knows all about startups. The 51-year-old father of five got his real estate broker’s license when he was 19 and started his mortgage business with $5,000 in 1985. Intuit Inc. bought the company, which was then called Rock Financial Corp., in 1999 for $532 million and renamed it Quicken Loans.

Gilbert bought it back in 2002 for $56 million after the tech bubble had burst. He told the Enquirer in 2009 that his company avoided the subprime lending craze that ruined others because “I couldn’t understand it. If I can’t understand it, I don’t know how I’m going to make money at it.” Last year Quicken Loans closed more than $70 billion in home loan volume over the phone and online. It’s privately held.

Overall, Rock Ventures employs more than 7,000 people in Detroit, and more than 15,000 across the country overall. As it’s grown, Gilbert has stayed obsessive about customer service. While there’s nothing particularly innovative about insisting employees return phone calls and emails promptly, that’s not to say it isn’t a critical business strategy.

It’s how his startup competed with the banks, when Gilbert and two other employees worked out of a room half the size of his modest office today at Quicken Loans’ headquarters.

“We had to out hustle them, outperform them and out service them, and that’s where they were weak, because they thought business was just going to come to them,” he said. “You might have been able to call a bank back then, but I don’t think you’d get a hold of anybody, so to be able to call and talk to somebody about a home loan … it sounds simplistic today, but it was sort of a novel concept back then.”

About every six weeks, Gilbert spends eight hours with new employees and takes them through ISMs, a 128-page, colorful handbook on Rock Ventures’ corporate culture. It’s not rocket science, but it is a useful reminder that in every business, responsiveness, enthusiasm and attention to detail matter.

A tour through Rock Ventures’ various properties included small examples of how employees push that culture down through the organization. Twice, company spokeswoman Jennifer Kulczycki stopped to pick up small pieces of paper and a random grape stem that had fallen on the floor. Another Rock Ventures employee made sure the sidewalk was clear of snow when visitors got out of the car to enter his building.

While expectations are high – Gilbert promises to “root out” employees who don’t make customer service a top priority – the ISMs book also contains plenty of examples of how Rock Ventures rewards its employees.

When Quicken Loans employees have birthdays – and their children who are 12 or younger – get handwritten notes from CEO Bill Emerson that are mailed to their homes. The kids also get a coupon for an item from Fathead, the graphics company that makes wall-sized sports and entertainment poster cutouts and is owned by Rock Ventures.

Gilbert says it’s all about what he calls packaging, whether it’s mailing a birthday note instead of leaving it on an employee’s desk, or creating a casino.

“If you were to leave a card on somebody’s desk – ‘Hey, this is for your kid at home’ – it would have some effect. But that little twist of sending it to their house is the whole deal,” he said. “And the same thing with casinos. They all have the same tables, same slot machines, same stuff, but if it’s not an experience and packaged well, it becomes a whole different deal.”

Casino should drive Downtown activity

Packaging also means connecting the Horseshoe Casino Cincinnati to the rest of downtown. The entrance is an example. Kulczycki said there was intense focus on making sure it was transparent and faced downtown, so that patrons will be directed toward the city when they leave.

Most urban casinos have taken the opposite approach, creating a bunker-like fixture that encourages people to stay inside.

“We consider ourselves city builders now, and this concept of pushing people both ways is new to the casino industry,” Gilbert said.

“It’s creating jobs, but it should be more than that. It should create activity and buzz and be a real magnet for people to be in downtown Cincinnati.”

Gilbert said he might get involved in the local startup scene.

Rock Ventures is constantly looking for ways to engage with the communities where it does business.

It has launched Bizdom, a tech-based accelerator that gives portfolio companies $25,000 in seed funding, in Detroit and Cleveland. Gilbert said Rock Ventures will evaluate creating a Bizdom branch here if it helps complement the existing activity.

“It’s something we’re always involved in and we’d love to explore that,” he said.

Josh Pichler, The Detroit Free Press.