Gazelles Roam Creative Corridor

Posted on April 10, 2013

Jason Huvaere doesn’t hesitate when he describes the relationship between his company, Paxahau, and Detroit. The city serves as a muse for him and his firm as strongly today — when they are putting together the Movement Electronic Music Festival — as it did when promoting parties in gritty factories 20 year ago.

That connection is why Huvaere spent most of the last decade working to bring Paxahau back to downtown Detroit. He finally accomplished that goal last year, moving the fast-growing company into the former Metro Times space above Floods Bar & Grille in Greektown.

Paxahau currently employs 15 people after hiring six new employees over the last year, including a couple of its interns. The firm’s ranks swell to as many as 250 during the Memorial and Labor Day weekend when it puts on the Movement and Jazz festivals in downtown Detroit. And those jobs are in high demand as the company has ramped up its hiring since the move from Ferndale.

“We had 160 applicants for a street promotion position,” Huvaere says. “I was like, ‘Oh my God!’ We were only hoping for 30.”

Paxahau is far from alone. There has been a visible influx of creatively based businesses opening in, moving to or setting up an office in the greater downtown Detroit area. Pluto, a downtown Birmingham-based marketing agency, built out an eclectic office in Corktown last spring. 1xRUN, a fast-growing Internet start-up that sells limited editions of art prints, made the move from downtown Royal Oak to Eastern Market at the end of last year. The Quicken Loans family of companies seems to announce another office move to downtown at least once a month.

“I have found that there are a lot of people who are looking to come here,” Huvaere says. “There are a lot of big suburban companies that are looking around here. Downtown Detroit is hot.”

Gazelle stampede

A gazelle company is characterized as a high-growth business with multiple years of double-digit growth in revenues and staff. Detroit Labs is well on its way to growing into that description. It likes to bill itself as “the fastest-growing startup in Detroit.” It’s a characterization that is tough to argue against.

The mobile app company’s business has boomed since it opened, creating custom apps for the likes of Chevrolet, Stryker and Domino’s Pizza. Detroit Labs is aiming to begin making its own mobile apps this year and has its eyes on spinning out some of its own start-ups to seize upon the creative energy of the its growing staff.

“We’re a combination of creative and technology,” says Paul Glomski, CEO of Detroit Labs. “We’re not a creative ad agency but we are very good at the creative side of mobile apps. We are mobile technology crafts people. We are makers.”

And growers. Detroit Venture Partners made Detroit Labs its first portfolio company with the promise of capitalizing on the skyrocketing app economy. Detroit Labs hasn’t disappointed, doubling its staff to 32 employees over the last year. Glomski expects his company to double in size again.

That growth has come with some consequences. Detroit Labs was one of the first startups to move into the M@dison Building, the eclectic tech hub that has become the most dynamic office space in Detroit. That was in 2011, when Detroit Labs was only a few months old. Today, its space has become so constrained, it is building out its own office nearby on Woodward Avenue.

When Quicken Loans Chairman Dan Gilbert and his team built out the M@dison Building overlooking Grand Circus Park, they envisioned a pipeline of fast-growing tech start-ups flowing out of it and filling the empty commercial buildings nearby. Detroit Labs is one the first firms to make that transition. And more creative companies are moving into the neighborhood, with the Detroit Bus Co and Loveland Technologies setting up headquarters a block away in the newly created Department of Alternatives co-working space.

“It’s a combination of energy and authenticity that comes with having a lot of creatives around,” Glomski says. “It’s also a sense of it’s not just us.”

Skidmore Studio is another member of that happy band of creatives staking out their space in downtown. The creative agency was founded in Detroit in 1959 and eventually ended up in Royal Oak. It signed up to be the anchor tenant at the M@dison Building in 2011, taking the entire fourth floor and completing the circle to its hometown.

Since making that move, Skidmore Studio has hired nine “creative souls,” as the company’s CEO Tim Smith likes to call his employees. More hires are expected as the firm works to keep up with the growing demand for its services, which have spiked since making the move downtown.

“I loved the idea,” Smith says. “Since we have come downtown there have been a lot of companies that have come down. When we first made the decision, people told me it wasn’t a good decision. Now it’s not only a great idea for our business but from an emotional standpoint. It’s rewarding to see that the creative energy has translated to business success.”

Gazelle fawns

New pipelines of creative businesses have been opening up in the greater downtown Detroit area in the last few years. The M@dison Building has established itself as one of the primary providers, pumping out venture-based tech start-ups at an impressive rate. The College of Creative Studies’s A. Alfred Taubman Center for Design Education in New Center is not only providing space for classes but is the home for the new Shinola watch and bike company.

The Taubman Center is also the base of the Detroit Creative Corridor Center, an incubator for creatively inclined startups and entrepreneurs. It launched in 2011 and graduated 17 businesses in its first class last year, spawning 42 new creative-class jobs in the process.

“A few of them will be busting out pretty soon,” says Matt Clayson, director of the Detroit Creative Corridor Center. “I can see a few of them becoming 10-15 people.”

The Detroit Creative Corridor Center is currently working on helping 24 companies grow. Most of those are made up of a team of 1-2-3- or 4 people, and many of them will remain that size. But Clayson expects a few of them to scale significantly in the near future and choose to set up shop in the greater downtown Detroit area to accommodate that growth.

“These companies aren’t just located in the city,” Clayson says. “They are thriving and flourishing in the city. They are finding ways to leverage their space in the city to grow.”

Jon Zemke, MODEL D, via semichiganstartup.