After mastering the mortgage pitch, Dan Gilbert is now attempting to sell an even bigger product: Detroit.
There’s something in the air in downtown Detroit. Depending on who you ask, it’s a resurgence, a revival, or perhaps a white-washing. Ancient skyscrapers have new life. People are milling in the streets on lunch breaks. Startups are moving to the city at a surprising rate. Downtown Detroit feels alive – if only between 9 to 5. There’s one man primarily responsible for much of the urban renewal: Dan Gilbert, founder and chairman of Quicken Loans.
Dan Gilbert is from Detroit. He attended the city’s Wayne State University and nearby Michigan State University. He founded his mortgage company in 1985, formerly Rock Financial, in suburban Detroit. After selling to Intuit in 1999, Dan repurchased the company in 2002, retained the Quicken brand, and announced in 2007 his intention to move the company from the affluent Detroit suburbs to the city proper in 2007.
Now, in the latter half of 2012, Quicken has around 5,000 employees scattered throughout several towers that the company recently purchased or leased in downtown Detroit. A company spokesperson gave us a tour, pointing out each building, explaining how most now have a 98 percent occupancy rate. Quicken Loans owns a good chunk of the downtown corridor. The company even hired a large private security force to discreetly keep watch on the streets surrounding its buildings. It’s a true corporate arcology, a recycling of space that both breathes new life into Detroit and puts Gilbert in the cat bird seat when it comes to city policies.
What follows is the transcript of our talk with Dan Gilbert.
The second reason is more on business. Reasons why and that is that people in their 20s, 30s, this generation, I think it’s pretty clear to everybody they want to be in urban core, so they just ditch Michigan. When you sit around tables and you listen to people talk about their relatives or their kids or their grand kids or their friends or their friends’ kids, they say “This one is moving to Chicago, this one is moving to New York, this one is moving to San Francisco.” If we’re going to keep growing and keep doing the kinds of things we do, we’re Quicken Loans, we’re really technology company that happens to do loans. Most of our stuff is technology. That’s certainly who we are.
I felt that we have to affect the urban core to maintain and acquire talent. Why not make it great in Detroit? In Detroit, the price of the things are very, very low.
We have this need and we’re ending in the suburbs. Quicken had to make a decision whether to build a campus on a bunch of farmland or disperse ourselves out in the suburbs. We have a very strong culture and core and DNA. My view was we all have to be together, as close together as we possibly could be, and this availability, this urban core, looking at some of these beautiful buildings, the ridiculously cheap prices that they were selling for, and they’re empty.
So we first came down into this building [Compuware World HQ], which, actually, we don’t own. We made a deal and it’s about 250,000 square feet, about 1,500 – 1,600 people. And as soon as we got to a hundred, people were lit up. We’re still having a hard time finding one or two people who really say, “I hate it. I’d rather be in the suburbs.” I’m not saying they don’t exist, but maybe they don’t tell me or whatever.
We move the rest of our people in and we’re up to 6,500 people down here in the core. We’re not just here; we’re engaged in community. We’re trying to impact the outcome and impact change. I’m working with some national urban planners now. I’m trying to really address this retail and residential stuff.
So that’s why we’re here – that kind of tails into your question as to why people want to come. The Midwest has, I think, incredibly hardworking people. You know they’re going to be successful because quite honestly I can not work with people from the East Coast – A little bit variance on the coast – I’m from Ohio and I understand that.
So you do have that, all those exceptions on both sides. But overall, I think you’ve got great hardworking people who are educated and some of the great staff is here at University of Michigan, Michigan State and others.
For us it’s retaining and maintaining those people.
For instance, I always tell this group the same stories and same slides, and you need to see that. I mean, the Groupon guys, despite what’s happened recently on the stock and all of that, but the overall success of what they been through. So I happened to bump into two of the three guys in Mexico and not knowing said, ‘Where are you from? What do you do?’ ‘We’re from Detroit.’ They actually grew up two blocks from where I grew up. ‘Why did you leave,’ I said? ‘Three companies ago, but we thought Chicago was a place to be, so we moved to Chicago,’ they said So here it is, this company that I think has 6,000 to 7,000 employees and billions in market capital and more, a few months ago, a billion each quarter.
And in Detroit, the idea is, “Look, how do you measure that? Detroit lost that. We should have that.” So we can’t miss the next entrepreneurs. The next ones are going to come out here and leave. The first thing is to hang on to everybody who is talented, who is entrepreneurial, who wants to make an impact and a change and start attracting ones.
Now, we have attracted a lot of people, surprisingly, because we really haven’t gone out and really gone for it yet. We thought we’re going to – we’ve only been here two years and three months and it’s just that people are starting to come. I mean, from San Francisco, Boston, New York – people who have no connection here. In fact, there is a company that’s come here recently. It’s very interesting.
It’s called Fossil. [Tom] Kartsotis or something. He was the CEO or still is the Chairman of Fossil.
He found a new product. He tested it out. It’s made in America. It’s made in Detroit and people love that. So he just literally came to Detroit and is over in the State Building building watches and bicycles.
It’s this attraction of getting in and being able to impact change and make a difference both from people who are coming out maybe overseas or entrepreneurial, but also wealthy, established guys who want to do different things.
Did you know about the intern program at all?
Of all the things that we’ve done by far or all the things we’ve been engaged with and trying to do anyway. This one [the intern program] is by far is the most important one because they go back and they just tell everybody [about Detroit].
In fact, we had 250 the first time, December of 2011, and without any advertising, we had 8,700 applications for internships last summer. We only had room for 600. So there’s this – I don’t know. There’s this sort of feeling that I [the worker] can make a difference and I can make a change and I can get into the ground floor versus something that’s more advanced.
Now, I always tell these people or the interns that come and say, “You can go to New York, Chicago, whatever and do well. You’re all graduating from good schools and you’re smart people, but here, you can do that. Hopefully get a job, a good job where you also can impact the outcome and impact change.” And I think that sells to them. Maybe people wouldn’t think that would sell, but it really becomes an important thing that they actually can make a difference.
I think that’s one of the attractions though with your program is that you can assist them to do that.
So where they can either help temporarily on loan and there’s been strength here. So those guys are – we used to have some of them. They work very, very hard for a long period of time and now they’re ready to maybe take up a leadership role and entrepreneurial and we’re down with that, too. We try to say that we’re not just venture capital or money, but there’s value added to it because you can get money in a lot of places but the expertise is probably more.
We like scalable companies that we think we can grow – because of our expertise operational is consumer-facing. For the most part, consumer-facing technology driven process, driven sometimes if they’re call center or into the sales type of stuff associated with it. We think we can really help them, but then being in the family is then again not a 100%. There’s no white line or great line. But mostly we’re probably not going to be doing like a startup dry cleaners or startup – although we need that here [in Detroit], too. From the fund, that’s what we’re focused on.
And when you do have that, it’s really expensive. So there’s a company who does open source hardware, for example, and they just bought a huge lot in Manhattan which is pretty incredible for them, and then a buddy of mine does 3D printers, and they built their [NYC] – they’re opening a big space with offices and warehouse space in Brooklyn again.
You can impact the outcome. That’s the main thing for people who can and want to and are motivated to impact the outcome.
One of the figures I give to people here is that you pay less per square foot for the building than the average rental rate is in New York for a year. So you think about that difference. I’m not bragging, I’m just saying, “Hey, there’s a significant advantage” even in Cleveland where we’re active, the real estate prices didn’t decline like in Detroit.