Dan Gilbert loves his hometown of Detroit. He loves it so much that the billionaire founder of what would eventually become the mortgage lender Quicken Loans has poured at least $2.5 billion into rehabilitating buildings in the heart of the city.
He has also invested in many companies that are now tenants in those buildings, along with the restaurants and retailers that have made the scene far livelier than before Gilbert began his campaign to reestablish Detroit as one of the most important cities in the country.
We had a chance to talk with Gilbert, a father of five whose other notable interests include the highly valued e-commerce marketplace StockX, which he co-founded in 2015, and the Cleveland Cavaliers NBA team, which he acquired -- along with their arena in downtown Cleveland -- for a reported $375 million in 2005.
He shared why Detroit should be top of mind for founders from across the U.S. We also talked a bit about sports and why he chose a traditional IPO path for Rocket Companies, the parent company of Quicken that he took public in August of last year. Excerpts from that conversation follow.
TC: As a native Clevelander and longtime Cavs fan, I'm curious about your connection to Cleveland.
DG: When the Cavs came up for sale in 2005 or 2004, the banker who was selling them called us up because our group had made an attempt at the Milwaukee Brewers baseball team, and they thought we may want to buy the team. And the seller at the time [businessman Gordon Gund] wanted a very simple, non-complex process with one buyer. So they called us up, and we decided to do it.
TC: Well, you got us back in the game, so to speak, so thank you. In the meantime, you've obviously been very focused on Detroit, where you grew up and went to college. What's the case for Detroit over other Midwestern cities?
DG: First of all, one of the metrics that companies use when they decide on a city is how many people they can reach within a five-hour drive, because they figure that talent within that five-hour circumference is willing to drive in or at least explore that city. And there are 60 million people within five hours of Detroit, including in Chicago, Toronto, all of Michigan, all of Ohio, Indianapolis, Pittsburgh -- I could go on and on.
The same is true of universities. There are something like 30 major universities within a five-hour drive, including the University of Michigan, Michigan State, Wayne State, Carnegie Mellon and Ohio State, and those are just the bigger schools. There are also a bunch of great schools in Canada that specialize in software development. Collectively, that's a huge advantage when it comes to tapping into possible talent.
Detroit has had so many decades of bad PR that it's hard to get over that image without seeing it for yourself, but once you spend two hours here, you get it. You feel the energy. You feel the passion. You see the young people.
TC: Do you think Detroit is better suited for companies of a certain size? Things are changing quickly but there's a learning curve in some cities regarding the specific needs of startups. I talked with Drive Capital in Columbus recently, and they said they'd had to do a lot to educate landlords. Of course, you're among the biggest landlords in Detroit.
DG: That's a really great insight from Drive. At this point, Detroit is home to both [big and small companies]. We first moved around 1,400 people from the suburbs into downtown Detroit in the summer of 2010 and we now have more than 20,000 people at this tech company, which Quicken Loans clearly is. And [that kind of hub] allows you to create an ecosystem of people and ideas that interest VCs, so that's become one part of it.
We control a couple million square feet of real estate ourselves, but then we have another four or five million square feet that we're building or that's already bought, so we can accommodate startups and be flexible around their growth. But on top of that, we have three locations in downtown Detroit that companies like Pinterest and Snap have used; you've got existing big tech companies with locations here like Amazon, which has an engineering office with more than 500 people downtown, and Google, which has a 50,000-square-foot office, and Microsoft, which has 50,000 square feet in the same building I'm in. So it's not just the startup scene.
TC: Are there enough venture dollars in Detroit to support what you're trying to build? The Drive team also talked about missing opportunities because they don't have the bandwidth to fund everything they are seeing. They need backup. Do you?
DG: Certain VCs have discovered us. Ron Conway of SV Angel, for example, fell in love with Detroit a couple of years ago and he has exposed us to everybody in his network. He has invested in a lot of our deals here. And there are others. Google Ventures and Battery Ventures came in early. DST Global, General Atlantic, GGV Capital, Altimeter, Whale Rock Capital, Tiger Global have put money into startups here.
It's kind of a new thing for us. Quicken Loans just went public after 35 years, and we never really raised much VC money because we never had to because of our cash flow. So it's a little bit of a new thing for us with StockX; we never really had a startup blow up that suddenly. But every brick in the wall helps.
TC: Speaking of StockX, its tagline is the "stock market of things." Might one of those things be non-fungible tokens at some point? A lot of people are suddenly buying and selling digital items.
DG: Like NBA Top Shot? We love that model. We have some similar models that we're working on right now. We're in research and development on some things that are very close to it. I have four teenagers out of five kids at home, and I can tell you that's definitely the hot thing right now.
TC: What is the next step for StockX? Is it an IPO?
DG: I think the next step for StockX will probably be an IPO. It's just a matter of when. Probably sometime in 2022. I'm not saying anything official here; I'm just saying there's a good chance it will.
TC: Do you have strong feelings about traditional IPOs versus other ways that companies are going public? You took Quicken public through a traditional IPO. Another Detroit-based mortgage company, United Wholesale Mortgage, more recently took the SPAC route instead.
DG: I think [a StockX offering] would probably be traditional only because, to be honest with you, I don't know much about the complications and all the details of trying to do it a different way. We had success with Quicken Loans, so that's what we're coming off of.