Transcript

The bromance that rebuilt Detroit: Dan Gilbert and Mayor Mike Duggan

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0:53 Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. Hey folks, Jeff Berman here. As we gear up for our next Masters of Scale summit in October, we wanted to share one of the best conversations that happened on stage last time we gathered for this event. Our friend Naima Raza, now the host of the Smart Girl Dumb Questions podcast, interview Rocket Company's founder Dan Gilbert and Detroit mayor Mike Duggan.

1:54 They reveal how their unique public-private sector partnership has fueled an incredible rebuilding of this iconic Midwestern city. I hope you enjoy the conversation as much as we did. I was just in Detroit. You guys have done a ton with the with the place. I want to find out what are the lessons that are translatable. to other cities like San Francisco, what you've learned and how does it translate.

2:23 I wanna know how you two work together, the public, private. Thoughts of it all. Does this been faster than you expected or slower than you expected? The change in Detroit? I mean you moved your headquarters there and Two thousand seven.

2:36 So Did you expect that Detroit would be where it is right now? Is it on track or is it Well we announced it in two thousand seven. We didn't move to two two thousand ten and then we kept moving people after that. We were We had Thousands of people in the suburbs of Detroit spread all over the place and

2:52 Well we're looking for a new Place for the next decade. 'Cause our leases were up in two thousand ten. And we said We looked at other suburban locations that wasn't very appealing.

3:03 We look downtown, we said, These buildings are just beautiful down here. I mean, we can redo'em, we can fill'em with our people. We don't have to be landlords where we're buying the buildings and then go find tenants. We can fill them with our own people. Yeah. So at one point we had almost twenty thousand of our own people downtown and then And even some of the big name tech companies have locations in Detroit. Amazon, Google.

3:25 Yeah. Microsoft, LinkedIn. I mean they're all there with pre with significant Locations and then we got an entrepreneurial environment there that's pretty strong too. StockX is a big company there. Right. Of course Rocket Company is A lot of people have come. There's still a lot of buildings that are not yet filled.

3:44 Right. But certainly it has attracted a ton of investment. You put in Six billion dollars. Through development of the city. Definitely. Must be nice, dad. Must be nice. You're all in? I'm all in, yep. That means okay six billion dollars. And how much of that is do you think of it as philanthropy, or how much of it do you think is a smart investment that's gonna pay you back? We have this philosophy of doing well by doing good. It's all mixed together. There's really it's really not separate.

4:16 I mean some of that is the company's money, some of it's my personal money, some of it's some other partner's money. But we uh we try to mix it all together. I mean, just as I mentioned earlier. The investment in the buildings is one thing and that's a business decision. Right. And moving there is a business decision. But then we have philanthropy that puts a lot of the infrastructure around, does a lot of things in the parks, does a lot of place making and so it's all connected to each other. And obviously like you call this the big bang theory. I mean

4:44 in economic development you talk about anchor tenants coming to a city to make it happen, but then The infrastructure, the enabling environment all has to happen. And so, Mayor Duggan, when you came into you know the job eleven, twelve years ago, what were you thinking in terms of how do you prioritize as a public sector? Well in in twenty thirteen I was running the big hospital system in Detroit, the Detroit Medical Center and Uh the city had gone into bankruptcy, half the street lights were out, we had the highest unemployment, highest poverty rate. in America

5:14 And The city's eighty three percent African American. Yeah. Uh but what we had done in the hospital system, I think, was show what happens when you can put aside your differences and and and turn it Turn it around and so I went out.

5:29 In twenty thirteen and campaigned and said. You know, the us versus them politics in this city has held us back. Yeah. And if if you want a city where it doesn't matter if you're black or brown or white, doesn't matter if you're gay or straight, doesn't matter if you're born in Detroit or an immigrant from another country, Vote for me and People laughed at the time when they had had a white candidate for mayor in fifty years, but this city has embraced partnership.

5:56 And we have bonds with the suburbs, we have bonds with the business community and bonds with the neighborhood. And And really, I think the biggest difference in Detroit's turnaround. has been that the politics of the city, the people of the city are embracing Uh everybody. Yeah, I mean it and it is in a moment where there is so much kind of national friction around identity politics around and Detroit

6:16 as a you know in in your approval numbers and and kind of the change of Detroit show that they're willing to let a lot pass for the economics. to work. But that said, you know, Detroit was the home of the black middle class. It was I think eighty three percent. Black now, it's something like seventy seven percent black the city over the course of your uh tenure there. And how do you make sure that

6:39 the development doesn't feel like it's like drives people out or crowds people out because real estate becomes unaffordable. And we're two white guys and you know, a New Yorker. Sitting up here talking about this. Like does that matter? So why and I I got reelected last time with seventy five percent of the vote. So I think the people are happy. But here's the interesting thing. Two hundred thousand people moved out of Detroit in the decade before I got elected. It's an astonishing number. But I didn't get elected by the people who moved out. I got elected by the people who stayed and We had 47,000 abandoned houses when I walked in. All those people who left didn't take their houses with them. Now we're down to three thousand. Property values have doubled and tripled.

7:20 We have had three billion dollar growth in black wealth in home ownership in the last decade. I'm proud of the fact that it The trainers who stayed. Yeah. I got the benefit and that's the way it should be. Yeah. They're gonna stay, they're gonna get richer, and then they're not gonna track their six billion dollars.

7:38 But but uh and But I and I'm I wanna tell you one story though because you wonder how this is that in most places you'd have animosity toward right the billionaire, the white billionaire who came in. This is Dan Gilbert. We got all these abandoned houses. I'm knocking'em down. Dan comes to see me one day and he says. Do you realize that most of the houses being foreclosed on today?

7:59 Our landlords. I said yeah I know. They buy the house of the treasurer's auction for five hundred bucks, they rent it out for a thousand dollars a month, don't put a nickel into it, don't pay the taxes, they get foreclosed that again. Yeah and Dan says, Yeah, but there's renters who every month are paying the rent. What if instead of foreclosing we went in, we paid the taxes, we knocked on the door of the renter. And said would you like to buy and own the house that you've got? I'll set you up with a mortgage. I said, Dan, that's too complicated for city government. I'm trying to get the street lights on.

8:32 And Dan says, It's a good thing I run a mortgage company. Dan set that program up. And when you see a mom who's got two kids who when she gets that deed says to her kids This is our house, we're never gonna have to move again, you don't have to switch schools again. One thousand four hundred families who are renters are homeowners because of what Dan Gilbert did.

9:01 By the way. The the mayor understated one thing before earlier when he said he was running in two thousand thirteen. You have to understand the odds of this is a as you can see a white mayor or white guy running again in a eighty three percent African American city. And here's the deal, he's running against a very strong

9:19 Black candidate and For Some technical reasons so He went on a writing campaign against another Mike Duggan. Wow. And yet if you're running away, Mark Dogging campaign is you screw up your filing in the first place and get thrown off the ballot.

9:39 Yeah. That story about, you know, this m the mortgages and thinking about like the Detroit Land Bank, every everything that's happened in terms of real estate. How I'm curious about your relationship. Like how often do you guys talk? I just met him backstage. Uh-huh, sure. Like are you texting all the time? Y you know, it's it's such an interesting thing. Yeah. Uh I don't know how Dan has time to do it, but he all in addition to running his own companies, he always has plenty of time to tell me how to run the city. What is the last significant disagreement that you had about something substantive in Detroit's future?

10:20 I mean I'll leave it to you. Have we had any big disagreements? You know, I I I wouldn't we would never share them. This is truly couples therapy, it stays in therapy. But but here's where the relationship goes. When Dan moved in in 2010, I was running the largest employer in Detroit, the Detroit Medical Center, eight hospitals, 14,000 employees. I was thrilled. to see him come to town. So he calls this meeting and he says, Mike, I want you to come to this meeting about placemaking. I said

10:48 What the hell is placemaking? I never heard the term. And he says, If we're gonna get people to move back here, we've gotta create environments where people wanna live, where they wanna celebrate and the like and I want you to come, we're gonna make this up. I said Why isn't city government Doing that. And he says, Seriously?

11:05 Uh and so a lot of what's happened today was even when city government was heading toward bankruptcy and was non functional. Yeah. Dan and his team stepped in and he wasn't thinking about placemaking is gonna sell more mortgages. He was saying the future of the city is about creating a riverfront, about creating campus marshes, about creating districts people wanna visit and I'm just astonished when I see the fact that Fifteen years ago, if you were on the streets of Detroit at five thirty at night, it was empty. People drove in From the suburbs at eight thirty in the morning, they left at five thirty.

11:39 Now If you haven't been to our city, let me ask, how many people have been to our city in the last five years? Right? How many have never been to our city? Uh

11:47 You come in now. There are more people nights and weekends on the streets of Detroit. Uh than there are during the day. It's been remarkable a transformation in a short period of time. Yeah. In twenty seventeen, uh Politico published this piece on America's eleven most interesting mayors. Mayor Pete Utez was on the list, Eric Garcetti from Los Angeles was on the list. And you, Dan Gilbert. Uh they called you uh The shadow mayor.

12:13 Oh that's because I walk behind him every all every day. So Is it a fair characterization? Well not with the great mayor that we have, it's not. Yeah. I mean they mentioned, of course, Mark Duggan as well, but Well, your number eleven. But but is it a fair characterization? I mean look, like we we talk about billionaires owning things like the media, Twitter, et cetera. Do you feel the kind of outsize power Of this role that you have in Detroit. Well you know, the shadow the big shadow that you have. And so we decided to do it. So if that's power, I think that's a that's the kind of power you want to yield.

12:55 Yeah. I mean and we it's not just the capital, the monetary capital, it's the amount of people. When I tell you that when we had twenty thousand people, every single one of them, and I mean every single one of them. is involved in some kind of community effort in Detroit, and that just makes such a huge massive difference. Right. And it attracts this gener your generation, I guess I should say.

13:16 You're more I guess purpose driven is those the two words? That's what they say, yeah. I mean y you want to get stuff done outside of just making money and that that's just the that's an appeal to and so building a city and having the place making stuff like you're talking about everything just attracts

13:33 The kind of people that we need in the city. So it's a two way street. But but here's the thing. You you if and and I've spent some time in San Francisco in the last few months. Yeah. If you're gonna come back, you can't have an ego problem between your business leadership and your political leadership. You gotta figure out how to work together. Uh and that means the businesses have to behave in a in a responsible way so the so the political leaders can afford politically to support him. But I just give you an example of the way this works. Dan calls and he says Microsoft is looking for a place in Michigan for their new headquarters. He says we're gonna pitch him, lays out this pitch We go into the meeting with the Microsoft executives, hundreds of jobs gonna be somewhere. And also with us is the head of procurement for General Motors, who Dan also called. Turns out Microsoft's two biggest customers in the state of Michigan are Quicken and General Motors.

14:27 Damn, if Microsoft doesn't move their people into the city of Detroit. Right. Uh and this is the way that we work. There's times I call Dan and I say Here's somebody we gotta go after, and we just don't worry about it because the people of Detroit are so much better off. With And I can bore you with details. This city was in bankruptcy because ten years ago we had two hundred million dollars a year in income taxes. Our police officers made fifteen dollars an hour. We couldn't fill them.

14:55 Today we don't have 200 million, we have 440 million in income tax revenues. Right. And our cops are starting out at sixty thousand dollars a year. Uh we've got the grass cut in the parks. We've got the kind of amendments. We build a billion dollars in affordable housing, but it's because we work together. And you've got this community policing, kind of community service as an alternative to police, which is important too, I think. I I mean certainly done a lot, but this is also something that you must think as a kind of as a someone a member of government and regulators must think, you know, how do you think about the partner that you have. It depends who you have across the table. A long time ago, GM was part of the reason why the trolley system, the busing system, you know, paused in Detroit and now you guys are rebuilding that public infrastructure, but they wanted highways then. So it m it the incentives of your partner matter too, right? Yeah, we don't hold the nineteen fifties against GM anymore. I did, but I gotta tell you I do too. Uh GM is still bad. But GM announced that they were gonna close the big factory in Detroit, the Pole Town plant. I sat down with Mary Bar, I sat down with the right hand Mark Royce, I said, Let me give you the business case for staying in Detroit. They have now got Their major e electric vehicle factory, more than four thousand employees making the electric Sierras and Silverados and Hummers in the city, and they're bringing supplier plants into the city. So if you don't spend a lot of time attacking over what they did before

16:27 But I don't go to GM and say, Do it for me for charity. Right. I said let me show you the things I'm gonna do so that you're gonna make money in the city of Detroit. But you're still not at GM. So you look at that I mean the dam. They're moving the headquarters into one of our buildings, next week. Exactly. So now it's all good. Now it's it's somewhat good. Now they're a tenant. Yes. That's a good kind of power. Um what is the end goal? Like when will it have been a success? I want each of you to answer. You know, I think building what we're building is it's like your family. You never really see

17:00 When is your family gonna be a success? It's just every day you're hoping your family is healthy and better and better. And relationships are better and things are better. I think it's the same thing with the city. You can't really say there's an end date and here we are. Yeah. Also I know that every single day it seems to be getting better and better and better. And I really encourage all you guys to visit it. And if you have startup business, I encourage you to move there. Okay. And I think you'd be shocked and surprised at the kind of help you'll get. You'll be a bigger fish in a smaller pond. We have venture capital.

17:29 Detroit Venture Partners is a great venture capital business, and there's others too. And we have a great ecosystem, very favorable city government, as you can see here. Very favorable state government right now. Yeah. Entertainment a lot of great bars that I know is important.

17:49 That matters, yeah. I liked Seldon Social. It was good. When will you know it's successful. This comes to me in in in waves almost of shock. Uh when I started and we had a twenty percent unemployment rate, I went hard at the manufacturing industry because we had a lot of folks with high school degrees who needed jobs. Right. Now we're going hard at tech companies, but the day Google had four hundred software engineers and they had to choose between Ann Arbor, where the University of Michigan is, and Detroit is. And they picked Detroit. And I went to the announcement, I asked the Google execs

18:22 I said I'm a little surprised at that. And they said what our research is showing us is while they may graduate from the University of Michigan. Yeah. When they graduate, they don't want to live in Ann Arbor. They want to live in the city of Detroit. And since then we've landed five hundred companies, a national company called Major El tech company could have picked anywhere in America, but with our our beautiful riverfront now. Від терс, вит спортс. I would say I never thought in my lifetime I'd see the day that tech companies

18:52 would be coming to Detroit as opposed to Anthem or Chicago. To mi. That's the early signs of success. And uh Uh you probably gather from the fact that we flew all the way out here, we got room for some more.

19:07 Yeah. Um So you've accomplished a lot. And you're up for reelection. Uh you're up for reelection for mayor, you could seek a fourth term.

19:21 If Mayor Duggan doesn't seek re election, would you consider running ever? In political politics, yeah. I can get a lot more done Being in the private sector and having a great mayor. Whether it's Mayor Duggan, whoever takes his place. It's not gonna be as good, I'll tell you that, but

19:37 Hopefully they'll be close. What about buying a Detroit sports team? Because you obviously have the Cavs, which has been a huge part of Cleveland. You're investing in Cleveland right now. Sport is taking off in Detroit. You brought the you guys brought the draft there. I am a Lake Erie kind of guy, so I like Detroit and Cleveland, but I will tell you that You have to have a seller before you could buy a sports team. And you couldn't buy the pistas. You can't have two NBA teams at once. But w but we could have a major league soccer team.

20:06 We could. Oh, that's a good idea. You guys should text about that out there. And and a WNBA team. Can you? Are you allowed in the league rules to own an NBA and a W NBA team? Absolutely. In fact they they prefer that at the league. Are you looking into it? We aren't looking at

20:26 Okay. That's right. Um I do want to end on sports because I have to say there was something Very remarkable in seeing that sports

20:37 center in Detroit, and I landed on the heels of a the Lions had beat. the Cowboys uh 47 to nine and every Uber I was in told me about it. And I was like, yeah, but it's the Cowboys. But that's still really good. But but there's something about the sports that's that's really um able to move a city and bring people together and get around, you know, some of what we were talking about earlier, the national, the kind of identity politics, the friction. What do you think it is that That makes that possible. And w what is it about sports that gets around so much of the challenges of our culture?

21:10 I think Detroit and and Cleveland and the Buffalo in some of these midwestern cities. I mean it's it really is a fabric of the city. It the sports towns and generational. When the Cavs finally won the championship back in two thousand sixteen, I got more letters from people Talking about how they went to games with their Parents with their grandparents.

21:30 And it's just a generational thing. They hand on they hand off the seats from year to year. Mm and it it j it really becomes the fabric of the city and and what's what's kind of ironic and crazy is that The city comes back and all of a sudden the Detroit Lions who have let's be honest stunk for sixty years All of a sudden. our super bowl candidates like I never thought in my life I would say these seven words

21:51 The Detroit Lions may be in the Superbowl there. In fact, every generation of fathers has to sit their sons down And say, look, get over it. It's gonna be thirty years of hell. And I did that to my kids and now look what's happening. So And you've seen that too as mayor. I you know I do a once a month radio call in show and Uh last fall somebody called in and said Are you starting preparations for a super ball parade?

22:18 Oh and I said that is the first time a mayor of Detroit has ever been asked that question. So we we didn't need to prepare one. last year but I it is a a unifying force and uh we we've been very fortunate in Detroit. And the other thing is this though, and again I will keep pitching you if you haven't visited, the only city in America Where all four professional sports teams are in downtown. Right. We have the Red Wings, the Pistons, the Lions, the Tigers in walking distance, uh right near Dan's office. Right. And the Lions were always there, but the Pistons moved down in this recently. Actually we brought the Lions back in the nineties. The Lions had left For Connac, which was a devastating thing in the nineteen seventies, the Pistons followed them.

23:02 uh to uh Auburn Hills and those were those tore a piece of the city's hearts out. Yeah. But the fact that we brought the the Lions and the Pistons back down. And when we got the pistons to come back down, something I worked really hard on, that meant that all of the concerts in south eastern Michigan. are now in the city of Detroit and it's really made it the epicenter of entertainment. And uh I think it's it's driving a lot of our recovery. So as an owner, Dan, I mean if you think about America's cities and the challenges that they have, obviously every city is unique, but are you a

23:33 In favor of league expansion, which is a topic for the NBA. Yeah, I think there's a there's a case for a couple of cities Couple more. I mean you don't want to overexpand too quickly, but Seems to be case for two or three more teams. I mean the league's got

23:47 Thirty two teams, right. Thirty one teams right now. Thirty teams rather. Yeah. Would be thirty two if they had expansion. Could be good for cities. Yes, it could. If I were Oprah, by the way, I would tell you there's like a ticket to Detroit under all of your seats, but I'm I'm not Oprah. There's not a ticket, but if if people do go to Detroit, give them one uh recommendation of what they should do. Just walk around. Walk around, walk walk around downtown. It's completely safe. It's one of the safer urban corps in America, believe it or not. Walk

24:13 the riverfront, the city that Dan and I grew up in, we didn't know we had a riverfront. I mean it was all factories and cement silos and you couldn't get near it. But now what's happened in the last fifteen years been named USA Today Best River Walk in America. But The sports stadiums were the one place where people from different cultures came together. I'm really excited about the fact that Tens of thousands of people descend to the riverfront. Uh from

24:38 Uh all incomes, all areas has become our uniting place. Walk down, uh you'll love it, and if you visit, you might decide. Not a bad place to uh Open your business. Yeah. I would I would say have a Coney Island, guys. I think it's like you know, eat eat some of the food. There's amazing food, Arab food, all kinds of food in in Detroit. And I was actually kind of. Hook ya. Okay. All right, well see at Detroit, maybe the whole country will be like Detroit. Who knows? All right, thank you guys. Thanks so much, Mary Jane. Thank you.

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