Scaling a business in the US can feel like a maze.
Each state has its own payroll benefits and compliance rules, pulling your focus away from growth, which is why founders use DEAL.
DEAL is the Professional Employer Organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team.
The National Association of PEOs says businesses can grow twice as fast if they use one.
So if you're scaling, make it simple with Deal.
Go to deel.com slash MOS and get up to three months free.
JustWorks is the human resources platform that knows your employees are more than just employees.
They're your people.
People like the show producer on the East Coast who's constantly juggling schedules, studio bookings and last minute edits before an episode drops and sometimes has a question about payroll that they need an answer to right away.
Luckily they can reach out to JustWorks for 24-7 human support and not have to wait for their boss on the West Coast to wake up.
JustWorks does human resources right so you can do right by your most precious asset, your people.
To learn more, go to JustWorks.com.
JustWorks for your people.
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, interviewed Rocket Company's founder, Dan Gilbert, and Detroit Mayor Mike Duggan.
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 place.
I wanna find out what are the lessons that are translatable to other cities like San Francisco.
What you've learned and how does it translate?
I wanna know how you two work together, the public private thoughts of it all.
Has this been faster than you expected or slower than you expected, the change in Detroit?
I mean, you moved your headquarters there in 2007.
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 2007.
We didn't move until 2010, and then we kept moving people after that.
We had thousands of people in the suburbs of Detroit spread all over the place and When we were looking for a new place for the next decade because our leases were up in 2010 and we said we looked at other suburban locations that wasn't very appealing.
We looked downtown.
We said, these buildings are just beautiful down here.
I mean, we can redo them.
We can fill them 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.
So at one point, we had almost 20,000 of our own people downtown.
And then a bunch of other companies followed.
And even some of the big-name tech companies have locations in Detroit.
Amazon, Google, Microsoft, LinkedIn.
I mean, they're all there with significant... locations.
And then we got an entrepreneurial environment there that's pretty strong too.
StockX is a big company there.
Of course, Rocket Company.
Yeah.
It seems like a lot of people have come.
There's still a lot of buildings that are not yet filled, right?
That have to yet be filled.
But certainly it has attracted a ton of investment.
You've put in $6 billion through development of the city.
Something like that.
You're not keeping track?
Definitely not.
Must be nice, Dan.
Must be nice.
Let's put it this way.
I'm all in.
You're all in?
I'm all in.
Yep.
That means, okay, $6 billion.
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 going to pay you back?
We have this philosophy of doing well by doing good.
It's all mixed together.
It's really not separate.
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 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 placemaking.
And so it's all connected to each other.
And obviously, like, you've called this the Big Bang Theory.
I mean, 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 the job 11, 12 years ago, what were you thinking in terms of how do you prioritize as a public sector infrastructure?
Well, in 2013, I was running the big hospital system in Detroit, the Detroit Medical Center.
The city had gone into bankruptcy.
Half the streetlights were out.
We had the highest unemployment, highest poverty rate in America.
And the city's 83% African-American.
Yeah.
But what we had done in the hospital system, I think, was show what happens when you can put aside your differences and turn it, turn it around.
And so I went out in 2013 and campaigned and said you know, the us versus them, politics in this city has held us back.
And 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.
They hadn't had a white candidate for mayor in 50 years.
But this city has embraced partnerships.
And we have bonds with the suburbs, we have bonds with the business community and bonds with the neighborhood.
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 everybody.
Yeah, I mean, and it is in a moment where there is so much kind of national friction around identity politics around, and Detroit, as a you know, in your approval numbers and kind of change of Detroit show that they're willing to let a lot pass for the economics to work.
But that said, Detroit was the home of the black middle class.
It was, I think, 83% black.
Now it's something like 77% black, the city, over the course of your tenure there.
And how do you make sure that the development doesn't feel like it drives people out or crowds people out?
Because real estate becomes unaffordable.
And we're two white guys and a New Yorker sitting up here talking about this.
Does that matter?
So I got reelected last time with 75% of the vote.
So I think the people are happy.
But here's the interesting thing.
200,000 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 3,000.
Property values have doubled and tripled.
The University of Michigan said we have had 3 billion growth in black wealth in home ownership in the last decade.
I'm proud of the fact that the Detroiters have stayed, got the benefit and that's the way it should be.
Yeah, they're going to stay, they're going to get richer, and then they're not going to track their 6 billion.
But I want to tell you one story, because you wonder how this is that in most places you'd have animosity toward the billionaire, the white billionaire, who came in.
This is Dan Gilbert.
We got all these abandoned houses.
I'm knocking them down.
Dan comes to see me one day and he says do you realize that most of the houses being foreclosed on today are landlords?
I said, yeah, I know.
They buy the House of the Treasurer's auction for 500 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 on again.
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.
And Dan says, it's a good thing I run a mortgage company.
Right?
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 going to have to move again.
You don't have to switch schools again.
1,400 families who are renters are homeowners because of what Dan Gilbert did.
Thank you.
By the way, the mayor understated one thing before earlier when he said he was running in 2013.
You have to understand the odds of this is a, as you can see, a white mayor, a white guy running in an 83 African-American city.
And here's the deal.
He's running against a very strong... black candidate and for some technical reasons.
So he won on a write-in campaign against another Mike Duggan.
Wow.
And yet, if you wrote in Mike Duggan, I don't know how to differentiate.
The way you wrote a write-in campaign is you screw up your filing in the first place and get thrown off the ballot.
But as it turned out, the people of Detroit knew what they wanted.
That story about the mortgages and thinking about the Detroit Land Bank, everything that's happened in terms of real estate.
I'm curious about your relationship.
How often do you guys talk?
Well, I just met him backstage.
Uh-huh, sure.
So are you texting all the time?
You know, it's such an interesting thing.
I don't know how Dan has time to do it, but 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 we'll do some couples counseling here.
What is the last significant disagreement that you had about something substantive in Detroit's future?
I mean, I'll leave it to you.
Have we had any big disagreements?
You know, we would never share them.
This is truly couples therapy.
It stays in therapy.
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, 14000 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.
And I said, what the hell is placemaking?
I never heard the term.
And he says if we're going to get people to move back here, we've got to create environments where people want to live, where they want to celebrate and the like.
And I want you to come.
We're going to make this up.
I said, why isn't city government?
And he says, seriously?
And so a lot of what's happened today was even when city government was heading toward bankruptcy and was non-functional.
Dan and his team stepped in, And he wasn't thinking about placemaking is going to sell more mortgages.
He was saying the future of this city is about creating a riverfront, about creating campus marshes, about creating districts people want to visit.
And I'm just astonished when I see the fact that 15 years ago, if you were on the streets of Detroit at 530 at night, it was empty.
People drove in from the suburbs at 8.30 in the morning.
They left at 5.30.
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?
You come in now.
There are more people nights and weekends on the streets of Detroit than there are during the day.
It's been remarkable, the transformation in a short period of time.
Yeah.
In 2017, Politico published this piece on America's 11 most interesting mayors.
Mayor Pete Buttigieg was on the list.
Eric Garcetti from Los Angeles was on the list.
And you, Dan Gilbert, were on the list.
Really?
They called you the shadow mayor.
Oh, that's because I walk behind him every day.
Oh, okay.
Is it a fair characterization?
Well, not with the great mayor that we have, it's not.
Yeah.
I mean, they mentioned, of course, Mike Duggan as well.
What number was he?
He was in the bottom of your number 11.
But is it a fair characterization?
I mean, look, we talk about billionaires owning things like the media, Twitter, et cetera.
Do you feel the kind of outsized power of this role that you have in Detroit?
You know, the shadow, the big shadow that you have.
You know, we're in a fortunate position to have positive impact, and so we decided to do it.
So if that's power, I think that's the kind of power you want to yield.
Yeah.
I mean, and it's not just the capital, the monetary capital.
It's the amount of people.
When I tell you that when we had 20000 people, every single one of them and I mean every single one of them is involved in some kind of community project effort in Detroit.
And that just makes such a huge, massive difference.
Right.
And it attracts your generation, I guess I should say.
Yeah.
I mean, you're more, I guess, purpose-driven.
Are those the two words?
Purpose-driven.
That's what they say, yeah.
I mean, you want to get stuff done outside of just making money, and that's an appeal to it.
And so it.
Building a city and having the place making stuff like you're talking about everything just attracts the kind of people that we need in the city.
So it's a two-way street.
But here's the thing.
And I've spent some time in San Francisco in the last few months.
Yeah.
If you're going to come back.
You can't have an ego problem between your business leadership and your political leadership.
You've got to figure out how to work together.
And that means the businesses have to behave in a responsible way 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 going to pitch them, lays out this pitch.
We go into the meeting with the Microsoft executives.
Hundreds of jobs are going to 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.
Damn, if Microsoft doesn't move their people into the city of Detroit.
And this is the way that we work.
There's times I call Dan and I say, Here's somebody we got to go after.
This city was in bankruptcy because 10 years ago we had $200 million a year in income taxes.
Our police officers made $15 an hour.
We couldn't fill them.
Today, we don't have $200 million.
We have $440 million in income tax revenues.
And our comps are starting out at $60,000 a year.
We've got the grass cut in the parks.
We've got the kind of amenities.
We build a billion dollars in affordable housing.
But it's because we work together and bring people back.
And you've got this community policing kind of community service as an alternative to police, which is important too, I think.
I mean certainly you've done a lot, but this is also something that you must think as 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 paused in Detroit and now you guys are rebuilding that public infrastructure.
But they wanted highways then.
So the incentives of your partner matter too, right?
Yeah, we don't hold the 1950s against GM anymore.
Yes, we don't.
But I've got to tell you, GM announced that they were going to close the big factory in Detroit, the Poletown plant.
I sat down with Mary Barra.
I sat down with her right hand, Mark Royce.
I said, let me give you the business case for staying in Detroit.
They have now got their major electric vehicle factory, more than 4000 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, but I don't go to GM and say, do it for me for charity.
I said let me show you the things I'm going to do so that you're going to make money in the city of Detroit.
But you're still mad at GM.
So you look at that.
They're moving the headquarters into one of our buildings now.
Exactly.
So now it's all good?
Now it's somewhat good.
Now they're attentive.
That's a different kind of power, being a landlord as well.
Yes.
That's a good kind of power.
What is the end goal?
When will it have been a success?
I want each of you to answer.
You know, I think building what we're building, it's like your family.
You never really say, when is your family going to 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 a city.
You can't really say there's an end date, and here we are.
Yeah.
All I know is 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 a startup business, I encourage you to move there.
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, 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.
And it's got great entertainment, a lot of great bars that I know is important.
What is success?
That matters, yeah.
I liked Seldon Social, it was good.
What do you think success looks like?
When will you know it's successful?
I tell you, success comes to me in waves almost of shock.
When I started and we had a 20% unemployment rate, I went hard at the manufacturing industry.
Because we had a lot of folks with high school degrees who needed jobs.
Now we're going hard at tech companies.
But the day Google had 400 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.
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, 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 500 companies.
A national company called Majorelle tech company could have picked anywhere in America.
But with our beautiful riverfront now, with the theaters, with the sports teams, I would say...
I never thought in my lifetime I'd see the day that tech companies would be coming to Detroit as opposed to Ann Arbor or Chicago.
To me, that's the early signs of success.
And you probably gather from the fact that we flew all the way out here, we got room for some more.
Yeah.
Dear...
So you've accomplished a lot, and you're up for re-election.
You're up for re-election for mayor.
You could seek a fourth term.
If Mayor Duggan doesn't seek re-election, would you consider running ever?
For mayor?
Yeah.
I just think 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 is not going to be as good, I'll tell you that, but...
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.
Sports is taking off in Detroit.
You guys brought the draft there.
It was a big success.
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 can buy a sports team.
And you couldn't buy the Pistons.
You can't have two NBA teams at once.
You can't, yeah.
But we could have a Major League Soccer team.
We could.
Oh, that's a good idea.
You guys should text about that after.
And a WNBA team.
A WNBA team.
Can you...
Are you allowed in the league rules to own an NBA and a WNBA team?
Absolutely.
In fact, they prefer that at the league.
Are you looking into it?
We are looking at it.
Okay.
That's great.
I do want to end on sports because I have to say there was something very remarkable in seeing that sports center in Detroit.
And I landed on the heels of the Lions had beat the Cowboys 47 to 9.
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 there's something about the sports that's really 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 makes that possible?
And what is it about sports that gets around so much of the challenges of our culture?
Well, I think Detroit and Cleveland and Buffalo and some of these Midwestern cities, I mean, it really is a fabric of the city.
They're sports towns, generational.
When the Cavs finally won the championship back in 2016, I got more letters from people talking about how they went to games with their parents, with their grandparents.
And it's just a generational thing.
They hand off the seats from year to year.
And it really becomes the fabric of the city.
All of a sudden our Super Bowl candidates like I never thought in my life, I would say these seven words.
The Detroit Lions may be in the Super Bowl.
In fact, every generation of fathers has to sit their sons down and say, look, get over it.
It's going to be 30 years of hell.
And I did that to my kids and now look what's happening.
Yeah.
And you've seen that, too, as mayor.
I do a once a month radio call in show.
And last fall, somebody called in and said, are you starting preparations for a Super Bowl parade?
And I said, that is the first time a mayor of Detroit has ever been asked that question.
So we did need to prepare one last year, but it is a unifying force.
And 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 is the city of Detroit.
We have the Red Wings, the Pistons, the Lions, the Tigers in walking distance, right near Dan's office.
And the Lions were always there, but the Pistons moved down.
In this recent Actually, we brought the Lions back in the 90s.
The Lions had left for Pontiac, which was a devastating thing in the 1970s.
The Pistons followed them out to...
Auburn Hills, and those tore a piece of the city's hearts out.
But the fact that we brought the Lions and the Pistons back down and we got the Pistons to come back down, something I worked really hard on that meant that all of the concerts in southeastern Michigan are now in the city of Detroit and it's really made it the epicenter of entertainment.
I think 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 in favor of league expansion, which is a topic for the NBA?
Yeah, I think there's a case for a couple cities, a couple more.
I mean, you don't want to overexpand too quickly, but it seems to be the case for two or three more teams.
I mean, the league's got 32 teams, right?
31 teams right now?
30 teams, rather.
Yeah.
Would be 32 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 not Oprah.
There's not a ticket.
But if people do go to Detroit, give them one recommendation of what they should do.
Just walk around.
Walk around.
Walk around downtown.
It's completely safe.
It's one of the safer urban corridors in America, believe it or not.
Walk 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 15 years has 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 on the riverfront from all incomes, all areas.
It's become our uniting place.
Walk down.
You'll love it.
And if you visit, you might decide not a bad place to open your business.
Yeah.
I would say have a Coney Island, guys.
It's like, you know, eat some of the food.
There's amazing food, Arab food, all kinds of food in Detroit.
And I was actually kind of impressed.
And give me a call when you get there.
I'll hook you up.
All right.
Well, see, Detroit, maybe the whole country will be like Detroit.
There we go.
All right.
Thank you, guys.
Thanks so much.
Masters of Scale is a Wait What original.
Our executive producer is Eve Tro.
Our senior producer is Trisha Bobita.
The production team includes Masha Makatamina.
Our senior talent executive is Stephanie Stern.
Mixing and mastering by Aaron Bastinelli and Brian Pugh.
Original music by Ryan Holiday.
Our head of podcasts is Lital Molad.
Visit mastersofscale.com to find the transcript for this episode and to subscribe to our newsletter.
