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Motown Gold

I invite you to join me on a little side tour of optimism, as I examine the flip side of collapse. This one is fascinating.

As I was working through my Landmark blog on the Detroit Bankruptcy, my mind kept running to Rothschild’s investment advice from the 1800s: “The time to buy is when blood is running in the streets.”

Clearly, blood is running in the streets of Detroit. It’s bad.

This cesspool of decay and corruption breeds the highest violent crime rate of any major city in America.

The mayor has moved his residence to the Federal Penitentiary in Milan, Michigan.  It had something to do with “extortion, bribery, and fraud,” according to a federal prosecutor.


A Risky Bet

No wonder people are slow to invest.

It’s unpleasant to buy, if it turns out the blood running in the streets is yours.

Any building you purchase may have been stripped of copper and aluminum. Fixtures doubtless floated out the missing doors years ago.

And how do you really feel about visiting your new investment in Detroit? I mean, in terms of being mugged before you even see your property.

The mugging doesn’t have to come from the nearest drug addict, by the way. It’s just as easy to have the union shake you down. Or, possibly you prefer special treatment at the hands of the local government.

There’s effectively no police force and no ambulance to carry you away.

You’re on your own.

This is the Wild West, here.

But, still, there is a ton of opportunity, right?

I looked for a role model

My first question – in the absence of locking in on the right answer – was “Who’s doing it now?”

I can’t possibly be the only person who is attracted to disaster.

It took about a minute to discover Dan Gilbert.

Sports fans probably know the name. I’ll admit, I didn’t know him.

He’s a major investor in Detroit, but he lives in Cleveland.

OK, so here’s the quick rundown…

Dan Gilbert is the chairman and founder of Quicken Loans. He’s got a net worth of a couple billion dollars. Really.

In the Wikipedia listing (which I’m sure he approved) he’s listed as “…the majority owner of the National Basketball Association’s Cleveland Cavaliers, the American Hockey League’s Lake Erie Monsters, the Arena Football League’s Cleveland Gladiators and the NBA Development League’s Canton Charge. He is also the operator of the Quicken Loans Arena in Cleveland, Ohio and chairman of Rock Gaming, which opened its first Horseshoe Casino in downtown Cleveland in May 2012.”

There’s much more. This guy has been seriously and aggressively on the move. Here’s a link to his Wikipedia page…

So, anyway, Dan Gilbert forms one company after another. He’s moving so fast that news articles about his ventures wildly disagree with each other, simply because of the dates they were published.

Bottom line (if there is one)… “Quicken Loans moved its headquarters and 1,700 of its team members to downtown Detroit in August 2010, where Gilbert and the company are helping lead a revitalization of Detroit’s urban core.”

I’m suspicious how many of the “team members” were excited to hear about their new home, but I have to believe the company saved a bundle.

What kind of person is he?

Well, he’s got a blog.

It may not be the most sophisticated or complete insight into who this guy is, but I can’t really belittle blogging, while I’m writing my own blog, now can I?

As you might imagine, Dan Gilbert’s “Choose Thinking” blog showcases one solid, positive message after another.

A good example is his list of “Things I’ve Learned In 27 Years.”

I think you’ll like it. Check it out here:

So, we’ve found someone who’s on board with a Detroit investment.

We’ve seen a little of what he’s like.

And now, let’s get a sense of what he’s been up to.

What’s he doing?

In Detroit, it looks like Gilbert’s first move was to bring his Quicken Loans headquarters to Detroit in August of 2010.

I can imagine that was a little chaotic, but I have to believe the price was right.

This really should have started paying for itself very quickly.

Less than a year later, the Huffington Post reported that Gilbert owned “more than 2.6 million square feet of commercial property, second only to General Motors,” with a total of 15 buildings.

OK. We’re no longer talking about a guy who’s saving a few bucks on a real estate play.

This is a coordinated attack.

Less than a year after that, opened an article, reporting that Dan Gilbert’s “affiliated companies own more than 30 buildings and 7.5 million square feet of real estate in downtown Detroit.”

At this point, I think we have to substitute a different word for “optimistic.”  What do we call this? “Possessed?”

We have gone from a significant investment, to a huge investment, to the largest single investor in the area, and we’re accelerating into a flat out feeding frenzy.

On the very day that Detroit filed for Chapter 9 Bankruptcy protection, Team Gilbert was in town, buying the county jail!

It seems another botched government project lay hemorrhaging, $115 million into a $300 million project to construct a jail for Wayne County. Gilbert snapped it up.  He issued a statement on the day of the city’s bankruptcy filing, closing with the words, “We are all in. We are more committed than ever to Detroit and the opportunities downtown. Detroit’s best days are ahead.”

Do you think?

Dan Gilbert is obviously not a man to sit around and wait for things to get better.

He jumps in and immediately makes improvements on his own.

In fact, he gets in so big that he becomes his own trend.

But, even that can’t possibly be powerful enough to guarantee a solution for a problem as big as Detroit.

He’s needs others to join in, as well.

Could I find anyone else coming on board with Gilbert?

Who surrounds him?

Of course. In mere seconds, I found this big announcement…

“DETROIT, July 21, 2011 – Earvin “Magic” Johnson, Hall of Fame NBA star, philanthropist and entrepreneur, announced today he will join Detroit Venture Partners (DVP) as a general partner. DVP is a Detroit-based venture capital firm that invests in seed and early-stage technology companies primarily located in the heart of downtown Detroit. Mr. Johnson will also be investing millions of dollars into the fund itself.”

How perfect is that?

So, Let’s Review

To become a billionaire, it’s helpful to move into troubled environments, take control, and immediately make positive changes.

You want to be bigger than the problem, so you can dominate it.

You must be bigger than your competition, so you don’t get fleeced.

You want other people to benefit, so they’ll speak well of you.

And you want to attract strong, positive partners who can carry your momentum well beyond your own resources.

Yeah. That should work.

Now if you’re just a little guy…

Hang out with people like Dan Gilbert.

Posted in Leaders, Pick.

2 Responses

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  1. Phil Laurette says

    There are a lot of problems in Detroit that is for sure. It is under the control of an emergency manager and has filed for the largest municipal bankruptcy in U.S. history. Our art, parks and other assets are all in jeopardy. We have just started a mayoral race for a job that potentially has no power or influence yet the primary saw Mike Duggan win with a write in campaign. He got around 56 percent of the 17% of voters who bothered to vote. That means that around 9% of the voters chose this candidate who will likely go on to inherit the office in November. But with all that is going on it is hard to believe that there are still investors looking to make a difference. Mike Illich; owner of Little Caesars Pizza, the Detroit Tigers, the Detroit Red Wings and numerous other ventures has recently announced plans to build a new multi-use complex near Comerica Park that will include a new arena for the Red Wings. This represents a huge investment in the area and an opportunity for other businesses in the area to expand and prosper as well. With the Tigers, Lions and Red Wings all located within walking distance the area is a perfect opportunity for restaurants, bars and nightclubs to draw fans all year round. Wall Street is snapping up Detroit municipal bonds in anticipation of a recovery so all eyes are on Detroit to see where things go next. If you are looking to invest in Detroit, now is definitely the time.

  2. Ted Dieck says

    Thanks for the insights, Phil. I wouldn’t have the nerve to buy munis, but it certainly looks like investors are betting on the upside for Detroit. If you notice anything else worth passing along, please give me a Heads Up. We’ll be paying attention to this one. — TD

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