Can Detroit Become a Product Innovation Hub?
While it’s easy to start, the path to getting a DTC startup to scale successfully may be evolving.
Spring broke through in Detroit, and we’re all feeling better for it.
Today I want to discuss product startups. In Detroit, we share a culture of design and a spirit of making things, born from our decades of experience designing one of the largest consumer goods: the automobile.
This rich history has created an ecosystem and an advantage for Direct to Consumer (DTC) startups to begin their journey in Detroit. But what does it take for these startups to succeed?
I sat down with Justin Mast of Bloomscape and Mast Venture to discuss what challenges this community experiences. (And we’re discussing this topic live at Bamboo on Thursday - so come join us in real life!)
While it’s easy to start, the journey of growth can be challenging and the path to getting a DTC startup to scale successfully may be evolving.
The Advantages of Being in Detroit
Justin and I spoke of the many advantages to starting in Detroit. We have a cultural history of design and innovation – from automobiles to furniture – giving us an edge in manufacturing. Along with this comes a certain cultural brand savvy. When Mast first started his company, the perception of Detroit as a place where “brands could emerge from” wasn’t great but that’s changed. We know how to build brands, from automobiles, furniture, to Shinola handbags, and others are taking note.
There is also a rising talent pool, from Moosejaw who just sold for the second time, to Shinola and Pet Supplies Plus. Startups like Whisker, Bloomscape, The Lip Bar, Floyd, Healthy Roots, Naturalicious, Ashe & Erie, and Ease Living are all growing here. Whisker, headquartered in Auburn Hills, Michigan, with a factory in Wisconsin, is perhaps the largest company with over 400 employees creating innovative pet technology. They bootstrapped their company for years, taking no venture capital, eventually raising $31 Million in private equity capital to grow.
“There’s all these different stages, enough of a scene to justifiably start a consumer brand in Detroit,” says Justin. “It’s a decent place for tapping into talent.”
Startups can also tap into some existing local shipping infrastructure and manufacturing resources. Some, like Gildform, are redesigning the entire process, creating a new way to design and manufacture goods.
The Path Forward for DTC Startups
Recently, venture capital interest has cooled on DTC startups. While seed funding is still growing in Detroit, finding startup capital can be a challenge. Mast believes the growth model has changed for DTC startups. The area of “huge DTC rounds is mostly over” but a slower growth model can work.
“The funding model of slower growth plays better to slightly more conservative cost-conscious approaches,” Mast said. “There is more time to train people up rather than hire, and we have the mentorship here now. This is exciting for our community.”
Talent was one of Mast’s biggest challenges as he hit the Series A stage for Bloomscape. This is a challenge for many in Michigan. We don’t have natural access to an ecosystem brimming with COO/CEO/CFO talent. And if you do find the talent, can you get them to move here if that’s needed now?
For Mast, recruiting young talent was easier than seasoned executives experienced scaling in the venture-baked environment. He shares a bit of hope for us. Now, younger talent is growing and learning from the last few years of ventures, perhaps evolving with the community.
If you’re part of the community, we’d love to hear your story, challenges, and successes. Join us at the Building Customer Obsessed Products with Whisker, where you can hear from some of the talented founders mentioned above.
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PS. Special thank you to Literary Mama for sharing my personal craft essay, and a special thank you to all the grandparents of the world. You are the real MC’s who help make the world go round. Us new parents had to ride out a few weeks of spring bugs.
Michigan Companies mentioned:
*And more? Leave in the comments.