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Startups See Something Worth Saving in Detroit

In Detroit, necessity is the mother of reinvention.

Liz Gannes

Rotting theaters and schools. Feral houses overgrown with green vines. Former auto plants coated with char and graffiti. Aerial views of the Detroit city limits dividing tidy rows of houses in the suburbs from abandoned lots in the city.

There’s a reason that photos like these go viral on the Internet. The physical devastation of Detroit must be seen to be believed.

But it’s hard to grasp the prevailing narrative that Detroit is a lost cause when you meet the people in it.

And while the Motor City’s primary industry may still be cars, the substance of Detroit is real estate, now more than ever. Through force of collective will, people are trying to bring value back to a place that was in the process of being left for dead.

And that setting is an opportunity not just for real estate speculators but also, perhaps, for technology startups, as I’ve written in this Re/code special series on the innovation that’s refueling and rebuilding Detroit.

There are something like 100 technology startups in Detroit. Many of them could have been born in any city — they’re in Detroit because their founders want to be in Detroit.

But Loveland Technologies and Castle are different — they are really by, for and of Detroit.

Loveland documents evidence of urban blight to build a body of accessible real estate data as a civic resource. Castle has set up shop within an abandoned house bought at auction for $8,000, and is building software for landlords. Let’s take a visit.


Adventures in blexting

I’m riding in a gold ’94 Ford Escort with 344,000 miles on it, driven by a gangly kid named Bobby Justewicz. Soundtrack: “The Rocky Horror Picture Show,” on cassette tape. He’s armed with an Android tablet and a gregarious curiosity.

Justewicz, 27, is an undergraduate student in urban studies at Wayne State. On the side, he does household mold testing and takes pictures of recently burned buildings for a tech startup. That’s what we’re doing today.

The first stop on our list is 6051 Hastings. It’s the old Fisher Body Plant, Justewicz tells me. They used to make Cadillac Limousine bodies here. That was a long time ago, though. These days, it’s a hollow carcass of a building, tattooed with graffiti.

Justewicz gives a brief dossier on the building: Lots of people have snuck into it, including himself. It has been used as a movie set (here’s a video of Michael Bay fake-blowing it up for “Transformers: Age of Extinction”). Word on the street is that someone from Berlin wants to turn it into a nightclub (the would-be buyer is a huge techno fan).

Though Justewicz’s app indicates that a fire was recently reported here, it’s hard to say where exactly the new damage on the building is. We pull over, walk around and take some pictures through the chain-link fence. It must be that collapsed tower over there, he says.

 Bobby Justewicz used to be a surveyor for Loveland Technologies, a part-time job while he finished his urban studies degree.
Bobby Justewicz used to be a surveyor for Loveland Technologies, a part-time job while he finished his urban studies degree.
Liz Gannes

I’m in Detroit the week after Halloween. There were 97 fires in the city in the three nights up to and including Halloween this year. Which was more than last year, but only by two. Half of them were deemed “suspicious.”

Some more context, for people who might not live in a city where there are plumes of black smoke on the skyline every day: 97 is a heck of a lot less than the arson heyday of Devil’s Night in the 1980s, when some 800 fires were reported over a period of three days leading up to Halloween.

But this year’s total was actually not that much more than the average number of fires on any given day in Detroit: 26.

In Detroit, these metrics are familiar. Every year, the mayor puts out a press release after Devil’s Night — now rebranded Angel’s Night — about the total number of fires.

But what about after Halloween? How badly were the structures burned, did the people who lived there move out, and do they need to be demolished?

This is the job that a startup called Loveland Technologies has assigned itself, for Devil’s/Angel’s Night, and every other.


Loveland — which has $700,000 in seed funding from hometown billionaire Dan Gilbert and others, and hopes to sell its software to other cities — hired 150 community surveyors earlier this year and took a picture of every single parcel in Detroit, all 380,000 of them. Data is collected on phones and tablets and put onto a site called Motor City Mapping that anyone can access. Now Loveland is keeping track of when things change, for the worse or the better.

And the biggest daily catalyst of change in Detroit is fire.

John Grover, a Loveland employee, has a police scanner tuned to record firefighter transmissions, which he segments to identify all the structure-damaging fires, and then pins them on a map. Then he and Bobby drive around taking pictures of the structures from the same angles that were previously captured.

(Since Justewicz and I met, he was laid off, in part because his schoolwork was taking up too much of his time.)

Loveland calls this “blexting” — squishing the words “blight” and “texting” together. It’s awk-cute.

The company has a rudimentary app for volunteers and employees. (While standing in the rain with Grover outside a burned-down corner store on another scouting mission, I learned the hard way that the “back” button was broken, as I fat-fingered my way through the blexting questionnaire.)

The building in the background burned the night before we came out to “blext” it. The one in the foreground had previously burned but not yet been demolished.
The building in the background burned the night before we came out to “blext” it. The one in the foreground had previously burned but not yet been demolished.
Vjeran Pavic for Re/code

Grover would drive around and take pictures of Detroit even if it wasn’t his job. That’s what he did for the past seven-plus years, first commuting from Ohio and then moving here full-time. By now he’s very familiar with people’s concerns that he and others are making “ruin porn” that objectifies the city, but with Loveland he’s found a way for his local documentation obsession to contribute to the greater good. Hopefully.

Grover is an introspective guy who has thought a lot about fire. He reads backstories into the melted siding on the side of a house and the kids’ toys in the front yard. He shows me how one house, which looks like it was in relatively good shape before it was burned, must have already been unoccupied, because around the back, wires had been cut by scrappers.

“The thing about arson fires,” Grover says, “is they not only burn down the existing housing stock, but they also spread fear.”

Some of the most dangerous fires to fight are those in houses that have already burned, and have been abandoned but not demolished. “It costs $10,000 to $15,000 to demolish a house, and it can be much more to firefight it,” Grover said.

He argues that documenting this stuff, and making information accessible, has its own value.

“Detroit is changing so quickly, and it’s really easy to talk about change in this abstract way,” Grover tells me. “Find any Internet blog or forum and everyone’s got an opinion about Detroit. But if tracking fires and following the demolitions and keeping the data updates helps people stay informed about the city — not just policy decisions, but their lives — then it’s important.”

Detroit is a city where so much is left unknown and unenforced — water bill payments, unauthorized urban farming, taxes — that for Loveland to help shed light on what’s going on is a loaded prospect.

But then, it’s hard to improve a situation that’s a big unquantified mess.

Back at the Loveland office, CEO Jerry Paffendorf tells me, “Detroit has been a frozen city for a long time. And now there’s an effort to warm it up. To do that, you really have to take a flamethrower to aspects of it. But the trick is also going to be, how do you codify lenience, depending if someone can’t afford to pay their taxes or water bill. How do you codify alternative land use? Bees or goats or farms — that’s all illegal right now.”

Today, Loveland data is mainly used in relation to the city’s Land Bank, which manages auctioning foreclosed properties as well as the too-slow process of demolitions of broken buildings. Loveland is sometimes criticized as a tool for real estate speculators, but Paffendorf and others say its redeeming quality is getting cities and residents on the same page.

Detroit plans to foreclose on 62,000 properties this year and put them up for auction in the fall. According to Loveland data, as many as 37,000 of these properties are thought to be occupied. Armed with that information, prospective buyers might be better able to avoid evicting people from their homes.

As Paffendorf put it, one of Loveland’s central challenges is: “Now that this is all going into the spreadsheet, how do you make the spreadsheet human?”

 The Castle house was bought for $8,200 at auction by its current residents, who moved to Detroit for the Venture for America program.
The Castle house was bought for $8,200 at auction by its current residents, who moved to Detroit for the Venture for America program.
Vjeran Pavic

Castle on a cloud

It’s almost like a frat house.

“Except we work all the time, and don’t party, and aren’t douchebags,” Max Nussenbaum tells me.

Nussenbaum is 24. He lives with his co-founders in the Detroit neighborhood of New Center. Last year they bought the house we’re standing in for $8,200 at tax auction. It had been left empty and half-renovated and scrapped for four years.

The three-story brick mansion does look a lot like a frat house. It’s in a neighborhood built a hundred years ago to house General Motors executives, on a block that’s currently about two-thirds occupied. And there are a few Wayne State fraternities down the block, so my question about the frat house wasn’t that far off.

Nussenbaum, Tim Dingman and Scott Lowe raised crowdfunding online to buy the building, but then realized the total rehab budget was more like $200,000. So they formed a company and took outside investment. “We’re underwater,” Nussenbaum says.

The three met each other when they moved to Detroit straight out of college two years ago as part of the inaugural class of Venture for America. It’s like Teach for America, except you get placed at a startup in an up-and-coming city instead of a school. Two out of three of them worked at companies backed by Dan Gilbert.

When the VFA program was over, they decided to stay in Detroit. They owned a house, after all, which they were rehabbing to rent to future VFA fellows. When Nussenbaum and Dingman moved in this past July, the house had no running water, and only barely had electricity — the wires were no longer in the walls, and there were no outlets.

When I visit, in November, they had a tiled bathroom, hot water and even a TV — but no kitchen yet. It’s a work in progress.

Two days before I show up, the guys set up a co-working space in the living room, which entailed setting up Wi-Fi and clearing the detritus to put out desks.

Wednesday nights are house-work nights. I get there around the same time as Lowe, who’s clad in a collared shirt, peacoat and scarf. He reappears in paint-splattered work clothes and heads down to the basement to deal with the floor.

The house is now home for the three of them, Lowe’s fiancee (What does she think of Detroit? She “doesn’t love it,” he says), and two more roommates who are starting companies — one of them dedicated to making low-carb pasta out of chickpeas.

And Nussenbaum, Dingman and Lowe are working on a tech startup to help other people do what they did — sort of. They call it Castle.

 Scott Lowe, Max Nussenbaum and Tim Dingman
Scott Lowe, Max Nussenbaum and Tim Dingman
Vjeran Pavic

Castle is an online property management company. For $49 per month per unit, the company handles tenant screening, rent collection, maintenance and on-demand workers. If you had to use one of those “X for Y” comparisons, you could call Castle an “Uber for landlords.”

The company’s first customers are other people who bought properties at the Detroit tax auction this fall. One guy bought 12 parcels at prices from $500 to $1,000 each. The Castle guys are helping him evaluate which ones to fix up and rent out (definitely not the one that was already a burned-out husk).

Lowe leads engineering, Nussenbaum is raising funding (turns out startups are a different kind of risk than real estate, he says), and Dingman is helping out operations by getting his real estate sales license through online classes.

Will the Castle founders stay in Detroit long-term?

“Once you get to the end of the two years [of the VFA fellowship], you’re like, why would I leave this city where I have all these connections?,” says Dingman. “We’re kind of big fish in a small pond — not to compliment ourselves — but if we moved to the Bay Area, we’d be absolute nobodies.”

Plus, there’s a good reason to work on a company like Castle here, Dingman adds. “Detroit is synonymous with real estate. You can’t live in this city without thinking about real estate on a day-to-day basis.”

This article originally appeared on Recode.net.