Next week our team attends Techstars Detroit, where they are going to join Demo Days of the Techstars Detroit Accelerator Program. Here is an interview with Ted Serbinski, managing director of Techstars Detroit on what is so special about Detroit and the entrepreneurial ecosystem.
Iza: A few years ago, you moved from Silicon Valley, the world’s biggest technology center, to Detroit. What do you find in Detroit that Silicon Valley is missing?
Ted: I got to Detroit through randomness. I didn’t realize at the time, but I was completely burned out, over-anxious and depressed after selling a company I was a CTO of. I was ready to move out from Silicon Valley. I googled “Detroit startups” and I saw some activity here. I just sent a cold email to a company that was starting a venture fund, and I moved here two months later. I realized what was missing in Silicon Valley was that kind of passion for something bigger than yourself. Being in Detroit, by working with all startups here, makes you feel like you’re contributing to something bigger than yourself. In San Francisco, you don’t get that sense of mission and purpose.
How has the Detroit market changed over the past few years?
The big thing that has changed is how people perceive the city — eight years ago you would ask yourself why would you ever go to Detroit and now? Many smaller and bigger changes contributed to a new perception. When I came to Detroit, I noticed the lack of good food choices. Now, there’s a lot of trendy food places and cocktail bars. That’s visible in the industry as well — there’s a higher density of people, tech businesses and startup people in Detroit.
You said on your website that you left Silicon Valley to build a legacy here. Do you treat moving to Detroit as this legacy, as a part of this journey?
When I moved to Detroit I found a sense of purpose, and I’m feeling that I’m doing something bigger than just working with startups and building startups. Now, I’m really hoping to influence and contribute to the Detroit startup ecosystem. My mission now is to help change entrepreneurs perceptions of doing business with Detroit.
Do you have a project that you are the most proud of?
I think that working with Techstars has been the most rewarding. Over the last 5 years, just in the Techstars Detroit program, 54 startups have come here to Detroit from 10 different countries. They are very diverse individuals and businesses and can work with entrepreneurs around the world.
How do you choose companies for your accelerator?
We invest at the inception stage. There are no metrics, you can’t measure revenue or customers when none of that stuff exists. What we’re looking for is the team and the right dynamic of the team. You can think of a startup like of a music band — there’s a singer, a guitarist, a drummer, and together they create the harmonist effect, but individually there wouldn’t be the music. We look for that harmony in teams of designers, developers, salespersons, executors.
What does Techstars Detroit’s application process look like? What brings the most attention to a startup’s application?
Application is open for about 90 days. The Detroit program applications open in January, and we can have hundreds and hundreds of startups applying. The application should be an insight into the business. The biggest thing we looked for is authenticity, the right personality of the founders behind the application. The team video can be really insightful — showing who is the team, how they think.
Each accelerator has different methods while working with startups. In your opinion, what is the biggest value that Techstars Detroit gives to companies in your accelerator program?
What makes Techstars different than other programs is that it is a mentorship-based program. This means that you get hundreds of mentors that come by to the program to help startups. What makes Techstars Detroit different is that we take the mentorship-driven approach, and then we overlay that with the industry approach. We have mentors that have expertise across the automotive industry, transportation and manufacturing. I take it one step further, and my own philosophy is that relations with startups in the program is not a transactional investment, it’s rather a long-term relationship.This program is about opening a lot of doors — when you leave the program, you are not alone. If you have the right network, you might be able to find the right opportunity for growth.
Could you think of a historical success of one of the startups that joined the program? What did the company have that enabled it to achieve success?
In 2016, we had a company called Cargo. They have invented an idea of putting a container the size of a shoebox in an Uber or a Lyft, and use that to sell convenience store items, like snacks. Cargo was a team of two, and at the time they joined the program, they had only the concept. There was no legal entity, no business. They’ve now raised over $35 million from Peter Thiel’s Founders Fund, they have a huge partnership with Uber, and they were in the news talking about helping Uber make more money. They were able to leverage their program to build their network into Uber’s and Lyft’s. They were following a big market that was about to get much bigger and solving a really big issue of how to help Uber and Lyft retain their drivers, and if we keep drivers, we can help them make more money. They were able to follow two megatrends, and the founder had a background in delivering goods. So, it’s a combination of all the right ingredients.
At an early stage, one possible way to boost your speed is to find an external developer company that will help you grow. From your experience as a person with technical background and an expert of startup growth, how do you perceive a partnership with a development company?
Today we see an exponential growth of applications. It’s no longer enough to build a website — now, you should have a website with an app that has to work on a tablet and have a scalable backend. Now, you want to throw in a tremendous amount of data, connect with diverse data sources, apply machine learning. It’s generally much more complicated to build a technology business today, and it’s hard for one person to build all the technical support. Now, you need lots of technical people. I think early on, a lot of startups struggle with that they can build a business, but what is slowing them down is not just the technical capacity but building tech in the right way. There’s a lot of ways to build something from a technical perspective, but if you can tap into a dev shop that has built a lot of these things, like Tooploox, you can reuse best practices. The difference between a good developer and a great developer is not by a little bit; it’s actually an exponential difference.
What should you have in mind while choosing the right dev shop?
The biggest mistake startups or corporations make is first looking at the overall cost. It happens that a company optimizes by trying to price out and price down or when it’s valuing all developers the same, not realizing the difference between a good developer and a great developer. When something is built in the right way you get exponentially more results and ROI from it over the long run. Additionally, a company can experience misalignment of goals. To avoid that, instead of hiring a shop to do a specific thing, one could think of finding a long-term partner tying with them their success.
What is your experience working with remote teams?
I primarily work with remote teams. Techstars is remote. We are in Detroit, but programs are based all over the world. When I was in the developing world doing open source software developers were all over the world, as well. I think remote working is a great way to leverage the best of the best from around the world. On the other hand, it can also be hard if you’re a small startup to work with an outsourced development shop, especially if that development shop doesn’t have the expertise, or management. However, if the shop understands the full lifecycle development you can get a lot of leverage in terms of currency conversions and costs.
Have you ever had a Polish startup apply to Techstars Detroit?
We’ve probably had a handful, but none of them really stood out. It’s different with Tooploox. Tooploox, as a great technical development firm, is a company you’d think you will find in San Francisco, but it just happens to be in Poland.