On Nurturing a Startup in Detroit, Labyrinthine Bureaucracies, and RoboCop: A Conversation with Jerry Paffendorf

10/25/11Follow @XconomyDET

Jerry Paffendorf is one of those people who is always up to something cool, whether it’s spearheading a hugely successful crowdfunding project to get a RoboCop statue erected in Detroit, or selling vacant city properties by the square inch on the Web through his social entrepreneurship startup Loveland.com. I met him for coffee recently after making his acquaintance in September at TEDxDetroit, where he told me about my colleague Wade Roush’s excellent 2010 Xconomy profile about him. Since then, his Loveland crowdfunding project had grown, and it seemed to be a good time to check in with him.

“Detroit, in my experience, is not always inviting if you’re trying to do something different,” the San Francisco/New York transplant said. “At the moment, there’s clearly not a lot of money here. If I were doing this in New York or San Francisco, there would be more people jumping in, but it wouldn’t be nearly as interesting or impactful as what we’re doing in Detroit.”

And what, exactly, is Loveland doing in Detroit? Paffendorf says they’re “putting a lobster trap in the dark ocean” of the Wayne County Foreclosure Auction process by mapping the Detroit properties for sale during the 2011 auction. Round two of the auction began October 21 and runs through Thursday. They’re also selling land for $1 per square inch in a 50,000-square-inch “microhood” called Hello World after successfully selling all the pieces of their first microhood, Plymouth, to 588 people across the globe. There is also a mapping project designed to make intricate maps of city neighborhoods available as free downloads to the public for fundraising, canvassing, and land-buying purposes. Finally, there is Lovetax, which allows users to offer microloans to selected projects through a voluntary monthly subscription, or “tax.”

While one may be tempted to look at Loveland’s endeavors as “airy-fairy ideas about virtual communities and social entrepreneurship” (thanks, Wade!), Paffendorf is dead serious about making sure his efforts benefit the community rather than profiteers. His top concern in selecting properties for “inchvestors” is making sure Loveland’s ownership doesn’t disturb the neighbors or impede investors who are more serious about making the neighborhood a better place to live.

He tells me a story about an artist friend from New York who learned about the project, became excited, and placed the winning bid of $2,000 for a vacant property. He was contacted immediately aftward by the person he had been bidding against for the property. Turns out the other bidder lived next door to the vacant dwelling and wanted to buy it in order to board it up and keep it safe from squatters and vandals. Paffendorf’s friend promised to do what the neighbor intended, but life got in the way and the property he had acquired in Detroit was forgotten.

“What really kicked me in the stomach was that, if the neighbor had a simple way to communicate his plan ahead of time, my friend never would have bid on it,” Paffendorf said. “That’s why our maps now have an added ability to comment.” (I lost a whole afternoon last week reading the comment feed, which has community members weighing in on whether a home’s current tenants are suspected squatters or innocent people with shady landlords, how sound the structures are, and other surprisingly interesting bits of neighborhood gossip.)

Paffendorf calls his involvement in the auctions a bit of an accident that came about during the process of buying the Plymouth microhood. Back then, in 2009, Wayne County’s auction process wasn’t yet online. Instead, interested buyers like Paffendorf went to an office building downtown, where they were handed a list of available properties that was the size of a phone book. Paffendorf took notes on the parcels he had his eye on, drove around to confirm his interest, and then returned to the office on the day of the auction. The first day, he couldn’t get in because the room only held 350 people and he had arrived too late. The second day, he arrived early enough for a spot in the auction. He did that again the next day, until finally his property was called and he made his successful bid. But the ordeal left a bad taste in his mouth.

“It was like an unannounced silent auction, because I’m not sure people know unless they’re one of the specific actors in the room” Paffendorf said. “I was shocked by how few properties sold in the first round—only 111 properties out of 13,000. It couldn’t help but feel really inefficient. It was a downer environment all the way.”

The downer environment didn’t end when the auction did. Paffendorf said after he went back to the downtown office to pay for his property, he received a call from the office that afternoon asking what he intended to do with the property. Paffendorf, not yet accustomed to Detroit’s unique bureaucratic challenges that seem to haunt what should be otherwise simple transactions, told the woman on the phone that he planned to use it for a “virtual reality project.” She was not impressed. She told him he’d have to go before city council to get approval.

Another trip back to the office and four clerks later, Paffendorf was finally able to straighten out the mess he had gotten himself into with his cavalier description of Loveland’s crowdfunding plan. Though at the time it seemed to be drudgery of the highest order, the experience proved valuable.

“For what we’re doing to be really effective, we need to be open to meeting the needs of city offices,” Paffendorf said. “In our experience, the best way to go about it is to move thoughtfully forward.”

Move they have, growing Loveland into a multi-purpose nonprofit site that now engages as many locals as it does techgeeks and artpunks from the Coasts. Paffendorf also took his crowdfunding skills to a new level when he embarked on a Kickstarter project to get a RoboCop statue built in Detroit, earning not only widespread public praise and participation, but also national press coverage in outlets as vaunted as the New York Times, ABC News, and NPR.

Paffendorf said he’s raised $67,000 toward the statue so far through Kickstarter. San Francisco artist Fred Barton, MGM’s official licensee for RoboCop, will build the statue to scale from a variety of studio sources and original stone molds, and the final product will stand at Wayne State University’s TechTown.

Paffendorf said his life and work since moving to Detroit, like the RoboCop project, has moved on a trajectory from “interesting to important.”

“Micro real estate was a heck of a way to learn about the challenges here,” Paffendorf said. “In Detroit, it’s different because there are such huge opportunities and such huge creative challenges. I don’t relish the problems, but I do appreciate the scale.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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