Who decides retail? {Hoodstarter}

Uh, is this a problem? Who decides what businesses a community needs?

I’ve been contemplating this subject matter for quite a while. It boils down to commerce, capitalism, and “free market.” Especially in Hoboken…

In other words, when it comes to “businesses” in a city, community, neighborhood – what typically happens is that someone “takes a crack” at instituting an operation of some kind. Call it a dry cleaner, nail salon, restaurant, bar, convenience store, apparel shop or whatever. Sometimes they succeed, sometimes they fail. Their reasons for success or failure depend on many things. Market research, business plan, supply & demand, etc. Opening a “32 week pregnancy juice shop” in Boca Raton would probably limit your clientele to the point of “Bankruptcy in hours, not days.”

My point is – that the market typically decides what works and doesn’t work simply by where the money is actually spent. Simple as pie. Some idiotic businesses prop up and we watch them fail like a car wreck. They last for a brief stint and go away as fast as their money does. Lesson learned, experience gained.

That to me, is “capitalism” at it’s best.

However, there are very weird new operations popping up that are sort of looking to take this “individual risk” out of the equation and turn it into yet another collective “community” decision…

Hoodstarter Crowdsourced commerce - Who decides retail? {Hoodstarter}

Say hello to Hoodstarter

There is this new “progressive” website called Hoodstarter that is ambitiously trying to change the way capitalism works – and turn it into a “crowdsourced” method.

They want to get rid of the old-fashioned way business used to work, and turn it into a community based “we want this now!” model.

Basically, like Kickstarter, which allows a project, product or other local business earn some funding (while “rewarding” supporters with something of tangible value) – Hoodstarter sort of works on the same premise.

So what exactly is Hoodstarter trying to be?

Here is their “pitch” (and my concerns below):

“Every community has vacant commercial spaces. We believe you and your neighbors should decide what moves in. That’s why we developed Hoodstarter…”

(Wait a minute – so the residents and patrons have the birthright to decide? I thought taking the initiative to start YOUR OWN BUSINESS was the traditional way of “deciding” what moves in. BY DOING IT YOURSELF! Holy crap!)

“With Hoodstarter you identify vacant spaces, suggest what should move in, vote on the best ideas, and help fund the businesses that want to set up shop in your neighborhood…”

(Okay, we’re making some progress with the “funding” aspect of that… but it leaves a LOT out of the equation. Because that boils down to SEED FUNDING, which normally gives investors a return on investment if the business succeeds… not just a crappy t-shirt. more on that in a minute).

(Additionally, we’ve been doing that on Hoboken411 for almost a decade – by simply talking about it – and providing free market research for potential entrepreneurs.)

“When you share ideas and vote at Hoodstarter, you help make your community attractive to potential business owners. The more ideas and votes associated with a specific location, the more likely a new business will find your neighborhood a friendly place to locate. And the more likely your neighborhood will get exactly what it wants.”

(This has many potential holes. For one – you’d have to have a massive user base across all age groups and financial levels. Even greater than “Facecrook.” Because if you do NOT have an accurate representation of who would eventually be the ongoing patrons to said businesses – you’re set up for disappointment. The younger generations can talk a big talk online, but often cannot back it up with their wallets.)

(And “votes” online – no matter how many – will never be good sample without widespread adoption – nearly 100%.)

How Hoodstarter gets “rewarded” for this service – is 5% of all revenue generated. So they’d have to rely on $20 million dollars “donated” by people just to earn their first $1 million.

Slow adoption in MN, would it work in Hoboken?

Like we mentioned before this is like the “What Next?” feature on Hoboken411 – but with added monetization.

And they launched this year in Minneapolis, Minnesota – with what appears to be a tepid response so far (but they are still in “startup” phase, to be fair).

But would this “crowdsourced” way of “deciding” what moves into town really work? Would the revenue be enough to keep Hoodstarter in business?

The good, the bad, the ugly about the Hoodstarter concept

The “good” about Hoodstarter:

  • There could be some benefit “centralizing” the discussions regarding commerce in a particular city. Having a single web portal dedicated to those discussions is one of the initial positives I saw.
  • The “funding” aspect of this model is a fairly cool attempt at improving the “I want” mentality of the equation (i.e., put your money where your mouth is).

The “maybes” about Hoodstarter:

  • This type of “market research” has the potential to get tainted with false negative reviews (like how Yelp is essentially useless now). Most online “debates” become divisive and counter-productive.
  • Is the “funding” aspect of this sustainable? How many “micro-angel investors” can there possibly be? Especially in down economies? What happened to people raising their own money?

The “no thanks” about Hoodstarter:

  • I still can’t get over fact that this company believes that is the community’s choice what should or should not be implemented. Like I said before, if someone WANTS something, they should do it themselves. Sure, if it prevents a shitty business from opening – that might be okay, but it’s not the way true supply and demand works.
  • Depending on “votes,” I can see how a a business might get “voted in”- and it still FAILS. Can one demographic sustain a business? I don’t think so.

Maybe this is the wave of the future?

While Hoodstarter is not 100% original (“mashing up” other crowdsourcing concepts), it does have the potential to change how commerce works. But like I suggested earlier – it needs CRAZY widespread adoption for it to be truly successful nationwide and beyond.

Who knows, if they get some positive momentum – it’s quite possible they’d get absorbed (bought) by a much larger entity like a Google or Facebook.

And most certainly – there will be lame-ass copycat-copycats who muddy the waters with almost-similar technologies. You can almost bet on that (if there aren’t already half a dozen like Hoodstarter).

Is this how funding will work for everything eventually? If so, I can see how the more crowded the field gets – the more “lost” the rest of the people will become – rendering everything back to square one again in terms of obscurity.

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