Just around the corner from where I live is this shop. Its in a small parade opposite Portslade train station, along with a couple of barbers, a greasy spoon cafe, a bric-a-brac shop and a newsagents. The parade is typical of the kind you find at the fringes of suburbia, where town centres dwindle to broadly residential areas with a few clusters of shops squeezed in between.
This shop used to be a record store, with a couple of rare items on the wall and the usual bargain bucket MOR in the shelves. After that, it sold second-hand white goods, and then about 6 months ago it had a brief refit before re-opening as a place to get your feet nibbled at by small fish. My daughters found this fascinating, and would peek in the window whenever anyone was getting a treatment, at least until the owners put up blinds to stop them gawping.
I was fascinated for a different reason. The shop seemed to generate business solely through Groupon promotions, and was doing alright for a while, with a steady stream of feet walking in for the Garra fish to nibble. Then, a couple of months ago, the blinds were open more often, the fish looked like they were getting hungrier, and the only thing to see was a bored-looking assistant.
A few more posters started appearing in the window for other services – photo printing on banners or canvases, and OoNaNa body and bath treatments. I imagine the owners were picking up other business ideas from Groupon that had that magic formula – small up front investment in stock/equipment plus niche demand times groupon promotion equals a profit marginal enough to pay the rent on a small shop in a fringe suburb. The window started to look like a physical version of the ads you see on bad websites – it was only a matter of time before teeth-whitening or simple weight-loss remedies starting appearing.
I wonder if this is the future of retail for some shopping areas in these austere times? It feels like the hipster-led ‘pop-up shop‘ idea has trickled down to something approaching a Demand Media business model for physical shops. The Groupon Shop feels like a brave, but slightly clumsy, attempt at algorithmically-driven retail, in which a tiny cost base can be the justification for a series of iterative attempts at creating a viable business model. Previously, only charity shops have had a cost-base low enough to take over the empty high st in a recession, but perhaps Groupon shops are a sign of things to come?
This feels like James Bridle‘s New Aesthetic pushing through into suburbia, in the most vernacular way imaginable. The future of retail is not malls full of check-out-less Apple Stores and immaculately groomed geniuses. Its marginal profits promised by multiple algorithms indexing millions of search queries, emerging like weeds in the gaps in the High St vacated by chain stores who have themselves been eaten by the remorseless efficiency of the Internet.
Or at least it might be, if the Groupon Shop wasn’t closing, perfectly mirroring the bubble of Groupon itself. What will appear there next? I’d like to think the owners will have another try, learning to iterate quicker, and discovering another couple of dozen business models that they can pick up and discard based on the algorithms of coupon sites. Maybe they need to be more like Zynga, who are the current masters of extremely rapid iteration. I’d quite like to buy our milk and eggs from a Farmville shop.
[Update: Just after I wrote this, NESTA tweeted a link to this high-end version of The Groupon Shop]
Over at the 4iP site, a few of us that have been involved in setting up the project have been posting blogs about creativity, innovation, public media and other 4iP related issues. My first post was a commentary on Clay Shirky’s FutureView keynote at the Edinburgh TV festival (disclosure: I produced his session).
Mike Butcher of Techcrunch has posted a rallying cry to create a ‘TechHub’ in London, based on the model of the Dublin Digital Hub. He’s looking for the same kind of serendipty and collegiate collaboration that you see in clusters like Silicon Valley. But in comments, there is a debate about whether these clusters are the result of physical proximity, or something more cultural and complex.
I have some personal experience of this, as I inadvertently ended up running a media centre in Yorkshire for a few years in the late 90s. We provided many of the services that Mike is asking for – a mixed ecology of entrepreneurs, artists, etc; discounted serviced office space; even a cafe. Obviously Huddersfield isn’t Shoreditch, but I think there’s some things we learnt that might be useful to Mike’s campaign.
My first instinct would be to say that the idea of tech-hubs and media centres has been around for at least 15 years in the UK’s creative industry sector, and almost every region (except, strangely, London) has their own version. Secondly, I’d question whether something as complex as establishing and running a physical office complex can be crowdsourced as easily as a logo or barcamp event, but actually, Tara Hunt’s Citizen Space seems to be doing well, and might be a good model. But rather than point out that the idea is not a new one, or shoot it down in flames, I thought I’d look at the idea from three perspectives – the people who might need a Tech-Hub, the people who might run it, and the people who might fund it. In my experience, its the overlaps and (more importantly) the differences between the needs of these three groups that most schemes like this don’t plan for, and find difficult to accommodate.
People who might use a Tech-Hub…
Want cheap office space that’s also cool and funky
Start ups, obviously want the cheapest place to park themselves. We used to subsidise the first 6 months rental, and offer schemes for recent graduates starting their first company. But sometimes even this isn’t cheap enough, so they also…
Start-ups want to cut deals to share space with friends, or visiting geeks, or anyone in fact who might give them money. Then if they get funding, they want to grow, fast, and start making the space look like a proper office. They also want to be able to grow or quit at very short notice.
Want to roll their own IT solutions
They want to choose their own ISP, hosting, comms solutions, etc. They want to be in total control, as this is their business, and the flexibility to bring whatever services they need into the building.
Want a cool, social environment
They want to meet other people like them in the shared spaces, and a cafe or bar that is relaxed enough to hang out in, but smart enough to host meetings with potential clients
Want 24 hour access, and good transport links
They want the place to be 100% secure, but also to be able to come and go when they please. They also want the local transport connections to be good, or to be able to reserve parking on site.
People running a Tech Hub…
To minimise capital investment
Kitting out a building is *expensive*. Even if you do it on the cheap, building regulations still count, and it costs a lot to bring the space up to regs in order to lease it to clients.
To maximise occupancy
Empty offices cost money, so at some point you’ll have to weight up whether to preserve the eclectic startup culture, or let any old company in. Would an accountancy fit with the Tech Hub culture? Or a solicitors? Or do you only want cool web 2.0 startups?
To minimise risk
Long leases and tied-in contracts will secure you the core funding you need to run the building every financial year, which is essential when you’re fixed costs (rates, interest, staff wages, etc) are constant and mostly in year-long cycles. Unfortunately, most businesses want to negotiate the shortest possible notice period…
To consolidate and resell services
Outside of office rentals, most workspaces make their main profit on buying in core services (comms, etc) in bulk and reselling to their clients. In fact, its preferable to have a lock-in, so that clients can only use your comms solutions in their offices. This tends to be fine for clerical and general business companies, but causes no end of problems with tech/media companies.
To outsource risky ventures like cafes and cultural events
Running a cafe or restaurant is a completely different business, so its preferable to outsource it rather than run it yourself. And finding somebody who is willing to do this, experienced, and suits your culture is bloody impossible, trust me. As for making the space vibrant and full of events – this is not impossible, especially if you’ve got creative businesses in the building, but don’t under-estimate the amount of work and money it takes to co-ordinate.
People who might want to fund Tech Hubs…
Want a clear business plan
Even RDAs and other public funders need to know that the investment is sustainable. This will be high-risk venture, as its based on high-risk clients.
Want to see an experienced management team
Just like VCs, public funders want a team who have done this kind of thing before, and know about regulations, Health and Safety, etc as well as the experience to know what works and what doesn’t. Most people with experience in this sector now work in the commercial office sector (REGUS, etc) which is very different from the kind of culture/commerce mix that Mike is proposing with Tech Hub.
Want to guarantee certain outputs every year
Public funding is output-driven – its created to achieve pre-agreed goals and targets, such as new business creation, jobs created, GDP increase, etc. The Tech Hub will have to understand how these are measured, and make sure that the business plan can reach these targets, or risk having funding pulled before the project is established.
Want ownership, credit or even representation
Depending on the amount of public sector funding, the funders will require equity stakes, branding opportunities, or even board membership. The last can be very problematic, depending on how good the funder’s suggested board members are. At the Media Centre, it took us years to clear out the Council-Elected board and replace them with people who actually knew how to run a business.
So – these are kind of things that aren’t immediately obvious when you go and visit a Tech-Hub, but these issues, and the conflicts between them, will inevitably be the key factors in it being successful. And these are just the most immediate loigistical issues that come to mind, and most of them are actually pretty easy to solve if you have an experienced team, some understanding and helpful funders, and the time to plan well.
The harder thing to plan for is that elusive spark that turns an ordinary building or location into a hub of activity, innovation, collaboration and economic productivity. This has been a hot topic in cultural policy circles for the last 2/3 decades. The policy makers in Huddersfield were very influenced by Charles Landry’s work, in particular his book The Creative City. More recently, Richard Halkett’s , research and policy team at NESTA have been producing some fantastic reports, including studies of historical trends in regional innovation and creativity in the UK, and Innovation and Cities.
But of course, reading all of these doesn’t actually help you achieve the alchemical mix of people, money and innovation that makes places like Silicon Valley hum. Sometimes you just have to take the plunge, build it, and hope they will come.
I hope Mike’s idea gets more support, and even better if something concrete happens as a result. I’d be happy to lend any spare brain-cycles I could to the cause. But the most important thing to remember is this – in an age of virtual companies and networked innovation, working in the real world is still as complicated, frustrating and inefficient as ever. And it takes more than a logo and funky cafe to solve these problems.