Wednesday, December 8, 2010

On foosball tables and economic development

Photo by Jon Cockley
A few weeks ago, while riding my bike in the vicinity of 5th and Washington, a friendly voice flagged me down. Jamal asked if I was lost; my stopping and starting and aimless observation of the neighborhood must have lent that impression. We ended up talking at length about Hudson, in particular the Hudson known to citizens like Jamal--young, minority, and living north of Warren Street. Jamal didn't tell me anything surprising, but it was nonetheless saddening to hear him say that "kids around here think that only white people are allowed to have businesses."

Jamal appeared to be in his mid-twenties. He works in construction doing odd tasks, earning enough to pay the rent on a basement apartment while supporting his young daughter. I asked if he had any business aspirations of his own. He thought briefly, then offered, "I'd like to run a gaming place. You know, people would come in, play video games or ping pong, I'd serve food and drinks." He presented his idea in a way that suggested he had not revealed it to anyone before.

What would Jamal need to realize his dream? 

"Money," he said. It's the same answer the economic development experts give, except they call it "capital." Jamal would need a big loan in order to rent or buy a suitable commercial space, renovate it to his needs, purchase games, equipment, and lighting, hire staff, engage lawyers and accountants, pay for advertising and insurance, and so on. Before opening his doors for business, Jamal would be in for a couple hundred thousand dollars, easily.

Which makes it very unlikely Jamal will ever realize his dream, at least according to the conventional, capital-intensive business development model. But there is an alternative model, and it provides a far more natural and less expensive path to economic growth, urban development, and self-actualization. My own recent experience, if you will indulge, will illuminate.

My partner Sorche and I rent the second floor of a house on Union Street. In addition to a comfortable apartment, we have access to a large, unfinished attic. A couple weeks ago, in anticipation of hosting visitors for Thanksgiving, Sorche perused craigslist for some entertaining diversions. She found a foosball table for $40, a ping pong table for $65, and a dart board for $35. We had to rent a van to bring everything home, but for a little over $200 we turned our attic into a pretty cool entertainment space.

Now to intersect our comparatively privileged reality with Jamal's: A century ago, folks like Sorche and me--and Jamal--would have been free to think, "You know, a lot of people in this part of Hudson would enjoy a place like this." We could have hung a cheap sign on the front of the house and charged folks a few bucks an hour to play games. Perhaps we'd have made a few sandwiches in the kitchen and sold them for a couple bucks each. And before anyone could say "business plan" we'd have a running version of the business Jamal can only dream about today.

While this might seem like merely a stray, if interesting, notion of how someone might start a business, it was how nearly all urban businesses in America got their start a century or more ago. You can still see the evidence in and around Hudson today: innumerable old buildings whose ground floors were converted to retail or business use a long time ago, only after they were built as residential buildings. These conversions allowed ordinary folks a way to make a good living while simultaneously enriching the urban landscape.

Such conversions occur occasionally today, but only within districts formally designated by zoning as mixed-use. Otherwise, the built examples you will find tend to date no later than the early 1900s. It was then that modern regulatory codes--building, labor, health, zoning, and so on--made it difficult and eventually illegal for Americans to open most types of businesses in their homes. The businesses taken off the table by regulation were not only the ones that helped make urban places urban--hair salons, laundries, restaurants, retail stores, repair shops, even taverns--but they were the businesses that citizens on the lower rungs of the economic ladder were most likely to want to open. This is why the explosion in home-based businesses over the past two decades has been limited to professional enterprises--financial consulting, software development, and other clean-hands undertakings: unlike the aforementioned, they aren't illegal to do in your spare bedroom.

The incremental economic development model is not perfect; I can think of a dozen reasons why it might not work in any given instance. But there are dozens more reasons why it generally works very well. The initial investment is small; so too is the disruption to the entreprenuer's life. Jamal wouldn't have to leave his daughter behind just to tend to his business. He wouldn't even have to leave his weekday job right away, if he wanted to try out his business idea on the weekends. And he could easily change his business if he discovered it needed to be something different from what he originally envisioned, or he could pull out altogether if he discovered it wasn't what he really wanted to do. Compare it to the oppressive situation Jamal would find himself in were he to gain access to the capital-intensive model: He'd wake up every day burdened by debt and committed to an obligation to run perfectly a business he hadn't tried out for even a day. It's a terrible set of commitments to visit upon either a city or an individual, when all anyone wanted to do in the first place was play a little foosball. 


  1. "kids around here think that only white people are allowed to have businesses."
    WOW I can show Jamal at least 5 non white owned businesses (if forced to count that way) with in 2 blocks of where you and he were having your conversation.
    Sounds like he listened to the bill of goods being sold by SLC just a few short years ago.
    love the blog btw

  2. Windle, thanks for reading and commenting. Trying to look at this from Jamal's perspective, I'm wondering: 1.) How many white-owned businesses reside in the same 2 blocks you mention? 2.) How many of the non-white owned businesses you mention are actually black owned? (There is a big difference between the experiences of blacks and other minorities regarding the pursuit of the American Dream.)
    I wasn't in Hudson for the SLC debacle... what was the "bill of goods"? Best, Matt

  3. It would take a very long time to answer your question about the SLC 'debacle' but in short they were 'selling' 125 jobs in the proposed cement plant which turned out to be only 1 when one did the real math. In spite of that, their PR job convinced people that we, the antiques dealers (i.e. white carpetbaggers from NYC, probably with pets and not children) were chasing the plant away.

  4. Jennifer, I was aware of the SLC debacle, but I'm not seeing the connection to Windle's point, i.e., that Jamal's views on black business ownership has something to do with SLC. There are black kids in lots of places in this country, untouched by SLC, who feel much as Jamal does.

  5. Just saw this blog, the relevant post and subsequent conversation. My two cents -- regardless of color, economic background, size of the business desired or its type, what's really required for a business to be successful is rational, focused strategic and tactical business planning. Not necessarily the fullblown, b-school type of 100+ page business plan, but something that permits the would-be owner to think through the challenges to success (besides money) and ways to overcome or avoid them. Sure, money is necessary -- when has it not been? -- but in my experience with my own and others' businesses, the only thing you know for sure is that mistakes will happen and hurdles will appear. Planning helps the entrepreneur overcome these, learn from them how best to grow their business.

  6. So, to finish the thought started with my last post, what Jamal needs more than money is a relevant business education. This can be in business admin, economics, philosophy, poli sci, law, history, ceramics, art history -- whatever, any liberal education will do. What he needs, more than money, is the intellectual wherewithal properly trained to think through how to make his business a reality. Part of this will necessarily entail his having to justify his choice of business, location, etc. If he can do this, if he can show that the business is a good idea but he lacks the money to get started, in my experience he'll be able to raise the money and, if properly crafted, such a deal should enable him to own the company outright within the foreseeable future. This is true regardless of the race of the entrepreneur. So what might help Jamal the most is some mentoring from an entrepreneur who can guide him through the process of thinking through his idea and what it will require to make it happen. More organically, what the community needs is a formal system to accomplish this either through the schools in partnership with local businesses or otherwise.

  7. Hmmm... $400 / start the next day / keep your current life intact versus $400,000 / start in 5 or 6 years / uproot yourself and your child. I suspect most people in Jamal's situation would prefer the former.

  8. Cool blog; please allow me to pontificate on Jamal’s, the black community’s issue. First off, Hudson is a far cry from its former self, but then again, depending on who you talk to, it has changed for the better. In my youth you could find many black owned businesses, chicken shacks, game rooms (like Jamal described) and bars, which Hudson had on every corner.
    Besides the lack of black owned businesses, there is a lack of black own homes. As someone who has lived in Hudson my entire life, I have watched as the majority of black home owners I knew move, sell or lose their homes. This is one of the problems people like Jamal face every day. How can someone conceivably think of starting a business, when they don’t have a stable roof over their head? This dilemma has forced elected officials like me to look deeper into the cause or causes of this issue. The top underlining factors I have found to be, lack of education, lack of funds, lack of role models/support system and the number one cause, lack of good credit. The lack of good credit is prevalent in the black community and its importance is understated. In today’s economy, the lack of good credit not only limits you from starting a business, it also limits where you can live and in some cases will determine what kind of job you can acquire.
    Saying you would like to buy a home or start a business is easy, but doing them is hard regardless of your ethnicity. With this in mind, there is a concerted effort to create some kind of information/training center in Hudson. Earlier in the year, we applied for but didn’t get a $250,000 grant which was going to be used to develop a training center in Washington hose fire house at the lower end of Warren St., right in the middle of the highest concentration of low income housing. Although the initial effort failed, doesn’t mean we are not going to continue the fight. This is an important issue and it is going to take people like those on this blog to help it come to fruition. I’m not sure Hudson can return to its past self, but I believe its future is bright and if I have anything to say about it, that means the black community too.