Third places and neighborhood entrepreneurship (2024)

Or, the kind of people who are likely to create startups are drawn to cities that are big on coffee shop culture.

As usual the direction of causation is a bit difficult to tease out

I think you have to assume the ability to meet other people like that helps in founding start ups though?

What throws a big wrench into determining causation is that Starbucks tries to avoid opening where there isn't already a sufficient customer base.

Even if you do manage to tease out causation tech and other "sophisticated" industry startups are also just the tip of the entrepreneurship iceberg.

The bulk of the area under the curve of a city's wealth is the long tail of blue collar people who wouldn't voluntarily associate with the kind of people who go to Starbucks starting and making moves to grow businesses that HN snobs don't even notice.

The brief summary on the actual paper (https://www.nber.org/papers/w32604):

"...tracts that received a Starbucks saw an increase in the number of startups of 9.1% to 18% (or 2.9 to 5.7 firms) per year, over the subsequent 7 years. A partnership between Starbucks and Magic Johnson focused on underprivileged neighborhoods produced larger effects."

Seems like third places have strong effects here.

I wonder if it's more free wifi and an air conditioned/heated room than anything else.

Blue collar people drink starbucks, HN isn't a monolith of elite snobs. Please don't use unfounded or un-provable negative stereotypes to try to make a point.

If you read the article, you see that the effect was pronounced in lower income areas where a natural experiment was effectively run with Magic Johnson's intervention. Which kind of goes directly against what you are saying.

This isn’t enough information about the study to tease out cause and effect. There may be a third confounding variable that positively impacts both entrepreneurship growth and Starbucks growth.

For instance, what if Starbucks only decides to move into neighborhoods that have reached a certain level of economic growth (ie number of households, number of business, etc…)? Neighborhood economic growth would likely attract entrepreneurs as well, and we wouldn’t be able to conclude that Starbucks had anything to do with entrepreneurship growth.

Said a different way, would adding Starbucks in the middle of the Atacama desert grow Peruvian entrepreneurs? I mean come on it’d be the only third space around!

I can’t read the full paper because I don’t have a subscription, but the fact that they don’t call this out in the abstract makes me doubt it’s a meaningful conclusion.

My snobbish take that always gets downvoted was that you couldn't get a good cup of coffee in NYC during the 1990s. [1] There seemed to be two or three Starbucks on most blocks, probably because they thought they could fool stock market analysts into thinking it was that way coast to coast (like Duane Reade?) Independent espresso bars, which you could find in any mid-sized city in a flyover state by then, were driven out and you were left with bodegas and Jewish delis that served terrible gas station coffee at best.

Not long after, this Ithaca company

https://gimmecoffee.com/

opened up a shop in Brooklyn and won an award for best coffee in the city, half because they have great coffee, half because they had no competition. It is better now, but the standard for gas station coffee is vastly higher thanks to things like

https://concordiacoffee.com/products-tag/convenience-stores/

[1] An astonishing hotbed of conformity. Sitting out in front of the headquarters of Fox News I was told that my wife and I were the freakiest looking people they'd seen in NYC and we only had matching costumes of t-shirts, jeans, ALICE packs and boonie caps with plastic flowers.

Or cities that were growing had a Starbucks join up? I highly doubt people get enthusiastic and start working because a “Starbucks” (specifically) opened up in the neighborhood.