Ephemeral Businesses, Detroit Reversing the Doom Loop, & The Kindest Thing You Can Do
Small Cities Weekly | 04.26.2024
As part of the work we are doing on the Small City Segment, we send out a brief weekly post of thoughts, links, and research in progress that reflect the week’s work. I’d love to hear from you if you have any thoughts, questions, disagreements, or things to add. Please forward this on to people you think might enjoy reading it.
Ephemeral Businesses
There have been a lot of headlines lately about 23andMe and their struggles, as the initial business of selling DNA tests finds the limit of its market and declines in profitability. At the same time, the pivot into other lines of business, like drug development and research is taking longer and more capital than expected. It’s currently trading at a market cap that is less than cash-on-hand.
I am not an expert on the company or its journey, but it did spark some thoughts about the expectations we put on companies. Every tech company is expected to build something that will last for a very long time, with investors, founders, and employees hoping to compound value long into the future.
But what if that is just an unreasonable expectation? Are there other models that may make the same path a success, and not a failure?
It got me thinking about different potential categories of businesses, in terms of their longevity:
Ephemeral - these are businesses that have a natural end point, probably because of natural limits to the size and frequency of need
Enduring - these are businesses that solve a need that doesn’t change much and is (in some way) ongoing
Evolving - these are businesses that somehow blend the two; as a company they find a way to be enduring, but in any particular era they are a bit ephemeral. They do this by successfully pivoting from market to market, problem to problem.
Everyone wants an enduring company. Evolving seem to be the second in demand. No one wants to touch the ephemeral.
If we structured capital and expectations differently though, maybe ephemeral could be exciting? Imagine if 23andMe had been able to keep capital raised much lower and focused on only profitably delivering tests. From the beginning, they had made it known that their goal was to deliver DNA tests for as long as it remains financially viable, trying to build the biggest DNA dataset in the world. Investors, founders, and employees get paid out through dividends of a profitable DNA testing company. Once it is no longer financially viable, all IP - DNA testing and anonymized DNA data - will be open-sourced for use by the scientific community. A “profitable project” might be an alternative name for this type of endeavor.
This is probably wrong and impossible for all sorts of reasons. In the case it’s not, it’s an interesting alternative framing for the problems that entrepreneurs could solve - releasing them from having to twist them into something that they aren’t.
Links
You can find links from this and all previous editions here.
Most Wisconsin dentists don’t take Medicaid. That leaves limited options for patients who need care., Hope Kirwan, Wisconsin Public Radio
“They’re forced, in many cases, to take a loss in order to see those patients, and many practitioners will do that,” he said. “But we don’t have the ability in a small practice environment to do a lot of cost shifting like you would with a bigger hospital or a bigger medical facility with multiple providers.”
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In order to further increase access, Hansen said the state also has to address the overall shortage of providers. Retirements among dentists have increased in recent years, both in Wisconsin and across the country. The number of dental hygienists has also declined, causing some dental offices to have to cut back on the number of patients they can see.
I don’t know how you solve this problem without policy interventions but these are two trends that are true across many types of healthcare, not just dentistry.
Reversing the Real-Estate Doom Loop Is Possible. Just Look at Detroit., Konrad Putzier, WSJ
He calls his real-estate development strategy the “big bang approach.” Downtown needed apartments, retail and modern office space. “Well, what do you do first?” he asked. “We thought, you really have to do it all at the same time to make it work.”
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Rock-bottom office rents long ago forced developers to come up with other things to build. They added casinos and sports venues and restored aging theaters. That made downtown less office-dependent, an advantage in the age of remote work.
“An allegedly smart urbanist would have probably said don’t do that—billions of dollars on stadiums and casinos,” Florida said. “It sounds odd to say this, but in a way their downtown looks more like a Miami or Las Vegas.”
Two weeks ago, I shared an article about St. Louis’s impending real estate doom loop. This week, the WSJ had a follow up article about Detroit and how they have managed to reverse the loop. We talked about one strategy being “a need for an almost irrational actor to break the cycle described above. Someone willing to bet so long-term on a downtown that the “numbers” don’t matter to them on the type of horizon that most people would consider reasonable.” Dan Gilbert’s “big bang approach” is very much in line with this idea.
The Kindest Thing You Can Do, Scantron’s Newsletter
To ever get anywhere in your career, someone has to take a chance on you. All it takes is to have one person believe in you when no one else will.
…Taking a chance on someone is one of the kindest things you can do. You just may never know where it may lead.
I’ve been very interested in the idea of Angels as Activators in small, nascent entrepreneurial ecosystems. I like this essay because it pushes on a lot of similar ideas. What seems important that are not necessarily covered in either is that often times taking a chance on someone works because there is some risk involved for the person making the bet as well. That’s what makes it such a special and valuable thing to do. I’ve benefited this from multiple people in my life and couldn’t be more thankful for it.
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