Entrepreneurship

Straitjackets for New Ideas

What happens when an idea doesn't fit the regular regulatory categories?

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One of the toughest economic challenges "is discovering what consumers want that doesn't already exist and making it happen," Virginia Postrel writes in her latest Bloomberg column. "Regulatory power, by contrast, requires a finite number of rigid categories into which every new idea must be crammed, no matter how it is deformed in the process."

Starbucks

When Starbucks, for example,

wanted to open stores in San Francisco, it discovered that many neighborhoods had banned the conversion of retail spaces into restaurants, reflecting a surprisingly common city-planning prejudice against eating out. Starbucks could sell coffee to go, but it couldn't give customers anywhere to sit unless it located in busy shopping districts away from where people lived. Already a well-established company, Starbucks lobbied to get a new zoning category created, "beverage houses." Now you can find all sorts of coffeehouses in San Francisco neighborhoods where they were once forbidden.

Postrel notes that this "only happened because a wealthy company had the resources to survive in less desirable locations while it worked to change the rules." Most enterprises, and most people with new ideas for enterprises, aren't as big and rich as Starbucks.

And that's what it took to open some coffeeshops with chairs—not exactly a bold innovation, even if it felt like one in certain sectors of San Francisco. Postrel points to plenty of other products, from Airbnb to "tailored and dynamic cocktails of bacteria-attacking viruses," where the regulatory straightjacket has been even more confining. To read the whole thing, go here.

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  1. Certain San Francisco neighborhoods had a lot in common with Cuba, and then Starbucks ruined it.

      1. Was it faithful – or as the latins like to say – fidelus to the spirit of Castro?

    1. SF has a lot more true believers in communism.

      1. It’s a lot easier when the communism is mostly theoretical.

        1. So when they seize the means of production, does that mean enslaving software developers? Or just taking their computers? Because I don’t think the computers would be much value without the human capital occupying them.

          1. Easy one, since communism makes everyone a slave.

  2. It’s the problem with establishing drone delivery services. The federal government has made it nigh impossible.

    But Amazon has the resources to lobby, and so they can use their financial position to pursue what promises to be big business and have a huge advantage before any smaller developers can because it’s too risky to pursue something that you may not be able to get the regulations changed to allow you to operate at all.

      1. To be fair, Japan doesn’t really have pizza to be delivered. Sure they will tell you that you can order a pizza but when it shows up it is just some dough with random things on top. Like mayonnaise, corn and tuna.

        1. I love how they put corn flakes on ice cream and call it a “parfait”.

      2. Snow in Tokyo after 54 years! Climate change!

  3. You cannot allow people to just do as they please, especially if they’re only doing it to make a profit. That’s worse than anarchy. That’s theft.

    1. No! It’s crazy talk

  4. And this-

    many neighborhoods had banned the conversion of retail spaces into restaurants, reflecting a surprisingly common city-planning prejudice against eating out.

    is my cue to reiterate my belief that single use zoning has been one of the most pernicious and destructive forces in American life for decades.

    1. Hey, just because you own something, doesn’t mean you should be able to use it in any old way!!!!1111ONE!Eleventy!

    2. Its never off-topic, in my opinion.

    3. You ever looked at strongtowns.org?

      Interesting site as the founder is libertarianish leaning conservative type. Lots of the readers/writers/commenters are more hard left who are more into the smart growth/anti-sprawl stuff, that seems to align with him. Then he writes articles on how he opposes smart growth and throws them into a tizzy.

      Its amusing. And I like a lot of what he writes.

      1. Robc is correct. Add strongtowns to your bookmarks. F the squirrels at hnr.

      2. I just came from there after you suggested strongtowns. I want to run down bicyclists with my jacked up one ton now.

    4. Its funny how zoning also bites them in the ass in two local towns when life was booming they rezoned downtown so that real estate offices couldn’t be in prime retail space since the cities didn’t get sales taxes from them. but once the economy turned and several store fronts became empty the city was happy to get anything back into those spaces so that the downtown area didn’t look like abandoned town. So now once again tourist who pass by a real estate office and see all the homes maybe they will buy and grow the town once again.

  5. I spent a bit of time at Salon (I know, I’m a masochist) talking to people about the effects of regulation and zoning on poor people and social mobility, especially as it relates to inner-cities. I actually got through to a few people, which surprised me. Taxi cab regulations seemed to be the one that people could most relate to, which Reason has been pushing for a while with Lyft and Uber, though I did not speak of those two companies directly.

    1. I’ve gotten “yeah sure, like zoning and licensing laws are the biggest problem for poor people”. They just need bigger welfare checks.

  6. reflecting a surprisingly common city-planning prejudice against eating out

    That is weird.

    1. Yeah, I’ve never heard of this either.

      1. Probably much of this “prejudice” is a reaction to residents with no garages complaining they can’t park in front of their houses because of people lounging at the eateries.

  7. Is Starbucks the only megacorp that hipster doofuses don’t mind killing off small mom and pop shops?

    1. Well there was that thing about Starbucks supporting the 2nd Amendment…

    2. Probably, but in this case Starbucks effected change to allow a few mom and pop shops to be created.

  8. First you allow coffee to be consumed on the premises and the next thing you know there will be alcohol consumed on the premises.

    But I wouldn’t doubt if the law is old enough to keep Chinese tea shops out of certain neighborhoods.

    1. Oh yes there’s trouble
      Right here in San Francisco
      With a capital T
      And that rhymes with C
      And that stands for coffee

    2. Starbucks has talked about adding alcohol to their menu. those basterds had a long term plan to get alcohol on every street corner all along.

      1. The Starbucks near me now serves wine.

      2. The Starbucks liquor was short lived. I enjoyed it.

  9. What happens when an idea doesn’t fit the regular regulatory categories?

    You create a new regulatory category. Now I’ll read the article.

  10. Postrel notes that this “only happened because a wealthy company had the resources to survive in less desirable locations while it worked to change the rules.” Most enterprises, and most people with new ideas for enterprises, aren’t as big and rich as Starbucks.

    And this is lost… lost… lost… on a certain political set. Lost.

  11. You ever looked at strongtowns.org?

    I haven’t. Sounds like I should.

    1. From their mission statement–

      A Strong Towns approach:

      Relies on small, incremental investments (little bets) instead of large, transformative projects,
      Emphasizes resiliency of result over efficiency of execution,
      Is designed to adapt to feedback,
      Is inspired by bottom-up action (chaotic but smart) and not top-down systems (orderly but dumb),
      Seeks to conduct as much of life as possible at a personal scale, and
      Is obsessive about accounting for its revenues, expenses, assets and long term liabilities (do the math).

    2. Bookmark it.

  12. Very interesting. Bookmarked.

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