Why Investors Should Care about “Third Places”

I’ve been thinking a lot about the concept of “third places” recently, and particularly how startups are capitalizing on this non-tech based macro trend.

What is a Third Place?

Ray Oldenburg is widely regarded to have been the thought leader behind the concept. In his 1991 book, third places were originally defined as “the public places on neutral ground where people can gather and interact. In contrast to first places (home) and second places (work), third places allow people to put aside their concerns and simply enjoy the company and conversation around them. Third places “host the regular, voluntary, informal, and happily anticipated gatherings of individuals beyond the realms of home and work.”

The History of Third Places

Historically, third places were the village square, local park or the community’s religious institution. In post-war America, the shopping mall and movie theater became popular and ubiquitous third places. Remember when we all used to go to the mall just to hang out, meet friends and maybe get a snack at the food court? It was a social gathering place for a mostly suburban community. But not anymore.

Online = Third Place?

Then came online. Social media sites like MySpace and Facebook and then Twitter, Snapchat and Instagram allowed us to keep in touch with our friends digitally. Technology like Viber, What’s App, Skype, FaceTime, etc. let us keep in touch with far-flung communities. But were any of these really a true third place?

Online Isn’t Enough

Evidently, online just hasn’t been enough of a third place. At the same time as we’re see ever-better ways to communicate, interact and connect to people over online channels, there’s been a renewed demand for offline places – physical locations and events where people can connect again, IRL. A new third place. But this time, it’s not one size fits all. Our third places are now interest- and community/demographic-specific. That’s a huge opportunity for entrepreneurs and we’re starting to see that play out in these sectors:

  • Boutique fitness communities – You’ve heard of them all – Soul Cycle, SLT, CrossFit, and dozens more. All with devoted fanbases who are regulars and even sport their studio’s logos when not working out.
  • Activity-based places – One of the clearest examples here is Massachusetts-based PaintNite and its many sip and paint competitors all over the country that provide a fun, easy activity that groups of friends can do together in a physical space.
  • Co-working and co-living places – WeWork may be the best known co-working space, although there are plenty of others. Newer startups include co-living models that create communities for young people early in their careers (e.g., Founder House, Common, Krash).
  • Affinity-based places – Networking communities (e.g., Ellevate, Meetup) have been the start of this trend and they do offer physical events, but I’m guessing we’ll see more of these morph into physical locations. I know of at least one startup that’s working on this, and there are probably others out there.

So why should we as investors care? Because more and more, these businesses are investable and scalable businesses – and we’re missing out if we don’t pay attention.

 

 

 

 

 

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