Monday, August 17, 2015

Hard Knock Life For Investors

For past blog posts, we've seen that geek "community" businesses have been cropping up around the country. From bars and lounges to gaming parlors and cupcake shops. In our area, Dallas/Ft. Worth, we don't really have much of a gaming lounge. They've attempted to make gaming bars happen, but they seem to disappear within a year of creation. So for a number of us, we look to these bars as passing phases. People attempting to get rich quick off of the nerdy buzzwords of late. And for most of us, we know better then to dump our money into crap products. Word travels fast among us. :)

Which is why I was surprised to see not only another attempt at a gaming den, but this one initially asked for $500k on Indie GoGo (now it's $275k but wow...that's a lot of money). It's called Hip, Slick, and GEEK. Their plan is to have a retail center completely focused on nerdy products, along with a café, and gaming area. With an opening date of late 2015 (really?) to early 2016 (I mean...really?), they plan to take over a Texas city in the DFW metroplex and let the geeks multiply.

So why is this an issue? What's wrong with a start-up company asking for money?

When business Gods & Monsters opened up in Orlando, Florida they only asked for $15k on Indie GoGo to help ensure that they get everything that nerds and gamers wanted in the store (better computer monitors for example). The other 98% of their funding came from investors and loans. They went to a bank, proposed their business plan, and went through the proper channels to ensure they received the capital they needed to start. Asking for $275k to be completely crowdfunded for a business sounds shady. It raises a lot of red flags. This isn't the norm, and could potentially be illegal with the city.

Look to this as a general guide of what to scan before deciding to drop your money on a GoFundMe, Indie GoGo, Kickstarter campaign. And remember, with sites like GoFundMe and Indie the recipient keeps every dollar donated even if the campaign isn't fully funded. Only Kickstarter has that "goal" restriction.

Flag #1: Why didn't you ask a bank for a loan? Why aren't your getting investors on board? Why haven't you saved up if you knew you were going to be starting a business?

Flag #2: Time frame. It's mid-August right now. And they plan to have a shop open and stocked in 4 months? Let's give them the buffer of early 2016 and say 7 months. That puts them in mid to late March as an open date. While it's feasible for a store to open in such a short time-frame, the amount of customization that the business wants to dive into, 7 months is not enough time. They have to factor in not only stock and getting vendors to provide them goods, they need to go through licensing and health inspections for serving food and drinks. They need to ensure public restrooms are available (because in that city, if you serve food, you are required to have a bathroom open to the public). And have a working internet connection throughout the store if you want gamers to stick around. It all adds up to a lot of time that half a year is not enough to bring this type of business into a working condition. Health checks alone can easily take 3-5 months. Minimum.

Flag #3: The dollar amount. While it's been scaled back to something more manageable, $275k from the public is A LOT of money. One of the things about Texas that a number of our politicians preach is that this is a great state for business. And it's true. With the numerous amount of tax cuts, the low property rates, and low cost of start-ups, you can easily get a retail business up and running here for around $100k. And a good, nice-looking business. Not a hole-in-the-wall where you question the last time the floor has been washed. Even for a gaming lounge and retail, you can get a lot accomplished for $100k. Build up the business in stages. Start with the retail and gaming areas. Build on the café later as business settles in. So what are they going to do with that extra $175k?

Flag #4: No business plan. Reading through the GoGo page, they have a lot of ideas. And they're not bad ideas. They're ambitious. But no real concept of how this all goes together. It's just magically suppose to happen, I guess.

Flag #5: Talking down other businesses. I know most people don't realize this, and think that Texas is full of red necks and cowboys. But we have a pretty big nerdy industry here. There's a reason why Penny Arcade selected Texas as the spot to be for PAX South. Some of the biggest nerd conventions in the country happen here. Outside of SDCC and Dragon*Con, we have the largest attendance rates for comics and anime. Austin constantly ranks in the top 10 best comic shops in the country. We speak geek and know it well here in the lone star state.

But one thing that has not settled well with the description of Hip, Slick, and GEEK is how they talk about other businesses. "I soon realized that there did not yet exist a store that treasured rare and outstanding GEEK items. In the Dallas area, there are plenty of comic book and toy stores that seem to offer bits and pieces of what a true geek is looking for." Their Facebook page also has some disparaging comments and they have responded to concerns from the public about how they are approaching their campaign. The answers have ranged from "don't put down our store" to "Donald Trump didn't make friends when he started."

Here's the thing. The geek community prides itself on inclusiveness. Even with all of the nerd hate within our groups, the bulk of us love being geeks because we don't shun others. We don't hate or discriminate. We want people to talk about their fandom in an open environment. And this new business is doing the opposite. It's also being disrespectful to the other businesses in the area that do have those unique geek items you can't get elsewhere.

Needless to type, I won't be supporting this business. There are just too many questions, and no answers to believe this will work. And at 16 days with $103 dollars in the bank, it's clear that others agree with me as well.

Kids, be sure to read and research all of the facts before you jump on board with a crowd-funding campaign. You might be surprised at what you find.

2 comments:

  1. Well said. And that's leaving out that the rewards for sponsoring these guys kept changing and most of them were so out of line with the amount asked for as to be unreal.

    By way of a for instance, one of their original incentives was an autographed picture from one of their favorite cosplayers in exchange for $70. An autographed picture from a professional cosplayer - your Yaya Hans or Jesssica Nigris - will set you back $15-$20. And you can get that personalized and choose from one of several pictures. You don't get that level of customization with your donation to these twits and there's no guarantee that their "favorite cosplayer" won't turn out to be someone's kid sister in a Party City Batgirl costume.

    ReplyDelete
    Replies
    1. Starman has made his appearance! Now I feel extra special. :D No sarcasm. Promise. This is really cool to see you post here!

      The rewards on this particular crowdfund were insane. I don't think I've ever seen it so out of hand before. $70 for a random cosplay photo that isn't personalized? No choice in image? No choice in signature? How do we even know the same cosplayer is the one signing it? It could be Jim Bob signing on a Nigri pic.

      Glad this one did not get funded. It did not deserve the money.

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