Houston—It’s not just biotech companies that must cross the valley of death on their way to commercial success.
Everyday Mom-and-Pop shops, too, have to navigate the tricky adolescence period when their businesses are starting to take off but they don’t have the capital to rent out the space and equipment to fulfill larger orders—a problem that could lead to the failure of the business.
“Real estate is so expensive,” says Reda Marie Hicks, a Houston entrepreneur. “[Small business revenues] can’t keep up with the rent that they would have to pay.”
That’s why Hicks founded GotSpot, an online match-maker for smaller business owners who need to temporarily rent kitchens or other facilities to fulfill growing orders. “How do they find each other,” Hicks says. “Right now, the best tool is Google, which is not great.”
Hicks describes the GotSpot’s model as “AirB2B.” With GotSpot, a pilates teacher, for example, is connected to a neighborhood studio that has a free evening for classes, or an accountant can offer tax preparation seminars to clients in a community college classroom, she says.
It’s early days for the Houston startup but GotSpot has zeroed in on a broader trend in commercial real estate: flexible leases designed to attract retailers that don’t want to commit to typical multi-year contracts. With shoppers increasingly making purchases online, brick-and-mortar stores are shuttering locations and scaling back on real estate. To make up for that, real estate developers are rotating through more “pop-up” style retailers that use short leases.
One of those retailers is Neighborhood Goods, which opened last month in suburban Dallas. The store is designed for its brands to rotate in and out and have leases as short as a couple of months. Many of those tenants will be smaller, online-only retailers.
These arrangements are also popular in the restaurant world in the form of “ghost” or “cloud” kitchens: commissary-like facilities that also connect cooks to third-party delivery specialists capable of dealing with the comings and goings of drivers. Kitchen United in Pasadena, CA, offers cooking space for restaurateurs who are considering expanding but not yet ready to open a new storefront. Nearby, in San Francisco, Tinker Kitchen is a crowdfunded makerspace that sells memberships for cooking space and equipment, and also features classes for amateur cooks seeking a place to get experience.
Closer to home, Capital Kitchens has opened a second location in Austin designed to connect food startups with experienced food vendors. Dallas’ Trinity Groves is a restaurant incubator that takes an equity stake in the eateries in exchange for space and consulting services.
Hicks recognizes the popularity of for-hire kitchens. “I’m getting calls for one,” she says, but she’s still on the hunt.
Hicks’ inspiration for GotSpot began years ago after she got married and joined the corps of nomadic military spouses, who, unsure of how long they would be at each post, tended to found businesses they ran out of their homes. Hicks says a big topic of conversation in this community on social media was how to process orders that required use of outside kitchens, factories, or exercise studios. She says she often wondered about developing a better way to help these business owners find the space they needed.
“[Hurricane] Harvey was the kick in the pants,” she says of the storm that hit the Texas Gulf Coast in August 2017. Hicks, who is an attorney for a large shopping and logistics company in Houston and active in a variety of civic organizations, received calls after the storm from people seeking temporary homes for both displaced businesses and residents. Seeing that need spurred Hicks to turn idea into reality, and she founded GotSpot last fall as a side project.
Since the startup’s launch in September, GotSpot has 50 users, who can browse categories such as culinary, wellness, or education “spots.” There are 30 spots in total so far.
She estimates that there are about 40,000 commercial spaces with the excess capacity in the Houston area but only around 200 of them are being regularly used. On GotSpot, users can search by area and filter by features and read reviews. Business owners provide available hours, pricing, and detail any restrictions.
To build up her roster of available spaces, Hicks is forming an affiliate network of event planners, property managers, and members of geographic or ethnic chambers of commerce. GotSpot takes a cut of the rental fee users pay to the businesses. Any affiliate members who bring business to the startup will receive a portion of that fee, she says.
So far, GotSpot is focused on the Houston area, but Hicks says she hopes to expand into other regions next year. To help fuel that growth, she’s considering seeking outside investment.
While the online matchmaking model is not unique, Hicks says GotSpot’s advantages are her network of military spouses—a sizable customer base with which she has rapport—and her legal expertise.
Hicks says she wants to emulate the user experience of AirBnb, but she’s also keen to avoid some of the stumbles made by the San Francisco vacation rental site.
GotSpot is developing what Hicks calls a proprietary verification system designed to make sure that the “spots” available for rent match their descriptions, have the amenities offered, and other details. The startup also verifies the small business owners’ credentials such as having the required licenses.
“We’re building a proprietary playbook,” she says.