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Shot in Brooklyn (New York), Williamsburg

9 min read

Growth and identity: when success consumes its origins

Artists came to Williamsburg because it was cheap, and success pushed them out. What this teaches a company about the link between growth and identity.

Andrea Barchiesi
Andrea Barchiesi

Contents

In this Italian-language video, shot in Williamsburg, Brooklyn, I say that gentrification is also a strategic metaphor, and that every company that grows has to ask itself whether it is growing around its identity or replacing it. Here I describe how success made the neighborhood too expensive for the people who had made it unique, drawing on a book by the sociologist Sharon Zukin, and what this teaches a company about the relationship between growth and identity.

Video transcript (translated from Italian)

Williamsburg, 20 years ago, was an industrial neighborhood, full of empty warehouses and disused factories.

A place nobody paid attention to.

Then the artists came. Not as a strategy, but out of necessity: rents were low, the spaces huge.

They opened studios, galleries, workshops. They built themselves an ecosystem without planning it.

And something happened that people in business study closely: an identity was born from the ground up. Not from a marketing plan, not from a calculated investment, but from the natural coherence of people who shared a vision.

Today Williamsburg is one of the most recognizable neighborhoods in the world.

But it is also a case study in a specific risk: what happens when success replaces the identity that generated it.

When a neighborhood, or a company, grows too fast, it risks losing exactly what made it unique.

Gentrification is not only an urban phenomenon. It is a strategic metaphor.

Every company that grows has to ask itself whether it is growing around its identity, or replacing it with something else.

Because growth without roots is not development. It is dilution.

At a glance

  • Andrea Barchiesi, business strategist, argues that success raises the cost of the conditions in which an identity was born, and that the link between growth and identity breaks when price decides what to keep.
  • Sharon Zukin argued in 2010 that in New York the demand for authentic neighborhoods drove prices up until it pushed out the immigrants, the artists and the working people who had made those neighborhoods unique.
  • Closing the door on growth does not protect an identity: what protects it is growth that teaches it to the people who arrive.

My thesis

Success raises the cost of the conditions in which an identity was born: growth consumes that identity when price decides what to keep.

Artists came to Williamsburg because it was cheap

In the late 1980s, Kay Hymowitz writes in City Journal, young Manhattan artists began crossing the East River because large lofts in Williamsburg were cheap. A generation later, the neighborhood they had made famous was too expensive for many of them.

Success raises the cost of the conditions in which an identity was born: growth consumes that identity when price decides what to keep.

Seen up close, the industrial neighborhood has a long history. The Domino sugar refinery, on the waterfront, had been operating since 1856: it employed 4,500 people in 1919, 450 in 1996 and fewer than 300 in 2001, and it closed in 2004 (Landmarks Preservation Commission, 2007). The real estate market paid little attention to the area, where zoning rules mostly did not allow housing to be built. Yet many people worked there, and the geographer Winifred Curran has described the small manufacturers, still in business, that loft conversions pushed out through buyouts, leases that were not renewed, changes in zoning and higher rents.

In 2005 the waterfront was still what the video describes: “largely derelict, dominated by empty lots and crumbling structures,” wrote New York’s Department of City Planning. By then the artists had been there for some fifteen years. In 1993 a one-night event, “Organism,” had brought together a hundred artists and 2,400 guests in an old mustard factory (Hymowitz).

Gentrification puts a price on authenticity

The word gentrification has a date of birth. In 1964 the sociologist Ruth Glass, who had founded the Centre for Urban Studies at University College London, wrote that one by one the city’s working-class quarters had been “invaded” by the middle classes. Once “gentrification” started, it went on rapidly until the original residents had been displaced and, in her words, “the whole social character of the district is changed.”

In Williamsburg the shift has a precise date. On May 11, 2005, the City Council approved the Department of City Planning’s rezoning of nearly 200 blocks of Greenpoint and Williamsburg: about two miles of waterfront went largely from industry to housing, with towers that could rise above 100 meters (about 330 feet). Between 1990 and 2010–2014 the neighborhood’s average rent rose by 78.7 percent, more than in any other part of the city, as I explain in the piece on how an identity grows from the ground up. On July 30, 2016, Apple opened its first Brooklyn store, at the corner of Bedford Avenue and North 3rd Street.

Sharon Zukin, a sociologist at Brooklyn College and the City University of New York, devoted Naked City (2010) to this mechanism, with a chapter on how Brooklyn became cool. The thesis, as her publisher puts it, is that a strong demand for authentic urban life, the kind found in aging buildings, small boutiques and ethnic restaurants, ended up forcing out the people who made those neighborhoods unique. In the chapter on Williamsburg she describes the underground parties in lofts, and reports that when the Village Voice wrote about one of the organizers, some people said the publicity had killed the atmosphere.

Sharon Zukin argued in 2010 that in New York the demand for authentic neighborhoods drove prices up until it pushed out the immigrants, the artists and the working people who had made those neighborhoods unique.

Seen up close, the replacement follows a precise order. Success does not ignore the identity of a place: it values it, and the price it sets on that identity drives away the people who produced it.

Growth and identity in a company: success makes slow things expensive

In a company the mechanism is harder to see, and what follows is my own observation. A company becomes recognizable for things that cost money: a slow production process, service from people who know the customer, a local supplier that is not the cheapest, patience with small customers. While the company is small, those costs are its way of working. When it grows, every hour and every machine is worth more, and the same things start to look expensive. In their place come the standard product, the distant supplier, the same process as the competitors, like the chains that arrived on Bedford Avenue.

Two facts make the picture less comfortable. The first comes from Williamsburg itself. For Kay Hymowitz, artists were “the drivers as much as the victims” of the transformation. Her example is a young couple who found the canvas of an old billboard in a dumpster, turned it into messenger bags with a logo inspired by the neighborhood’s industrial skyline, and called the business Brooklyn Industries: in 2016 it had 16 stores in three states. The consumption of an identity can begin with the people who created it, and there is nothing wrong with that, as long as someone decides what is not for sale.

The second comes from research on displacement. Lance Freeman and Frank Braconi (2004) studied seven Manhattan and Brooklyn neighborhoods that gentrified in the 1990s. According to the summary by Terra McKinnish, Randall Walsh and Kirk White (2010), they found that low-income households there moved less than those in poor neighborhoods that did not gentrify, a sign that the change came mainly from the people who arrived. These data predate the 2005 rezoning, and the debate remains open. For a company the lesson holds all the same: an identity is also diluted by newcomers who do not know it, not only by those who leave. I have written about the pace at which the people who run a company learn to work with new people in the piece on business growth; here what matters is what the new people learn.

Growing around identity, not in its place

Stopping growth would do little good: an identity that closes the door becomes rigid, as happens to regions locked in by ties that are too tight.

Closing the door on growth does not protect an identity: what protects it is growth that teaches it to the people who arrive.

The question I raise at the end of the video then becomes a test for the people who run the company, one to take while the numbers are growing: is this growth being built around what made us recognizable, or is it replacing it? Answering means deciding what you will not give up, even when it costs money, and teaching it to the people who join.

It is a choice about direction and priorities, which the owners make with the strategist beside them. It is also a concrete way of deciding what not to do. What remains, if the choice holds, is also what makes a company hard to copy, its competitive moat. Keeping what costs money, when the numbers would suggest cutting it, is the choice I respect most in the people who run a company.

What to do and what not to do

  • List the things that made the company recognizable and that now look expensive, before cutting them.
  • Decide which processes, people and customers stay even when they cost money.
  • Teach the identity to newcomers, drawing on the people who carry it.
  • Do not let price decide what to keep.
  • Do not mistake a refusal to grow for a defense of identity.

Sources

Competitive moat

A competitive moat is what keeps competitors from copying a company’s advantage and, with it, the margin that advantage brings.

Full definition

My work · Direction and priorities

When there is too much to do and all of it looks urgent, this is where I start: together with the owners, I decide what to move forward and what to stop.

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