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Commercial Ecosystems: A New Investment Approach To The Ever-Evolving Retail World

4min read
Business

Throughout my career, I've learned that the most fruitful business decisions start with an optimistic vision for the future. Whether that's seeing the potential to build new communities through real estate development or how investing in the right innovations can move entire industries forward.


Bold visions must be supported by comprehensive research, confident and capable teams, meticulous planning and, of course, good timing. But, it all starts with a vision.

Having served as a Commissioner on the New York City Planning Commission under Mayor Bloomberg during a period when the Commission approved several major influential rezonings, I gained a new appreciation for how development can transform or reinvent a neighborhood.

As a real estate executive, I have always aspired to work on projects that champion communities, empower businesses and enrich neighborhoods through thoughtful design and planning. Community—a group of people and businesses in a physical space—is my primary focus. If the streetscapes are inviting, if people are encouraged to walk through an area, if the layout is thoughtful, then the developments can become truly community-oriented spaces. After decades building community through real estate, I began to explore what other investments could enrich the lives of residents and businesses in neighborhoods.

Retail has always been a big part of my life. After college, I started my career in real estate by launching clothing stores in SoHo and the Village. These experiences in New York City retail were all-encompassing. For each store, I had to build my understanding of the market, the customer base, sales, inventory and communication without the help of the magical research tool that is the Internet. It was an exciting time to be in retail in those burgeoning neighborhoods, but the work of coordinating a business was often complex and labor intensive.

As my career progressed, I continued to work with retail tenants across many of my developments with Continental Ventures. I noticed in my conversations with them that not much had changed in the past 30 years in terms of logistics. Order fulfillment, inventory management and retail logistics are still elaborate processes that require mountains of back-end paperwork. I envisioned a simpler way of running a business: there must be a technology-enabled, full circle solution to make order fulfillment more seamless and less burdensome on brands and retailers.

Consumer expectations have also been evolving. Today's consumers want to buy from brands that speak to who they are and will often use online marketplaces to discover these brands. People want to know more about what they buy. The question is no longer just "What is a brand selling?" Consumers ask: "Where the materials are sourced?" "What is the environmental impact?" "What is the brand's mission?" Today, the role of a retail brand is not simply to get quality product into the hands of their customers. Consumers expect far more; they want to understand the story and message of the brand.

From what I have seen, retail evolves so rapidly that for a brand to be truly prepared for its future means it must have the flexibility to adapt. The interplay between online shopping and brick-and-mortar stores is exciting, and their relationship will continue to change as consumer preferences and expectations shift. The premise of omnichannel retail is that consumers need a mix of e-commerce and physical shopping experiences to meet their desires.

As a real estate developer, I recognize that physical presence matters in retail, and retail space remains an important element of any successful development. Research shows that more Americans are interested in urban living. For real estate developers, this means investing in walkable areas that meld together live, work and play—communities that include housing, employment opportunities, cultural experiences and shopping.

Shopping, of course, looks different today and my vision as an investor is to support technology that helps brands adapt to these shifts and engage their customers. If e-commerce continues to account for more realized sales, brick-and-mortar stores become an experiential complement to online retail. They are tactile showrooms, places for consumers to immerse themselves in the brand's mission, aesthetics and ethos. E-commerce and physical retail are not mutually exclusive—in fact, they enrich one another.

This dynamic is at play for one of my current SoHo tenants, ARJÉ. The brand positions each ARJÉ store location as a "home" and launches new clothing collections as "chapters." They express their philosophy through store design, which adapts to each new chapter but retains a cozy atmosphere with live plants, seating areas and a beverage bar. The online store reflects this friendliness and warmth, driving purchases around the world.

I believe in two models of investment: invest in what you know and invest in something related to what you know that has the support of a strong and knowledgeable team that executes the vision. My partner and I structured Continental Ventures as a multifaceted company that invests in integrated solutions for real estate-related businesses. We have had the opportunity and continue to invest in building communities, one building at a time; we are partners in a private equity lending business that supports this growth and most recently invested in an e-commerce marketplace and fulfillment business, Project Verte; all of these platforms are part of a larger ecosystem.

By investing in these types of companies, I have the opportunity to partner with forward-thinking leaders in e-commerce technology. With this investment, we work together to support a retail landscape that encourages brand-consumer relationships and nurtures valuable physical and digital experiences. I sincerely believe that innovation in e-commerce extends far beyond online shopping. It is all part of my vision for how people communicate and build community.

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Choosing the Right Corporate Structure: Which Business Entity Should You Go With?

Business entities can be defined as the corporate, tax and legal structures which an organization chooses to officially follow at the time of its official registration with the state authorities. In total, there are fifteen different types of business entities, which would be the following.


  • Sole Proprietorship
  • General Partnership
  • Limited Partnership or LP
  • Limited Liability Partnership or LLP
  • Limited Liability Limited Partnership or LLLP
  • Limited Liability Company or LLC
  • Professional LLC
  • Professional Corporation
  • B-Corporation
  • C-Corporation
  • S-Corporation
  • Nonprofit Organization
  • Estate
  • Cooperative Organization
  • Municipality

As estates, municipalities and nonprofits do not concern the main topic here, the following discussions will exclude the three.

Importance of the State: The Same Corporate Structure Will Vary from State to State

All organizations must register themselves as entities at the state level in United States, so the rules and regulations governing them differ quite a bit, based on the state in question.

What this means is that a Texas LLC for example will not operate under the same rules and regulations as an LLC registered in New York. Also, an LLC in Texas can have the same name as another company that is registered in a different state, but it's not advisable given how difficult it could become in the future while filing for patents.

To know more about such quirks and step-by-step instructions on how to start an LLC in Texas, visit howtostartanllc.com, and you could get started with the online process immediately. The information and services on the website are not just limited to Texas LLC organizations either, but they have a dedicated page for guiding fresh entrepreneurs through the corporate tax structures in every state.

Sole Proprietorship: Default for Freelancers and Consultants

There is only one owner or head in a sole proprietorship, and that's what makes it ideal for one-man businesses that deal with freelance work and consulting services. Single man sole proprietorships are automatic in nature, therefore, registration with the state is unnecessary.

Sole proprietorships are also suited to a degree for singular teams such as a small construction crew, a group of handymen, or even miniature establishments in retail. Also, this puts the owner's personal financial status at jeopardy.

Due to the fact that a sole proprietorship entity puts all responsibilities for paying taxes and returning loans, it directly jeopardizes the sole proprietor's personal belongings in case of a lawsuit, or even after a failed loan repayment.

This is the main reason why even the most miniature establishments find LLCs to be a better option, but this is not the only reason either. Sole proprietors also find it hard to start their business credit or even get significant business loans.

General Partnership: Equal Responsibilities

The only significant difference between a General Partnership and a Sole Proprietorship is the fact that two or more owners share responsibilities and liabilities equally in a General Partnership, as opposed to there being only one responsible and liable party in the latter. Other than that, they more or less share the same pros and cons.

Registration with the state is not necessary in most cases, and although it still puts the finances of the business owners at risk here, the partnership divides the liability, making it a slightly better option than sole proprietorship for small teams of skilled workers or even small restaurants and such.

Limited Partnership: Active and Investing Partners

A Limited Partnership (LP) has to be registered with a state and whether it has just two or more partners, there are two different types of partners in all LP establishments.

The active partner or the general partner is the one who is responsible and liable for operating the business in its entirety. The silent or investing partner, on the other hand, is the one who invests funds or other resources into the organization. The latter has very limited liability or control over the company's operations.

It's a perfect way for investors to put their money into a sector that they are personally not experienced with, but have access to people who do. From the perspective of the general partners, they have similar responsibilities and liabilities to those in a general partnership.

It's the default strategy for startups to find funding and as long as the idea is sound, it has made way for multiple successful entrepreneurial ventures in the recent past. However, personal liability still looms as a dangerous prospect for the active partners to consider.

Limited Liability Company and Professional LLC

Small businesses have no better entity structure to follow than the LLC, given that it takes multiple good ideas from various corporate structures, virtually eliminating most cons that are inherent to them. Any and all small businesses that are in a position to or are in requirement of signing up with their respective state, usually choose an LLC entity because of the following reasons:

  • It removes the dangerous aspect of personal liability if the business falls in debt or is sued for reparations
  • The state offers the choice of choosing between corporation and partnership tax slabs
  • The limited legalities and paperwork make it suited for small businesses

While more expensive than a general partnership or a sole proprietorship, a professional LLC is going to be a much safer choice for freelancers and consultants, especially if it involves risk of any kind. This makes it ideal for even single man businesses such a physician's practice or the consultancy services of an accountant.

B, C and S-Corporation

By definition, all corporation entities share most of the same attributes and as the term suggests, they're more suited for larger or at least medium sized businesses in any sector. The differences between the three are vast once you delve into the tax structures which govern each entity.

However, the basic differences can be observed by simply taking a look at each of their definitive descriptions, as stated below.

C-Corporation – This is the default corporate entity for large or medium-large businesses, complete with a board of directors, a CEO/CEOs, other executive officers and shareholders.

The shareholders or owners are not liable for debts or legal dispute settlements in a C-Corporation, and they may qualify for lower tax slabs than is possible in any other corporate structure. On becoming big enough, they also have the option to become a publicly traded company, which is ideal for generating growth investments.

B- Corporation – the same rules apply as a C-Corporation, but due to their registered and certified commitment to social and environmental standards maintenance, B-Corporations will have a more lenient tax structure to deal with.

S-Corporation – Almost identical to a C-Corporation, the difference is in scale, as S-Corporations are only meant for small businesses, general partnerships and even sole proprietors. The main difference here is that due to the creation of a pass-through entity, aka a S-Corporation, the owner/owners do not have liability for business debt and legal disputes. They also are not taxed on the corporate slab.

Cooperative: Limited Application

A cooperation structure in most cases is a voluntary partnership of limited responsibilities that binds people in mutual interest - it is an inefficient structure due to the voluntary nature of its legal bindings, which often makes it unsuitable for traditional business operations. Nevertheless, the limited liability clause exempts all members of a cooperative from having personal liability for paying debts and settling claims.

This should clear up most of the confusion surrounding the core concepts and their suitability. In case you are wondering why the Professional Corporation structure wasn't mentioned, then that's because it has very limited applications. Meant for self-employed, skilled professionals or small organizations founded by them, they have less appeal now in comparison to an LLC or an S-Corporation.