For years, many believed that only governments or non-profits could provide public goods like infrastructure, security, and dispute resolution. But for-profit companies, from hotels to shopping malls, already deliver these services effectively through voluntary contracts. Consider the MGM Grand in Las Vegas—it offers governance, infrastructure, and security much like a small city, all while remaining profitable.

This aligns with Spencer Heath’s vision that landowners are uniquely equipped to provide public goods. Spencer MacCallum expanded this idea, comparing multi-tenant properties to homeowner associations (HOAs). His research showed that entrepreneurial communities, or entrecomms, are far more effective.

The Problem with Subdivisions and HOAs

In traditional subdivisions, developers sell parcels of land and hand over governance to HOAs. While HOAs aim to protect property values, they often become politicized and rigid. Covenants can prevent needed changes, and disputes over shared costs—like installing a playground—leave some residents dissatisfied. With fragmented incentives and no clear leadership, HOAs struggle to adapt.

Why Entrecomms Work Better

Entrecomms operate under a single owner who manages the community through contracts. This model has several advantages:

1. Flexibility: Owners can adapt to market demands, such as building office space or new amenities, ensuring the community evolves organically.

2. Dispute Resolution: Clear incentives drive owners to resolve conflicts efficiently, keeping tenants satisfied.

3. Aligned Interests: Profits depend on tenant satisfaction, creating a feedback loop where community well-being drives success.

4. Tenant Selection: Owners can curate communities based on shared values, fostering harmony and inclusivity.

A Real-World Example: Morazan

The semi-autonomous zone of Morazan exemplifies the entrecomm model. Here, landowners provide essential services, infrastructure, and safety while adapting to tenant needs. Their ability to respond quickly to market demands ensures a thriving, flexible community without the bureaucratic delays typical of governments.

Rethinking Governance

Entrecomms prove that for-profit governance works—and excels. By aligning incentives, fostering adaptability, and prioritizing tenant satisfaction, they create thriving communities. As more examples like Morazan emerge, entrepreneurial communities could reshape how we think about governance and urban development.

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