May 27, 2020
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Amazon might be buying Zoox

This week the FT reported that Amazon is in “advanced talks” to acquire the self-driving startup Zoox. This would be Amazon’s first acquisition in the space, though it did lead a $530M funding round in Aurora in early 2019.

Zoox last raised two years ago and was valued at $3.2 billion. Rumor has it that its valuation will be less than that today. Some of its investors, according to FT, include Breyer Capital and the Canadian Pension Plan Investment Board.

The move seems reasonable. Amazon wants to build out its (driverless) logistics capabilities. It’s also in keeping with what we have been seeing from big tech. Companies that can are using this environment to be acquisitive, invest in the future and, hopefully, gain market share. It’s probably also inevitable that the self-driving space will see some consolidation going forward.

If you go back to this post from earlier this year, Zoox and Aurora weren’t near the top in terms of R&D spending on autonomy. And it has become increasingly clear that this a giant problem/opportunity requiring giant funding capabilities. It’s going to take time.

I recently heard Chamath Palihapitiya refer to Jeff Bezos as the greatest investor of our time — even more so than Warren Buffet. Why? Because he is consistently, and sometimes exclusively, investing in the future. Is this one of those moments?

May 26, 2020
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The state of the restaurant industry

People are starting to eat at restaurants again. Here is a recent chart from the WSJ showing seated diners at restaurants on the OpenTable network:

OpenTable has been publishing this data since the beginning of the pandemic in something they call “the state of the restaurant industry.” All of their datasets from around the world can be downloaded here.

Back in March, it was interesting to see this data, but most people basically just stopped eating out around the middle of the month. After that, in-person dining mostly flatlined. (This data wouldn’t capture takeout, delivery, and other activities not flowing through the OpenTable network.)

At this point, we are now seeing geographies reopen in different ways. Germany, for example, is ahead of many other countries (at least on the OpenTable network). Note the spike (i.e. lower year-over-year decline) on May 21st. It was a national holiday.

You can also drill down into individual cities:

I think this is a pretty good indicator for how people are feeling, and so it could be useful to follow this data. Governments can reopen things, but people need to feel confident to go out and spend money. It looks like a number of people already feel that way.

May 25, 2020
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Tracking epidemics in cities

The last thing you probably need at this point is another webinar. But this one could actually be interesting. On May 29th, 2020 at 9:00 AM eastern, the Senseable City Lab at MIT is hosting one called, Tracking epidemics in cities: urban environments and the insights they provide into disease. The Senseable City Lab has previously looked at how sewage could be mined for real-time information about an urban population, revealing things like eating habits, genetic tendencies, drug consumption, and — yes — contagious diseases. In this webinar, SCL plans to pickup on this last point, as well as discuss how mobile phone patterns can help to inform epidemiological studies. If you’d like to register, click here.

Image: SCL

May 24, 2020
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Jostling for space on the grass

The talk this weekend in Toronto is about how everyone is jamming into downtown parks — like Trinity Bellwoods — to enjoy the beautiful weather and drink outside with friends.

Some, including our mayor, are “extremely disappointed” by this selfish behavior. Others are chalking it up to those hipsters. And others, such as Richard Florida, are being highly sympathetic: these are young people who live in small urban spaces and they are clamoring for some green space. Let them be human.

This, of course, is a debate that is playing out not just here in Toronto, but all around the world as we flirt our way into a reopening. Videos of the Lake of the Ozarks were making the rounds on Twitter when I last checked.

I’m not here to pass judgement or predict a second wave (though a few waves are probably inevitable). I’ll leave that to the epidemiologists. The silver lining to all of this, I think, is that it is a clear demonstration of just how persistent urban life remains in the midst of this pandemic. The desire to be around other humans is a powerful force of attraction.

Here is an excerpt from a recent FT Opinion by Ben Rogers called, Cities are not dead — they will get younger:

Cities have always worked particularly well for young people. They flock to them to build up vital social and professional networks, meet their mates and learn how the world works. Around the world there is massive unmet demand for city homes and workspace. The idea that the centres of London, Paris and New York will turn into tumbleweed towns is fanciful. The age composition of these cities might change, but people and business will still be jostling for space near the centre.

In Toronto this weekend, that jostling for space played out on the grass of Trinity Bellwoods Park.

Photo by Adrien Olichon on Unsplash

May 23, 2020
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Laneway garage conversion in Toronto

This isn’t a laneway suite per se, but Office Ou here in Toronto recently completed this garage conversion. The idea was to take a typical rear laneway garage and turn it into something that could better house a wide range of uses.

As Toronto reconsiders its laneways and as fewer people own cars (a separate topic to be debated), we are likely to see many of these spaces rethought. In this case, the result is a true extension of the existing home. You probably want to have a nice looking car — a Porsche would do — if you’re going to continue to use it for that purpose.

I’m drawn to spaces like this because I start imagining all of the different use cases: a dining room, an office, a studio for photoshoots, a place for Pecha Kuchas, and so on. In big and expensive cities it can be rare to have that bit of extra space that allows you to tinker and experiment. And I am a big fan of tinkering.

Office Ou was founded by Nicolas Koff, Uros Novakovic, and Sebastian Bartnicki. Nicolas and I went to architecture school together both here in Toronto and in Philadelphia. Congratulations on completing a beautiful project.

Photo: Adrian Ozimek

May 22, 2020
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What drives attachment to cities

The Knight Foundation recently published a report looking at what attaches people to the place in which they live. To get this information, they surveyed over 11,000 Americans, some of which live in urbanized areas and some of which just live in metro areas across the United States. This is interesting information to know at any time point in time, but you could argue that it’s even more important at a time like this, where everyone seems to be questioning everything about cities.

Here are two of their key findings:

  • People who spend more time in the principal or main city of a metro area — whether as residents or as frequent visitors — tend to be more attached. This is is true both in terms of how they feel, but also in terms of how they act, such as how much they give back to the community. I suppose you could debate whether going to the city creates attachment or whether attached people tend to go to the city, but this association does seem somewhat intuitive to me. I am imagining a greater sense of place in principal cities.
  • People who choose to live in a place because of its quality of life tend to express more attachment than people who live in a place for other reasons — such as for work. About 40% of Miami transplants cited the climate as the primary factor for moving. Sounds right. Weather is pretty hard to control, but there are lots of other things that cities can do to improve quality of life. And it seems to be one of the stickier factors. Similarly, access to cultural activities and recreational amenities seem to lead to greater attachment.

More specifically, here are how some people feel about their metro areas:

This chart is showing the “perceived accessibility to quality features.” The left column is what they believe to be the national average. And the other columns are for Akron, Charlotte, Detroit, Macon, Miami, Philadelphia, San Jose, and St. Paul. Looking at one row in particular — affordable housing — we see that about 50% of Americans surveyed believe they have access to it. In comparison, only 29% and 12% of residents in Miami and San Jose, respectively, feel the same way.

For a full copy of the report, click here.

Chart: Knight Foundation

May 21, 2020
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Niall Ferguson discusses life with COVID-19

Last night I watched this Munk Dialogue with historian Niall Ferguson. (Some of you may remember that I wrote about a previous dialogue with Malcolm Gladwell a few weeks ago.) One of the sobering lessons of history is that, without a vaccine, we’re probably not yet in a position to talk about life after COVID-19. At least in the short-term, this is going to be life with COVID-19.

Here is an excerpt from an article Niall wrote talking about how “a second wave could capsize Trump.”

In history, all the great pandemics have come in waves, including the Black Death of bubonic and pneumonic plague in the 14th century and smallpox in the 18th century. The first recorded plague outbreak — in Athens in the 5th century BC — had three waves: in 430BC, 429BC and 427 to 426BC.

In some cases, the second wave was worse than the first. Take the great influenza of 1918-19. The first official recorded outbreak was at a Kansas army base, Camp Funston, in March 1918. But the global peak of mortality was in the second wave of October and November. A third wave affected some areas of the world in early 1919, principally England and Wales and Australia.

The 1957-58 influenza pandemic hit Hong Kong in mid-April 1957. It reached America in June and produced a surge of deaths among teenagers that autumn. But there was a second wave in January-March 1958. There were further spikes of excess mortality in early 1960 and early 1963.

The other topic I was left thinking about from the dialogue is what all of this does to US-China relations, and more broadly relations between the West and China. Even before this pandemic, Niall had been arguing that Cold War II had already begun. Today’s news that China is planning new national security laws for Hong Kong certainly doesn’t help.

May 20, 2020
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Long live the megacity

Azeem Azhar’s recent newsletter, titled “Don’t call time on the megacity: cities will learn and adapt,” is a reminder of the tensions that cities face. There are forces of attraction. And there are also forces of repulsion.

Cities all around the world continue to create wealth and lift people out of poverty. But they also repulse people through traffic congestion, housing supply shortages, and overcrowding (which is distinct from density). Generally though, the forces of attraction have tended to outweigh the forces of repulsion, which is why the world continues to urbanize.

As Azeem points out, the first city believed to have reached 1 million inhabitants was Rome. It happened some 2,000 years ago. In the 1930s, New York then became the first city to reach 10 million inhabitants. And today, the 10 largest urban agglomerations in the world look something like this:

Outside of Japan, all of these city regions are expected to add many more people by 2030. Missing from this chart, however, are cities such as Lagos, Nigeria. Between 2018 and 2050, the UN estimates that 35% of the growth in the world’s urban population will come from just three countries: India (+416 million), China (+255 million), and Nigeria (+189 million).

Long live the megacity.

May 19, 2020
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Form follows what?

Late 19th century and early 20th century architecture and industrial design is known for the axiom, “form follows function.” I think of the German Bauhaus School when I hear this, but supposedly it can be attributed to American architect Louis Sullivan. Either way, it was meant to represent a functionalist approach to architecture and design, which was, as is often the case, a reaction to what had come before it.

It was Modernist architects eschewing decorative elements or what was referred to at the time as “ornament.” If it didn’t serve a functional purpose, it was to be removed. Nothing was to be superfluous. And similarly, if the function of something didn’t change, there was no need to change its form.

Of course, if it was truly all about function, one could argue that there should have been a great deal of variation in the resulting forms. But instead, the designs that emerged out of schools, such as the Bauhaus, are some of the most recognizable in the world. That is true even to this day.

Which is why I think this is a great line from Witold Rybczynski (taken from a recent post about the book iBauhaus): “It is also a quintessentially Bauhaus example of form follows predetermined aesthetics rather than form follows function.” Ouch. The difference here is that Witold obviously isn’t a fan of the Bauhaus or of Modernism, whereas this period of time is what inspired me the most as a student of architecture.

Photo by Marina Reich on Unsplash

May 18, 2020
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Uber to close 45 of its offices

On Monday it was reported — by the Wall Street Journal, Tech Crunch, and others — that Uber will be laying off another 3,000 employees and closing 45 of its offices around the world. Here is a quote from TechCrunch:

“I knew that I had to make a hard decision, not because we are a public company, or to protect or stock price, or to please our Board or investors,” Uber CEO Dara Khosrowshahi wrote to employees today in a memo, viewed by TechCrunch. “I had to make this decision because our very future as an essential service for the cities of the world — our being there for millions of people and businesses who rely on us — demands it. We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating.”

According to this SEC filing, the company expects to pay approximately $110 million to $140 million in severance and other termination benefits, and somewhere between $65 million to $80 million in costs related to closing its offices.

All of this is, of course, being driven by a steep decline in ride bookings, which is about 70% of the company’s revenue. Ride bookings were down 80% in April from a year earlier. For Q1 2020, they were down about 5% compared to 2019.

Uber Eats has seen a spike in demand with people staying at home. Bookings were up 52% in Q1 2020 from a year earlier. The problem is that, unlike its rides business, their food delivery business is far from profitable. That’s the point of the possible merger with Grubhub.

The company has said that they are seeing some signs of a recovery in markets that have begun to reopen. But it’s too early to predict what that will really look like. The hole is pretty deep.

Pre-COVID, ride hailing demand tended to surge on the weekends as people went out to restaurants, bars, and clubs. So presumably those activities will need to return for its revenue to return. But I also think we could see a spike because of people being nervous to take public transit.

Either way, the company is making some really tough decisions right now. But it seems to be doing what it needs to do in order to get to the other side of this and become a self-sustaining and profitable business. Full disclosure: I own some $UBER.

Chart: Uber Q1 2020 results