Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.
This is an interesting business story. Deliveroo is a London-based online food delivery company that was founded back in 2013 and today accounts for a big chunk of the online restaurant platform market in the UK. (They are also developing a network of “ghost kitchens” through a subsidiary called Deliveroo Editions.)
Amazon has been and still is interested in buying a minority stake in the company (Roofoods Ltd). But the Competition and Markets Authority (CMA) has been blocking it out of fear that it would stifle competition. The thinking was that if they blocked this deal, maybe, just maybe, Amazon would enter the market on its own. And more participants means more competition.
Well, Deliveroo’s business is now struggling amid this pandemic. To deliver food from restaurants and then charge those restaurants a commission, it turns out that you typically need those restaurants to be open for business. So the CMA is now revisiting the case. Is it better to have Amazon invest in Deliveroo or have Deliveroo possibly fail?
Just over a month ago, as North America was beginning its lockdown, the Europeans were the ones showing us how to stay sane in quarantine through balcony orchestras and viral internet videos. Now we’re looking to them for how best to reopen the economy and minimize the number of fits and starts.
This morning Spain recorded its lowest daily death rate from the coronavirus. It is beginning to prepare for a phased relaxation of its lockdown rules. Things will not return to normal overnight. [Financial Times]
Spain allowed construction activity and manufacturing to resume this past week. As a reminder, Spain’s strict lockdown started on March 14. [New York Times]
Bookstores are open in Venice, but that’s about it. Customers have to enter one at a time, or schedule an appointment. Hotels, restaurants, and cafes remain shuttered. It is believed that at least 1/6th of all Italian restaurants and bars will not survive. Reopening is not happening uniformly across Italy’s 20 regions. [Wall Street Journal]
Last week, Denmark became the first country in the Western world to reopen elementary schools. The desks are far apart and teaching outside is being maximized, but some/many are concerned that this is too soon. Are we prioritizing the economy (i.e. free up the parents) over the health of our children? [New York Times]
The Czech Republic currently has one of the lowest number of cases on the continent. But hardware stores and bike shops are some of the only nonessential businesses that are allowed to be open. The Easter weekend saw an over 60% increase in year-over-year sales. Biking is something to do right now. [Wall Street Journal]
On Monday, the lockdown will be further relaxed by the Czech government. Weddings of up to 10 people will start to be allowed. Gyms are expected to open on May 11, but their change rooms will remain closed. (I’m surprised by this one.) Malls, hotels, and indoor restaurants aren’t expected to reopen until June 8 at the earliest. Should the number of new daily cases exceed 400 going forward, the government has said it will reimpose a lockdown. [Wall Street Journal]
The UK is not yet considering a relaxation of its lockdown. As of Sunday, the situation remains “deeply worrying.” The UK currently has the 5th highest national death toll. [Globe and Mail]
On April 13, Emmanuel Macron announced that France would begin a phased reopening of its economy — schools and some businesses — starting on May 11. This is a unique approach. He gave a firm date, well into the future. What if this doesn’t make sense when the time comes? Clearly the government felt that the psychological benefits of a firm date outweighed the potential risks. Minimize uncertainty during an uncertain time. [Le Monde]
Lots of discussion around the porosity of borders. Logically, there’s a view that unless there’s a common strategy, it’s better to keep borders closed. But what are the economic implications of doing that? [New York Times]
Marc Andreessen’s recent essay, called “It’s time to build,” is destined to ruffle feathers. In it, he not only sings the virtues of building in its broadest sense — everything from healthcare and housing to education and manufacturing — but he calls out the western world for smug complacency with the status quo. We are no longer choosing to build. And a good example of that is how we have been managing (and mismanaging) this current pandemic.
Here’s an excerpt:
In fact, I think building is how we reboot the American dream. The things we build in huge quantities, like computers and TVs, drop rapidly in price. The things we don’t, like housing, schools, and hospitals, skyrocket in price. What’s the American dream? The opportunity to have a home of your own, and a family you can provide for. We need to break the rapidly escalating price curves for housing, education, and healthcare, to make sure that every American can realize the dream, and the only way to do that is to build.
Marc has also included a suggested reading list if you click through on the above tweet. By the time you do that, I am sure there will also be a lot of discussion around his essay.
I am sure many of you are getting tired of the news. I know I am. But it turns out that when you’re in a global pandemic and you spend the entirety of your day looking at Zoom — while fidgeting your leg, I might add — there’s only so much else you can talk and write about.
One of the more interesting things you could read is Howard Marks’ memos. Howard is the co-founder of Oaktree Capital Management and, from what I can tell, he’s been writing since 1990. Some years it’s an annual memo and some years — like this year — he writes a bunch more. His most recent is regarding, “Knowledge of the Future.”
If I had to summarize it: The future is unknowable and none of us can say with any certainty what the next quarter or the next year is going to look like. In Howard’s words: “These days everyone has the same data regarding the present and the same ignorance regarding the future.”
Most of the time, he explains, we simply extrapolate from the past and then apply our own biases to come up with a prediction. Howard describes himself as more of a worrier, whereas I would describe myself as more of an optimist. I believe, to a certain extent, in creating self-fulfilling prophecies.
Notwithstanding our inability to predict the future (which isn’t a new phenomenon), I think it’s important to have opinions and take positions. Any decision is better than no decision, right?
For a full archive of Howard Marks’ memos, click here.
This week it was reported that a South American family has bought and closed on ~$27 million worth of residential condos at Waterline Square in Manhattan. Apparently they went into contract (after the online showings) and closed on the same day, which I suppose you can do when it’s an all-cash deal like this was. The agent, Maria Velazquez, didn’t disclose who the family was, but apparently they’re from Peru and they wanted a safe place to park their money during this pandemic. Uncertain times usually create buying opportunities, and it sounds like the family did get a bit of a bulk discount here. But it’s also interesting to see where capital is flowing right now and what is perceived as a safe haven. Residential real estate in one of the world’s preeminent global cities probably won’t come as a surprise to any of you.
For years, French photographer Ludwig Favre has been doing a series on the swimming pools of Paris. The first one he photographed (and the first photo below) was the Piscine Pontoise. Designed in 1933 by architect Lucien Pollet, Pontoise was one of four pools that he completed for the Piscines de France at that time. Another one of his designs was the Piscine Molitor (second picture below), which is the most famous of the bunch for a few reasons. It was the place to be seen in Paris when it first opened. It was where the world’s first bikini was apparently unveiled. And it was also abandoned and almost demolished, during which time it got filled with street art. If you aren’t familiar with the work of Ludwig, I would encourage you to check out his portfolio. He does an incredible job showcasing these pools, as well as many other aspects of our cityscapes.
I came across this video the other night. (If you can’t see it embedded above, click here.) It is a tour of the UK and Ireland’s different accents by Andrew Jack. It is an extraordinary demonstration of his skill.
Above is a chart from Moovit showing usage from January 15, 2020 to April 12, 2020, for a collection of US cities including San Francisco, Chicago, New York, Philadelphia, Seattle, and others. Early March is when usage started to really fall off, with most of the cities now sitting somewhere around 70-75% below January levels.
For the most part, the cities included in this chart have followed a similar trajectory. But there are a couple of outliers. Philadelphia doesn’t seem to have fallen quite as much as other major US cities (-55.7% as of April 12, 2020). I’m not sure why. San Francisco looks to have “corrected” a lot faster. Perhaps because of an easier/quicker shift to working from home? And then there’s Seattle.
The first confirmed US case of COVID-19 occurred in the Seattle area on January 21, 2020. Looking at the above chart (and implying causation), that single case appears to have had an immediate impact on transit usage. Over the subsequent three days, ridership dropped to -4%, -8.3% and then to -9.1%. Usage then remained consistently lower relative to all of the other cities in this index.
Was that it? Did Seattleite’s behaviors really change that quickly? (And yes, I did have to look up the demonym for the fine people of Seattle.)
I am a huge fan of Malcolm Gladwell (and not just because he is Canadian and also went to the University of Toronto). Last week he kicked off a new Munk Dialogues series focused on the world after COVID19. (The next Munk Dialogue will be with Fareed Zakaria on Wednesday, April 15 from 8 PM to 9PM Toronto time.)
In case you’re not familiar with the Munk Debates, they are normally a biannual event held here in Toronto. Their mission is to help people rediscover the “art of public debate” and they do that by convening some of the world’s brightest and most creative thinkers. Right now they are doing that online.
In this Q&A with Gladwell, they touch on a lot of the topics that we are all debating right now on Zoom calls with our colleagues and friends. When will we get back to “normal?” What will change forever? Is working from home the new normal? Will people still want to go for Mandarin buffet? I won’t spoil it for all of you, but I did want to mention three points that I found myself agreeing with (I guess that is partially spoiling it).
The first is his analogy to weak link sports such as soccer. Here you’re only as good as your weakest player. This is in contrast to strong link sports such as basketball. In this case, you’re only as good as your best player. If you want to win a championship, you get someone like Kawhi Leonard. Gladwell argues that this pandemic has further exposed us as a complex weak link society. We don’t even have the basic PPE and testing in place to fight this virus.
The second is about whether this will create a more permanent shift to working from home. I have said before on the blog that I think it’s easy to overreach at a time like this. We might think that everything will change, but we also have short memories. Gladwell takes it a step further and argues that the exact opposite will happen. This pandemic will actually set working from home back a generation. We are going to be so sick of isolating that we will race back to what we had before.
Finally, I like the point that right now is an opportunity for experimentation. This is true of all crises. It’s a lot easier to question the status quo when the status quo has already been disrupted. And we are seeing this happen at all scales, from people experimenting and learning new things at home to new companies being formed. Hopefully there will also be lasting benefits to our public health systems.
Anyway, I would encourage to watch the video. If you can’t see it embedded at the top of this post, click here.
One of Alphabet’s moonshot projects is an autonomous delivery drone service called Wing. As far as I can tell, they’re only company offering this kind of service to the general public in North America — though they are only operating in a few test locations in Virginia, Finland, and Australia.
Specifically:
Canberra, Australia
Logan, Australia
Helsinki, Finland
Christiansburg, United States
Not surprisingly, demand for Wing deliveries has surged during this pandemic. According to the Verge, the company made over 1,000 deliveries in the past two weeks, which represents a doubling of deliveries in the US and Australia. The most popular items seem to be essentials like toilet paper and coffee.
This is perhaps a good example of the argument that COVID-19 isn’t going to change things per se, it will simply accelerate the adoption of things that were already in the process of happening. I was and am of the opinion that drones will become an integral part of delivery logistics. (Full disclosure: I own a bit of Alphabet and Drone Delivery Canada stock.)
There is still a lot that will need to happen. Alphabet/Wing is also working on an autonomous traffic management platform, because you obviously need something robust if you’re going to scale this up. How you make this work in dense urban environments is also a whole other kettle of fish, though already people are starting to reconsider how rooftops are used.
