Category: Uncategorized

• Is crypto just snake oil?

  As I understand it, databases are pretty important to technology companies. Here is an excerpt from a recent post by Albert Wenger talking about why he and his company (Union Square Ventures) believe that web3/crypto is going to unlock new value for our society:

  As a first approximation all the big powerful internet companies are really database providers. Facebook is a database of people’s profiles, their friend graphs and their status updates. Paypal is a database of people’s account balances. Amazon is a database of SKUs, payment credentials and purchase histories. Google is a database of web pages and query histories. Of course all of these companies have built a great deal more over time, but operating a database has stayed at the core of why they are powerful. Only they get to decide who has permission to read and write to this database and which parts of it they get access to.

  So how will web3 be any better? Well blockchains, at least right now, are poorer performing databases in almost all dimensions, according to Albert. And this is one of the reasons why they’re being so quickly dismissed by most people. But they do have one key advantage: permissionless data. No single entity controls a blockchain database. More from Albert:

  It is difficult to overstate how big an innovation this is. We went from not being able to do something at all to having a first working version. Again to be clear, I am not saying this will solve all problems. Of course it won’t. And it will even create new problems of its own. Still, permissionless data was a crucial missing piece – its absence resulted in a vast power concentration. As such Web3 can, if properly developed and with the right kind of regulation, provide a meaningful shift in power back to individuals and communities.

  All of this said, I do agree with Fred Wilson and others that the web3/crypto enthusiasts on Twitter these days are getting to be a bit much. For obvious reasons, everyone is trying to pump the crypto stuff that they own. And it can certainly feel like shills trying to sell snake oil. But as Fred pointed out today, this isn’t the first time that we’ve been here:

  It reminds me of the early days of web2 in 2001/2002/2003, when we started USV. That was also a time of great cynicism. We almost did not get our first fund raised. Nobody was buying the story we were telling. But of course, that story turned out to be true. And I am confident this one will too.

  If/when this story does turn out to be true — and I believe it’s a when — I think we will see it permeate through all sectors of the economy, including how we plan, build, and operate our cities. Of course, this will probably take decades and much of what will happen is unknowable right now. But it’s pretty hard to ignore that this was a pivotal year for the crypto space.

  2021.12.29

• We should build more nice places to live

  Nice places to live — however you want to define that — tend to be expensive places to live. There are all sorts of reasons why this might be the case. Perhaps it’s on a body of water, next to a park, or it has some other redeeming qualities.

  Daniel Herriges of Strong Towns makes a cogent argument, here, that when it comes to nice and desirable places it usually comes down to one thing: scarcity. Demand > supply. But on top of this, he argues that in most cases, the supply constraint is artificial.

  Here’s an excerpt:

  In fact, our shortage of nice places is almost totally self-imposed. And it’s precisely because 98% of the North American built environment is so blah that the 2% of places that are really well-designed environments quickly get bid up by the rich and become inaccessible to the rest of us. The solution to this isn’t to stop creating such places, but to create vastly more of them.

  He goes on:

  The same story applies to the countless row house neighborhoods of the Northeast, Chicago, and San Francisco. In city after city, the mass-market, working-class housing of its time has acquired a distinctly bourgeois reputation today. In all cases, the reason lies in economics, not design. What’s abundant becomes culturally coded as middlebrow; what’s scarce becomes culturally coded as elite.

  We have talked before on the blog about how tastes change over time and how housing that was previously undesirable can sometimes/oftentimes become desirable given enough time.

  My sense is that there are a number of factors at play here and it’s perhaps a bit difficult to decode where new “cultural coding” truly starts. But I very much appreciate Daniel’s scarcity argument. Scarcity drives so much in markets (just look at the NFT art market right now and the fixation on rarity tables).

  But let me be the devil’s advocate. If we were to be successful at building no blah and all nice stuff, wouldn’t the rich just seek out a new 2% rarity? And if so, would the 98% still seem just as nice?

  Either way, more nice places to live should always be the ambition.

  2021.12.10

• Do, and then theorize

  Architecture school has a way of indoctrinating you with an appreciation for the past. One of the ways that is done is through architecture history and theory classes.

  In my case, I was taught to appreciate the work of Le Corbusier, Mies van der Rohe, Louis Kahn, Adolf Loos, and many other influential architects from the 20th century.

  It was okay to disagree with their ideas, but you at least had to learn about all of the important stuff that they had done and/or thought about. It’s a standing on the shoulders of giants kind of thing.

  But as Witold Rybczynski argues in this recent post, it’s important to keep in mind that history and theories are written after the fact:

  “Some buildings are, in a sense, experiments, and when something works, and is taken up by others, it eventually becomes a rule of thumb, perhaps even a theory.”

  For me, this is yet another reminder that the world moves forward as a result of doing, creating, and making new things happen.

  Sometimes you’ll get it wrong and do the wrong things. But sometimes you’ll do something wonderful that nobody else has thought of before.

  And when then happens, the world will have moved forward such that it’s then possible to look back at what happened and make sense of it all.

  As Witold puts it, “first you build a flying machine, and later you discover the aerodynamic theory that supports flight.”

  2021.12.09

• Why construction productivity sucks and how it might be fixed

  

  We are living through an inflationary hard cost environment. In speaking with one of our cost consultants the other week, he was predicting that overall we could see another 9-10% increase next year here in the Toronto area. Now, who knows what will ultimately happen. But this is top of mind for everyone in the industry and it will continue to impact how and what we build.

  One of the challenges with construction — and this is will documented — is that unlike the manufacturing industry, which has seen sustained productivity improvements over the years, the construction industry has seen relatively little productivity growth over the last half century. In fact, you could argue that it’s been mostly negative in recent history.

  The obvious thought is why not just apply what we’ve been doing in manufacturing to construction. There is, of course, a long standing tradition of trying to do this, with varying degrees of success. But at the end of the day, building a house remains different than building something like a car.

  Probably the key difference is that every construction site has unique constraints and conditions and so the process is constantly changing. Whereas the innovations that Henry Ford pioneered were centered around interchangeable parts and a well-defined process that could be repeated millions of times to generate the exact same output.

  From what I can tell, there seems to be two ways in which we can think about improving productivity. One, we can try to be more Ford-like and drive standardization. This means more off-site factory construction and more standardization. This is the typical “pre-fab” approach and companies like R-Hauz, as well as many others, are already successfully doing this. The trade-off is less design flexibility.

  The second option has to do with better software and hardware. What if we had significantly better “digital twins” for our buildings such that we could see and experience it in 3D before it is physically built? I’m thinking strap on VR goggles and do a walkthrough with the team. This could allow us to pinpoint all of the issues before they actually happen on the job site.

  In parallel to this, what if we had far better on-site automation and robotics to then execute on the above digital twin? Think 3D printing concrete instead of using traditional forms. This is all happening and being worked on, but it doesn’t seem to be at a point where it is changing our industry. But it is exciting to think that it may one day.

  Photo by Di on Unsplash

  2021.11.27

• Grocery-anchored real estate as food logistics

  Blair Welch, co-founder of Slate Asset Management, was recently on Institutional Real Estate’s podcast talking about grocery-anchored real estate. In it, he talks about the role that this asset class plays in last-mile food logistics, why ecommerce might actually be strengthening its importance, and why it needs to be considered as being distinct from other kinds of retailing. This is a topic that we have covered a few times before on the blog and I think many of you might find it interesting. To have a listen, click here.

  2021.11.16

• Urban China’s empty homes

  

  China Evergrande Group has been in the news lately for being one of the most indebted property companies in the world. The company is now looking to raise some $5 billion by selling a stake in one of its business lines. That seems like a lot of money, but apparently it has upwards of $300 billion in liabilities. As I was reading about the company (in this WSJ article) I was surprised by some other stats about China’s housing market. According to some sources, nearly a third of the country’s GDP can now be tied back to real estate-related activities (see above chart). On top of this, about 21% of homes in urban China were thought to be vacant as of 2017. This equated to about 65 million empty homes. I don’t know what the exact numbers look like today, but these are staggering figures that speak to overbuilding.

  Chart: WSJ

  2021.10.04

• From free CDs to a decentralized internet

  Why Web 3 matters 🧵

  — Chris Dixon (@cdixon) September 26, 2021

  This is a great Twitter thread by Chris Dixon talking about why Web 3 — the next major iteration of the internet — is kind of a big deal. In it, Dixon refers to Web 1 as the period from about 1990 to 2005. This is the period of time that started out with CompuServe and AOL sending us all free CDs in the mail and most of us using a dial-up modem to access the internet. Web 2 was the period from about 2005 to 2020. It is the iteration of the internet that gave birth to social media as most of us know it today. If you subscribe to this timeline, then we are in year one of what’s next. Maybe it’ll also run for another 15 years or maybe it won’t. But either way, getting in on the ground floor is usually a pretty valuable thing. When Dixon tweets, I listen.

  2021.10.01

• 🙌 La Bovida

  

  Paris 1e

  2021.09.25

• ✈️ Off to France and trying something new

  Neat B and I are off to France for the next two weeks. We optimistically booked this trip at the beginning of the year and assumed that the world would be fairly normal and well-vaccinated by now. While there remains uncertainty, things are at least better than they were last winter when we were all caved at home.

  Regular readers of this blog will know that I aim to post 365 days a year, regardless of what may be going on in my life. And that will remain the case for the next two weeks. But I have decided to challenge myself and try something new.

  I’m going to exercise my photography passion a little and instead post a single photo each day. On some days it may have a caption or a short description, but on other days there may be no accompanying text at all. The plan is to shoot entirely on my Fujifilm X-T3. Or at least that’s the thinking right now.

  I’m sure that there will end up being some great content for those of you who are interested in the built environment (architecture, design, planning, real estate). But if travel and beautiful photos aren’t your thing, feel free to check back in two weeks for our regularly scheduled programming.

  2021.09.15

• The history (and future) of the grocery store

  

  Slate just published a new thought piece on the evolution of the grocery store. It starts with the first “self-service” Piggly Wiggly in Memphis (an innovative approach at that time) and ends with the important functions that grocery stores serve today and will likely serve in the future.

  The shopping experience has become increasingly omnichannel (i.e. online & in-store), which means that grocery stores are in the midst of transforming from simple retail stores to hybrid retail and last-mile distribution hubs. (Related post here.)

  All of this is central to how we think about this real estate asset class and we are to happy share it publicly in this new thought piece. Slate plans to publish more of these and so, if you’re interested, I would encourage you to subscribe at the bottom of the page.

  Full disclosure: I am personally long Slate Grocery REIT.

  2021.09.09