Brandon Donnelly

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.

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  • Of course, Nike buys digital sneaker company

    This week it was announced that Nike has acquired RTFKT Studios (pronounced “artifact”) for an undisclosed amount. When I read the news (official Nike announcement here), I immediately thought to myself, “Yeah, of course!”

    Some of you may remember that I wrote about RTFKT back in April. They are perhaps best known for their digital sneaker NFTs (on the Ethereum blockchain). And so this is an exceedingly obvious and strategic buy for Nike.

    But more importantly, I think this is great validation for the crypto/NFT space and further evidence that our digital and physical worlds are continuing to collide in some new and very interesting ways.

    What this ultimately means for life in 10 or 20 years is anybody’s guess, but sneakers are the tip of the iceberg. And this doesn’t necessarily mean that we’re all destined to live in some sort of metaverse video game.

    Another way to look at this whole metaverse thing is to consider it not as an actual place or space, but instead as a moment in time (Shaan Puri makes this argument here). Put differently, the metaverse is simply a point in time where we begin to bestow tremendous value on our digital life and our digital assets.

    Instagram is one example of this. Profiles have become integral to people’s identifies. We use them to vet restaurants. We use them to vet travel destinations. And we use them to vet potential dating partners, among many other things.

    So while sneaker NFTs might be a new thing, there’s already lots of evidence that digital goods can have just as much value — and potentially even more value — than physical goods. I am sure that Nike recognizes this and it’s part of why they bought RTFKT.

  • A figure-ground map of Paris by building period

    This is a great tweet and link:

    The link is to a figure-ground map of Paris that allows you to filter its buildings by period of construction. Here’s what all of the periods and all of the buildings look like:

    Once you play around with the map, it will become obvious that the second half of the 19th century and the early 20th century was a prolific building period for Paris (1231 hectares of area). This is what Samuel was getting at in his tweet.

    I would love to see a map like this for every city in the world.

  • Amazon’s supply chain moat is turning out to be useful

    Today, Amazon ships approximately 72% of its own packages. This is up from about 47% in 2019. Ben Thompson of Stratechery recently published an excellent article talking about why this is important and how the company’s investments in logistics are, yet again, paying dividends.

    The foundation of Amazon’s “moat”, Ben argues, is aggregating customer demand. When most people buy something on Amazon from a third party merchant, they think and feel as if they’re buying directly from Amazon. Some people probably don’t even appreciate the difference and in most cases it probably doesn’t matter. It comes in a box with Amazon’s logo on it and that’s that.

    But it’s an important distinction because if you’re a third party merchant, Amazon pretty much “owns” your customers. They are the ones aggregating demand. They have the brand equity and loyalty. And if you left the platform, your customers would be unlikely to follow you.

    This is kind of the opposite of how Shopify’s ecommerce platform works. When you operate a Shopify store you are using their platform, but you are bringing your own brand, web domain, and other assets to it, such that you can now establish a more direct relationship with your customers. This doesn’t mean that Shopify doesn’t have a moat, it’s just something different.

    All things being equal, most businesses would rather “own” their customers than not. The problem right now is that shipping and supply chains are no joke, and so there are real advantages to being on Amazon and having them handle your fulfillment. It could mean the difference between getting your products out for Christmas, or not.

    So all things are not equal.

  • Retaining earth in the mountains

    As many of you know, I am working on a new build in Park City, Utah. One of the things that I have had to get up to speed on are earth retention systems. Building in the mountains is challenging. Here are a couple of photos from this morning of a new single-family home under construction near the lot that I am working on.

    It looks to be a combination of cast-in-place concrete and precast blocks (right side). We are looking at a similar strategy. To give you a sense of the magnitude, some of the concrete blocks we are looking at are 1,800 lbs each. As is the case with many construction projects, a lot of the costs here end up going towards things that most people won’t ever see or think about.

  • 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.

  • 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.”

  • Three steps to the future

    Each year, tech analyst Benedict Evans publishes a “big presentation” on the macro trends in the tech industry. This year’s presentation is now out (link here) and it’s called “Three Steps to the Future.” Not surprisingly, crypto, web3 and the metaverse feature prominently in his exploration of what tech might look like by 2030 (obligatory market cap chart shown above). But there’s also a lot about ecommerce, logistics, TV/content, and a number of other topics and industries. The back half is filled with some great charts and I think that many of you will find it interesting.

  • All-in-one real estate transactions

    Opendoor just published its 2021 year in review.

    In it are a few interesting figures about the housing market in the US. According to a recent survey that the company did, the average first-time buyer made 10 offers before successfully securing a home last year. The percentage of all-cash offers is also up to 25% from 15% a year ago. What is clear is that demand is currently outstripping supply. Based on these figures, housing supply in the US is at the lowest it has been since the early 1980s.

    But of course, the real point of the year in review was to talk about all of the great things that Opendoor has been doing to digitize the real estate industry. Perhaps the most interesting is its focus on creating “all-in-one real estate transactions.” What this aims to do is consolidate the now separate processes of selling a home, buying a new home, and obtaining financing, into one digital workflow. Whether or not Opendoor is the one to do it, I believe that this is the future.

    And what we have learned from other industries (that have successfully digitized) is that when you make something super easy, people end up doing a lot more of it.

    Full disclosure: I’m still long $OPEN.

  • Bangkok has a lot of messy wires

    Actor Russell Crowe tweeted this out back in October while he was in Bangkok filming a movie:

    It’s a photo of the city’s notoriously messy communication wires. As I understand it, many or most of these wires aren’t even active. The telecom industry just has a very ad hoc approach to running new ones and there’s also nobody responsible for removing any of the old ones.

    In response to this tweet, the Prime Minster of Thailand, Prayut Chan-o-cha, has called for these utilities to be tidied up and put underground. No more mess! Who knows if it’ll actually happen, but it’s kind of cool to see what can be done with a single tweet.

    I wish I could say that my tweets were also capable of inspiring such swift urban action.

  • To collect is to be human

    Nearly 1,000 lots from Karl Lagerfeld’s estate are soon to go up for auction. I was reading about it over the weekend in FT and, what is obvious, is that Lagerfeld liked to collect things. He had homes all over the place and in those homes were lots of nice things, ranging from art and tapestries to unique furniture and iPods.

    Yes, he really liked iPods. After he passed away, over 500 of them were discovered in one of this drawers and another 70 were found in his office in Paris’ 7th. Apparently he used to curate music on them and then gift them to people. It was one of his things.

    Of course, Lagerfeld was a wildly successful fashion guy and his estate is surely pretty unique. But I think it’s important to keep in mind that to collect is a deeply human endeavor. We have been doing it forever. And in this context, it’s not surprising at all why non-fungible tokens (NFTs) have taken off in the way that they have.

    Our world is profoundly digital, but before blockchains and NFTs, we were missing a way to validate ownership over digital assets. That’s no longer the case. For more on this, here is an interesting TEDx Talk by Roham Gharegozlou, who is the CEO of Vancouver-based Dapper Labs (the company behind CryptoKitties and NBA Top Shot). The talk is from 2018, but it’s just as relevant.