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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Tag: andreessen horowitz

  • The next wave of computing innovation

    Venture capital firm Andreessen Horowitz (a16z) has just launched a new site called Future. It is a site for “understanding the future, how tech shapes it, and how we build it.” I just subscribed to it and, if you’d like to do the same, click here. At the same time, the company also just announced their latest crypto fund (a $2.2 billion fund). Here’s an excerpt from the release:

    We believe that the next wave of computing innovation will be driven by crypto. We are radically optimistic about crypto’s potential to restore trust and enable new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed. 

    I’ve been reading a lot more about crypto over the last few months (which is something that I mentioned I was doing here.) I am not in this world day-to-day, but I am now fully convinced that we are in the very early innings of a profound shift. So pretty soon this is going to become my day-to-day, whether I like it or not.

  • Evolution of online marketplaces

    I have written a lot about Opendoor over the past few years because it is one of the most promising “proptech” startups in operation today and I am obviously very interested in the impact of tech on the real estate industry. 

    I also have a fascination with online marketplaces. From the Greek agora to today’s mobile apps, the exchange of goods and services is a fundamental human activity. Uber, Alibaba, Instacart, Airbnb, Amazon, and Kickstarter are all marketplaces. I think sometimes people forget that.

    Andrew Chen, who is a general partner with the venture firm Andreessen Horowitz, recently published an essay on the future of online marketplaces, where he argued that what’s next is a reinvention of the $10 trillion service economy.

    Andrew posits that the internet has brought about 4 eras of marketplaces. They are:

    1. The Listings Era (1990s)
    2. The Unbundled Craigslist Era (2000s)
    3. The “Uber for X” Era (2009-)
    4. The Managed Marketplace Era (Mid-2010s)

    The listing era birthed marketplaces that were essentially online versions of the things that already existed offline. Craigslist, for example, simply took the classified section and put it on the internet.

    Over time, these online marketplaces began to focus on specific verticals (the unbundling of Craiglist) and they started to introduce services and features that were native to the internet and later to mobile. Uber obviously only works when everyone has a smartphone.

    Today we are living in the era of what Andrew calls the managed marketplace. Opendoor – to get back to the first paragraph of this post – is a managed marketplace. Instead of just connecting homeowners with buyers, they take on specific steps of the value chain. They buy and fix up the homes themselves.

    So what’s next? 

    Supposedly it is regulated services (2018-?). As of 2015, it was estimated that about 26% of employed people in the US carried some sort of license. These are healthcare practitioners, architects, engineers, real estate agents, financial advisors, trades people, and so on.

    And the argument is that a lot of how we regulate services today is a result of us creating them before the internet. We needed licenses and certifications to signal to us who was qualified and who was not. But now we have technology to help us do that, which is why this could be the next great era of online marketplaces.

  • The case for self-driving electric car fleets

    Below is a presentation by Frank Chen – head of research, deal, and investing at the venture firm Andreessen Horowitz – which makes the case for self-driving electric car fleets.

    He starts the presentation by talking about why he thinks this shift is going to happen faster than most people think. 

    One reason for this is that the batteries are becoming dramatically cheaper and the battery makes up a large part of the cost. By 2025, it is expected that electric vehicles will become cost neutral with ICE (internal combustion engine) vehicles assuming zero government subsidies.

    And by 2038, Bloomberg believes we will hit peak ICE vehicle sales. That is, electric vehicle and ICE vehicle sales globally will hit 50/50. Norway has already hit this threshold but they impose heavy financial penalties on ICE vehicles.

    2025 is not that far away.

    If you can’t see the presentation below, click here.

    [youtube https://www.youtube.com/watch?v=of5j-Lztqrg?rel=0&w=560&h=315]

  • So the tech works. What’s next?

    Below is a keynote talk by Benedict Evans about what’s going on in tech today and what may happen in the next ten years. It covers: the growth of mobile; S-curves; Google / Apple / Facebook / Amazon (who knew Amazon had so many employees?); machine learning; autonomous vehicles/impact to cities; mixed reality; crypto-currencies; and so on.

    For those of you interested in crypto-currencies – and that appears to be everyone these days – it’s interesting to hear how Evans describes their current position at the beginning of the curve: “The tech works, but what’s the use case?” This is not to say the potential isn’t huge. It is. Automated trust. Distributed and programmable money. But the future is still unclear.

    If you can’t see the video below, click here.

    [youtube https://www.youtube.com/watch?v=cVYDkPidXrU&w=560&h=315]

  • I can’t spend unrealized gains

    image

    Earlier this week the Wall Street Journal published an article claiming that the celebrated venture capital firm Andreessen Horowitz was lagging behind its elite peers in terms of returns.

    The firm then responded with a well-written blog post explaining why this accusation is off the mark. Their response was simply that you can’t measure returns on “unrealized gains.” Until there is a liquidity event – that is, the company gets sold or goes public – it’s just paper returns. And what matters is cash. 

    As the post clearly states: “I can’t spend unrealized gains.”

    But beyond just a rebuttal, the blog post is a great primer on how the venture capital industry works. We talk a lot about the tech space on this blog, so I thought some of you might find it interesting. 

    One of the reasons I like to follow the VC space is that there are many similarities to real estate development. Not only in the way that the funds are structured, but also in the way that the gestation periods are incredibly long.

    The post talks about this as a “J curve.” In the early years of a fund, the returns are negative. Money is going out the door to invest in immature and risky startups. And it’s not until the harvesting period (7+ years later) that the realized gains start getting paid out to investors (LPs).

    It’s also interesting to note that the exit timing for companies – at least according to Andreessen Horowitz – seems to be increasing (10+ years). This is yet another similarity to real estate development where it seems to be getting harder and harder to build and deliver new supply.

  • Made in Toronto: 500px

    Photograph Sunset in Toronto by Daniel Fernandes on 500px

    Sunset in Toronto by Daniel Fernandes on 500px

    https://500px.com/embed.js

    If you’re a regular reader of Architect This City, you’ll know that I generally like to include at least one photo with every post. Sometimes I run out of time and I don’t always do that, but that is at least the intent.

    You might have also noticed that my go-to for stock photography is 500px. That is the case for a few reasons. 

    I find the photos to be of higher quality than any other service. I can easily “embed” them into my posts while giving appropriate credit to the author and linking back to 500px. The company was founded by a good friend of mine and snowboarding compadre. And the company is made in Toronto.

    That’s why it’s exciting to report that yesterday the company announced an additional $13M in funding (Series B). To date the company has raised $23M of outside funding, from some big names like Andreessen Horowitz. This is great for the everyone in the company, and I believe it’s great for this city.

    Why is that?

    Well, here’s a video from the New York Times’ Cities For Tomorrow conference, where Andrew Ross Sorkin and Fred Wilson talk about creating startup hubs. It’s about 20 minutes long and well worth a watch.