Tag: silicon valley

• Wealthiest cities in the world

  According to this annual survey by Henley & Partners (first chart from Bloomberg), these are the top 10 wealthiest cities in the world when you count the number of high-net-worth individuals (i.e. people with investable wealth greater than US$1 million):

  

  However, if you instead count billionaires, the top city flips from New York City to the Bay Area (which includes San Francisco and all of Silicon Valley). This isn’t all that surprising.

  Also not surprising is the precipitous decline in the number of HNWIs residing in Hong Kong. From 2012 to 2022, the number declined by 27%. That said, a bunch of other cities fared even worse. The city that lost the most millionaires over this same decade was Moscow. It declined by 44%.

  For those of you wondering about Toronto, we placed 12th, just after Chicago, with 105,200 millionaires, 193 centi-millionaires, and 18 billionaires:

  

  The next city in Canada on the list is Vancouver, and following that is Montreal:

  

  

  It is interesting to see how much further behind Montreal places with these metrics given that it is an urban region with about 1.6x the population of that of Vancouver’s.

  Also interesting — given its size and global importance — is Paris (18th when it comes to HNWIs):

  

  However, when it comes to seasonal draw, Paris is second only to Miami, which appears to be the undisputed global destination for rich people in the winter. Paris has 126 centi-millionaire residents, but during its peak holiday month (presumably summer), this number is believed to increase to over 300:

  

  Finally, looking at Park City, Utah, it has 8 permanent centi-millionaires and this number is thought to increase to over 100 during the winter snowboarding season. And to be clear, this transient population figure only includes people who own a second home there. It does not include rich people paying US$3,700 per night to stay at Deer Valley. That’s pretty good for a small town of only 8,500 permanent residents.

  

  To check out the full list of 97 cities, click here.

  2023.04.22

• California has a plan for 2 million new homes

  On July 1 of this year, a new California bill, called the “Affordable Housing and High Road Jobs Act of 2022”, will go into effect. And the goal of this legislation is to significantly increase the supply of new homes in the state by allowing multi-family construction on lands that are currently zoned for commercial uses.

  On some level, it is of course curious that there even needs to be this bill. Because what we are effectively saying is, “hey, we should allow people to build a mix of uses on our main streets and with high enough densities that we might actually be able to support transit.” Why was this not always the case? (Rhetorical question.)

  In the words of architect and planner Peter Calthorpe, who was recently interviewed here in ArchDaily, this is a “landmark piece of legislation” that has “received very little attention.” So that’s why we’re talking about it today.

  Calthorpe was actively involved in crafting this legislation, and his work apparently started with different scenario land-use models. The first experiment looked at a 43-mile stretch of El Camino running from San Francisco to San Jose (pictured below). And what they found was that this one strip alone could accommodate somewhere around 250,000 new infill homes.

  

  To put this into context, the state of California is currently building about 140,000 new homes each year, through a roughly equal (1:1) split of multi-family and low-rise single-family. Already this represents a shift, as supply used to be slanted (3:1) toward low-rise. (I don’t know when exactly this was the case, but Calthorpe mentions the figure in his interview.)

  Moving on from El Camino, Calthorpe and his team then ran a similar exercise for the five-county inner Bay area. And here they found that some 700 miles of commercial land could produce up to 1.3 million multi-family homes at “reasonable densities.” This was then expanded to the entire state of California and the number increased to 10 million new homes.

  Of course, as we have talked about before on this blog, not all of this land might actually be feasible for development. Sometimes the math doesn’t work even at a zero land cost; you might need a negative land cost in order to pencil a new development. Meaning, you might need to be paid, perhaps through some sort of subsidy.

  So what Calthorpe and the team did was use MapCraft to quickly run development feasibilities on the above sites. They had it run 6 different pro formas using local rents, construction costs, city fees, and so on. And what they determined was that this 10 million number drops down to 2 million when you apply the economic realities of the world.

  As a disclaimer, I’m not at all familiar with MapCraft. But I’m going to take this number at face value and say that this is still a lot of new homes. And this is what people are hoping for come July 1 of this year.

  Image: HDR / Peter Calthorpe

  2023.04.08

• Walking is good for creative thinking

  Here is an excellent reason for why you may want to spend more time walking:

  People have noted that walking seems to have a special relation to creativity. The philosopher Friedrich Nietzsche (1889) wrote, “All truly great thoughts are conceived by walking” (Aphorism 34). The current research puts such observations on solid footing. Four studies demonstrate that walking increases creative ideation. The effect is not simply due to the increased perceptual stimulation of moving through an environment, but rather it is due to walking. Whether one is outdoors or on a treadmill, walking improves the generation of novel yet appropriate ideas, and the effect even extends to when people sit down to do their creative work shortly after.

  The results were a bit inconclusive as to whether outdoor walking is better than other forms of walking, so for now we will just say that walking — in general — is good for creative thinking. But where my mind immediately goes is: Does this finding scale up?

  In other words, if you were to take two different cities — City A where everybody, for the most part drives, and City B where everybody, for the most part, walks — could you find any evidence that City B was on average more creative than City A?

  I guess one way you could measure this is through patents. And if you were to look at patents per capita in the US, you’d likely find cities like Princeton (NJ), Redmond (WA), and cities in Silicon Valley near the top of the list. I’m not sure there’s an obvious correlation here.

  But it is kind of interesting to think about a possible relationship between urban form and creativity.

  2022.11.11

• A headquarters in the cloud

  Venture firm a16z just announced that it will be “moving its headquarters to the cloud.” At the same time, it announced 3 new offices in Miami Beach, New York, and Santa Monica. These will be in addition to their existing offices in Menlo Park and San Francisco.

  Part of their argument is that hybrid work is weakening the network effects and agglomeration economies associated with being right in Silicon Valley. So they’ve deiced to be virtual, but still have offices where they can “materialize physically” when needed.

  They acknowledge that physical presence is important for developing a company’s culture, building relationships, and helping entrepreneurs (their core business).

  What’s interesting about all of this is that it’s further validation for Miami (Beach). Here is one of the most important venture firms out there saying that when they quickly materialize in real life, they want to be able to do that in Miami Beach.

  It also raises some interesting questions. Because even if the network effects of Silicon Valley are weakening when it comes to tech, this announcement still speaks to the importance of agglomeration economies. These three new office locations were chosen for a reason.

  2022.07.21

• Quietly booming tech town

  We have all seen these headlines before, so it’s not so under the radar for us. But the New York Times just published this article about Toronto calling it a “quietly booming tech town.” Depending on how you want to measure things, Toronto is now the third largest tech hub in North America after Silicon Valley and New York City (or at least that’s what the NY Times is telling me). The article touches on some of the ingredients for this success, but let me be a bit more explicit in this post because I think it is particularly relevant right now.

  Canada is a “Western” country. What does that mean? It means that we’re a democracy, we have the rule of law, we respect individuals (including private property), and we allow for pluralism of opinion, along with many other freedoms. These are all wonderful and magical things that are sometimes taken for granted. But I couldn’t imagine living in a place that doesn’t allow for such freedoms, nor would I want to.

  On top of this foundation, we have two other important ingredients: extraordinary universities, like the ones mentioned in the article (University of Toronto and University of Waterloo), and some of the most liberal immigration policies in the world. Our borders are open for the smartest and most ambitious. With just these handful of things — freedom, rules, education, and talent — we can screw up a lot of other stuff and still accomplish some pretty great things. I may be oversimplifying, but probably not by much.

  Humans are wonderfully talented. Let people be and they’ll show you. Because history has shown us time and time again that the above recipe works remarkably well. (Related post: Do the best cities have a lot of immigrants?)

  2022.03.21

• Architect Bjarke Ingels announces new “design living” company

  News has just dropped that architect Bjarke Ingels, Roni Bahar, and Nick Chim are launching a new “design living” company called Nabr. Their website says that it is “coming soon to Silicon Valley” and so presumably there will be tech involved and we should actually be calling it a startup.

  The video embedded at the top of this post (link here) will tell you a little bit about it. But from what I can glean from their website, the focus is on using technology and modular construction to deliver housing that is more personal / adaptable, more sustainable, and more attainable. There is a note on their site about buying with only 1% down.

  We have talked a lot on this blog about the antiquated and slow-moving nature of design, development, and construction. So what it absolutely clear is that there are many problems to be solved here. I am excited to see what the team brings forward.

  2021.08.11

• Unicorns overwhelmingly originate in big cities

  In the world of startups, a unicorn is used to refer to a company with a market cap greater than $1 billion. A decacorn, the latest benchmark, is what it sounds like in that it’s a company with a market cap greater than $10 billion.

  While unicorn status is just one measure, valuations are an important yardstick for cities and countries. How many big new companies are you creating? That is a critical question because, presumably, these big new companies are going to create a bunch of new jobs and generate a lot of new wealth for people.

  This recent blog post by Elad Gil is a great summary of what’s happening in the world from this perspective. The raw data is also available if you’d like to dig deeper.

  Here are the number of new unicorns since October 2020 by city:

  

  Silicon Valley, not surprisingly, continues to dominate, followed by New York.

  Here is a breakdown for the United States as a whole:

  

  Miami and Austin have been in the news a lot over the past year and their startup scenes may very well be on the rise relative to other US cities. But it’s interesting to see other smaller cities on this list, like Salt Lake City, who are, at least right now, holding their own.

  I found this last set of two charts particularly interesting:

  

  

  They are showing unicorn count (first) and unicorn market cap (second) as a percentage of their respective countries. For example, Silicon Valley is sitting at about 47% and 51%, respectively. So about half of all unicorns in the US have originated from this geography.

  But for most other cities on this list, the percentage is much higher and, in many cases, it is 100%. (Silicon Valley is perhaps relatively low because the US has lots of other big and important cities.) For me, this shows the continued dominance of cities. If you’re building the next great unicorn or decacorn, the data tells us that you’re probably doing it in a big city somewhere. And I don’t see that changing anytime soon.

  2021.06.27

• Luxury housing surges in San Francisco

  

  The story of two markets continues. Median rents in San Francisco are down some 27% percent over the last year. Sales of homes priced under $300,000 are down by about a fifth. And yet, according to the Financial Times, sales are up significantly for homes priced above $2 million. For the top 5% of homes, prices ended the year up about 26.5%. Overall, the median home price in San Francisco was up 16.8% last year. It now sits at $718,000. As we’ve talked about before, much of this can be chalked up to the fact that the financial impacts of this current environment are being unequally felt. But I also see it as evidence that, despite all of the media headlines, many/most people aren’t actually betting against cities.

  Chart: FT

  2021.02.11

• Rich people and nerds (in Miami)

  

  Back in 2006, Paul Graham penned an essay about how to be Silicon Valley. Since then, it seems like every city on the planet has tried to replicate the successes of the Valley. At the time, his argument was pretty simple. Geography used to be destiny when it came to cities. New York City, for example, is arguably what it is today because of its geography and its deep harbor, which created a natural competitive advantage compared to other east coast cities such as Boston and Philadelphia. But this, he argues, has become far less relevant. Now, you can create a great city pretty much anywhere. So what are the necessary ingredients?

  Paul argued that you only really need two kinds of people to create a technology hub: rich people and nerds. You need people creating new things and you need rich people to fund those new ideas. That’s it. So in theory, if you could just dump a bunch of these kinds of people in one place — Nunavut? — you’d perhaps get unicorns coming out the other end. He goes on to say that Miami is a perfect example of a city that has lots of the former, but very few of the latter. It has lots of rich people, but, in his words, it’s not the kind of place that nerds like. So it is/was not a good startup city. (I’m a nerd and I like Miami.)

  But the year is now 2021 and a global pandemic seems to be helping to change this dynamic. Every tech entrepreneur and/or investor now seems to want to move to either Austin or Miami. To that end, SoftBank recently announced that it has earmarked $100 million for startups that are based in Miami or that plan to be based in Miami in the near future. It’s perhaps a good testament to the momentum that seems to be developing around the startup scene in the city, which is something that their mayor has been incredibly vocal about.

  But here’s something to consider. Was Paul right about the two requisite ingredients for a successful startup hub? And if so, does Miami now have enough nerds? Maybe this recent influx of people was just what it was missing.

  Photo by Cody Board on Unsplash

  2021.01.28

• Where people are moving in the US

  

  Another day, another set of announcements about large companies and rich people moving to lower cost US states. Yesterday it was announced that Oracle will move its corporate headquarters from Silicon Valley to Austin, Texas. (If you remember, Elon Musk also recently announced that he had moved himself to Austin from California.) The company has said that the move puts Oracle in the best position to grow and to give its employees greater flexibility about where and how they work.

  While these sorts of moves are making headlines right now, it’s important to keep in mind that this is not necessarily a new phenomenon. In fact, depending on how you look at it, you could argue that these headlines are a lagging indicator for trends that have been underway for some time. Below is a chart from New Geography showing the top 50 state-to-state moves last year. Number one is the move from California to Texas with 45,172 net movers. And number two is the move from New York to Florida with 38,512 net movers.

  

  According to New Geography, California saw a net domestic migration loss of 912,000 people from 2010 to 2019. And the most popular receiving states are what you would expect: Florida (1,230,000 people) and Texas (1,146,000 people). A big part of this story obviously has to do with housing affordability and the search for an overall lower cost of living. As well, since companies are always in need of young and smart talent, it makes since for them to locate in places where young and smart people want to live.

  But urbanists like Richard Florida have also pointed out at this relocation of companies could be a leading indicator for something else: the decline of innovation in America. Here, he argues that in the nascent stages of a new invention, there tends to be a tight clustering phenomenon. Think steel in Pittsburgh, cars in Detroit, and computing in Silicon Valley. However, as the industry matures, the tendency to centralize seems to decline and companies then start moving around.

  I’m not yet convinced that this is what’s happening. Because there seems to be a pile on happening in specific cities like Austin (which, by the way, I hear is terrific). Even before this pandemic, there was a growing sense (from the outside, mind you) that the Bay Area had simply gotten too expensive, both for individuals and for companies. It would seem that when you greatly restrict the supply of new housing and make it unattainable for many, people go find housing somewhere else. Sometimes in other states.

  Photo by Tomek Baginski on Unsplash

  2020.12.12