Tag: silicon valley

• The geography of innovation and equality of opportunity

  The Equality of Opportunity Project has a recent paper out called: Who Becomes an Inventor in America? The importance of Exposure to Innovation. Vox also has a summary of the findings, here.

  The overall goal of the project is to “use big data to identify new pathways to upward mobility.” And in this particular study, they discover that in America there are many “lost Einsteins” – people who have the ability, but not the opportunity.

  Not surprisingly, socioeconomic class, race, and gender play a significant role. Children from high-income families are 10x more likely to become inventors (measured in patents) as compared to children from low-income families.

  Geography, place, and environment also matter. Where and how a child grows up has a significant impact on future outcomes. If a child grows up in a city/network that exposes them to other inventors, it increases the likelihood that they too will invent. 

  Where a child grows up also has an impact on the types of inventions, even if the child move cities as an adult. For example, the study found that if a child grows up in Silicon Valley but moves to Boston as an adult, it is still more likely to author patents related to computers because that’s what it was exposed to as a child.

  These associations also impact in a gender-specific way. Women are more likely to invent in a particular technology if they grow up surrounded by similar female inventors. The presence of male inventors has no impact. This makes a powerful case for better gender diversity and strong role models.

  If you would like to read the full paper, click here.

  2017.12.05

• Geography is no longer destiny

  

  The Q3 2017 Moneytree Report from PwC and CB Insights was recently released. It tracks venture capital trends in the US and globally. 

  Last quarter, US venture capital-backed companies saw $19 billion in total funding across 1,207 deals. Perhaps most notably for the US, funding in the NY metro area rose 57% to $4.227 billion and inched out the San Francisco Bay Area ($4.177 billion).

  But this was really because of two epic rounds to WeWork (NYC HQ) totalling around $2.5 billion. Also, Silicon Valley ($2.2 billion) is tracked separately to the San Francisco Bay Area in the report.

  Still, there’s a real sense that the New York tech ecosystem is on the rise and that it is probably furthest ahead in the US in terms of being able to catch up to California.

  Last week, MongoDB (NASDAQ: MDB) went public. Albert Wenger, who is an investor in the company, argued on his blog that this is an important milestone for technology companies based in New York. 

  It’s the first core technology company (instead of applied technology company) to go public in the city and it’s a big step forward in terms of demonstrating that “geography is no longer destiny.” 

  You don’t have to move to the Bay Area to win in tech.

  2017.10.28

• What are bubbles?

  Social Capital (Silicon Valley VC firm) recently published an interesting series on (economic) bubbles: what they are, how they form, when they are useful, and so on. It’s worth a read – you can start here.

  Here’s a taste:

  “Prices in markets turn out to have two roles: they tell us something about the past, and they influence our actions — and therefore, their own price — in the future. Sometimes, in a big way, this dual role makes a particular asset class — tulip bulbs, railway stock, Canadian real estate, a digital token — become attractive solely because its price is going up. George Soros characterized and mastered this phenomenon, known as Reflexivity: when our views and our actions reinforce each other. If an expensive price means that something is high quality or otherwise attractive, we will tend to buy more of it and drive the price higher, independently of whether or not the thing is any good. It’s true for sunglasses, it’s true for ICOs, and a whole lot more.”

  For obvious reasons I couldn’t resist posting this quote. Notwithstanding the shot at Canadian real estate, bubbles are a fascinating topic. They happen time and time again because we are greedy.

  2017.09.14

• Big bad (software) developers

  “There is no higher God in Silicon Valley than growth. No sacrifice too big for its craving altar. As long as you keep your curve exponential, all your sins will be forgotten at the exit.” –David Heinemeier Hansson

  Snap Inc. went public last week. Offering price was $17. Closing price on the first day was $24.48. Given that the company is not profitable and may never be profitable (their caveat, not mine), many people have been asking: Is a valuation somewhere around $34 billion justifiable?

  This is a common question when it comes to tech companies. And the answer usually comes down to something along the lines of this:

  The Snapchat story “is all about growth,” Mr. Nathanson said. “It’s not about economics.”

  It’s about the future.

  I love Snapchat and I think the company is run by a very creative founder. But now that Snapchat Stories was stolen by Instagram, they need, in my humble opinion, something new and killer to stick.

  How else will they meet their growth targets?

  On a related note, I recommend you read a piece by David Heinemeier Hansson called: Exponential growth devours and corrupts. That’s where the quote at the top of this post is from.

  Here is an excerpt:

  What sucker wants to earn $10 million/year at a 52.5% tax rate when you can get away with hundreds of millions in one take at just 15%? Nobody, that’s who.
  

  It’s hard to argue that boards, founders, and their financiers aren’t just doing exactly what the incentives are coaxing them to do.

  Which is why growth is now everything and residual value is nothing. In fact, the latter can be outright harmful to the former. When you’re being priced on the hopes and dreams of potential, reality can be a dangerous and undesired competitor. Best just to appeal to the exponential curve and let the imagination roam free. An epic capital gains score awaits!

  2017.03.05

• The lure of super-places

  

  If you’re a very talented person, you have two choices: you either move to New York or you move to Silicon Valley. This is the message that Peter Thiel delivered to a conference being held in Chicago earlier this month. Not surprisingly, it pissed a few people off.

  Peter responded by saying that he was simply illustrating the “extreme version” of a metaphor about the impacts of globalization and technology. And while it certainly doesn’t sound very nice if you’re sitting in Chicago, or the countless other fantastic cities between the coasts, I can appreciate what Peter is getting at.

  Saskia Sassen is known for coining the term global city. These are cities which play an important role in the functioning of the global economy. But what has happened, she acknowledges, is an even further concentration of activity within a select few “super-places.”

  Here is an excerpt from a Financial Times article by Simon Kuper (2014) talking about Amsterdam’s position in the world:

  “…a new, higher category of cities may now be emerging: global capitals. Amsterdam has risen but New York, London and Hong Kong have risen faster. The Dutch elite is moving to Amsterdam; but many ambitious Dutch people no longer want to join the Dutch elite. They want to join the global elite. That often requires moving to a global capital.”

  Anecdotally, I can say that almost everyone I know who has left Toronto for an opportunity has moved to New York, Silicon Valley, London, and so on. They have moved up the rank of global cities/capitals.

  So while Peter may not have chosen the right way to deliver this message, I do believe it is a message worth delivering.

  2016.09.28

• The Toronto startup ecosystem in numbers

  When I met with all of the lovely folks from Amsterdam last week, one of the things that I mentioned about intensification is that it is almost certainly a contributing factor towards innovation, agglomeration economies, and the overall startup ecosystem here Toronto. 

  I don’t know to what extent, but I feel it happening. And there’s lots of research correlating urban density with innovation. 

  The continued densification of Toronto means it is constantly becoming easier to schedule that morning coffee before going into the office or to pop into that meetup after work. And those sorts of things are hugely valuable in today’s economy.

  I talked about a number of local startups in my presentation, including 500px, Wattpad and Wealthsimple. But I didn’t show any hard data. So I’d like to do that today. Below is a chart showing total venture funding (internet/software) and the number of deals (Seed to A/B/C/D) in Toronto since 2009:

  

  It was taken from this Medium post. Supposedly this places us 12th in the world as far as startup cities go.

  Again, who knows how much of this venture growth has been helped along by intensification. After all: “Silicon Valley proper is soul-crushing suburban sprawl.” But I would bet money that it’s moving the needle in the right direction.

  Here is another relevant post by venture capitalist Albert Wenger where he talks about the great startup ecosystem that Toronto is growing. He posted it earlier today.

  All of this is important because some of these deals will spawn big companies. And those companies will the hire lots of people, as well as consume space. 

  Real estate developers like to talk about how they create jobs. And we do. But we can’t have a city of people just building buildings. People and businesses need to fill that space and that hinges on entrepreneurs who are willing to go out there and forge something new for themselves. Fortunately, Toronto seems to have a growing number of those kinds of people.

  2016.09.23

• The self-driving car arms race

  Earlier this month, I came across the following chart from USA today. 

  

  It was based on market caps as at July 29 and so the order wouldn’t look quite the same today. Still, here are the largest companies by market cap and the top 5 are US consumer-facing technology firms.

  Remember when it was a big deal that Apple had surpassed Exxon Mobil as the world’s most valuable company?

  We are living in a tech-driven world.

  Then yesterday, I was reading this New York Times article talking about Uber’s acquisition of Otto (a startup focused on self-driving truck technology) and its plans to allow riders in Pittsburgh to summon self-driving vehicles later this month.

  The vehicle will be a tricked out Volvo:

  

  These two snippets from the NY Times stood out for me:

  Suddenly, it seems, both Silicon Valley and Detroit are doubling down on their bets for autonomous vehicles. And in what could emerge as a self-driving-car arms race, the players are investing in, or partnering with, or buying outright the specialty companies most focused on the requisite hardware, software and artificial intelligence capabilities.

  “There’s an urgency to our mission about being part of the future,” Travis Kalanick, Uber’s chief executive, said on Thursday in an interview. “This is not a side project. This is existential for us.”

  The way it will work in Pittsburgh this summer is that the self-driving Volvos will still arrive with a driver, in addition to a sidekick in the passenger seat taking notes about how the vehicle is performing. But the goal is to start weaning us off of human drivers. These pilot rides will be free to start.

  This is quite possibly the start of a general change in terms of the way cities operate (quote from Bloomberg):

  In the long run, Kalanick says, prices will fall so low that the per-mile cost of travel, even for long trips in rural areas, will be cheaper in a driverless Uber than in a private car. “That could be seen as a threat,” says Volvo Cars CEO Hakan Samuelsson. “We see it as an opportunity.”
  

  Uber is currently logging about 100 million miles per day. Hopefully it is clear at this point that this is not as simple as ride sharing vs. traditional taxis. Cities who are thinking about it in this way are thinking short-term and missing the bigger picture.

  Companies such as Uber, Tesla, and Google are aiming for a fundamental rethink of urban mobility. There is an arms race going on that I believe will completely eradicate the need for human drivers.

  2016.08.20

• The back-end of our cities

  I love cities. We all love cities right now. 

  Everyone, for good reason, seems to be fixated on both people returning to cities (like those narcissistic Millennials) and people urbanizing for the very first time. This latter scenario is happening rapidly across the developing world and in many cases – but not all cases – it is helping to lift people out of extreme poverty.

  But by most measures, urban areas represent only about 2-3% of the world’s land area, despite housing over 50% of our population. So here’s an interesting thought for this morning: What is happening and what will happen with the remaining 97-98%?

  In this recent talk by architect Rem Koolhaas, he attempts to dissect the future of living, loving, and working through the lens of architecture. However, he starts by saying that architecture is, in fact, too slow to properly capture the zeitgeist of any time period. It is, “an unbelievably slow art.” That said, Koolhaas has a remarkable ability to identify what is happening (see Delirious New York) and then call it out in a way that you probably haven’t thought about. 

  In the above talk, he hones in on the impact of Silicon Valley – certainly the spirit of our time – on the rural landscape outside of our cities. Interestingly enough, he also talks about how the tech industry has begun to borrow terminology from architecture in order to describe itself.

  Screenshot from the video:

  

  Despite their ethereal appearance, technology giants still have large physical footprints for servers, production, logistics, and so on. But there’s no reason – or way – to accommodate them inside of our cities and so they cluster outside, in the 97-98% areas. These are places like the Tahoe-Reno Industrial Center, which is the home of Tesla’s new Gigafactory.

  Because of sheer scale and because there’s no need for them to possess much in the way of humanistic qualities, these are spaces which are void of architecture, urbanism, and, in some cases, a light spectrum beyond what is absolutely necessary for the specific function of the building (discussed in the video).

  Of course, the periphery has long serviced the core. But Koolhaas’ thinking has, as it often does, made me consider this phenomenon in a slightly different way. He paints a picture of a spiky world where we are all crammed into sensor and app-driven cities (the front-end), all of which are then powered by big mechanistic boxes that many of us may be naive to (the back-end). In some ways it feels like the Matrix. What we see and experience could just be the tip of the iceberg.

  Architecture may be unbearably slow, but as a society we have always built what matters to us most at the time. At one point it was places of worship. But today, at least for part of our landscape, it is boxes not intended for us to really experience. Maybe that’s not really architecture. Maybe it is simply the back-end for our cities.

  2016.07.03

• Building new, better cities

  Earlier today my friend Saadat sent me the following tweet:

  @donnelly_b you need to apply to this: https://t.co/NrYmO1D1ge

  — Saadat Qadri (@saadatqadri)

  June 27, 2016

  //platform.twitter.com/widgets.js

  It’s a link to a new research project by Y Combinator – the famed Silicon Valley seed accelerator. They want to explore the possibility of building new and better cities.

  I don’t have the time for something like this, but if any of you are city experts (I know a lot of you are) and you’re based in or willing to be based in San Francisco (I think they are flexible on this), you should absolutely consider applying to be their full time “Cities Researcher.” The deadline is July 30, 2016.

  Here’s a taste of what they are thinking about…

  There are many high-level questions we want to think through, for example:
  

  – What should a city optimize for?

  – How should we measure the effectiveness of a city (what are its KPIs)?

  – What values should (or should not) be embedded in a city’s culture?

  – How can cities help more of their residents be happy and reach their potential?

  – How can we encourage a diverse range of people to live and work in the city?

  – How should citizens guide and participate in government?

  – How can we make sure a city is constantly evolving and always open to change?

  
  

  And there are tactical questions we want to dig into, for example:

  – How can we make and keep housing affordable? This is critical to us; the cost of housing affects everything else in a city.

  – How can we lay out the public and private spaces (and roads) to make a great place to live?

  – Can we figure out better zoning laws?

  – What is the right role for vehicles in a city?

  – Should we have human-driven cars at all?

  – How can we have affordable high-speed transit to and from other cities?

  – How can we make rules and regulations that are comprehensive while also being easily understandable?

  – Can we fit all rules for the city in 100 pages of text?

  – What effects will the new city have on the surrounding community?

  The convergence of city building and tech is something that I’m deeply interested in. I also think it’s inevitable. And I think that Toronto – thanks to our robust real estate industry – is in an ideal position to be a leader in this space. So I would love to see someone from here take on this job.

  But even if you’re not from Toronto, you should still apply because it’s an exciting initiative 🙂

  2016.06.27

• The top 20 US neighborhoods for venture capital investment

  There’s a lot of talk about how venture capital investment has shifted from the suburbs to cities and how it is also concentrated in certain metro areas. But a new report from the Martin Prosperity Institute has dug even deeper to look at the top 20 neighborhoods (zip codes) in the US for venture capital investment.

  Here’s a summary of what they found:

  “The top 20 neighborhoods or zip codes for venture investment include nine in San Francisco, five in San Jose, three in Boston-Cambridge (one in suburban Waltham and two in Cambridge close to MIT) and one each in San Diego (close to the University of California, San Diego), Dallas, and New York (close to New York University).”

  And here’s the full top 20 list:

  

  Initially I looked at this list and thought that neighborhoods such as Menlo Park and Redwood City shouldn’t be labeled as San Francisco, since they are outside of the county. But technically they still fall within the San Francisco Metropolitan Area. 

  It’s amazing how San Francisco dominates this list.

  2016.06.17