Tag: startups

• Attract and extract

  Chris Dixon’s recent piece on why decentralization matters is currently making the rounds online. It clearly explains the first two eras of the internet and how the third era is developing as we speak. Cue decentralized cryptonetworks.

  I particularly like how he describes the relationship that centralized platforms – like Facebook – have to their users and to their complements (other businesses, software developers, creators, and so on). 

  Here are two graphs from his article:

  

  In the early days it’s all about cooperation and doing everything you can to attract users. The platform gets more valuable the more users are on it and so the immediate goal is to build up the network effects and lock people in.

  But as the platform grows, the relationship flips (top of the S-curve). In Dixon’s words, it becomes a zero-sum game whereby to continue growing the platform starts extracting data from its users and competing with its complements.

  The promise of cryptonetworks is that they will do away with many of these negative externalities, but at the same time empower the kind of sophistication that we see today with centralized platforms.

  The venture capitalists are circling because a fundamental shift in the architecture of the internet will mean disruption. I’m following it because I want to understand how it may apply to real estate and the built environment.

  2018.02.19

• How to act like an entrepreneur

  I really like the post that Seth Godin wrote on his blog today called: The four elements of entrepreneurship.

  He defines entrepreneurs through their actions and behaviors. In his view, this is what they do:

  1. They make decisions.

  2. They invest in activities and assets that aren’t a sure thing.

  3. They persuade others to support a mission with a non-guaranteed outcome.

  4. This one is the most amorphous, the most difficult to pin down and thus the juiciest: They embrace (instead of run from) the work of doing things that might not work.

  As far as I can tell, that’s it. Everything else you can hire.

  He then goes on to say:

  All four of these elements are unnatural to most folks. Particularly if you were good at school, you’re not good at this. No right answers, no multiple choice, no findable bounds.

  Perhaps this is why many VCs seem to favor young founders. They’re not old enough to think they know what will work and what will not work.

  2018.01.16

• Is San Francisco losing its openness?

  Sam Altman has an interesting post up on his blog talking about what he feels is a changing cultural environment in San Francisco (which is where he is based). His argument is that heresies are good for innovation and for moving the world forward. We need people to question established norms. But for that to happen we need environments and cities that encourage it, or at the very least allow it.

  Here’s an excerpt:

  Restricting speech leads to restricting ideas and therefore restricted innovation—the most successful societies have generally been the most open ones.  Usually mainstream ideas are right and heterodox ideas are wrong, but the true and unpopular ideas are what drive the world forward.  Also, smart people tend to have an allergic reaction to the restriction of ideas, and I’m now seeing many of the smartest people I know move elsewhere.

  In San Francisco he is starting to feel that it is becoming increasingly difficult to have wacky ideas and to work on wacky startups. And for this reason, people are starting to leave the city in search of more open cultures. Openness used to be a hallmark of San Francisco. It was once the epicenter of counterculture. Has that changed?

  Here is a final excerpt:

  I don’t know who Satoshi is, but I’m skeptical that he, she, or they would have been able to come up with the idea for bitcoin immersed in the current culture of San Francisco—it would have seemed too crazy and too dangerous, with too many ways to go wrong.  If SpaceX started in San Francisco in 2017, I assume they would have been attacked for focusing on problems of the 1%, or for doing something the government had already decided was too hard.  I can picture Galileo looking up at the sky and whispering “E pur si muove” here today.

  Click here to read the full post.

  2017.12.15

• 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

• Uber Express POOL is kind of like public transit

  Uber is currently testing a feature in a few neighborhoods in Boston and San Francisco called Uber Express POOL. 

  Like the regular version of Uber POOL, this is a shared ride. But with Express POOL the app now automatically generates “smart spots” that are easy to drive to and close to the origin and destination of multiple passengers.

  So instead of a direct pick-up and drop-off, you now need to walk a few blocks to one of these dynamically created “smart spots.” In exchange for the added inconvenience, you get 25% off your fare.

  What’s immediately fascinating about this feature is that it further blurs the line between Uber and public transit. These “smart spots” are effectively low-volume and ephemeral transit stops that pop-up based on demand and then disappear.

  It makes the notion of a fixed stop and transit schedule, particularly in low usage areas, seem inefficient. Now imagine if we created some sort of visual marker on the street every time a “smart spot” was emerging based on demand.

  It is clear that Uber is trying to price these rides so that they are competitive with conventional public transit. And there’s no reason that this technology couldn’t also be applied to larger vehicles, such as buses.

  I find this fascinating. And it’s a perfect example of what we talked about in yesterday’s post. This is software and networks being layered on top of the built environment.

  2017.11.10

• 10x the scale

  Below is a chart from Benedict Evans comparing annual revenue from the Wintel era (Microsoft + Intel) to the current GAFA era (Google, Apple, Facebook, and Amazon). 

  His argument is that, today, “the scale of tech winners” is about 10x what it was during the previous cycle.

  

  And here is a chart, from that same post, showing how the internet ate print ads when it comes to global revenue:

  

  A lot of this has to do with the unprecedented growth of smartphones and the sheer number of people who came and are coming online. Mobile is 10x the PC market.

  But the other interesting narrative from the post is the argument that these companies (GAFA) have learned from previous generations just how aggressive you need to be to survive.

  The shift to mobile posed a structural threat to Facebook. At the time of its IPO, there were serious doubts as to whether the company would be able to pull off this transition.

  Which is why the founder went out and spent 10% of the company to acquire companies that would help with this transition and ensure its survival. That seems to have worked.

  In the words of Andrew Grove: “Only the paranoid survive.“ And in today’s tech world, the rewards for surviving are that much bigger.

  2017.10.16

• Empowering food truck entrepreneurs

  When I lived in Philadelphia I survived on food truck food. My go-tos were an egg and cheese breakfast sandwich for $2.50, a bowl of spaghetti for $4.50, and a pretty substantial chicken burrito for somewhere around $5 or $6. The food was good. It was filling. And it was all priced perfectly for a poor student, which I was at the time.

  I still remember when Renzo Piano came to the University to talk about potentially renovating the design school. Somebody stood up and asked if he had considered the placement of food trucks in his plans. Piano responded by saying: “I am Italian. Don’t worry. I will provide for the food.” This is how ingrained food trucks were and are in the culture of the city.

  The other great thing about these food trucks is that they are a low-cost way of starting your own culinary business. Many were run by immigrants. And some of these “trucks” were so small that I used to have to duck in order to make my way to the concession window. There was nothing fancy about them. But they worked.

  These days I don’t really eat at food trucks anymore. They are not as widespread here in Toronto as they are in Philly. I also find them expensive and the portions are usually so small that you have to order 2 or 3 things. They feel like the anti-food truck.

  I appreciate that there’s a growing market for trendy and “gourmet.” But there’s value in low-cost options and in lowering the barriers to entry for aspiring food entrepreneurs. There are numerous examples of humble food trucks growing into full fledged restaurants. Let’s encourage more of that.

  2017.10.11

• Is Trump good for Canada?

  Richard Florida and Joshua Gans just published an article in Politico called: Trump Is Making Canada Great Again. The overarching argument is that as the US closes its borders, Canada benefits. The best and brightest from around the world are coming here.

  This fall, international student applications at the University of Toronto were up 70% compared to last year. And numerous companies in Toronto are reporting “steady, double-digit increases” in the number of job applications from Americans.

  This is exactly what I was getting at when I made the pithy prediction that Amazon is going to choose Toronto for HQ2. It’s about access to human capital (though I acknowledge the political reality of selecting a city outside of the US). 

  Perhaps here or here might work for a location.

  Here is an excerpt from the Politico article that starts to speak to the importance of foreign-born workers in the US:

  As of 2013, foreign-born workers in STEM fields—science, technology engineering and math—accounted for nearly a fifth of workers with bachelor’s degrees in the United States, 40 percent of those with master’s degrees and more than half of those with Ph.D.s. In the San Jose metro area, consisting largely of Silicon Valley, immigrants comprise more than 55 percent of adults who hold advanced degrees.

  Here is a chart showing the US and Canadian metros with the highest percentage of foreign-born residents:

  

  And here is a chart showing which metro areas receive the most venture capital dollars (in millions of US dollars):

  

  As to be expected, Toronto, Vancouver and Miami lead in terms of the percentage of foreign-born residents. Though, I would bet that Toronto’s foreign-born population is far more diverse than those of Vancouver and Miami.

  However, when you look at venture capital dollars invested, Toronto is nowhere near the top. Vancouver isn’t even on the list. And I suspect that some of you are surprised to see Miami sitting in between Chicago and Seattle (arguably a city that overperforms in tech relative to VC dollars invested). I was.

  Perhaps Trump will help with this by making Canada great again.

  2017.10.03

• Network effects for autonomous vehicles

  

  In my recent post about why I write about tech on this city building blog, I made a pithy comment about autonomous vehicles and why it is “largely a software challenge.” 

  The argument I was trying to make was that the hardware, similar to smartphones today, will likely become a commodity. More of the value will end up flowing to the firms that control the software.

  Benedict Evans has an excellent deep dive into this topic on his blog. The post is called: Winner-takes all effects in autonomous cars.

  Here’s an excerpt about hardware:

  To begin with, it seems pretty clear that the hardware and sensors for autonomy – and, probably, for electric – will be commodities. There is plenty of science and engineering in these (and a lot more work to do), just as there is in, say, LCD screens, but there is no reason why you have to use one rather than another just because everyone else is. There are strong manufacturing scale effects, but no network effect. [My link, not his.]

  And here’s his conclusion:

  So, the network effects – the winner-takes-all effects – are in data: in driving data and in maps.

  That said, it is still early days for autonomous vehicles. Who knows if these network effects will end up being highly defensible or weak. There are still lots of assumptions and questions at this stage.

  From a city building perspective, one of the major concerns with autonomous vehicles is that they could tempt us back to car-centric city planning. That would be a shame.

  Photo by Zachary Staines on Unsplash

  2017.08.27

• Why I write about tech on my city building blog

  

  I had a friend ask me this week about how I decide what to write on this blog. His comment was that I tend to write about a variety of different topics. He wondered: Isn’t it better to focus on one particular niche?

  The simple answer is that I write about what interests me. And secondary to that is any concern around what will get the most clicks. In fact, I try not to fall into the trap of worrying about the latter. Sometimes it can be paralyzing to fixate on what will appeal most to the tens of thousands of people who read this blog on a regular basis.

  The reality is that my interests are much broader than, say, just design and real estate; though these two topics are clearly central. 

  I learned a long time ago while studying architecture and art history that what we make as a society is generally a product of the cultural milieu at the time. In other words, the built environment doesn’t happen in a vacuum. It is the physical manifestation of what we believe to be true at a particular moment.

  Today, it’s pretty hard to ignore the importance of tech. Think of some of the most valuable companies in the world right now: Apple, Google, Amazon, Facebook, and so on. Now, technology has always shaped our cities, but what makes this moment different is the decisive shift toward software.

  It’s arguably no longer about who can build the best mousetrap. It’s about who can build the best software layer on top of that mousetrap.

  In 2011, venture capitalist Marc Andreessen (previously the co-founder of Netscape) published a widely shared essay called, “Why Software Is Eating the World.” And over the past 6 years he has been proven to be very right.

  The 3 main points he aimed to make with that essay are as follows:

  1. Every product or service that can become software will become software.
  2. Every company will have to become a software company.
  3. The winning companies will be the best software companies.

  Depending on your industry, this may sound ludicrous to you. Certainly in 2011 it probably seemed that way. 

  But a perfect example of this phenomenon is the iPhone. The phone itself is manufactured in China, albeit where a lot of great hardware innovation is taking place. 

  But at this point, phones have become fairly commoditized. The profits that Apple makes from the iPhone disproportionately come from the software layer and the app ecosystem it has developed.

  You could make a similar argument with Tesla. Autonomous navigation – which most of us can agree will have a profound impact on cities – is largely a software challenge. 

  And so if you believe that autonomous vehicles will be a fundamental part of the future of mobility, then it’s not that hard to believe in point number three: the winning car company will also have to be the best car software company.

  Some industries have been less touched by tech and software – real estate being one of them. But if Andreessen is right and it’s not a question of if, but a question of when, then it behooves all of us to think about the potential impacts.

  I love how Andreessen ends this podcast discussion with Barry Ritholtz of Bloomberg and so I’m going to repeat it here to close out this post. He says: “There are no bad ideas. There are only early ideas.” 

  And that’s why I write about tech on my city building blog.

  Photo by Michal Pechardo on Unsplash

  2017.08.25