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.

Tag: tech

  • What’s in a neighborhood?

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    When I was working on my startup Dirt last year, one of the things we spent a bit of time figuring out was how to classify buildings according to neighborhood. Now, at first blush, this may seem like a fairly easy thing to do. You simply locate the building, figure out which neighborhood it’s in, and then tag it accordingly. But neighborhood boundaries and definitions aren’t as clear cut as you might think.

    For example, a lot of you probably know that I live in the St. Lawrence Market neighborhood of Toronto. And indeed, if you look at this Wikipedia definition, I live in that area. But if you look at what they call it, it’s just: “St. Lawrence.” They also specify that it used to be called “St. Lawrence Ward”, but that today most people actually call it “the St. Lawrence Market.” So here you have an example of an evolving and changing name.

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    But then there’s the question of boundaries. According to Wikipedia’s definition, the north boundary is Front Street. This means that the North Market Building would be technically outside of the area and so would the Market Square condos. But I suspect that almost everyone would consider these two buildings to be part of the neighborhood. So where exactly is the north boundary? Is it King Street? Or maybe by Front Street they mean that all buildings on the north side of the street are included.

    If you look at the city’s official neighborhood list (which is built from Statistics Canada Census Tracts) you’ll find a completely different boundary and name. According to this list, I live in the “Waterfront Communities–The Island” neighborhood. Obviously nobody, other than maybe somebody who deals with census data, would have any idea what this area is. But it’s how the city tracks its demographic data.

    What this begins to show you is that neighborhood definitions and boundaries aren’t as black and white as they might initially seem. And it’s partially because cities themselves are always in flux. New neighborhoods emerge and old ones reinvent themselves. And as that happens, people start introducing new names and new terminologies.

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    When I was about 19 years old, people in Toronto used to say they were going out “on Richmond and Adelaide.” Since then, gentrification has pushed many of the bars and clubs out of that area. So people instead go out “on King West” or “on Ossington.” And as people begin to use those terms and identify with an area, new brands are created. Ask anybody who lives downtown and I bet they’ll tell you that King West has its own unique personality and even a type of person who typically lives there. This is an on the ground type of awareness though, which doesn’t get captured in census tracts.

    The other reason neighborhood boundaries can be so fuzzy is because we – the real estate community – are constantly trying to manipulate them for our own benefit. I’m indifferent to the fact that this happens, but it is a reality. Think about how much the neighborhood of Yorkville has been stretched from its original roots north of Bloor Street. If a neighborhood has a good brand, agents and developers will naturally try and leverage it. Homeowners do it all the time too. Would you prefer to say that you live in Seaton Village or the Annex?

    Ultimately, we (my Dirt cofounder and I) decided that neighborhood definitions and boundaries needed to be fluid. They needed to dynamically adjust with the market and come from as many people as possible on the ground. Because at the end of the day if the official documents say one thing, but the majority of city residents believe another, then that official boundary and definition are probably out of date. The crowd wins here.

    We liked this approach because it was organic – just like cities.

    Images: Flickr, Wikipedia, Flickr

  • Put your window to work and make $50 a month

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    I’m convinced that city building – like probably every other industry – is going to get a lot more data driven. Yesterday I wrote about how driverless cars are collecting exact replicas of our cities as a result of the 3D scanning that they do. And today I learned about an interesting new startup called Placemeter.

    Basically it works like this: If you have a window (at home, at the office, or wherever) that faces onto a lively street, Placemeter will pay you to setup a smartphone in that window as a “meter.” The going rate is up to $50 per month and they’ll even provide you with the necessary suction cups.

    Through video, your phone will then start collecting anonymous data about that street’s activity levels: the number of people, cars, and so on. Below is a video of what that output looks like. Notice that it’s even collecting the number of people that go into each of the stores. Click here if you can’t see the video below.

    //player.vimeo.com/video/69091237

    To make money, Placemeter plans to sell (or is already selling) this data. And their goal is to “make your city better” by specifically improving the way that pedestrian spaces are designed. There are of course lots of other use cases for data like this (such as seeing how busy that bar is across town), but their primary goal appears to be around city building. At least that’s the case right now.

    Not surprisingly, there are concerns about privacy. But I’m sure they’ll be able to work around that. All of the data they collect is anonymous and they don’t save any of the footage that they receive from the meters. Their system just extracts the relevant data points and then automatically deletes the video. 

    What’s also interesting to me about this startup, though, is that it’s yet another example of decentralized value creation. Just like Airbnb empowered anyone with a spare room to run their own bed and breakfast and YouTube empowered anyone with some talent (or a funny cat) to create engaging content, Placemeter is allowing anyone with a window and a view to connect and contribute to a network of urban sensors.

    And it works because the marginal cost of adding a new meter to their network is relatively low. Especially if you compare it to what it might cost for a municipality to setup and manage a similar – albeit centralized – system. It’s a totally different cost structure. So when we talk about smart cities and data driven city building, we’re really talking about networks and an environment of decentralized inputs.

    It’s a pattern that keeps coming up as a result of the internet. If you start watching for it, I’m sure you’ll see it.

    Image: Flickr

  • Rules are made to be broken. So which one is next?

    Jevon MacDonald of StartupNorth published an interesting article today called, You are supposed to break the rules. It talks about entrepreneurship and how great companies are built by disregarding the way things are done today.

    And I think it’s for that reason that many stupid sounding ideas (think Airbnb and its initial idea of offering air mattresses) actually turn out to be great ideas. In reality, they weren’t stupid ideas. They just contravened the norm, and that made them sound stupid. It made people feel uncomfortable. And as humans, we tend to have a bias towards things that reinforce our existing view of the world.

    In any case, Jevon talks about some of the “big rules” that are being broken today. His list includes:

    But really he’s talking about Uber, Tesla, and Airbnb. They are the startups breaking those rules. However, that’s old news for most of us. What’s more interesting are the following two takeaways.

    The first is his prediction that startups are going to start running into more and more regulatory hurdles. In other words, we’re going to see more, not less, litigation. And I think he’s right. As technology starts to creep into other industries (like it has with the taxi industry, the car industry, and the hospitality industry), we’ll probably see a lot of incumbents fighting to hold on.

    The second interesting takeaway for me was that out of his list of “big rules”, the real estate industry (i.e. the MLS) is the only one that doesn’t have a formidable disruptor attached to it. Which makes me wonder: Is something like Opendoor.com inevitable?

  • Opendoor.com raises $9.95M to make selling your home as easy as a few clicks

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    If you’re a regular reader of ATC, you’ll know that I’ve been following the startup Opendoor.com for a few months now. I first wrote about it when it was codenamed Homerun and I just recently wrote about them as preface to a real estate survey I was conducting.

    Well, about an hour go it was announced that they’ve just raised $9.95M in venture funding from everyone and their grandmother. Here’s the list of investors (via TechCrunch):

    Paypal co-founder Max Levchin, Former YouTube and Facebook CFO Gideon Yu, Eventbrite co-founder Kevin Hartz, Y Combinator’s Sam Altman, Quora CEO Adam D’Angelo, Yammer co-founder David Sacks, Angelist’s Naval Ravikant, Yelp CEO Jeremy Stoppelman, Box CEO Aaron Levie, Initialized Capital’s Harjeet Taggar, Garry Tan and Alexis Ohanian, Former Twitter vice president Elad Gil, Blippy co-founder David King, Flixster co-founder Joe Greenstein, Angel investor Mike Greenfield, Quora co-founder Charlie Cheever, Path’s Dave Morin, Facebook vice president Dan Rose, Trevor Traina, Resolute Ventures’ Mike Hirshland, Caffeinated Capital’s Ray Tonsing, Felicis’ Aydin Senkut, True Ventures’ Om Malik, Thrive Capital’s Josh Kushner, Crunchfund’s Michael Arrington (who disclaimer: founded TechCrunch) and SV Angel.

    Not surprisingly, there are quite a few people who see an opportunity in the $20 trillion US residential real estate market – which I think is a good thing. This is a space that–despite its size–hasn’t seen an awful lot of innovation.

    There still isn’t a lot of information about the product, but there’s a clear focus on creating liquidity in the marketplace. Despite being located in San Francisco, the company will be launching in 3 markets outside of California – where liquidity isn’t as great for homeowners.

    The goal is to transform the typical 90 day selling process into a few clicks online. Homeowners submit their home to the platform and then Opendoor makes an instant offer to buy. Done.

    What I wonder then is if it’s going to be an arbitrage play. They buy the homes below market (because they’re offering total liquidity) and then they turn around and sell them at market.

    Do you have any guesses as to their business model?

  • Your thoughts on the real estate marketplace, please

    If you know me at all, then you’ll know that I’m a big proponent of introducing more technology into the real estate space. I think the industry is one that has been incredibly slow to embrace technology, but that it’s only a matter of time before it does.

    Two months ago I wrote a post talking about how entrepreneur and venture capitalist Keith Rabois is working on a home buying startup codenamed Homerun — now called Opendoor. Here’s how he recently described the state of affairs:

    “My friend [PayPal and Palantir cofounder] Peter Thiel suggested that I come up with an idea to innovate in residential real estate,” Rabois told VentureBeat in April. “It’s the largest part of the economy unaffected by the Internet. And that was definitely true then, and even with things like Trulia and Zillow, it’s fundamentally true today. But the process of [selling a home] hasn’t been transformed by technology.”

    What Opendoor is trying to do is really interesting, but I have a different idea. It’s called Unlyst. And today I’d like to ask the ATC community for a small favor. I’ve created a short home buying and selling survey (embedded below) that will take you at most 2 minutes to complete.

    If you could please take the time to do that, I would greatly appreciate it. I’ve made the results public as well, so you’ll be able to see how buyers and sellers currently feel about the real estate marketplace. If you can’t see the survey below, please click here. Thanks for your help!

    [googleapps domain=”docs” dir=”forms/d/1bKvHYdSUfYH3AGX7LcLIK0_-i7nt7WIdTmHeaJ8P7pY/viewform” query=”embedded=true” width=”760″ height=”500″ /]

  • Without trust, you have nothing

    I was reading Fred Wilson’s AVC.com blog this morning (as I do every morning), and I thought his post on trust was a really important one. He was talking about it in the context of building successful web applications, but I don’t think it’s only applicable to internet businesses.

    As marketer Seth Godin wrote on his blog earlier this year, the most important questions are not:

    Is my price low enough?

    Is it reliable enough?

    Do I offer enough features?

    Am I on the right social media channels?

    Is the website cool enough?

    Am I promising enough?

    No, the most important question in marketing something to someone who hasn’t purchased it before is,

    “Do they trust me enough to believe my promises?”

    Without that, you have nothing.

    I thought this was such an awesome, yet simple, post that I actually circulated it to a bunch of people in the office after I read it. Because whether you’re marketing widgets, marketing private cloud storage, marketing to investors, or marketing new condominiums, that question of trust is paramount.

    And it’s for that reason that I think social media and mediums such as blogging have become so important. Customers want to feel like they trust you before they buy your product. The best brands know this and forge “relationships” with their customers. And with the tools at our disposal today, it’s become a lot easier for companies to do that.

  • Tech and the City

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    I’m reading a great book right now called Tech and the City. I’m only 31% of the way through it (according to my Kindle app), but already it’s been an interesting read. It’s about the making and rise of New York City as a technology and startup hub – which, is fairly recent phenomenon. There aren’t too many cases where New York plays second or third city, but tech is one of those instances. Silicon Valley dominates.

    The book talks about the deliberate efforts that were made, by the Bloomberg administration as well by many others, to diversify New York’s economy away from financial services and towards technology, startups, and entrepreneurship. It gives you all the backstory about the rise of Silicon Alley in the 90s, its subsequent crash in the dot com era, and all the players involved. And yes the reference to Sex and the City is both on purpose and explicit throughout the book.

    But at a time where cities all around the world are trying to replicate the success of Silicon Valley, the takeaways from this book are perhaps universally applicable. It certainly got me wondering if, here in Toronto, we’re doing enough to prepare our city to dominate in the 21st century.

    Image: Stephen Wilkes

  • How mobile apps are going to help us build better cities

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    Some of you might know that I’ve recently started using a mobile app called Strava. It’s a platform that allows you to track your runs and bike rides, as well as those of your friends. It tells you your speed, elevation changes, and it also maps your trips–among many other things. Here’s what my 50 km ‘Ride for Heart’ looks like from last Sunday.

    But what’s even more interesting is how cities are starting to use the data this app collects:

    For $20,000 a year, transportation planners and others can access Strava Metro, which provides an unprecedented look at where and how people are biking. It can tell them where they speed up and slow down, for example, or where they might stay in the street or ride on a crosswalk. That information can reveal where bike lanes or traffic calming measures would be useful, and if those already installed are effective.

    It’s a perfect example of how “tech” is infiltrating so many other sectors. Mobile technology and networks are generating huge amounts of data and it’s happening at an increasing rate. We’re gaining insights into the way people live that simply wasn’t possible before. Some of this information will inevitably be misused, but a lot of it will be used to improve the way we live our lives.

    I know that the City of Toronto also has its own proprietary cycling app and is hoping to collect similar sorts of data from it. But intuitively, I don’t think they’ll be able to compete with the scale of a platform like Strava. Though I certainly applaud the initiative.

    The information age is an exciting time.

    Image: Strava via Wired

  • Home remodeling site Houzz valued at $2.3 billion

    Earlier this week it was announced that home remodeling site Houzz raised a $150 million Series D round, which would value the company at around $2.3 billion, post-money. Meaning, that’s the value of the company including the money it just raised.

    If you’ve never used Houzz before, it’s a platform that offers design inspiration for remodeling projects, products for sale, and a directory of home professionals. The company makes money by selling products through its online storefront and through premium accounts for the pros.

    The perceived value of Houzz likely stems from the fact that it provides a platform to address the estimated $300 billion home improvement market. But what I see as really exciting is the potential for Houzz to bring even greater transparency to the whole renovation and construction marketplace.

    Already Houzz has started to aggregate data on average renovation costs throughout the US. But there’s a lot more they could do. Professional reviews and design inspirations are great, but I can imagine them “moving up the stack” to start acting as a king of virtual general contractor that manages more of the actual renovation process.

    And that would be pretty powerful.

  • Could a decentralized sales model work?

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    Since I started blogging last year, I’ve been getting regular emails from both people I know and from readers I don’t know (but hope to one day meet) asking for advice on buying real estate. Usually somebody sends me the link to a place they’re thinking about buying, and they want to know what I think about the property and the neighborhood.

    I’m more than happy to help when I can and I try to be brutally honest in terms of what I think. What’s interesting about this dynamic though, is that I don’t have a vested interest in any of the outcomes. Whether I tell that person I love the place or that it’s shit, I don’t stand to gain anything. And that means I can be brutally honest. It’s for this same reason that customer reviews on websites can work so well. 

    Because on the flip side, if I make money when you buy, then guess what, I’m going to want you to buy. That’s how it works for any industry–from financial services to real estate to retail. That’s why some stores will promote the fact that their sales people are not on commission. Although you could argue that those sales people are then less motivated to help you.

    In any event, all of this got me wondering if there isn’t some way to take customer reviews to the next level. Could a decentralized sales model work?

    Last year I had a conference call with one of the chief officers of one of the top 3 real estate websites in the US and I was told that they had actually tested a “social buying model.” It ultimately failed, but it strikes me as an interesting concept. Reviews are starting to feel a bit dated now on the social web, but I think the idea of crowdsourced input is here to stay.

    Image: Flickr