Startups Should Build Cities.
"Success is discovered by the economic system through a blanketing shotgun process, not by the individual through a converging search. – Armen Alchien
Ten years ago I coined the term "Startup Cities" to describe neighborhoods and cities built by startup companies. At the time, Paul Romer's "Charter Cities" (and ill-fated adventures in Madagascar and Honduras) were all the rage.
I, too, was taken by these ideas. I had just spent a summer in Kenya embedded with the Kenya National Alliance of Street Vendors and Informal Traders. I returned enthralled with the dynamism of developing world neighborhoods and starry eyed about how we might remove institutional barriers to growth and entrepreneurship.
In 2011, I gave a (now pretty embarrassing) TEDx talk that argued for a concept similar to Charter Cities, but with the problematic host/guarantor nations removed. (Funnily enough, this is basically what Charter Cities morphed into, though I certainly can’t take credit for that). Later I found myself interviewed by places like Virgin Entrepreneur where I pushed this concept.
In 2012, I became head of the now-defunct Startup Cities Institute, a ragtag group of researchers based at Universidad Francisco Marroquín in Guatemala City. We were a diverse bunch: some economists, some law professors, a couple architects. I raised some money in Silicon Valley and got to work.
It was a halcyon time. Cities have bottomless layers of complexity and there was always more to unwrap. Every conference or charrette or speaking gig unearthed something I hadn't considered. Every meeting with political delegations — Falkland Islands, Mozambique, Saudi Arabia, Mexico — raised new and difficult questions.
But the more I learned and the more time I spent living and working in poorer countries, the more conflicted I became. After a few years, I came to feel that our near-total focus on "governance" was a mistake. It was one-dimensional.
"Reform in law and governance", the wooly phrase used to describe the core value prop of such city projects, is only one area of innovation. It's a single piece of the complex technology stack that powers a city. The tech stack of a city stretches from roads and buildings to rules and licenses. Governance is important. It's a major constraint. But it's one piece of an enormously complex puzzle.
I grew disenchanted with "best practices", "step by step guides", and other such top-down, consultant-led approaches to building cities. More and more, my collaborators and I turned to prosaic questions like:
How can you source reliable and cheap electricity and water?
Do you even need zoning and planning rules?
How far away from an existing city should you build?
Does a new city actually need legal or political autonomy to massively improve urban life?
Do you need to sell land or can you just lease everything? What does this do to the business model long-term?
What's a minimal urban form that lowers the upfront cap-ex for a project's early days?
Is it really true that developing countries are the best places to build the first iteration of Startup Cities?
Many answers to these questions seemed contextual. There was no objectively right approach for all times and all places. I spent more of my time building: playing with code and leading the financial and organizational restructuring of a small but innovative college. These gave me a taste for the joys and heartaches of startup life. I came to see that building is contextual, often more "muddling through" than adherence to a pristine, ideal plan.
Eventually, my collaborators and I talked about "governance" less and entrepreneurship more. We called our shared interest: "entrepreneurship in community". It was clear to us that the possibilities of entrepreneurship in community were vast. We felt that the relevant audience was not just economists, but founders and technologists. The relevant questions weren't abstract and theoretical, but mundane questions of logistics, marketing, software, design, and operations.
The relevant constraint on startups building cities isn't research, it's entrepreneurship.
I felt so strongly about this that I shut down our research group in 2016 to work with startups full-time. The Startup Cities space is full of what Josh Hall would call "overhang technologies" — ideas and concepts where theory outstrips practice. We need way more founders and technologists building neighborhoods and cities or we'll drown in whitepapers but never know what works.
The early days of Startup Cities were lonely. Conniving journalists would visit our office and try to trick me into saying incriminating things about people and places. We were rejected from the last round of YCombinator. A co-founder and mentor tragically died. I'd attend events in San Francisco or Switzerland and earnestly suggest: "Startup should build cities end-to-end!" Some were offended. Most were confused. But only a few seemed to instantly get it.
Much has changed. The concept of startups building cities has left the fringe and become a frontier idea in tech entrepreneurship. Web3 is changing how communities fund and organize! Innovations in materials science and construction are lowering the cost and complexity of building infrastructure! Startups, right here, right now, are starting to build cities! I couldn't be more excited.
My hope for the writing here is to help more technologists and entrepreneurs understand the incredible potential of startups building cities. I want to inspire more smart people to build, so this space can blossom into the multi-billion dollar industry that it should be.
I look forward to talking with you and don't forget: startups should build cities!
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