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This week:

Hong Kong Nail Salons
NIMBY and NIMA
Why can’t I sell mixed drinks from my mother’s garage?
Which zoning regime permits drag shows in my carport?
Brothels on Greene Street
How we crush businesses before they’re built
How startups that build cities can eat externalities rather than ban them

A Prediction

Startups that build cities will awaken surprising, novel uses for urban space. Cool things will happen that no one predicted.

This sounds like a statement of faith.

But, really, it’s just the logical conclusion of comparing highly-regulated cities — such as those of modern America — with less-regulated cities in other countries.

Let me explain.

NIMA: Not In My Aesthetic!

I once rented an apartment in Hong Kong. It had blue lightbulbs and no windows. But the most interesting thing about this apartment was that it sat next to a nail salon … on the 23rd floor.

Last week I went to a jeweler on the 6th floor of an old grandfathered-in-before-we-smothered-everything building in Denver — one of those brick, Wild West-era “skyscrapers.” I suddenly realized that, in America, I almost never see a small business on a high floor.

I can’t think of a single newer skyscraper in Denver — or even a mid-rise “mixed use development” — that has a small business on a floor higher than 2. Offices, sure. Apartments, check. But a nail salon? No way!

Why?

No doubt there are economic reasons for this. The jeweler and nail salon aren’t exactly on prime real estate. But, then again, people do much of their business discovery on Google Maps these days. That’s how I found the jeweler. So perhaps this less-than-prime location isn’t a big deal.

And maybe these businesses are on prime real estate if we consider their X, Y coordinates in the city. It’s only their Z coordinate (their altitude) that seems less-than-ideal. In the age of Google Maps and elevators, how bad is a high number for your Z?

Homogeneity is a red flag in cities: a code smell that somewhere a committee made a decree. That sucks. Why can’t I get a manicure on the 23rd floor?

Offend Tradurbanists With This One Simple Trick

The tradurbanist Jane-Jacobs-people are now screaming at their monitor: “BUT COMMERCE GOES ON THE FIRST FLOOR!”

Ok, sure. I get it: “eyes on the street,” “activity around the clock” and all that.

But does that mean we can’t have commerce on higher floors too?

I don’t have an urban planning degree but "commerce must go on the first floor” sounds suspiciously like the self-righteous maxims trotted out to support Euclidean zoning and all the other stuff that tradurbanists hate.

There’s a prejudice here.

Here’s famous urbanist Jan Gehl:

I would say that anybody living over the fifth floor ought generally to be referring to the airspace authorities. You're not part of the earth anymore…

What?

Here’s Leon Krier in The Architecture of Community:

There is no ecologically defensible justification for the erection of utilitarian skyscrapers; they are built for speculation, or short-term gain, or out of pretentiousness.

Krier says skyscraper-loving idiots like me suffer from “I <3 New York Syndrome” and don’t understand that skyscrapers are “network congestors.”

What?

Have these people ever been to a dense city in Asia? Have they read about Kowloon Walled City or Torre David? OK, these two aren’t pretty places. But are they an invalid part of their cities? The skyscraper is a network!

No commerce on high floors seems like another way to say: “I think this is aesthetically bad and so it shouldn’t exist.” It’s an architect’s NIMBYism — instead of Not In My Back Yard you get NIMA: Not In My Aesthetic!

We know that businesses can thrive on high floors… because they exist. In Taipei, Taiwan I often found myself at a coffee shop or clothing store or a restaurant on a floor higher than 5. If a nail salon is viable on floor 23 — why should we stop it?

Why can’t I get a manicure on the 23rd floor? This complaint sounds petty. But it’s an allegory for all the things we miss when we smother cities with rules and committees.

These restrictions have a human face.

Why Can’t I Sell Mixed Drinks From My Mom’s Garage?

Netflix just released a new show called La Divina Gula (Heavenly Bites). The show is nominally food porn, but it’s secretly a show about how working-class people build a business.

Every story starts with: “I started baking conchas in my abuela’s kitchen.”

Every story continues: “Then I parked a homemade cart in front of the market/bus stop/town square/subway station.”

Every story ends: “And that’s why I’m now a rich restauranteur with franchises throughout Mexico, an $80,000 truck, and a Netflix special.”

One story features a couple of guys who converted their Mother’s ground-floor garage into a mixed-drink stand (this is what tradurbanists mean by commerce on the first-floor, amirite?)

Sounds fun! And very illegal.

La Chubechada, garage turned mixed drink stand — Source: *La Divina Gula*, Netflix

Now that their inventive drinks are a hit, these guys run their street. They bring the vibrancy. Operations like these create the dynamism that urbanists blandly describe as “diverse uses” and “street culture.”

But these businesses wouldn’t exist if rules were rigorously enforced in their cities. The natural onramp from abuela’s kitchen (illegal use of unregulated food preparation facility!) to home-built street cart (obstruction of sidewalk and unlicensed commerce!) to franchise restaurant wouldn’t exist.

Though few people want to destroy businesses once they’re already successful, people are eager to smother businesses like these in the cradle. Millions of Americans will watch a show like La Divina Gula with wide-eyed excitement: “How exotic!” “Let’s go to Mexico, honey!” <GringoAccent>Ay, qué rico!</GringoAccent>

And yet these same people phone into city councils and yell incoherently in favor of rules and procedures that stop such things from happening here.

Which Zoning Regime Allows Drag Shows in My Carport?

My favorite Gula story is about a drag queen from Veracrúz whose name is Doriloca: “Crazy Dorito.” Apparently Moms with garages are the VCs of blue-collar entrepreneurship in Mexico, because Doriloca operates a drag show and restaurant from her Mom’s carport. Paging code enforcement!

La Doriloca a.k.a. Lola in her carport — Source: *La Divina Gula*, Netflix

No one thinks it’d be cool to crush the business of this happy, successful drag queen. But imagine proposing it to a committee! Señorita Dorito would never get permission. More than likely, she’d just never try to build.

And that’s the problem. What we lose is unseen. All the cool things we could have in our cities are off in another less-NIMBY’d branch of the multiverse.

When “Crazy Dorito” stands in front us, with flowing blonde hair and excellent mascara, we get it. This person had something peaceful and productive to build. And people like it! But when “Crazy Dorito” is unseen, an abstraction hidden beneath rules, just an inkling, just a crazy idea, we crush her.

It takes imagination to break out of today’s Matrix Of Stagnation. Or, we could just look at history.

Brothels on Greene Street

Behind all the nascent businesses we destroy is the pernicious myth that planners are smart enough to predict the highest-valued use of land. But the highest valued use for a piece of land is not known in advance. It’s discovered through entrepreneurship. Doriloca discovered that her carport is more valuable as a drag bar than as car storage.

Just as user behavior isn’t fully understood before an application goes live, designers and planners have limited knowledge of how users will experience a built environment. Drag-show-in-carport isn’t in the plan.

Plus, the highest valued use for a given parcel — or a given space in a building — doesn’t last forever.

One of my favorite bits of economic research is Bill Easterly’s “A History of Greene Street” which studies a mere 486 feet of Manhattan. This hyper-micro analysis shows that these few buildings have been textile factories, brothels, an art gallery, a slum, and now luxury condos and a high-end fashion store.

Does anyone believe this was in the plan? Was there anyone, ever, in all of the history of New York that would have designed this evolution?

Look, we’ll start with an I-3 zoning for light industrial to get those textile anchor tenants. Then a hundred years later we need an R-2 to make sure the brothels can move in.

By the time my great-great-grandchildren are alive we’ll need to issue a variance to make sure the fancy people at NYU can buy designer handbags between lectures.

PUT IT IN THE PLAN!

Externalities are Subjective And Negotiable Which is Just a Fancy Way of Saying that Startups Should Build Cities

Now a different set of people are yelling at their monitor, “BUT YOU CAN’T JUST LET PEOPLE DO DRAG QUEEN STUFF FROM THEIR CARPORT! THINK OF ALL THE NOISE!”

Right, sure. There might be a lot of noise. But, as in any enterprise, competent management must balance the benefit of an activity against the costs (in this case, externalities) that it creates.

When people talk about externalities, it’s almost always framed as black and white. It’s almost always negative and the conclusion is always: we must stop X from happening because of negative externality Y.

But this is a lie. The “THINK OF ALL THE NOISE” argument is not clearcut.

First, externalities are inherently subjective. Some people might like the liveliness of the garage-turned-bar — meaning that in pure economic terms they should pay a premium to be near it! One man’s nuisance is another man’s “lively neighborhood.”

Second, people will tolerate nuisances for a price. “Crazy Dorito” could pay her neighbors for the right to make noise, a Coasean bargain. Or, what’s more likely, apartments near a noisy bar will have lower rents or sale prices (which is what the owners want to lobby against, of course).

This takes us to a city or neighborhood built by a startup.

Behind the NIMBY bias of ban-all-externalities is the assumption that we’re in a highly subdivided city with no residual claimant on the urban environment as a whole.

A city with unified ownership has many tools available for the “Crazy Doritos” of the world.

First, it’s in the business’s interest to allow innovative uses of urban space. If “Crazy Dorito” brings in the people, she is a partner to the enterprise — not a nuisance. Startups want to make money. And if there’s a way to let “Crazy Dorito” bring the foot traffic without irritating everyone, then they’re incentivized to find it.

A startup team might subsidize rents for units near the noise polluters, effectively creating the Coasean outcome without costly multi-party bargaining. Or they might offer an in-kind incentive, such as free drinks at the bar (my own apartment building does this). Or they might just decide that the business is so valuable that they do nothing — people can renew their leases or leave based on how they feel about the externality. Startup Cities have fundamentally different incentives towards the discovery of novel uses for urban space.

Letting people discover new uses for space has an egalitarian side. Many micro-innovators won’t be elites. “Crazy Dorito” is a working-class person in search of onramps to financial security. And, in America, it’s home-owning, pension-retiring, too-much-free-time-having elites who all too often would use city management against her.

Traditional city management forces a false black-and-white understanding of externalities. It’s an inherently risk-averse pattern for urban space. And it offers machinery for special interests like NIMBYs and other cronies to capture and wield against innovators.

Entrepreneurial management is a different beast. That’s why I’m so excited for it.

The false security of urban plans and “externality management” by traditional cities excludes the “Crazy Doritos” of the world. To some, these businesses may feel like an edge case of an edge case. To such people, losing “Crazy Dorito” is worth the plan.

But such losses add up. They drain the color from our world. They empty the streets at night. And, damnit, they stop me from getting a manicure on the 23rd floor.

On Sunday I’ll publish my first link roundup. It’ll include lots of on-topic good reads with light commentary from the month of January.

See you next week and don’t forget: Startups Should Build Cities!

Startup Cities

Mixed Drinks with Mexican Drag Queens