Startup Cities Goodreads: January 2022
Skyscraper heights; free land; Chinese Private City Operators; Brightline's epic value capture; SF in 1940; Nabr; Talent City Nigeria; Venice adopts the Tech Yuppie strat
You’re reading Startup Cities, a newsletter about startups that build neighborhoods and cities.
This week features my first monthly goodreads list.
There’s no good aggregator for interesting developments in the Startup Cities space!
Plus, I’ve noticed a chunk of readers like bite-sized material more than 20-page deep dives. Let me know what you think!
Why Are Skyscrapers So Short?
The always-excellent Brian Potter examines constraints on skyscraper heights. His conclusion may see obvious, but Potter’s framing and analysis makes this one my favorite reads of the past month.
The upshot: in Europe and the U.S. it’s primarily legal and regulatory restrictions that cap building height. Potter’s analysis also suggests there’s a lot of money left on the table for Startup Cities that build tall (assuming they can attract enough people to justify it).
Free Land in Flyover Country
Rural towns are giving away free land and free housing. This is similar to the “pay Tech Yuppies 10k to move to Arkansas” proposal shared a few weeks ago. Despite the good deal, many towns with free land programs are still losing populations.
Other places, like Southern Italy, have similar programs that underperform. Another example of how it’s the entire urban environment — and its network effects — that drive customer choice.
Business Insider profiles Chongqing, China, an area the size of South Carolina that holds 32 million people. A great exploration of density on mountainous terrain (the first floor of some buildings are at the 30th floor of others), competent public transit, and a seriously impressive skyline. I want to get lost here!
More Politicians Menace Honduran ZEDES
Politicians continue to menace the Honduran ZEDEs, the legal backbone of “charter cities” in Honduras. Here’s a video (Spanish) of someone appointed by President Xiomara Castro threatening to “declassify all the secrets” around the founding and administration of the ZEDE legislation.
There are many lies circulating about the ZEDEs, which can only complicate matters further. Founder of Ciudad Morazán, Massimo Mazzone, appears to be fighting half the population of Honduras on Twitter in an attempt to set the record straight:
I’ve received mixed signals from those on the ground. Possibly this will be a disaster. And possibly it won’t matter at all.
Brightline goes all Hong Kong MTR on Miami
Brightline, a privately-run intercity rail system in Miami, took a lesson from Hong Kong’s MTR and is developing 83-story megatowers along their line. This is probably the most exciting project in transportation right now.
Notice also what Brightline’s strategy says about the underlying models for high cap-ex businesses. Brightline will create a massive positive externality once their service is up and running. Brightline can capture this value by building the megatowers.
There’s so much to explore on this topic of value capture in cities. First, things like Brightline shows a deep dysfunction at the center of most American cities: management creates positive (and let’s be honest, also negative) externalities throughout the city. Management captures this value poorly.
If you believed popular opinion (or any jaded New Yorker, as I once was), it’s impossible for public transit to run with sane finances and competent service. And yet transit systems elsewhere are listed on the stock market!
Brightline gives the lie to the idea that transit must be provided by the state and that it must be an economic basketcase. Imagine all the positive externalities that cities built by startups can create. Now imagine the potential for value capture and the diverse strategies available to these startups.
Alex Tabarrok on Private City Operators in China
Alex Tabarrok writes about the burgeoning market of Private City Operators in China.
These “PCOs” are vertically integrated companies that handle “urban planning, industry development, investment attraction, and public goods and services.” Here’s a perfect example of something I’ve written about before: there’s lots of room for unsexy innovation in city management.
No fancy new technologies. Just competent management and biz school stuff like vertical integration. This strategy can’t be achieved piecemeal, a PCO needs to be the driving force and residual claimant on the value of the city. PCOs look way more capitalist than 99% of urban environments in capitalist America. Here’s to hoping a new generation of Startup Cities can rip open this market beyond China.
AI Takes us to Pre-NIMBY San Francisco
Deep Learning technologies (a type of AI) have created a cottage industry in amazing footage of old cities. Here’s some of 1940’s San Francisco.
One of the techie lessons here is how AI models that are only good at an individual domain can be composed together to create a novel output. In this case, distinct models for colorizing, super-resolution, and frame interpolation combine to improve the footage. People who say “yeah AI is good at narrow task X but it could never do broader task Y!” fail to grasp that broader task Y is sometimes a collection of narrow task Xs.
The other lesson is that ol’ San Fran looked pretty much like any other city before the NIMBYs took control.
CityDAO Buys Land, Wyoming Media Rejoices
Wyoming Public Media covers CityDAO’s milestone purchase of land as a DAO under Wyoming’s new DAO LLC law. I’ll put my current prediction here again: DAOs will struggle with collective action problems to the extent they pursue “business by voting.” But DAOs will thrive as aggregators of capital (and low-transactions cost “sources of truth”) around shared interests.
Venywhere: Venice Adopts the Tech Yuppie Strategy
The catch: workers pay for the concierge service. This alone makes the project a bit of an outlier in world of Tulsa Remote and NW Arkansas.
Also, come on, it’s Venice! Have you seen the place? There’s something compelling about Venywhere to me. But maybe that’s just me fantasizing about writing code from a gondola on this cold Denver morning.
Talent City in a City in a Free Zone
Projects like Talent City embody a demand sourcing strategy that I call “The Siphon” (a future article will go in more detail). Sub-Saharan Africa is rapidly urbanizing and projects like Talent City can hopefully ride this wave to success.
Every time I give a talk on programming my inbox fills with notes from ambitious Nigerian teenagers who want tips or connections to the American tech market. I’m often impressed with the brains and drive of these Nigerian software developers, most of whom seem to come from around Lagos. So, anecdotally, there’s a lot of potential talent for the city.
Talent City also shows an interesting bit of institutional nesting: it’s inside Alaro City, built by famed African city development firm Rendeavour. Alaro City is itself inside the Lekki Free Zone. TechCrunch is pessimistic about Talent City’s prospects and the Charter Cities Institute was quick to defend the project.
I’m between these views. Many tech journalists are obnoxious pessimists, basically walking incarnations of the cheems mindset. Just because something feels radically new doesn’t mean we should focus on failure modes alone.
But… I was once super bullish on the “governance” angle of Startup Cities and the absolute necessity of SEZs for success. I’ve since changed. It’s hard to get clear data and even to categorize such jurisdictions, but it seems the overall evidence on SEZs is mixed. Even if we agree that SEZ-enabled institutions are an important part of the technology stack that powers a city, they are only one piece of a complex product.
Here’s to hoping Talent City blossoms!
MiamiCoin Hits Pay Dirt
MiamiCoin, a project of CitCoins, has supposedly generated $22.5 million for the city. There are some issues using the currency. But, by early February, Mayor Francis Suarez reported a $5 million disbursement. New York is following suit.
I estimate a 100% chance that more than one Startup City project in the upcoming years will issue tokens in an effort to
rake money from fans finance their growth.
Rwanda: Singapore of Africa?
Preston Martin and Thibault Serlet write about Rwanda as the “Singapore of Africa”.
They credit much of Rwanda’s advancement to Paul Kagame’s centralization of government offices into a single board. This is similar to a strategy that many special economic zones employ: a “one stop shop” for business incorporation and other services.
Fun fact: I once briefly met Paul Kagame at an event in Switzerland. He was standing off by himself, speaking to no one and sort of scowling. He is huge. His bodyguards are even bigger. I said hello. He nodded. I don’t think I’ve ever met someone that more fully emanates the vibe: “Do not screw with me.”
Nabr: Tesla of Homes
Housing startup Nabr, co-founded by architect Bjarke Ingels along with former WeWork and Sidewalk Labs execs, is on a PR blitz.
This interview hints at a lot of potential innovation. Nabr wants to build a “consumer-first housing company” starting with mass-timber apartment blocks built with modular techniques. These are buzzy terms, but I’m excited to see them used in a startup context.
Ingels complains about flatlining construction productivity (the bread and butter of the aforementioned Brian Potter’s excellent blog). Ingels says Nabr will manage the whole supply chain, searching for systemic problems in housing (Katerra vibes?)
One must assume they’re pursuing the Tesla start-at-the-top-of-the-market strategy because their initial products are $700,000 apartments in downtown San Jose. Master higher-end housing and then drive down market.
As you might expect, Nabr has already attracted critics.
Here’s one angry commenter:
"Thinking of apartments as products is the fricking problem, not the solution. Architecture, by definition, requires adaptation to climate, culture, etc. Globalising multi-family design is not the solution."
I don’t actually know what “globalising multi-family design” is… but those words put together make it sound like a good idea! Cities have way too little product thinking, not too much! The idea that thinking of housing (or a full urban environment) as a product is “the fricking problem” seems deranged.
Tangier: Renegade Literary Province
The people at Charter Cities Institute and Adrianople Group have put out a beautifully rendered history of Tangier as part of their Charter Cities Atlas project. I learned all sorts of interesting tidbits.
The overall project seems to be an effort at persuasion: showing that autonomous cities have a long history. (It also appears to be a chance to raise money through NFTs.)
Pointing to the long history of autonomous cities is admirable and certainly true. But I can’t help but feel skeptical whether a historical foundation that such-and-such an obscure place had autonomy in the 16th century will convince anyone that who doesn’t already believe that granting cities political/regulatory/legal/whatever autonomy is a good idea.
I’ve talked with way too many people about these ideas over the years. At no point did it feel like an historical analogy would sway them in the slightest. People are deeply resistant to charter cities and even the politically-way-simpler concept of “startups that build cities” that I talk about here.
There’s a set of deep-seated memeplexes that stand in the way. More on that in a future article. But anyway, the project is well done and the persuasion angle is certainly worth a try!
Searching for Unicorn (City) Founders
Pronomos Capital, a venture fund focused on the institutional-arbitrage branch of the Startup Cities world, writes about what they look for in a founder. The space needs, “visionary entrepreneurs, whose time-preference is low to a fault, who are willing to maneuver financial, political, and industrial waters to achieve their dream.”
In addition to these typical entrepreneurial traits, Pronomos seeks those who have:
An awareness of the macroeconomic fit of their charter city
A sense of the political currents in the host country and region
Understand urbanization, digitalization, and other megatrends
Comprehension of citizen (user) needs at the highest and lowest level
build_: A Multiverse Civilization
Professor of Architecture Russell Hughes writes an interesting article about build_’s progress and potential. I’m allergic to phrases like “Multiverse Civilization,” but there’s no denying that build_ has shown a remarkable ability to secure partnerships with physical workspaces and web3 technologists around the world. Check it out!
The Point: 15-Minute City in the Desert
FastCompany reports that 600 acres of state-owned land that surrounds a prison will soon become “Utah’s Innovation Community.” The community has Culdesac vibes in that it aims to provide customers with a “one-car community” (though Culdesac aims for zero cars).
The development boasts mixed use, a variety of mobility options, and a master plan based on the 15 minute city. I’m pretty skeptical of the overall concept of the 15 minute city due to a recent paper by Alain Bertaud.
The Point is also spearheaded by a local land authority, which seems to have done a lot of public consultation and takes great pains to suggest that “the site belongs to everybody.” This sounds dangerously like Innovation by Committee. But who knows! I’m eager to do a deep dive and find out more.
Investors Love Culdesac
Startup City builder Culdesac announced a $30 million Series A from several big-name investors. But the most interesting announcement is buried.
“We’ve started the next set of Culdesac neighborhoods, each 3 times bigger than Culdesac Tempe.”
Culdesac Tempe is Culdesac’s flagship neighborhood — a $200 million project — that’s already well underway. I believe there’s a lot of pent up demand for what Culdesac is selling, and so I’m very enthusiastic about their potential.
Progress and Optimism
In not-quite-Startup-Cities news I also wanted to share the launch of the Institute for Progress. Their announcement, “Progress is a Policy Choice” is a great read on the potential and peril in today’s lack of progress. Wired editor Kevin Kelly also writes an homage to optimism in which “Total Urbanization” features.
Thanks for reading and don’t forget: Startups Should Build Cities!