You’re reading Startup Cities, a newsletter about startups that build neighborhoods and cities.

This week: a transcript of my recent appearance on CityDAO’s excellent podcast.

The transcript is lightly edited. The interview is long. So here’s some topics you can hop to:

Cities as Technology Stacks
Or, Cities as Legacy Firms in a Market for Living Environments
The Controversial Idea of Cities Operated by Private Firms
The Dysfunctional Incentives of Traditional City Management
Modern American Cities as Companies that Coast on Past Success
Science, Technology, and Entrepreneurship as General Tools for Innovation
The Role of Software in Startup Cities
Real Cities Founded by Entrepreneurs & Publicly Traded Cities
Platform Cities vs. Product Cities
DAO-ifying the City, Management, and Why Voting on Everything is Overrated
Participatory Politics in DAOs vs. UX Research and Management
Cities and Customer Satisfaction Metrics
Automation, Alfred North Whitehead, and a City Where Everything Just Works
50 Year Prediction and The Europeanization of American Cities
1000 True Fans, Product-Community Fit, and Other Measures of Startup City Success
Closing: A Startup Cities Industry?

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Full audio on AnchorFM.

Intro

Eric Gilbert-Williams: In your own words if you could explain to everyone what is StartupCities.com, and why did you start it?

ZC: StartupCities.com is just a Substack newsletter. That's it. It's an ongoing conversation with a bunch of people that are interested in this stuff. And the overarching theme is that entrepreneurs, startups should build neighborhoods and cities end-to-end. That's the tagline: "Startups should build cities."

What I focus on are less philosophical issues. At least that's my goal. I focus more on the nuts and bolts of what does it actually mean for a startup to build a city? What are the relevant technologies? What does developing customer personas for your startup that’s going to build a city look like? What does the financing look like? What are the relevant business models?

All the kind of stuff that applies my own experiences as an engineer in various early stage companies, but to this problem space of building full-fledged neighborhoods or cities.

Cities as Technology Stacks

EGW: Let's unpack that for a second. I think back and I don't remember seeing a city physically start. I don't remember an open, barren piece of land and then a city all of a sudden appearing magically on it, or even slowly throughout the course of my lifetime.

The cities that I've seen have always been there. When you say startups should start a city, first of all, I think as opposed to who? As opposed to government as opposed to natural selection. What do you mean “Startups should build cities?”

I think there are two ways to slice that question. The first way is to think of a city as composed of technologies. Cities have physical technologies and social technologies.

The physical technologies are the obvious stuff. It's a road, a sidewalk, a light pole, buildings, whatever. Social technologies are things like rules, administrative procedures. They're a bit more ephemeral, but they're also extremely important for how a city operates.

One version of the startup city story is that the technology stack that powers the city is super old and not being innovated. And it's possible perhaps to innovate individual slices of this tech stack. You could make a major innovation in roads or radically change the way that people get a driver's license or something related to security.

All of these things are possible, but it's more likely that we're going to see really meaningful innovation if a startup attacks the whole stack. Rather than saying, I'm just going to improve a road it’s: I'm going to build a lot of those pieces together and innovate across it. The total unit rather than just the little slice. That's version number one, which I think of as the engineer's vision of what a startup city is.

Cities as Legacy Firms in a Market for Urban Living

The other version is to think about existing cities as essentially legacy cities. It's not that they're terrible places. I live in Denver. I like the city. I chose to live here. I used to live in New York. It's a great city. I've spent time in San Francisco, great place. Lots of things are good.

But many of these cities are like legacy firms. If we think of the overall market for urban space in the US, these are our legacy firms. These are the IBMs of cities. They're not terrible in many ways. But why would we want that to be the end of the American urban story?

Markets and industries improve in part by having new entrants. And so the other piece of this is: how do we get new entrants into the market for cities so that we can contest these legacy cities and offer something that is meaningfully different than the standard experience of a New Yorker or the standard experience of a San Francisco resident?

The Controversial Idea of Cities Operated by Private Firms

EGW: When I think about a startup coming in to do anything, I think about being capital efficient, about being lean, about experimenting and about pushing boundaries and about being accountable as well.

And it naturally gravitates me towards thinking of the opposite being the concept of government spending and of our existing system and structure. I'm struggling right now to remember which building it was in China, the massive skyscraper that was essentially government built, the government owned and ended up empty.

It just couldn't sell out anything. The way that it was designed is beautiful and amazing, but doesn't actually have the functional capacity or the price range to fill up. And so it's empty.

And there was this quote that came out. It said something like: In all of human history, there's never been a least efficient form of capital spending than government. And if you're looking to do that big giant budget that goes nowhere, then leave it to government.

Even where I am in Calgary right now, there's a huge center, huge mall center that has just strangely and inexplicably been a ghost area of the entire city for 20 years. Huge structure, all this amazing architecture, a playground and a water fountain and waterslides and carnivals and festivals just empty because, well, we could fill in the blank. Maybe it was a bad location or all this kind of stuff, whatever it is.

But there wasn't that motivation and accountability that was needed from a startup. No one gets fired if the spending didn't go as well as it was supposed to.

It looks nice. People like to look at it and that's important. But to be functional and to do it cost-effectively is a very different manner. And I'm wondering, is this what you're driving at a little bit when you say startups should build cities or is this am I going sort of off topic there accidentally?

No, no. I think what you're describing is a big piece of what I'm talking about. And I would say it's probably the most controversial aspect of the whole startup cities meme, which is the idea that the urban environment should be owned and operated by a private party.

I find this much less objectionable, I think, than many people, simply because from my perspective, what we're talking about is something like a shopping mall or a big hotel just scaled much larger.

Let's just take a big hotel. A big hotel has lodgings, so it has private spaces for the tenants. The tenants are not long term, they're short term, but at least in principle, they could be long term. A hotel has a public transit system. It's just that it's a single box that moves up and down between the floors. It has common amenities similar to, say, a playground or park, but it might be a lousy pool or a little lobby in the center.

So all the elements, the core elements of what define an urban environment are there. It's just that if you look at an hotel you say it's a small thing, it has these unimpressive little amenities and you stay there one night, but the fundamental principles are all there.

If we just took that principle and we made it 100X larger, well, it would probably look like a neighborhood. Instead of having a lousy co-working space in the lobby, it might have actually a proper nice co-working space. Or instead of the pool out in the back of the hotel, well, you have a big central park.

The Dysfunctional Incentives of Traditional City Management

The point here is not an ideological thing about capitalism. It's just looking at the incentives. Cities are overwhelmed with a patchwork of externalities, both positive and negative. It creates all sorts of crazy and dysfunctional feedback loops within cities.

The standard municipal government is not well incentivized to have the kind of entrepreneurial management that you're talking about. These things taken together mean that we would expect to see a lot of the dysfunction that we see in these cities if these incentives matter and if these structures matter, which they do.

I don't view this as some ideological marriage to capitalism or free enterprise or something like that. I just view it as it is an alternative to how it is that urban environments are operated. And we should try it because it's possible that it would be massively better than the way that we operate a city now.

It's purely a pragmatic thing and I think if people are willing to set aside some of the ideological antibodies that come out, when you think about, oh my God, what would happen if a startup administered a city, then your mind really opens to tons and tons and tons of really exciting and positive possibilities for how it is that cities could work.

I would argue that it's in many ways a more democratic and humane future for humanity is one in which you can choose to live in one of these these environments. But again, this is the most controversial thread in this meme, but I don't see any way around it. The logic just goes in this direction.

Modern American Cities as Companies that Coast on Past Success

EGW: When I go on StartupCities.com and look at some of the articles that you've written, you have one that came out that's titled "Building Cities Underground" and another one says, “We Should Build Cities like We Build AI”.

You've clearly spent a lot of time thinking about building cities and about the structure of cities from several different angles.

I'm just curious why? What's your prime interest? What drives you to get involved in cities in this way? Because in many ways, I think that to be a citizen of CityDAO must resonate somehow and connect in a similar way.

I live in the world of software because I'm a software engineer, but I care passionately about the physical world. I don't want to live in a future which — honestly, I think sadly the trend is going — where we build diamond castles in the sky in bits and everything that is bit-related is fantastic and improves in performance and quality and it's optimized for the customer and it generates tons of profits so it's self-sustaining and we have all this amazing stuff.

And then the physical world just gets abandoned to this sad, stagnated, very dysfunctional, conflict-ridden set of goods and services. In a way that’s how a lot of modern American cities feel.

It's like being stuck inside a super low-performing company where the company is coasting on its past success. You’re in the company and you're like, I can't really trust management. I can incrementally choose a slightly better manager maybe, but, what are they really going to change? You feel demoralized. The noisiest and most dysfunctional people seem to be in charge of everything and sensible people remove themselves from the conversation.

It's super sad because where you live matters a lot. They are your friends that you see in physical reality. Where you live, at least I still think for a long time, will help determine your economic prospects. COVID has mixed this up, but I still think there will be big effects around location for a long time.

[Location can determine] your happiness through things like where you commute. There's even some research around, “happy cities” where divorce rates are correlated with certain aspects of cities. I saw a recent study that argued that one of the most meaningful choices a parent can make for their child's future is which zip code they choose to live in.

A lot of stuff just doesn't matter at all. But the zip code you choose matters a lot because it's going to set up the social capital that your offspring are going to have access to for their life. And this matters a lot.

Science, Technology, and Entrepreneurship as General Tools for Innovation

So I'm very passionate that the physical world needs to be made better, and the way we make things better in other aspects of our life is is science, technology and entrepreneurship. I jokingly call this the holy trinity of my worldview.

Why would we not take these very powerful tools that consistently prove their value and effectiveness in other areas of our life, why would we not take them and generalize them onto cities? And onto this whole technology stack that I was mentioning earlier: roads and rules and all the stuff that powers cities is so extremely important and valuable. Why would we also not just go after it with the same zeal that we go after making spreadsheets more efficient or something?

We should do both.

The Role of Software in Startup Cities

EGW: I spent a considerable amount of time in my past life owning and running a construction company. There was 60 people and middle managers and we did a lot of work and sometimes often we'd have to go into the city and deal with plans and zoning, and I would show up to the city, wait an hour, end up in the front of the line, talk to the person.

They'd go shuffling through paperwork and back doors and come out with these big rolls of paper that physically showed the zoning and the structure and the permitting requirements. And we'd have to look at this paper together for 45 minutes and do some decisions and do some brainstorming.

And of course, they're not going to give any information at all. They're not going to give any tips or hints or advice there. Just tell us what you want to do and we'll tell you if you can.

And so, hey, let's do this. And then the next day they'll come back and say no. So, well, how about we do this? And then they'll come back and say, no. Efficiency doesn't exist in this equation.

So maybe you could tell me, in your view, what is the role of software in startup cities?

I think what you're describing is a ubiquitous problem here in the US too. I encountered it when I went and tried to pursue a particular kind of development which is too long of a story to get into. It was the same thing. The lesson I learned was: "this is going to take eight years and $100,000.” And it's just like, who has that kind of time to just get permission? I haven't even done anything yet. Right? So yeah, it's a problem.

As far as software, I'm going to give a slightly contradictory answer. I think that in startup cities people wildly overestimate the importance of software. But I think in legacy cities, the value of software is wildly underestimated.

If you think of city's administrative procedures as algorithms, which they are, they're just a series of steps and rules, many of these things could be digitized and made better.

Even if you didn't digitize the process or automate the process, the experience of how you interact with these things could be made so much more pleasant. And that's just front end Web Design 101, make a pleasant user interface for things! This is very low hanging fruit, but no one has any incentive to do it. So this rarely happens in legacy cities.

In new cities, I see the role of software as: it's not the main event. I think this is something that comes up a lot in this conversation, especially because it's attracted a lot of people in technology and engineers like me.

We love software. Software is sort of easy because you don't have to deal with people if you just go off into your corner and program it. And I think this is a distraction oftentimes from the actual hard problems, which are very human-centric.

Software shouldn't be the main event, but software is an enabler of the kinds of efficiencies that are really lacking in cities. And so I think of it as in my dream fantasy startup city, the software is almost all internally facing. It's about exploiting the efficiencies of the operation and making the business operational.

It would look more like a vertically integrated e-commerce company or something, and a lot less like a typical sexy consumer app, because it wouldn't be the main event. The main event would be the physical environment and the city, but the software would support it.

Cities Founded by Entrepreneurs & Publicly Traded Cities

EGW: Do you have a good example of a city being started up and founded by a startup?

I mean, we're exploring what to do with CityDAO, of course, and Parcel Zero was this 40 acres in Cody, Wyoming, and Parcel One is a really active discussion.

If anyone is listening right now and they're not part of this, they should be a part of the discussion because we're making these decisions that are, in my perspective, going to have potentially some very major historical significance.

One of the ideas that we're brainstorming on is, should we build the city, should we buy some land and build a city from scratch, or should we perhaps buy over an existing township?

We're very interested as well in building an embassy inside of an existing city that's like a co-work and an event center. These are really big decisions.

Now on the subject of should we buy some land and start a city, I'm wondering if you have seen or have some examples of cities that were founded as startups that we could maybe consider and reflect on?

Yeah. I think a city that is founded intentionally as in, “Hey, we're going to make Ericville, so we're going to go off...”

EGW: That has a nice ring to it. I think I like it!

Yeah! So we're going to go up in the mountains, we're going to get a bunch of land and we're going to found Ericville and we're going to have a Delaware C Corp and everyone's going to get shares and I'm going to raise venture capital. I think that’s something very new. I view that as the frontier where I hope this goes and where people like CityDAO and other firms are going.

But if you think of Startup Cities from the standpoint of, hey, are there examples where entrepreneurs were the prime force for the creation of a city? Then, yeah, absolutely. History is full of these kinds of cases.

I live in Colorado and tons of the now very premium and attractive mining towns were started largely by a small number of essentially co-founders that wanted to go into the mountain to seek the mineral wealth of the mountains. And then the city grew up around it.

More explicitly is the city of Vail, for example. So Vail you can find it listed on the stock market. You can go and find the stock ticker. Vail owns this huge network of ski resorts. If you go to Vail, it's very clear the town is just an extension of what is essentially a ski enterprise. But people live there, you can go and live in Vail and be a resident of Vail and all of that.

And this is a large, publicly traded company that started because some people had been trained as skiing soldiers in World War Two. They came out to Colorado and they said, hey, let's figure out how to exploit the natural beauty and get people skiing out here. And it's named Vail because Theodore Vail was the civil engineer in charge of the highway that was running up through the Rocky Mountains.

And because he connected that highway to the town of Vail, they named it after him! So that was probably like a graft decision. *laughter* But you can see that essentially this was an entrepreneurial effort pulling these pieces together to make that exist.

You also have the world of megaprojects, which I'm much more lukewarm on because they don't have a great track record empirically. For example, there’s a project like King Abdullah Economic City in Saudi Arabia.

This is a publicly traded city. It has a CEO. The city CEO gives quarterly reports to shareholders. It has a bit of a checkered past so I'm not saying that's the most amazing example, but it's not as though there’s no such thing as these very large real estate developments that encompass the full scope of city living being a private company. These exist. It's not a stretch of the imagination.

Platform Cities vs. Product Cities

EGW: I'm in Calgary, Alberta right now, and there's definitely a number of mining towns that exist in the region. And these are, well, I guess I never really thought of it this way, but they are start up cities, they are entrepreneurial-led towns designed with a purpose and an incentive and a motivation, and they're designed in a way to fulfill that purpose.

Now, mining towns are perhaps a way of the past, but there is certainly new motivations that have arisen, and CityDAO is one of them, CityDAO is was motivated to build a city on chain. And what does it look like to put assets on chain? How can modern technology work with the concept of ownership and transferability thereof or governance thereof? And that's the motivation.

What other motivations have you seen inspire people to create a city or start a city? And what sort of potential vision do you see for CityDAO that we could do that maybe would have a very positive world impact? Cause we're so new right now. We're not looking backwards at the city we built and applauding ourselves or criticizing ourselves.

We haven't built the city yet. And this is an opportunity for the 25,000 people on the discord and everyone who owns a citizen NFT. And I think there's maybe 6000 unique people or whatever that is, to build something historic that has a positive impact on the world for ages.

Do you have a vision or a curiosity of where this could go or a suggestion perhaps?

I go back and forth on this. I have this distinction that I'm not sure if it's totally true, but I think of these projects as "platform cities" versus "product cities."

Startup Cities

Platform City vs. Product City

You’re reading Startup Cities, a newsletter about startups that build neighborhoods and cities. Long time, no see! I’ve had some changes lately (including leaving my day job) that have taken me away from writing. I suspect my cadence won’t be as regular as it has been in the past. But it’ll be better than last month…

5 months ago · 10 likes · 4 comments · zach.dev

So platform cities, if you think about platforms like Facebook, they're primarily about building tools that enable a wide diversity of behaviors.

The value of the platform, it’s essentially this minimal substrate upon which people do all kinds of stuff. The platform says, cool, do all your stuff! And then we monetize that. With your data, in the case of Facebook.

With products, there's more of a right way to use them. It's more of a structured workflow or a particular customer journey. So for instance, let's say Spotify might be an example where there's a right way to use Spotify. They say they're a platform, but 99% of people, they just go into their library and listen to music and that's what Spotify is about.

So it's like a narrower conception. And I think in the startup city space you see a lot of clustering around the platform cities concept. I think this comes out of the Charter Cities legacy, which is more focused on new cities as engines of reform and as areas where you can make radical improvements to the quality of governance and economic growth.

In this case the vision is: the regulatory state is too oppressive and we're going to have some special economic zone over here and it's going to liberate us from these regulations and then economic growth is going to be better. Or, Africa is urbanizing and tons of people are arriving in slums. But we should build new cities so that people can instead arrive to these nicer new cities.

I think of these visions as platform visions where you're not really prescribing. It's not like there's a “right way” to use the city. It's just: come forth and pursue your various human ends. And we enable it by having rule of law and security and roads and houses.

That’s probably the most scalable vision I would guess, just given that we see the biggest cities that exist have bourgeois things that unite them. Just being a nice place to live. I get good career prospects, I can participate in the dating market. That's the platform vision.

The other vision, is maybe more what you see with some of the DAO-oriented projects, which it tends to be, hey, we have a common ideology and I want to live amongst other people who have a similar ideology, or I want to live in a place that's hyper-digitally enabled.

All the land is going to be tokenized and we're going to be able to have this super digital experience. That's more like a product city to me, because you're prescribing more about a specific journey. Such as: I buy this NFT, I get this special right. I go there, we're all like crypto people and it's super fun and I get to spend time that way.

I don't feel confident enough to say one is the right way and one is the wrong way. I think both are legitimate strategies. I'd argue that the platform vision is the bigger upside strategy, but I think the product vision is probably more easy to execute and more realistic as what a startup could build and realize in a reasonable period of time.

I hope that answers your question. I view these as two species of visions and then there's a lot of competing things underneath there about ideologies or special economic zones. Or it should be only people who like classical architecture or crypto people or this kind of stuff on the product side.

DAO-ifying the City, Management, and Why Voting on Everything is Overrated

EGW: You mentioned DAOs, which is a good segue into that subject. Would you say that DAOs are an effective way for organizing a city moving forward?

Are we on a path where all cities at some point and some end date in the future are going to be run in a DAO or DAO like structure? What are your thoughts on DAOs as a foundational tool for city development?

I doubt that the future looks like everything is DAO-ified, or even that most cities are DAO-ified. This probably won't endear me to some of your audience, but my opinion, which I'm actually very open minded to changing, is that DAOs will thrive as aggregators of capital and to the extent that they lower transaction costs.

To me that's what I see as the practical value propositions of the DAO. So for instance, CityDAO crowdfunding the purchase of land makes total sense. That seems fantastic to me.

But I think DAOs will stumble is as an actual governance mechanism because I think they're suffer many of the same problems that we see in lots of other collective decision making machinery

So when I hear about DAOs that are saying: we're going to do liquid democracy or we're going to make everything open for a vote and it's just going to be Switzerland on steroids, and we're going to have a referendum on every single possible decision that we ever make… well I'm not very optimistic about that path.

I'm willing to be proven wrong. Some DAO can just be hyper successful doing that. But I doubt it. And I doubt it because there is a reason that the C-suite exists, that entrepreneurial management exists.

There’s a reason that Google does not vote on every single conceivable decision that they do, which is just that there are benefits to consolidating decision making, having some information centralized, having a small number of individuals on the hook for taking the majority of the risk and incentivizing those people to make rational decisions.

It's not like it's a mystery. Voting mechanisms have well-known failure modes that have been studied over and over and over again. And what I see in the DAO space is it just seems a lot of people haven't seen that this research exists, but it's been around since the forties.

I'm not talking about anything cutting edge. I’m talking about Arrow's Impossibility Theorem or various public choice dynamics or all these things that are out there that you can go see.

Essentially: organizing capital through DAOs, awesome! Lowering transaction costs through DAOs: amazing! Great idea. Voting on everything through DAOs: I don't think so.

And honestly, I would say that I would put my money where my mouth is here. I financially would only probably support a DAO where there can be some voting, but where it's not treated as the main event of what we're doing here.

I would be happy to delegate a lot of that managerial power to a competent team that the DAO then says: This is our competent team taking care of it, give us some money and we're going to go and make this cool thing. I'm cool with that. And I think that the standard corporate model that we see everywhere will still be a dominant form in entrepreneurially created cities.

Participatory Politics in DAOs vs. UX Research and Management

EGW: One of the things that gets me excited about what I see inside DAO governance whether it's Blockbuster DAO or KrauseHouse or CityDAO … I see a level of engagement and optimism and excitement and initiative that I don't see in established companies, let's say, or existing political structures now.

When I was 18, I did a lot of direct sales and that led me to doing a lot of networking. And the networking led me to a lot of city events. And so here I am, this 18 year old kid, high school dropout, not a damn clue what to do in life or any experience.

I'm showing up at these events at City Hall and having lunch with important people. And next thing you know, I'm getting asked about participating in some decision and some voting in about how we're going to spend $1,000,000,000 budget or $5 or $6 million of infrastructure change.

You know, I'm 18 years old. I have no idea. But clearly, these people did not have enough community input. And you could see that they wanted to get community input, but they also didn't want it because the more community input they got, the more complicated their lives became.

But if they weren't looking for community input, then it would be conceived more as a dictatorship. So there has to be an open entrance for people to provide input. And lo and behold, you've got this 18 year old high school dropout that's making decisions on how to build the next sidewalks and what sort of park to build and why and how and where and when and who.

These are not the decisions that an 18 year old should be doing. What I found equally surprising is that the vast majority of people in my city have absolutely no idea that these voting things are happening at all.

And even if they did, they probably wouldn't show up. They'd be much more content to sit and complain about how it was done wrong and complain about how they have no power and point fingers at who's in charge.

With CityDAO and with other DAOs that I see out there that's just not that way. The engagement initiative and drive and excitement factor is so high to get involved in some of these decisions.

Now there's a problem in how do we have 6000 people voting on whether or not to get an Adobe subscription. And that's a problem. We can't be stuck there.

But when I look around and talk to my friends here and even my home city right now, there is an underlying vibe that they do not have control, they do not have power.

There's not going to be a change that ever initiates. They're not happy with the way it is. They're complacent and almost prefer pointing it fingers at other people than to take charge and make change themselves.

A DAO gets an ability to hit a reset button on and shake the whole damn thing down and bring up a new way of doing city building, of decision making, of governance.

It’s going to have a lot of problems, but I'm never going to walk in city hall here and say that we should decentralize land ownership. It's never going to happen. But a DAO just did it.

To me it's the DAO’s potential that might trigger an avalanche of a new wave of how we deal with each other as humans. And I don't know exactly what that looks like, but it's definitely one of the motivations I have.

So I'll stop my ramble rant here because I'm almost taking a different angle on you on it. Not contrarian, but different angle. So what are your thoughts on some of that stuff?

You’ve brought up a lot of really interesting dimensions there and I should clarify what I said. I'm not saying that you want to just not have any input from people and then you just make decisions and some room and management just makes them and that's it.

I think there's a difference between do you consult and get user/customer input versus does the user actually make the decision? Do I as a user cast a blocking vote in the final outcome versus am I consulted for the thing?

There’s this perception that if you work in a startup, it's like you go off onto Mount Olympus and you have your brilliant idea and then you bring it back down engraved in gold, and then you present it to the market. That’s a recipe for having a terrible startup experience.

Good startups and even more mature companies are absolutely obsessed with consulting their users. I mean, if you think about this, there's an entire discipline that was invented by technology startups called user experience research, and it is entirely about trying to consult people and understand what is it that they really want.

The thing is, that sometimes people don't really know what they want or they say they want one thing, but actually they have a different problem and you need to solve it differently. Maybe a problem actually doesn't matter because it turns out there's a pathologically tiny number of people that care about this. But the cost to fix that tiny problem is not going to be worth it because it's going to say harm a much larger number of people.

Those are the moments where entrepreneurial judgment and managerial judgment has to come out. And it's not that you're dismissing the input of everyone. You're desperate for the input of people, but they don't get to block the decision, which is the difference here.

You go down to one of these hearings and people can block you forever depending on what happens. And I think that's a big difference.

Cities and Customer Satisfaction Metrics

How many cities have a user experience research department? How many of them? I've done research on some of this to try to figure out: do cities even calculate a Net Promoter Score, which is a standard industry metric for customer satisfaction.

The answer to that question is no, which means that many existing cities do not really care. By their actions, what they betray is that the existing city does not care enough to calculate a single number about how well they're doing in many cases!

EGW: Who wants accountability?

Yeah, who wants this evidence? So from my standpoint, the idea that a startup that is managed by a founding team is somehow anathema to democratic participation or democratic voice, it's completely wrong because startups are desperate to hear the voices of people. It's just that you have highly accountable people having to take those decisions.

Automation, Alfred North Whitehead, and a City Where Everything Just Works

The other piece I would say here that you brought up is people want to participate in the management, take action themselves. I agree that that can be a beautiful thing. A lot of these DAOs, including no doubt, CityDAO, have this and that's a fantastic feature of what this stuff is unlocking.

But there is the other side of this, which is the famous Alfred North Whitehead quote, that "civilization advances through the number of things that we can do without thinking about them."

If you think about it, to some extent, the management of your city is a thing that in an ideal world, the citizen would not have to participate in at all because all of their needs would be so perfectly anticipated that everything would just flow and everything would be great and it would be perfectly safe and it would be this amazing, perfectly structured experience.

Obviously, we don’t live in that utopia. So there is this exchange of information and study that needs to take place and iteration that needs to take place.

But I think this idea of hyper citizen involvement is contrary to all the trends that we see in other areas of technology, which is that the systems themselves become smarter and smarter and then fade into the background. I focus less on going down and arguing with my city council and more on spending time with my family and building a business and, I don't know, going to church or whatever you're into.

These are two, I think, competing impulses in this space. I would say I'm biased a bit more towards the automation side, the idea that it “just works.” There are fewer demands placed on your customer. But I'm certainly open to the idea that some people find joy in participating in these things, and I would never want to discourage anyone from taking that action themselves.

50 Year Prediction and The Europeanization of American Cities

EGW: So we've talked a bit about some potentials of where cities could go, some motivating factors and some different angles and challenges that need to be overcome.

A lot of this revolves around the subject of where are cities headed? Now crypto moves fast. I think it's fair to say cities move slow. Even in crypto, cities involve a lot of land ownership and traditional stuff.

And if people are going to physically move to a new place, that's a lot slower than crypto. So I think we have to maybe look at it from a decade perspective or even a 50 or 100 year perspective.

What general direction do you think modern cities are headed in 50 years from now? What is likely to be norm?

I'm always terrified of making any kind of future prediction because it's so easy to be so wildly wrong.

EGW: Oh, yeah, absolutely. They're fun questions, though! So I'm not going to hold you to it.

I've met some people that have this view that the crisis of crime and dysfunctional finances and poor public transportation, these things are going to come to a head and we're going to have this revolution and San Francisco is going to deregulate the housing market.

We're going to have 100-story skyscrapers in Mountain View. I'm skeptical of that because I think irrational things can persist for far longer than anyone believes that it's reasonable.

I think the right place to look, and I mean this with all due respect to my European friends, is Europe, especially southern Europe. Southern Europe is coasting on what they created in like the 17th century.

I was in Portugal recently. It's a beautiful country and it's very nice to visit. And oh, there's the funicular and the cobblestone path and the artisanal wine thing. But this stuff is ridiculously old. It's like being in a living museum. And there is a beautiful aspect of that because you visit it and it's nice.

But if you spend time with locals, all they talk about are the crushing tax burden, the high prices, the low wages, the inability for anything to grow. There's no turnover in businesses. You can't quit because you're not going to find another job that's any good.

You hear about why they want to leave Portugal for somewhere with more opportunity. All the big projects like the beautiful trains and stuff are subsidized by the EU, with money from Germany and the UK, at least in the past.

So it's this weird thing where it’s very possible to have a stagnant state of affairs for a very long time. And I worry and what I feel is the sad, pessimistic aspect of my prediction is that possibly a place like SF will be able to coast on its truly amazing social and financial capital that it's built up over the last hundred years.

The NIMBYs will continue to win for long periods of time and it will stay really dysfunctional for a really long time. That would be sad. So that's the pessimistic half of the prediction. The optimistic half of the prediction is I do think that there's a lot of opportunity now in suburbs and on the outskirts of cities or an unincorporated land just outside of many of these places. Also in smallish towns and cities that have good leadership.

My hometown, which is a very small town in Maryland, I follow the mayor on Twitter and I've talked to him a couple of times, and he recently went on Twitter and was bragging about all the new housing that is being built in this town.

I thought, hey, this is an example of the opposite of what you see in many American cities. It's a small city. It has some things going for it, but not a lot of things. There's some leadership there that's open minded and willing to build!

The startup city stuff I'm very optimistic about because it is potentially so valuable and someone will eventually crack a really great opportunity and make a ton of money. And then there will be a sort of gold rush. I see it as partnering with these small cities, pursuing projects on the outskirts.

Also projects internationally. What was it … that one in four people in the world are going to be African by 2050? So there's this whole other international dimension -- we're very American centric and I am too -- that’s missed.

Rampant urbanization in the developing world is a huge opportunity. Everyone ends up in favelas unless we do something better. Hopefully that doesn't happen. In the developed world, cities start looking like Lisbon and Rome, which would be not horrible but not great. And ideally new cities and these small and outskirt projects absorb a lot of new people, and that's where the innovation takes place. That's my very, very hedged guess and prediction of the future.

1000 True Fans, Product-Community Fit, and Other Measures of Startup City Success

EGW: I wanted to ask you about 1000 True Residents, and I don't exactly remember what that was supposed to go. So I'm just going to hand the speaking stick there to you.

1000 True Residents is an article I wrote. It was reasonably popular, at least amongst startup cities people. It was an attempt to describe what would be the lower threshold, the lower bound for success for a startup city project.

I'm specifically talking about a physical space because I think getting 1000 people in a Discord is a very different thing than getting 1000 people to uproot their lives and move to a particular location.

EGW: Order of magnitude.

Yeah. So there's this idea, I think it's from Kevin Kelly, called 1000 true fans. And the idea is if you’re an online creator, you've sort of made it if you get 1000 true fans because 1000 true fans will each pay you maybe $100 a year for your output. That means you make 100 grand, which is a respectable living. So you've made it as a creator with 1000 true fans.

I generalize this as 1000 True Residents, meaning that if you have a place where you've been able to attract 1000 people to live there well... The "true" is kind of important here because I think you can make a business park and a thousand people show up and go to work there and then they go home to their homes elsewhere.

So a "true" resident means multiple links to the community, meaning I live and work there or I live in shop there, or I work and shop there or something like this. I think this really would be an indicator of something like product-market fit or something analogous, whatever the product-community fit or whatever we would call it in this space.

I think especially if you have the residential aspect, you start to get into meaningful sums of money at 1000 residents. Not enormous sums, but it starts looking like a proper business, a proper neighborhood-scale business.

EGW: True tax dollars coming in, true budgeting for it, true responsibilities for it, your first deputy to enforce and all that kind of stuff.

And true problems. It's like this thing that happens in digital products too. In the beginning you get early adopters, they all love you and you reach some threshold of user base where the crazy people show up and they use your product in a completely unexpected way and break everything.

Or they're pathological and they're yelling at support every single day or something like that. You start getting edge cases and that starts straining the system and forcing you to adapt, right?

Ten people in a room, you sing Kumbaya, everyone gets involved. You don't have the problems. 1000 people… you're not singing Kumbaya anymore. You get problems, right? And you even see it in a big apartment building, like 1000 people in their apartment building. Someone sets their apartment on fire. It inevitably happens.

Closing: A Startup Cities Industry?

EGW: I wonder if there's anything else on your mind at the moment. I want to make sure that you have a good chance to share thoughts or cover some subjects that maybe I didn't touch on yet.

I appreciate it, Eric. I definitely welcome people to come question and argue with me in the comments at StartupCities.com. I love that. The problem space is so big that I have no illusions that I've understood every dimension. So I'm always very eager to hear other people's takes on it.

The only other thing I would say is that this is, at least to me, it's one of the most important problems that we face. It's hard. It’s somewhat fringe and viewed as a bit weird. And my belief is that we've got to get builder people and smart people and diligent people on this problem by being very welcoming to this very broad swath of people with builder personalities.

Hopefully we can avoid the ideological stuff and the pettiness and this kind of fighting and really focus on making an industry: a startup cities industry. That's the dream for me is that we're celebrating the funding rounds of startup cities and the product releases of startup cities in the same way that TechCrunch does highlights now or AngelList does highlights now. CityDAO and the community there can be a big part of that.

Thanks for reading and don’t forget: startups should build cities!

Startup Cities

Startup Cities on the CityDAO Podcast