My Five Proposals for Cities to Thrive
Cities Thriving Post-COVID, Tesla ➡️ Austin, Airbnb's Tough Few Months
Hi all, John here. Welcome to this week’s edition of Urban Tech! It is a special birthday week edition for me. I turned 25 on Tuesday. The current state of the world is not what I had in mind when I imagined the world at 25, but we have to make the most of it. I’m incredibly excited for the next year with Urban Tech. Starting a newsletter is something I’ve thought about for years, but I didn’t have the courage to do it until recently.
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Finally, I’m moving to LA next week, so the new time for Urban Tech starting in August will be between 8:30-10:30 am ET or 5:30-7:30 PT. If you are a new reader, you can subscriber here:
A Long Thing: My Wishlist for Cities
For the last 20-30 years, urban centers experienced unprecedented renaissance and revitalization. Remember, it wasn't that long ago that major cities, including NYC, were on the verge of bankruptcy. The suburbs were where you went to thrive as a young professional.
Policy reporter Matthew Yglesias described what we had seen for 20 years in cities like NYC, San Francisco, and LA:
“What you're seeing here is an overall pattern in which the urban revival is real but limited. There is increased demand to live in high-density neighborhoods, but those neighborhoods do not allow enough new construction for them to be affordable down the income chain. Urban neighborhoods have also not provided the kind of facilities, primarily schools and public safety, that make them attractive for the parents of older children.”
Things have changed though in the last several months due to coronavirus. Now many people are pontificating how cities will survive. Not to mention, urban growth stagnated even before COVID, according to Brookings.
While all the doom and gloom is warranted, I firmly believe we need to use this moment as a catalyst to transform our cities for decades to come. I also genuinely think we need significant reforms to ensure cities continue to prosper — and most importantly, we must ensure they prosper for all citizens and not just the wealthy. Below, I list the five initiatives I hope cities and governments across the country pursue. Many of the ideas are trends or proposals already underway like The Green New Deal or rezoning for denser housing through initiatives like the failed SB-50 bill in California. I agree with Richard Florida about the greatest risk to our cities:
1: Rezone inefficient land use like parking spaces and unneeded office space
One thing is pretty clear in cities across the country: as Jimmy McMillan, who ran for Mayor of NYC and Governor of NY, put it directly during his campaigns, "the rent is too damn high". Right now, in the U.S. there is a shortage of housing estimated at 3.3 million by Freddie Mac. We NEED to build more affordable and denser housing if we want cities to continue to prosper for decades to come. Cities are more than just playgrounds for the rich and need to be affordable to service workers, healthcare professionals, civil servants, and even teachers, can live in them.
There are a lot of ways we build more housing. Enough land isn't the issue. We have plenty — but we aren't using it efficiently. Now is the time to rezone parking spaces and commercial space zoned for offices not being used currently and likely to be used less in the coming years.
“In L.A. County, there are a staggering 18.6 million parking spots occupying 200 square miles of land in total. That’s more than 4.5 parking spots per person, spread over an area larger than the European principality of Andorra.”
Source: Micromobility
2: Invest in nationwide digital infrastructure
As we increasingly work from home, and now it appears schooling at least for the Fall will be predominantly online, we need the infrastructure to support this change of life. The FCC estimates 19 million Americans still lack broadband access in the Eighth Broadband Progress Report. I think this number is also probably an undercount, and it's likely even higher than that figure. It’s pretty much impossible to participate in today’s economy without a digital connection. Not only do we need more digital infrastructure, but we need to ensure it is also secure. Cities have become priority targets for hackers in recent years.
3: Pass a transformative housing agenda at the federal level
Here’s what I said last week about Joe Biden’s housing proposal:
If you read Urban Tech regularly or are engaged with these issues, one thing is clear: we need a bold, visionary housing plan from our leaders.
The plan needs to have many pieces and will be extremely expensive, but there is no issue like housing that would have an immediate impact and help millions of people.
I was partial to Elizabeth Warren’s plan when she was running, but Joe Biden might have our plan after all.
From Matthew Yglesias’ story on Biden’s proposal:
“According to original modeling by Columbia University scholars, it could cut child poverty by a third, narrow racial opportunity gaps, and potentially drive progress on the broader middle-class affordability crisis in the largest coastal cities as well.”
“The centerpiece is simple. Take America’s biggest rental assistance program — Section 8 housing vouchers — and make it available to every family who qualifies. The current funding structure leaves out around 11 million people, simply because the pot allocated by Congress is too small. Then pair it with regulatory changes to help the housing market work better for more people. It’s the general consensus approach among top Democratic Party politicians and left-of-center policy wonks.”
Keep in mind: there are easy steps we can take to help millions of people with housing, which is often an individual’s or family's single largest expense.
4: Commit to a future of green infrastructure
We need to think boldly about how we will tackle transforming our economy into a green economy that is less reliant on oil and fossil fuels. Transportation is one piece. The continued expansion of EVs is encouraging. I wrote about why I'm bullish for electrification in my Electric Optimism piece a few weeks back.
Where we can continue to expand our investments and efforts in areas like:
As a country, commit to getting to net-zero emissions by at the latest 2050.
Launch a “10-year mobilization” to reduce carbon emissions in the United States. With the goal of sourcing 100 percent of the country’s electricity from renewable and zero-emissions power, digitizing the nation’s power grid, upgrading every building in the country to be more energy-efficient, and overhauling the nation’s transportation system by investing in electric vehicles and high-speed rail.
Provide job training and new economic development, especially to communities and cities that currently rely on jobs in fossil fuel industries.
5: Commit to unbundling car ownership
I am 100% convinced in the coming decades car ownership for individuals will decline. With services like Uber and Lyft, rental services like Getaround, micromobility alternatives, and better public transportation services, spending the capital on an investment that will continue to depreciate will make less and less sense.
As tech reporting legend Kara Swisher put it last year in her opinion column: “owning a car will soon be as quaint as owning a horse”. Think of it as the unbundling or cutting the chord for the car. Keep in mind: private car ownership decreased on an annual basis in 2018, and things aren’t looking better for auto sales during COVID. From CNBC: “Major automakers reported a more than 30% drop in US sales in the second quarter, the biggest plunge in sales since the Great Recession and the auto bankruptcies of 2009.”
I'm moving to Los Angeles in a week and going without a car. I lived in NY for 3.5 years and didn't own a car either. I think it is entirely possible for people in cities and worth it not to own a car. Especially if working from home continues to be increasingly the norm. I think everyone should ask themselves if owning a car or multiple cars makes sense?
What I’m Reading This Week
CNBC: Tesla will build its next Gigafactory near Austin, Texas
The deal is done: from the Austin American-Statesman: ”In one of the largest economic development projects in Austin’s history, electric automaker Tesla says it will build a $1.1 billion assembly plant in Travis County that will employ 5,000 people.”
Key details that will need to be determined to tell how good the deal is for Austin: what were the final local tax and economic incentives provided to Tesla? At the time I'm publishing this piece, Tesla is the most valuable car company in the world by a significant margin over Toyota.
“Travis County, where the new car plant will reside, voted earlier this month to give Tesla tax breaks worth a minimum of $14.7 million to build the plant to bring jobs to the area.”
I have to imagine the city of Austin kicked in some incentives also.
The Statesman confirmed no State benefits were part of the deal but local incentives were.
Remember: it wasn’t that long ago cities across the country were bending over backward to win Amazon’s HQ2, and well, it didn’t entirely end up working out as Amazon intended.
I’m curious to see how the state's changing politics lead Texans to feel about the deal. Left of center politicians are galvanized by their base to oppose these kinds of incentives for major tech companies. Ben Smith wrote a fantastic overview last year of the Amazon situation and why it actually failed due to the NY primaries. I think this dynamic will continue to play out in cities across the country for some time to come.
Crunchbase News: Alibaba-backed Xpeng Motors Lands $500M
“Xiaopeng Motors, an electric vehicle maker based in China, said Monday it secured a Series C+ round of financing of approximately $500 million.”
“The investment comes seven months after receiving a $400 million round of financing. In total, Xiaopeng Motors, known as Xpeng, has raised $2.2 billion, according to Crunchbase data, which does not include yuan raised.”
“Alibaba Group backed Xpeng in a $314.8 million Series B+ round in 2018.”
Keep in mind: there’s a huge demand for more EVs and Tesla isn’t going to be the only maker. It’s costly to make, scale, and sell cars, which leads to needing high amounts of capital to continue growth.
Business Insider: Startup scenes shouldn't try to copy Silicon Valley, VC Brad Feld says
New Book Alert: “Startup communities are too unique to be replicated or controlled, Techstars founder Brad Feld and researcher Ian Hathaway write in their new book: "The Startup Community Way: Evolving an Entrepreneurial Ecosystem."
“ ’The Startup Community Way’ is a deep, theoretical take on what makes startup communities thrive due out July 28.”
“Local tech scenes are special because they unpredictably come up with powerful new ideas, Feld and Hathaway write.”
“One way to cultivate idea generation is to avoid letting startup communities like those in Silicon Valley, Boston, and Boulder be dominated by local government or any one person within those communities, they argue.”
As we see the impact of COVID, I’m increasingly interested in seeing how cities like Austin, LA, and Miami continue to grow their innovation economies and how resilient these kinds of cities are.
The New York Times: Airbnb Was Like a Family, Until the Layoffs Started
One of the best tech reporters out there, Erin Griffith, does a deep dive into Airbnb's last few months. I love the Airbnb product and what the team has done since launching in 2008, but it's been a difficult several months for the company, and I don’t see it drastically improving in the short-term.
Airbnb entered 2020 with plans to finally IPO. In May, the company laid off nearly 2,000 employees and the company has radically cut marketing and other costs. The company has also needed to take multiple loans in the last few months.
That said, the company is being more nimble through initiatives like virtual experiences, and it's majorly investing in stays that are more long-term as opposed to a holiday weekend or bachelor parties. The company also not that long ago faced major questions around safety and security.
In my opinion, where I think Airbnb has truly been hurt the most — and this article gets into it a bit — is how big of a negative impact COVID has had on Airbnb's backbone — its hosts.
Crunchbase News: Gett Raises $100M To Focus On Business Travelers
“On-demand ride-hailing startup Gett announced Tuesday that it completed a $100 million funding round to improve its offering for corporate travelers, where it said there is still opportunity despite the current travel environment.”
It’s incredibly interesting a service like Gett is raising during a time like this when business travel has almost screeched to a halt.
Thanks for reading this week’s edition! Remember to subscribe if you aren’t already doing so. Talk next week ✌️
JT