It’s a tough time to be a Davos Man. Even during globalization’s heyday, the World Economic Forum’s annual summit was mocked for being out of touch, and this year is no different, with the spectacle of billionaires debating how to fix the middle class, and using Pokestops to remind attendees about global sustainability goals. The conventional wisdom is that the WEF’s vision of free markets, falling borders, and globe-trotting do-gooders “is at best broken and at worst dead.” The good news? As last year’s summit proved, the “Davos Consensus” is invariably wrong.
Davos will survive, if only as a place to do deals. But this doesn’t sit well with the World Economic Forum’s paternalistic founder Klaus Schwab, who signed off several years ago on a plan to reinvent the organization from within. The Forum of Young Global Leaders, created in 2004, is the 800-strong group of thirty- and fortysomethings who are being groomed to save the world—or at least run it one day. Their ranks include Chelsea Clinton, Ivanka Trump, Yahoo CEO Marissa Mayer, Y Combinator’s Sam Altman, and Noma chef René Redzepi. But as of a few years ago, these youngsters, like their elders, were in it mostly for themselves, the WEF feared. The group’s mission of “improving the state of the world” had plateaued, partly because Schwab was telling them what they should think.
“We’d had some successful projects, but most members were either completely disengaged or only superficially involved to earn kudos,” says the World Economic Forum’s John Dutton, who took over the program in 2013.
Here, in a nutshell, was the paradox of Davos: What’s the point of having a global conspiracy of overachievers if you don’t use it?
So the World Economic Forum turned to a team of artists, designers, and data scientists to reinvent the program. The goal was to transform a clubhouse in the Alps into an incubator for social enterprise. And that’s how Shaffi met Eli.
Shaffi Mather, founder of India’s Ziqitza Health Care, claims to operate the largest ambulance company in the Global South. But that wasn’t enough, so a few years ago, “I started thinking about emergency response in the other 90% of the world,” where his network would never reach. Then at the 2013 Young Global Leader Summit in Myanmar, Mather found himself paired with Eli Beer, founder of United Hatzalah of Israel, which fields a free, motorcycle-riding fleet of more than 3,000 volunteer medics. They were part of a conversation circle including public health experts and VCs charged with creating what Mather had envisioned.
What they came up with is MUrgency, a global medical response network employing any means necessary to get doctors where they are needed the most. “It could be a nurse coming by bicycle, or a doctor arriving by Uber,” Mather says. Three years later, MUrgency’s medics have answered more than 300,000 emergency calls. Indian industrialist Ratan Tata personally invested in the service last spring, and Mather hints at an impending partnership with a “large emergency response organization” with 160,000 branches worldwide.
“I’ve been able to move ten times faster than if I didn’t have this as a platform,” says Mather, referring to his fellow Young Global Leaders.
This wasn’t by accident. Mather and Beer weren’t matched by chance. MUrgency’s cast of characters were selected by software and then stage-managed by a team from The Value Web, a nonprofit network of facilitators who have worked with a who’s who of nonprofits, ranging from UNICEF and the International Red Cross to the Indian government. With the World Economic Forum’s blessing, they embarked on a three-year experiment to rewire the Young Global Leaders from a loose confederation of thought leaders into a tightly wound ideas factory—without the participants barely noticing.
Their secret weapon was the software created in conjunction with one of their teammates, Brandon Klein. Dubbed “People Science,” his tool melds social network analysis and machine learning techniques to probe for hidden interests and connections between people, and then uses that information to generate new teams. That’s how they knew to match Shaffi with Eli.
Crucially, Klein and his colleagues didn’t limit themselves to LinkedIn profiles. Starting in 2013, at the Myanmar summit where the pair met, The Value Web’s team began collecting granular data about the Young Leaders—not just who and what they knew, but how and why. They didn’t limit themselves to careers or hobbies, either—they asked for the intimate details of their friendships, families, faith, and health.
All of this was then parsed by the software, which started connecting the not-always-obvious dots. The obvious thing would have been to create a members-only social network, or at the very least an app. No way, said Dutton. “They have enough apps. I’d rather they’d be present than distracted on their phones.”
So the machine passed along these suggestions to The Value Web instead. Duly armed with this inside information, they began assembling teams with potential collaborations in mind. At conferences, they replaced the panel sessions that their Young Leaders would be tempted to skip (as their elders do habitually in Davos) with ad hoc exercises that fostered bonding. Afterwards, granular surveys asked participants for the names and context of everything they learned and everyone they met, to be fed back into the software once again.
Together, they created a high-tech-meets-high-touch formula for collaboration. Most remarkably, it didn’t feel coercive or manipulative—members were given the space to discover what they had in common.
You can see the results for yourself. A network map at the onset of the program depicts a loosely coupled network surrounded by a sea of disconnected dots. (Interestingly, the best-connected members are objects of suspicion—it implies they’re inveterate schmoozers.) Fast-forward to today, and you’ll find a tightly knit lattice ready to get to work.
More than 60 Young Global Leaders initiatives have been launched since 2015, compared to just two in the first decade of the program. While most wilted quickly, others persist—there’s one group battling corruption in Sri Lanka (Apolitical), another planting urban farms in Newark (AeroFarms), and a third awarding prizes to startups tackling lower carbon emissions (Decarbonathon). Yet another offshoot, the philanthropic Maverick Collective, has mobilized $30 million to improve the health of 300,000 girls worldwide. As of last fall, 70% of the Young Global Leaders were collaborating on their own projects.
Klein would be the first to tell you this level of synergistic success is unheard of in corporate America, and he would know, having served until recently as the chief collaboration officer of UnitedHealth Group. There, he was charged with making more than 100,000 employees play well with others—a thankless task that prompted Klein to join The Value Web and launch Collaboration.AI, the company that runs People Science.
As he saw it, the World Economic Forum and its budding Davos Men and Women were the world’s most self-actualized lab rats. The combination of their genuine desire to save the world and their proclivity to talk endlessly to each other and about themselves presented him with an array of potential experiments. His favorite was from Davos two years ago, run in conjunction with Wharton professor and Give and Take author Adam Grant.
One hundred of the Young Global Leaders were tasked with making asks and offers in a makeshift flea market for human capital. After distilling their responses on three separate passes of the machine, The Value Web’s team in Davos herded them into smaller and smaller groups until the average size was four. This was profound, he said, for any number of reasons. For one thing, it meant that 96% of people in the room—or in your office, or at a conference—can’t help you do much of anything. But they had created a machine, and a process, that could find the 4% who could help, and do it over and over again.
“Listen, only one in 25 people can help you, and how many people will meet today? Twenty-five at best,” Klein said as I slurped miso soup for breakfast atop a skyscraper in Tokyo. Having only just arrived for the last day of the 2016 Young Global Leaders summit in late October, I asked him to fill me in on what I’d missed. The goal was to see People Science in action, but I quickly learned that it was like trying to observe a black hole—you could only spot the light escaping at its edges.
Upon arrival, for example, 600 or so of the Leaders, already sorted by his algorithm, had been subjected to a series of frivolous but rigorous icebreakers designed to separate them. “Because everyone wants to sit with their friends,” he said, “and we have to break those cliques.” Once malleable, they were reassigned to play Davos-themed rounds of Cards Against Humanity. (“Governments around the world were focused on [tiny hands], but [the first machine on machine conflict] caught them by surprise.”) And if that didn’t sufficiently boost their esprit de corps, the previous evening had ended with each team receiving a bus pass and metro map for a madcap dash across the city for dinner.
If these misadventures gave the conference the feel of the world’s most rarified summer camp, well, that was intentional, too. “We’re trying to create a storyline,” explained Aaron Williamson, a board member of The Value Web and its leader on the ground in Tokyo. “A lot of our preparation focuses on ‘what is the story?’ Because events don’t really become a part of us without that drama.” In other words, you can use data to forge all the weak ties you want, but it’s shared experiences that temper and strengthen them.
“How does a group of disparate people with different backgrounds from different countries come together to make a difference in the world?” he asked. “What decisions led to their impact?” If you can crack that code, maybe you could replicate it.
That was the deeper game, as Williamson described it. Sure, Bill Gates or Arianna Huffington attend Davos after they’ve ascended to the elite of the elites. But what if you could have followed their rise from mid-career, guiding and helping them help each other while identifying the patterns and relationships that made them successful? And once you had that, could you reverse-engineer the process?
The tone of Davos is an intoxicating mix of humble-bragging and overweening earnestnesses, and Tokyo was no different. At my prompting, conversations with Young Global Leaders quickly turned self-referential—they knew who was pulling the strings, and didn’t mind so long as it worked.
As someone experienced in finding signals buried in the noise, Bruno Sánchez-Andrade Nuño, who runs the World Bank’s Big Data projects, understood why the WEF would want to foreground these connections. “How to quantify the value of the YGLs is something the Forum has struggled with,” he said, “but to me, it’s the indirect value that’s huge. The compounding effect of connecting the right people could define the future of this enterprise. It could change your mind; it could change your life!”
A recurring theme in nearly every conversation was the overwhelming importance of “trust.” By this, they meant two things. One is that everyone here was equal in their self-regard; there was no wasting time establishing they were, in fact, peers. The other was rooted in the storytelling Williamson had described. “The algorithm can’t say: ‘You people should talk—go!” insisted Valerie Keller, executive director of global markets at Ernst & Young. Each fervently believed Klein’s software was necessary, but insufficient—that there was an irreducible human element it couldn’t account for.
A particularly resonant example of this belief belonged to Geoff Davis, a veteran micro-financier who’s worked closely with the movement’s founder, Muhammad Yunus. His nomination as a Young Global Leader in 2007 coincided with an illness that nearly killed him. “I was weeks away from dying; my organs and systems had started shutting down,” says Davis. After a year of secluded convalescence, the annual summit served as his reemergence. “I’d told a few people privately of what I’d endured and what I learned, and they insisted I tell the group,” he recalled. “So, I stood and started tearfully describing it…”
Multiple Young Leaders I spoke to recalled it. Surely such raw emotions can’t be crunched by an algorithm, much less reverse-engineered, right?
Wrong. The next morning on the Narita Express, Klein showed me the Matrix. “The health question is always my favorite,” he said, as we took a tour of the database during the ride to the airport. There it was, one field among dozens nestled in the records for literally hundreds of the Young Global Leaders: “Have you or your family suffered a serious illness?” Bonding over brushes with death is one of Klein’s strongest predictors of personal trust—and one of the best levers at his disposal. Even when he and his colleagues tried to generate teams with nothing obviously in common—as was the case on their sprint through Tokyo—the machine had silently matched them along such lines all the same.
Unleashing artificial intelligence on human relationships is one of the hallmarks of what the World Economic Forum calls the “Fourth Industrial Revolution,” which was the subject of a talk in Tokyo by Schwab. “When everything is predicted and prescribed, what is the role of humanity?” he had asked plaintively.
I think the pairing of People Science with the hands-on techniques of The Value Web offers one answer. When that the digitally networked and biohacked revolution is realized, the value will lie in helping people make their own discoveries, face-to-face, and to do it smarter and faster.
“It’s crazy how little time, energy, and money goes into convening people physically versus doing it online,” said Lucian Tarnowski, yet another of the YGLs and the CEO of BraveNew, a corporate learning and sharing platform. “VCs might categorize the market Brandon or I are in as ‘human resources,’ or tell me the knowledge management market is worth so many billion dollars per year. But this is a totally new market—call it the ‘potential gap’ market—and it’s so new it doesn’t have a value yet.”
The World Economic Forum, at least, is sold on the idea. Dutton’s team is busy internalizing and refining The Value Web’s methods at their behest (although it’s probably too much to hope they’ll use it at Davos 2018). For his part, Klein has taken Aaron Williamson’s long-term view to heart, and is currently testing People Science at a high school in Minneapolis that his children might one day attend.
Working with teachers and the school’s principal, they recruited students who self-identified as open-minded and diverse, as well as interested in designing their own curriculum. The only requirement is that they had to pick another student to join them in the class—one they didn’t know, and who differed from them in age, race, or interests. For three months, they ran a sort of mini-Youth Global Leader summit, with rotating groups overhauling science and English and history classes, with one team visiting local authors and booksellers and even writing a book.
“We have to apply these principles to our own communities,” said Klein. “Otherwise we’re all going to keep going in the direction that we’re going.”
The perceived wisdom is that Uber has disrupted taxis and that private automobiles are next, but what if we’ve misread what is happening in our cities?
Traditional thinking would suggest that UberPool, which allows users to split the cost of trips with other Uber riders heading in the same direction, will always be inferior to public transport. Sitting in the backseat of a Prius may be more comfortable than standing on a crowded bus or train, continues this reasoning, but carpooling can’t substitute for mass transit at rush hours without massively increasing congestion.
This is wrong. In the last six months, Uber has begun offering shared rides for as little as $1 (81p), introduced optimised pickup points that algorithmically recreate bus stops, and started testing semi-autonomous vehicles it hopes will solve its increasingly contentious labour issues.
Never mind the black cabs; Uber is out to disrupt the bus.
From loss-making to profitable monopoly
Its principal weapon is not renegade AVs or all-knowing algorithms; it’s cash. Back-of-the-envelope calculations suggest Uber’s passengers pay only 41% of the true cost of each ride – a figure since challenged for mistakenly including now-staunched losses in China.
Still, the figures raise red flags about Uber’s strategy: is losing $3bn annually the sign of a sustainable business, or the product of predatory pricing? “Uber is wildly unprofitable,” tweeted the economist Justin Wolfers, “[which] suggest that prices will rise once they’ve succeeded at monopolising the industry.” Perhaps to his credit, Uber CEO Travis Kalanick has never denied this.
The most important question surrounding Uber is not whether it is a platform or a transportation company, or whether its drivers are employees. It’s whether it can only recoup its investors’ billions by building a monopoly (or at least duopoly with Lyft) on the ruins of public transportation – and it may not take much to tear it all down.
In Washington DC a vicious cycle of declining ridership and service on the city’s Metro culminated in last spring’s “Metropocalypse” – a system-wide shutdown followed by a year’s worth of emergency repairs requiring the closure of entire lines for weeks at a time.
Stranded commuters abandoned transit in droves while Uber, Lyft and other services pounced, offering shared rides priced below the cost of a Metro ticket. Unsurprisingly, Metro ridership has plunged, creating a $67m shortfall in its budget.
London’s fare surge
This week’s London tube strike was a harbinger of what comes next, with stranded riders reporting Uber fare surcharges as high as 450%. As a spokesperson explained, “without this pricing, there would simply be no cars available”. Meanwhile, the number of licensed private-hire vehicles in London has nearly doubled from 59,000 in 2010 to more than 110,000 by the middle of 2016.
Ride-sharing and autonomous vehicles could prove to be an especially combustible mix if and when the technology is perfected. The Boston Consulting Group predicts a shared AV carrying three people could cost operators less on a per-mile basis than rail.
Passengers at the edge of the network would presumably be the first to defect for convenience, triggering shocks throughout the balance sheet. Even a modest decline in numbers, BCG argues, could tip well-managed transit systems into the red.
Support for public transport
So what are cities to do about the would-be disruptors tunnelling into their transit systems? First, do no harm. As the US magazine Slate recently noted, cities across America are partnering with Uber to strengthen weak transport links and then using its looming inevitability as an excuse to not improve their own service. Diverting funds to pay for blanket subsidies will only hasten the public system’s implosion.
That said, one of the rich ironies on US election day was voters’ embrace of public transport in sprawling cities such as Atlanta, Seattle and Los Angeles.
While LA Metro builds new rail lines, the city’s Department of Transportation has commissioned its own trip-planning app from Xerox, receives traffic snapshots from Waze and is exploring how best to combine various modes such as buses, bike-sharing and electric car-sharing to build a seamless system greater than the sum of its parts.
Los Angeles’ efforts trail more ambitious experiments in Helsinki, Hanover, Manchester and Birmingham, all of which are dabbling with “mobility-as-a-service” – monthly transport subscriptions combining car-sharing and taxi rides, for example, with unlimited public transport. The hope is to retain riders and woo residents away from their cars (and Uber) by making the whole of these services greater than the sum of their parts.
My own recommendations [pdf] are that simply banning Uber won’t work, and neither will battling its labour practices in court. Staving off disruption will require leveraging every tool at cities’ disposal, including lane access, parking regulations and incentives to shift the peak of rush hours commutes, to create communities that are at their best when served by mass transit – and could never be built around a million Ubers.
When siblings Jonathan Smalley and Melanie Charlton began brainstorming a startup in her Annapolis basement in 2014, they were unwittingly following in the footsteps of Bill Hewlett and Dave Packard, the pair who plotted the trajectory of their namesake company, Silicon Valley, and ultimately the zeitgeist from the splendid isolation of their Palo Alto garage. But Smalley and Charlton chose a different path, relocating to Washington, D.C. expressly to join the city’s first WeWork outpost. “We had been working from home, alone,” recalls Charlton. “Once we moved in, immediately everything began to change.”
They weren’t looking to change the world; their firm, Brilliant Communications (later shortened to the vowel-challenged Brllnt) would design the apps and sites and services for those who did. So they set out to meet their neighbors through liberally dispensing help, advice, and round after round of Nintendo’s Mario Golf paired with WeWork’s infamous free beer.
What followed reads like a parody of millennial startup culture — Smalley the salesman in his cutaway-collared shirts; Charlton the chic creative lead; her Shiba Inu, Cinna, starring in the annual “Dogs of WeWork” calendar — but it worked. They met 400 people in the office that year, including nearly half their clients, many of whom sat literally down the hall. They acquired a neighboring three-person firm the next year, began pitching for larger business with a trio of others, and poached WeWork’s own community manager to coordinate their efforts. By last summer, Brllnt had quadrupled in size to 16 people, with another half dozen freelancers on call.
“Like anything else, the space is what you make of it,” says Smalley. “If you want to meet people and forge relationships, you can do that — otherwise, it’s just an office. Our approach all along was to build a community inside.”
Brllnt’s symbiotic relationship with WeWork hints at a much larger shift in how we organize work, and where. The startup’s choice of a host was not coincidental. With more than 80,000 members spread across 112 locations in 32 cities worldwide, WeWork represents something new in the annals of the office: a talent pool with the scope and scale of a multinational corporation whose collective brain is there for the picking. Whether it justifies its $16 billion valuation, it’s already one of the biggest beneficiaries of two trends driving the unbundling — and rebundling — of creative work.
The first trend is how the shared office and the network have replaced the solo entrepreneur in her garage as the incubators for new companies and ideas. “Coworking” didn’t exist a decade ago, and today there are nearly a million people globally working alongside peers who aren’t necessarily their colleagues. Workers in these spaces consistently report making more connections, learning skills faster, and feeling more inspired and in control than their cubicle-dwelling counterparts inside large companies. They also have different expectations from cloud workers content to commute from their couch.
“They want connectivity, they want density, and they want fluidity — the ability to move quickly from role to role,” says Jonathan Ortmans, president of the Global Entrepreneurship Network and a senior fellow at the Kauffman Foundation. “I think all three things lend themselves especially well to shared work environments.”
The second, more powerful trend is the steadily climbing number of freelance, independent, contingent, and temporary workers — more than 53 million Americans at last count, including 2.8 million freelance business owners. Survey research by the economists Lawrence Katz and Alan Krueger suggests that nearly all of the 10 million jobs created between 2005 and 2015 fall under this heading, attesting to the rise of the “gig economy.” This structural change is exhilarating if you’re armed with a laptop, Obamacare, and a high hourly rate; not so much if your family needs a steady paycheck.
This stems from the fact that corporations are quietly hollowing out. A third of the average company’s workforce was contingent or contractual in 2014, according to the supply management firm Ardent Partners, which expects this percentage to rise to 45 percent this year. At the opposite end of the spectrum, solo entrepreneurs have steadily increased spending on freelancers. In 2013 (the last year for which IRS data is available), contract workers comprised 36 percent of sole proprietors’ labor costs, up from 20 percent a decade earlier.
As a result, entrepreneurs have more freedom than ever in assembling talented teams, as Brllnt’s founders would attest. The trick is finding them — then vetting, negotiating with, working with, and ultimately paying them. And this has to happen somewhere — we can’t all be digital nomads.
WeWork and its forerunners literally sit at the convergence of these trends. Rather than going to work at a “job” with your “colleagues” in an “office,” your workplace becomes the local embodiment of what the McKinsey Global Institute has dubbed “talent platforms” — the online exchanges connecting people to projects, talent, and resources. In typical McKinsey fashion, the firm estimates that these platforms — including everything from Uber to Upwork and LinkedIn — could add $2.7 trillion to global GDP by 2025. The next target for disruption is the office itself.
Why is this happening now? The one-word answer is technology. The slightly longer explanation comes from the economist Ronald Coase and his Nobel Prize-winning work on the nature of the firm. When the “transaction costs” of contracting with talent are high — as they were in 1937, when he formulated his theory — companies hire and compensate employees internally, producing post-war behemoths like General Motors or IBM. But when they’re low and falling, due to the rise of the Internet and the collapse of organized labor, you get 50 million gig workers and counting.
One result is that new kinds of organizations appear — smaller, ad hoc teams that are loosely joined and agile — along with new institutions to support them. This is where companies like WeWork come into play, by adding a physical space in which potential coworkers, clients, and partners can cross paths, and by offering services that make it easier for them to connect.
WeWork, it’s worth noting, is neither the world’s largest office space-as-a-service chain nor the most profitable — that would be Britain’s Regus, worth roughly a third as much on paper. WeWork’s great innovation was to convince companies of all sizes that sharing an office with hundreds or even thousands of strangers was an opportunity instead of a liability. Today, a tenth of the Fortune 500 maintains at least a part-time presence there, totaling more than 11,000 members nominally belonging to the likes of Microsoft, McKinsey, Salesforce, and Dell. Once paranoid, corporate tenants have at last grown comfortable rubbing shoulders in the mix.
Management consultants have evangelized for years about business “ecosystems.” As in the food chain, even apex predators are enmeshed in a complex web of partners, suppliers, customers…and prey. But until the advent of shared workspaces, these relationships rarely manifested in the workplace (unless you were a consultant). Today, you might meet a client or investor while pouring yourself a mimosa; tomorrow, she might invite you to work out of her office.
This is already the case in Holland, where one of the country’s largest insurers has taken the unusual step of welcoming strangers inside. A few years ago, Interpolis partnered with the Dutch free coworking chain Seats2Meet to share spaces within its buildings. The first, located inside its headquarters and furnished with vintage carousel horses, has become a popular outpost for visiting customers, alumni, and curious employees. “It’s a place where my colleagues can meet people from the outside and immediately build something with them,” says Bob van Leeuwen, the Interpolis strategist who conceived the project.
Though it’s fun to imagine your future co-founder might be sitting behind you, most of us can’t afford to wait. Which is why WeWork, Seats2Meet, and others are building their own talent platforms to compete with LinkedIn, gambling that curated propinquity will trump the latter’s size (and degrading signal-to-noise ratio). At WeWork, for example, community managers frequently consult the company’s own social network to assist members in finding the right UX designer — which is how Brllnt met several of its clients. As machine learning and social network analysis tools such as Conspire and Collaboration.ai are brought to bear on these networks, it’s not hard to imagine algorithmic matchmakers spotting these latent connections well in advance.
Because as Brllnt’s co-founders will tell you, the value of shared workspaces stems from face-to-face conversations with your peers. “As we’ve scaled our business, we’ve managed to scale our partnerships” with other firms,” Smalley says. “They’ve given us insight into problems we had to later face.” According to one survey of coworkers, 84 percent had consulted with fellow members, 60 percent had created new friendships, and nearly half (46 percent) had “innovated” in collaboration with another member. Working together makes you smarter.
One reason startups and soloists are leaving their garages, basements, and office spaces is the increasing strength and ease of digital workflow tools, which make it possible for one to work from anywhere — thus inspiring them to rethink where they should work. Between Slack, HipChat, Dropbox, and Asana, we’re living in the golden age of hyper-intuitive collaboration tools. But what’s been missing are equally intuitive apps for everything else — negotiating who does what for how much, ensuring the work gets done, that deadlines are met, people get paid, and the tax man is satisfied. That’s especially true of tasks unique to partnerships that dissolve as quickly as they form.
As Stowe Boyd, a consultant and futurist who’s worked with Microsoft, Google, and IBM, among others, sees it, most of today’s collaboration tools are outdated, and leave out key parts of the process. For example, “the trickiest part — negotiation — is handled over email or a telephone call and never captured in the project itself.” Building a platform that does all of that while obscuring enough of the underlying complexity to be useful is a lot harder than writing another chatbot.
The largest such network to date belongs to Upwork, the freelance marketplace created from the 2014 merger of Elance and oDesk. With ten million members earning more than $1 billion annually in gross annual billings (of which they tithe 10 percent), Upwork has invested heavily in matchmaking, monitoring, payment, and managing reputations, gradually compressing its average time-to-hire from three days to three hours. “We’re online dating for businesses and freelancers, except we know what happens after they meet,” says Rich Pearson, its senior vice president for marketing. “We know how many people they hired, what skills they actually used, and what their performance rating was.”
Pearson imagines managing “private talent clouds” on behalf of customers who could bring reinforcements aboard with a click, rather than after a background check. (He’d better move fast — Work Market already does this on behalf of thousands of customers, including Walgreens and Cisco.) The idea should appeal to entrepreneurs and corporate behemoths alike.
Deloitte, for example, is building what chief talent officer Mike Preston calls “bench strength” — a thousands-strong reserve of expert alumni, niche talents, and part-timers who can be summoned in a pinch. Given the churn of a firm its size (225,000 people worldwide), Deloitte has taken the enlightened view that its true workforce extends into both the past and future of its present employees.
Then there’s the question of how to provide benefits to pop-up ensembles of workers. TaskRabbit co-founder Kevin Busque is tackling aspects of this challenge with his new startup, Guideline Technologies. The goal is to first radically simplify retirement plans for small- to medium-sized businesses and then untether them from employers altogether. To that end, Guideline has partnered with Vanguard, the low-fee mutual fund company, created its own easy-to-use app, and added a solo 401(k) option in which workers can sponsor themselves.
Another company angling to reinvent back-office functions is Justworks, a New York City-based startup striving to shoehorn the legal requirements of HR into an app. “Our goal is to become the ‘employment layer’ for Americans,” says CEO Isaac Oates. “On top are millions of businesses, and on bottom are thousands of governments. And in between is a spaghetti of relationships.”
Left unsaid: the company that can untangle that — or at least sufficiently hide it — has a multi-billion-dollar business on its hands. Justworks, Guideline, and their many competitors are all chasing the same grail: an Amazon Web Services-inspired model allowing virtually anyone to run industrial-strength HR and accounting from their phones.
For a firm like Brllnt — which relies on Slack and runs on JustWorks — the flexibility provided by these tools has already influenced how, where, and with whom they work. Rather than obviating the need to cram into a fishbowl, today’s business climate made sharing a workspace that much more attractive. Despite the hype, technology didn’t end up killing the office. It enhanced and reinvented it, instead.
(In October 2016, the New Cities Foundation published this report as the culmination of the Connected Mobility Initiative, a one-year research fellowship sponsored by the Toyota Mobility Foundation. Below are the first few paragraphs from the Introduction. For the complete report, please click here or on one the links at bottom.)
“Cities are always created around whatever the state-of-the-art transportation device is at the time,” Joel Garreau wrote twenty-five years ago in Edge City. At the New Cities Foundation, we are intensely interested in the forces shaping the development of new and old cities alike, whether social, economic, environmental, or technological. The aim of the Connected Mobility Initiative is to explore the triple convergence of “mobility” — physical, digital, and socio-economic — and to propose strategies and steps toward more broadly sharing the benefits of this transformation while ameliorating its potentially corrosive effects on public institutions. In the 1980s and early 1990s, it was the then-cutting edge combination of the personal computer and automobile that spawned the suburban edge cities of Garreau’s title. Today, the state-of-the-art in transportation is the smartphone.
It’s not just that smartphones are ubiquitous, with annual sales approaching 1.5 billion handsets, compared to a total of 1.2 billion motor vehicles on the roads. They’re qualitatively different, doubling as a sensor and pocket supercomputer as well as the focal point of a vast data collection and analysis apparatus churning in the cloud. They’re also the locus of 21st century infrastructure spending, as America’s mobile carriers have collectively invested more than $500 billion upgrading the country’s cellular communications grid — roughly the modern cost of the Interstate Highway System. The smartphone’s ability to choreograph transport has supplanted the importance of any one mode, even the automobile. It will remake the city as surely as previous revolutions did.
The most important questions now are “How?” and “For whom?” The advent of mass-produced Model T Fords a century ago had both spatial and political consequences for cities. Jitneys were banned, streetcars demolished, and mass transit became the public’s domain to eliminate competition with burgeoning automakers. Federal funds were marshaled to build freeways and finance suburbia. Meanwhile, systematic disinvestment hollowed out cities, requiring decades to repair and recover. Nearly thirty years passed between the judgment famously (though falsely) attributed to British Prime Minister Margaret Thatcher that, “a man who, beyond the age of 26, finds himself on a bus can count himself as a failure,” and Bogota Mayor Enrique Penalosa’s more recent assertion that “an advanced city is not one where even the poor use cars, but rather one where even the rich use public transport.”
How will we speak of connected mobility thirty years from now? As an enhancement of Penalosa’s city, or as the moment public transport willingly began to dismantle itself in the face of smartphone-led disruption? It is critical for policymakers to understand that new technologies and services such as Uber, Waze, and autonomous vehicles are not neutral. They embody values and business models that, left unchecked, may run counter to the goals of creating livable and equitable cities — whether intentionally or unintentionally. It’s imperative for transit agencies, public officials and their partners to understand the implications of this shift and to reposition themselves as the stewards of a broader, more flexible networked transportation system.
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How big is the co-working phenomenon? Reliable estimates put almost a million workers in shared spaces worldwide, and their ranks are expected to nearly quadruple by 2020. And the biggest fish remains WeWork, which, despite some recent hiccups—like cutting 7 percent of its staff in June—still counts 65,000 co-working members packed into 90 locations spread across eight countries.
But if you think co-working is good only for camaraderie and free beer, you’ll be surprised at what businesses can get out of it. Washington, D.C.-based 12-person design and marketing shop Brllnt (pronounced “brilliant”), for example, was largely built and scaled within a WeWork. There, its founders succeeded in scoring clients, talent, and a merger partner—without ever needing to hop on a call or dash across town.
In March 2014, before Brllnt was born, Melanie Charlton, a creative director for a startup, and her brother Jonathan Smalley, then in R&D at Vanderbilt University’s School of Medicine, were brainstorming a company in her basement in Annapolis, Maryland.
The fledgling founders moved from Charlton’s basement to a local art co-op, but complications arose. “We knew it was time to move out,” says Charlton, “when our client calls got interrupted by band saws in the background.” So they set their sights on an office space in a city.
Brllnt got started when Charlton and Smalley obtained some key client leads from her former employer, the mobile web developer Fiddlefly.
The pair considered Baltimore but ultimately chose D.C. because they had more clients there. And they zeroed in on co-working spaces, sensing that being among scores of other co-workers could give their business a boost. In July 2014, they moved into D.C.‘s only WeWork location at the time, situated in a former Wonder Bread factory. (The high ceilings and outdoor space helped seal the deal.)
Brllnt’s first office at WeWork was a glassed-in, six-person space that was used by four people—the founders and their first two employees. Monthly cost: $2,850.
Workers’ playtime? One way Brllnt made its connections: video games. “We were known as the office with Mario Golf,” says Charlton.
Charlton’s dog, Cinna—a Shiba Inu who boasts her own Instagram account—frequently visited the pet-friendly location (and turned up in the “Dogs of WeWork” calendar).
The D.C. WeWork was initially filled with tiny companies drunk on the startup lifestyle (and free beer—legend has it that of WeWork’s first-generation locations, it consumed the most). Brllnt’s office quickly became a popular place to hang out, in part because Charlton and Smalley were known for helping out fellow WeWorkers seeking resources or other assistance.
Fellow WeWorkers provided both a talent pool and a sounding board for recruitment efforts. Brllnt even hired two people from WeWork’s own staff.
Brllnt’s video games and status as WeWork’s go-to office resulted in a steady stream of visitors, and proved to be a very effective form of lead generation. In Charlton’s telling, she and Smalley eventually met around 80 percent of their fellow members—there were roughly 500—and scored 50 percent of their first year’s clients from WeWorkers. Among them: floral delivery startup UrbanStems, which has raised more than $8 million (and is no longer based at WeWork).
A co-working merger
In August 2014, Smalley met Jason Nellis, founder of content strategy firm Overachiever Media. Nellis and Smalley chatted about their roles as their companies’ main salespeople, and bid together on a couple of projects. They started sharing a WeWork glassed-in office to reduce overhead and increase space before merging their businesses (it was as if “we’d moved in together before getting married,” says Charlton). Then, this past February, they moved again, into a 12-person space (monthly cost: $5,400), later adding another three-person meeting room.
How important is WeWork to Brllnt’s present and future? Fourteen of its 33 past and present clients came from WeWork. Eight were found “down the hall,” and four more were co-worker referrals. And the company keeps growing—which may force certain decisions.
Time to move on?
As Brllnt continues to add headcount, it’s bumping up against the limits of its location’s offices. Charlton acknowledges that soon the benefits of having a large enough private space will outweigh the advantages and costs of WeWork. “We have interns this summer, and there’s always the question of how we rearrange our space to accommodate them,” she says. So Brllnt is keeping its options open regarding its next move—and WeWork continues to rearrange its existing office spaces to accommodate clients that need more room.
You might think twice about boarding a bus named “If Tomorrow Never Comes,” with the phrase spray-painted in green above the windshield. I don’t, not when the alternative is loitering along the smog-shrouded shoulder of Commonwealth Avenue—the 18-lane highway looping through Metro Manila colloquially known as the “Avenue of Death.” And not when the ride in question is actually a jeepney, the garishly decorated offspring of U.S. Army jeeps abandoned in the Philippines following World War II. You might call it a death trap, but for millions of Filipinos it’s just part of the daily commute.
An app called Sakay.ph told me to switch jeepneys here, on the megacity’s deadliest stretch. Clambering into the back of what amounts to a stretched jeep with a tin roof, I slide down one of the vinyl seats to sit behind the driver, who flips his right palm backward to collect the fare of seven pesos, equivalent to 15 cents. The other passengers range in age from elderly couples to young mothers clutching their infants. Eighteen of us sit knee-to-knee. Everyone covers their faces with a handkerchief in one hand while bracing themselves with the other, and for good reason. Jeepneys have neither emissions standards nor seatbelts nor retirement ages—the eldest have been running since the 1970s. They are the most dangerous and decrepit two percent of traffic, and they generate 80 percent of vehicular pollution.
A speaker mounted on the floor blasts the 1986 hit “(I Just) Died In Your Arms.” Not necessarily what you want to hear while swerving across multiple lanes of traffic at top speeds. Worse is the tangle of wires spilling from the steering column and the plastic jerry can half-filled with gasoline sloshing at the driver’s feet. As we race along the Avenue of Death, weaving between cars, trucks, buses, and “trikes”—motorcycle taxis with improvised sidecars welded on—passengers tap the roof to signal their stop. Every few hundred yards a row of cinder blocks appears, sheltering a few lanes for pick-ups and drop-offs. We pull into one as if entering the pits at Daytona, idling only long enough for the next shift of passengers to hop in. Then we peel out again. Our driver is paid for how many fares he collects, creating the perverse incentive to race between stops when his cab is full or to interminably wait until it is. The only speed limits are those imposed by congestion.
This is what rush hour in Manila looks like: a Mad Max-style ride down Fury Road aboard vehicles with names like “Cold Fusion” and “Soldier of Fortune.” First hacked together more than 70 years ago and manufactured nowhere else outside the Philippines, the ageless, endlessly patched jeepney is both an icon of national ingenuity and testament to its utterly dysfunctional public transportation. Filipinos affectionately refer to them as the “Kings of the Road,” with a mixture of pride and eye-rolling resignation. Nearly half of the capital’s residents take one of its 45,000 jeepneys to work each day, more than double the number riding the city’s buses and trains. Yet it’s virtually impossible to cross the megacity riding just one; a typical commute involves some combination of the three.
But today, Metro Manila has a booming economy and a surging population—the supercity has added 6 million residents since 2000, for a total of more than 24 million. At the same time, middle-class Filipinos are fleeing jeepneys for a quiet, air-conditioned drive in their own vehicles. Cars presently account for less than a third of all passengers on Manila’s roads, but comprise nearly three-quarters of traffic. New car sales have nearly doubled in just the last three years.
The result is the world’s worst congestion, according to 50 million users of the driving app Waze. The average resident’s commute is 45 minutes each way—compared to 35 minutes for traffic-weary Los Angeles—stretching to several hours for those unlucky enough to be traveling from suburbs in the north to the city’s main business districts in the south. (Metro Manila is actually comprised of 17 separate cities; the modern city is squeezed between a lake and the sea, funneling nearly all traffic between the suburbs in the north and offices in the south.)
Solving Manila’s gridlock was a recurring theme in the debates leading up to the May 9 presidential election. Candidates’ plans ranged from building more roads to adding more trains to raising taxes on second or third cars, and a few proposed more extreme measures: One suggested building a new capital just to ease traffic for government employees. Lawmakers regularly call for “decongesting the city,” which in practical terms would mean expelling thousands or even millions of residents to the countryside. President-elect Rodrigo Duterte has vowed to devolve power to the provinces from “imperial Manila,” likely fueling such talk.
The megacity is already threatening to come apart at the seams. What’s the alternative? Metro Manila has just broken ground on its fourth train, running along the Avenue of Death, but that won’t be up and running until 2020 at the earliest. Manila’s first high-speed bus route was approved in December. Both are too little, too late. Could a cleaner, safer, connected—and maybe even electric—jeepney be the answer instead?
Out of Time
From the top floors of the Columbia Tower, you can watch metro Manila’s traffic nightmare unfold. The otherwise nondescript building overlooks Epifanio de los Santos Avenue, the twelve-lane ring road better known as EDSA. Thirty years ago, millions of Filipinos camped here to peacefully demand the resignation of Ferdinand Marcos; today, they sit for hours in their cars. Running alongside EDSA is Metro Rail Transit 3 (MRT3), the busiest of Manila’s three trains, with lines that spill out of the stations and down the stairs at rush hour.
This is the view from the Department of Transportation and Communications (DOTC), the much-maligned cabinet-level office charged with tackling Manila’s intractable congestion. Given the department’s failures to get a grip on the crisis, coupled with the last few DOTC secretaries’ tendencies to hire more lawyers than planners, voters have rightfully held this against President Benigno Aquino.
Current assistant secretary for planning and finance Sherielysse Reyes “Booey” Bonifacio arrives for our meeting in a burst of exhausted energy, wearing the sleeves of her jacket rolled over a hot pink t-shirt, as if Crockett and Tubbs were her chiefs of staff. She is funnier and more frank than any bureaucrat I’ve met, which isn’t surprising given she has nothing left to lose. Bonifacio assumed her post two years ago with the mandate to straighten out the capital’s jeepneys, trains, and buses before the end of Aquino’s term—which even she’d described as an all-out sprint. She’d failed on all counts; this is effectively her exit interview. “I’m a political appointee,” she says cheerfully. “I’m gone.”
The clock has run out on her four-part plan to transform Manila’s mess into a functioning network. She’d only managed the first step: nation-wide regulations on Uber and its local archrival, Grab, to reform the country’s taxis.
The next step, she says, was to use data from the World Bank—which receives a snapshot every six minutes from Grab’s 300,000 drivers across Asia—to identify the most promising routes for bus rapid transit (BRT). Launched 40 years ago in Brazil, BRT combines dedicated lanes and timed traffic signals with special platforms for high-capacity boarding. It’s basically a train on wheels. Less costly than excavating tunnels, BRT has been hailed as the starter kit for modern mass transit. In equally dysfunctional Jakarta, for example, the government crashed construction of the city’s first line in only nine months in 2004. Today, Indonesia’s capital has the world’s longest network, carrying 370,000 passengers daily over 129 miles of dedicated lanes along a dozen lines. In Manila, the DOTC studied 17 seventeen suitable corridors. President Aquino approved only one before leaving office.
Step three in Bonifacio’s plan was to reinvent the jeepney. No more jalopies held together with duct tape and scavenged parts. No more tasting exhaust. Yes to windows, seatbelts, air conditioning, and doors. Maybe even electric engines, or, at the very least, low-sulfur, less-polluting diesel ones. Bonifacio’s team hopes the next administration will pass on this idea to interested manufacturers such as Kia, Tata, and Isuzu in the hope they’ll design and build one. This assumes what’s left of the domestic jeepney industry doesn’t beat them to it.
The last step—and Bonifacio readily admits this borders on fantasy—is to replace the existing transportation system wholesale.
Jeepneys traditionally operate on a franchise system, with owners applying to the DOTC for the right to run on a particular route. The problem, she explains, is that the government never bothered to create a coherent network—it just handed out franchises to anyone who asked. The result was an incomprehensible tangle of redundant routes, plied not only by tens of thousands of jeepneys, but also more than a thousand bus companies and an untold number of illegal operators. According to the World Bank’s data, decades of adding routes without thinking has resulted in vehicles driving six times as many miles as bus systems in Beijing or New York.
Bonifacio’s plan would slash the number of routes by 90 percent and reduce jeepneys’ annual greenhouse gas emissions by 23 percent—equivalent to taking 105,000 cars off Manila’s roads. All it would take is 20 billion pesos ($43 million), she estimated, to buy out every owner. For less than half the cost of starting up bus rapid transit, the government could start over—this time drawing the network map first, then assigning new routes to ferry passengers to express buses, and finally deploying Jeepneys 2.0. How the government would foreclose on 90 percent of jeepney drivers—a poor but vocal voting bloc—is unclear, but that’s a problem for the next administration. “And anyway, I’m not a transportation planner, I’m a lawyer,” she says, running her hands through her hair.
The Jeepney Mystery
No one is certain how the Philippines came to be infested with jeeps. We know they arrived with General Douglas McArthur on October 20, 1944, the day he fulfilled his famous vow to return. The mystery begins after the war, when the vehicles started appearing in civilian hands. One theory posits an abandoned Ford factory in the jungle. Most stories have the U.S. Army handing over the keys as a sort of peace dividend before leaving in 1945. Another, likelier theory has U.S. troops burying everything they couldn’t carry, including jeeps, only for the locals to dig them up again.
Inspection at Front Lines on Leyte. Leyte, P.I.: Gen. Douglas MacArthur, who personally led his troops in the invasion of Leyte, waves a greeting to his men, moving forward on Leyte, as the General makes an inspection of his troops a few hours after the landings.
For many Filipinos in the ‘40s, jeeps were the first motorized vehicles they had ever seen. It didn’t take long for Manila’s more resourceful welding shops to cut open the rear, add cushions and steps, and start charging passengers the princely sum of a peso. Jeepney hacking quickly evolved from extending the jeep’s frame to adding a tin roof for shade to bolting on chrome ornaments.
The name derives either from a portmanteau of jeep and jitney, or from the practice of sitting knee-to-knee. Once again, no one knows for sure. What is known is that thousands of surplus jeeps were gradually siphoned from depots in Okinawa and Amsterdam to the Philippines, until backyard jeepneys had become the backbone of post-war transport on the archipelago.
By the 1950s, local manufacturers like Sarao Motors and Francisco Motors began building new models from scratch, combining truck bodies from Japanese automakers with reconditioned diesel engines. At their peak in the 1970s and ‘80s, production reached 5,000 per year. Then the bottom fell out. Francisco filed for bankruptcy in 2002. Sarao and others limp along, barely surviving. Jeepneys once again belong to the backyard mechanics keeping the last generation running on cannibalized parts.
One such jeepney belongs to a husband-and-wife team who give only their first names, José and Cherry. I climb aboard “Angel” at a stop in Quezon City, a city within Metro Manila that is more populous than Chicago and four times as dense. While José navigates the Avenue of Death, Cherry rides with me in back, collecting fares. She’s wearing a black t-shirt with “Captain” emblazoned in silver sequins, in case passengers are unclear. The pair ply this route daily from 7 to 7, ferrying commuters to the train in the mornings and back home at night.
Like millions of Filipinos, Cherry worked abroad for years—in her case as a caregiver in Hong Kong—before returning home a decade ago to buy this jeepney with her husband. As sole proprietors, they’re the exception, she says. The average operator owns somewhere between 20 and 50 vehicles. Only once, after a brush with engine trouble, did they consider selling. “But business has only gotten worse and worse,” she says. Competition from other jeepneys, buses, and even Uber has stolen riders, while increasing congestion limits the number of trips.
This is who Booey Bonifacio wants to replace. As one of the tiniest nodes in Metro Manila’s network, Cherry and her husband don’t seem to care how they connect to the whole. When I ask whether more frequent trains or the start of BRT might help—more train riders would need their help to get to the BRT—she just laughs. “No, it would be bad!” she says. Any more transportation competition is just that: more competition.
Can the Avenue Go Electric?
To see the lifecycle of the jeepney under one roof, you must drive past the end of the Avenue of Death, continuing on narrow two-lane streets choked with taxis, jeepneys, motorcycles, and trikes until you reach the factory gates of MD Juan. The name should be instantly familiar to vintage jeep aficionados. Founder Maximino D. “Doc” Juan was one of the most voracious post-war scavengers of surplus military vehicles, which he parlayed into painstakingly accurate reproductions. Eventually, he began exporting DIY kits for entire jeeps to overseas restorers, carving out a lucrative niche his local competitors couldn’t match.
Tucked away in one corner of the hangar-like factory, dominated by towering 1,200-ton hydraulic presses and the rhythmic clanging of sheet metal, is the eJeepney assembly line. Here, half-a-dozen workers wearing t-shirts and jeans apply coats of paint to snub-nosed minibuses that bear about as much resemblance to a diesel jeepney as a Jeep Cherokee does to a WWII jeep. And that’s probably a good thing.
Jeepneys are the brainchild of Doc’s middle-aged, baby-faced grandson Rommel T. Juan, who leads me on a tour of the factory. In addition to running the family business with his brother, Rommel is also president of the Electric Vehicle Association of the Philippines and vice president of Philippine Utility Vehicle, Inc., “the business arm of the Motor Vehicle Parts Manufacturers Association of the Philippines.” All of which is to say that he is the smiling, polo-and-chino-clad point person of an industry desperately trying to reinvent itself as clean, quiet, progressive, and profitable. His first electric jeepneys debuted to great fanfare in 2008 in Makati, Metro Manila’s lush central business district. That test involved 30 vehicles, of which only ten are still running. It is still the largest fleet ever deployed in the Philippines.
Peering into the back of one of his larger models—eJeepneys come in three sizes, seating fourteen, sixteen, and twenty passengers—I can see the empty bays beneath the seats where the batteries will go. Juan had bet on lead-acid technology, the tried-and-true kind most commonly found under the hood of your car. This choice had obvious advantages: They’re cheap, safe, easily sourced, and easily disposed of. They also had an obvious disadvantage familiar to anyone with range anxiety about electric cars. They don’t last very long between charges.
That’s the reason electric car makers like Tesla use lithium-ion batteries, and that’s the reason you won’t find eJeepneys or their smaller cousins, electric trikes, on EDSA or the Avenue of Death, but only on a handful of university and corporate campuses. Juan publicly set a goal of seeing a million eJeepneys on the Philippines’ roads by 2020, although “if we can get ten percent of that, we’ll be happy,” he says. At his current sales rate, he’ll be lucky to get a tenth of a percent. Jeepney owners just weren’t interested in replacing their indestructible diesel engines with batteries that needed to be swapped every few hours.
They might not have a choice. If all goes according to Booey Bonifacio’s plans, jeepneys 15 years or older would face mandatory retirement as early as next year. By her estimates, that would force nearly a third of the Philippines’ fleet off the road. “They can’t do it because it’s a very strong political bloc,” Juan tells me. “But if they do, everyone’s going to be better off.” Sensing that opportunity, he and his group lobbied to include eJeepneys in Bonifacio’s modernization plan. Perhaps a government-backed trade-in program is just what he needs move units out the door.
“Financing is the key right now, because drivers can’t afford to buy new vehicles,” he tells me back in his office, flipping through a well-rehearsed PowerPoint presentation. “Right now, jeepney drivers are the owners. Nobody controls them, nobody is teaching them.”
That’s the problem he hasn’t cracked. It’s one thing to manufacture a homegrown, electric version of the jeepney. It’s quite another to replace the crazy quilt of driver/operators, as both Juan and Bonifacio have discovered. Which is why Juan’s competitors are pushing a third way. Call it “jeepneys-as-a-service.”
Their main competition, GET Philippines, is fronted by Sigfrido “Freddie” Tiñga, a former Metro Manila mayor and current Congressman who plans not only to sell an American-made electric version to current jeepney owners, but also to pay them to run it on their behalf. Tinga’s interest isn’t in overthrowing the current regulatory regime; he just wants to sell eJeepneys to existing owner/operators—and then take a cut of their profits. For an upfront cost of $35,000 to $40,000, GET will hire the drivers, collect fares and sell ads. In exchange, GET will realize all of the advantages Juan and Bonifacio can only dream of: a centrally managed fleet, lower maintenance costs, and routes that make sense. (GET suffered a major setback when one of its vehicles’ lithium-ion batteries caught fire and publicly self-immolated on a highway last summer. Luckily, no one was hurt.)
If Juan sees himself following in his grandfather’s footsteps, then Tinga is taking his cues from Silicon Valley, where no less a disruptor than Elon Musk recently disclosed Tesla Motors’ top-secret plans to build autonomous buses roughly the size of jeepneys. A startup named Bridj has already begun offering a similar service in Kansas City (albeit with human drivers), while another named Via is doing the same in Orange County in partnership with Mercedes-Benz. And then, of course, there are Lyft Line and Uber Pool, which let anyone run a jeepney out of the backseat of their Prius.
Echoing the revolutionary rhetoric of these services, Tinga believes jeepneys are not just the bridge to better buses, but their replacement. “The world will best be served by these twenty-seat electric vehicles in a fleet-managed system,” he tells me. But how to manage those fleets will be left to someone else. Unlike Bridj or Via or Uber, GET has no plans to collect its own data, write its own algorithms, and develop its own apps. (Tickets will be printed with QR codes, a digital/analogue hybrid acknowledging the technological and economic realities of most riders.)
“Transportation planning in Manila is so far behind everything else,” he says. “We have to show the world the model works first. We haven’t. Nobody has.” After last summer’s fire, GET upgraded the batteries before resuming service on its only pair of routes. “It’s not a question of will this happen, but who, and when, and where,” alluding to competitors outside the Philippines. “We could fall flat on our face, and somebody else somewhere else could succeed.”
For less than $100, a Filipino could purchase one of Samsung’s Android phones with GPS, download the Uber or Grab apps along with Waze, and practically start driving for one of these services tomorrow. But jeepneys, still the backbone of Manila transportation, are absent from both maps and apps. Perhaps, then, the most immediate solution to Manila’s mess is not electrified jeepneys or revolutionizing the route system, but cold hard data. If the government can’t fix the system and entrepreneurs can’t layer a new one on top of it, could riders at least use their phones to chart a better path through the morass?
In 2012 the World Bank and the DOTC traced nearly a thousand jeepney routes winding through the city—almost twice the number they’d expected. The results were compiled, maps drawn up, and the database made available for download (it has been downloaded 40,000 times). The story would have ended there, boxed up with the rest of Bonifacio’s office, had the Bank not suggested they host a hackathon. By now, hackathons have become a brogrammer cliché, but in this case it produced something singular: Sakay.ph, the first and still the best app for navigating the city by jeepney.
Originally written by a pair of collegiate videogamers named Thomas Dy and Philip Cheang, it has since become the signature offering of their game- and software-development company, By Implication. Their studio occupies a small house on a residential street only a few blocks from EDSA, small enough that I missed the building completely on my first pass. Like the proprietors themselves, it’s decorated according to generally accepted programmer rules: Iron Man masks and videogame posters on the walls, hoodies on the men.
“When I go somewhere abroad, I pull out my phone, and I know how to use it to get around a city,” Cheang tells me. “And here, I don’t know how to get around my own hometown. We can’t fix the infrastructure problem, and we can’t fix the population problem. The best thing we can do in terms of software is solve the information problem: making Manila more accessible.”
Sakay.ph has done exactly that, albeit in baby steps. Although Cheang claims 500,000 users, he also admits the app has run just 1.5 million searches to date—only three searches per person, a sign more users would still rather use Google Maps to trace their route. He and his colleague hope to break though once they begin adding features like incident reporting to make Sakay.ph the jeepney equivalent to Waze.
I had test-driven the app the previous morning, charting a course from the University of the Philippines’ campus to, on a whim, President Aquino’s office in Manila. Standing on a leafy campus street where the app predicted my stop—there was nothing but curb—I waited for a jeepney to appear. Placing my faith in their code and the data underneath, I hailed the first one I saw, and climbed once again into the back.
After a few minutes of following my progress on the map on I realized we were once again going north on the Avenue of Death—this time cutting quickly across nine lanes of traffic to do a U-turn at the first available opening through the median. Swinging into the southbound lanes, we cut across another seven lanes to the pits on the far side, where the app instructed me to change vehicles. I’d come full circle, loitering at a roadside market outside a gas station on one of the most dangerous roads in Manila, where I waited for my ride, whose name turned out to be “In God We Trust.”
This time, we wended our way to the southeast, down a maze of side streets until we reached Aurora Boulevard, one of Metro Manila’s main east-west thoroughfares. For nearly an hour, we grinded our way through traffic, deafened by the noise. Finally, I hit my limits and hopped off not far from my goal, in a zone filled with universities, where uniformed schoolgirls sip iced Starbucks coffees inside the gates. Later, when one of Manila’s wealthiest property developers heard how far I’d gone, he let out a low whistle. “You were really in the belly of it,” he says.
There’s no question the Kings of the Road must reinvent themselves. They have the technology—cleaner fuels, GPS, inexpensive phones, and the apps to navigate the maze that is Manila. But none of that matters without a government willing to take decrepit jeepneys off the roads, owners willing to see the bigger picture, and someone willing to draw that picture. With the election now in the rearview mirror, that’s the challenge facing the next president before Manila chokes on its own exhaust.
On a sunny morning in March, Marcus Westbury brandished his iPad as if it were a window into another world. The screen depicted the street we were standing on in downtown Newcastle, Australia, circa 2008. Decades of suburban flight, a devastating 1989 earthquake, and the implosion of the city’s steel mills had left the center a ghost town. More than a hundred empty storefronts lined the commercial strip. The neoclassical post office and the Victoria—Australia’s second-oldest theater—both sat vacant. The street could have doubled as a set for The Walking Dead.
Now the sidewalks were bustling. The windows of the David Jones department store, another recent casualty, were filled with sculptors, milliners, jewelers, and stonemasons publicly plying their trades. Families sipped flat whites and leisurely ate breakfast at outdoor cafés. Compared to the desolate scenes of just a few years ago, the transformation was startling, especially considering it all stemmed from a bit of legal sleight-of-hand.
To demonstrate, Westbury ducked inside the store, whose yawning interior had been subdivided by plywood. A false wall rested on dusty display cases and was supported by sandbags. “This is not architecture,” he said, because the building’s historic status prevented any changes to the interior. And besides, according to the rules of the arrangement, Newcastle’s artisans could use vacant properties like this for free as long as they promised not to alter their interiors (and thus their tax statuses). Newcastle wasn’t saved by an influx of hipsters or developers, but through exploiting the right loopholes.
“What we’ve done is change the software of the city,” Westbury told me. “We’ve changed how it behaves. We’ve changed how it responds to people who want to try things, do things, and run their own experiments.”
In many ways, Newcastle’s decline and resurgence superficially resembles the cycles of blight and renewal seen in cities around the world over the past decade. From Brooklyn to Pittsburgh to Detroit, entire neighborhoods have been colonized by throngs of artisanal butchers, brewers, and designers. This mix has proven successful as a recipe for hyper-gentrification, at least in the handful of cities with a critical mass of affluence.
What it hasn’t done is provide a road map for the hundreds of struggling smaller cities across America that have neither the new arrivals nor the cash to re-create Portlandia. Which is where the combination of legal hacks, theatrical props, and kitchen tabletop start-ups comes in.
Westbury is the one most responsible for bringing his hometown back to life through the nonprofit he founded, Renew Newcastle. His vision for urban renewal is radically different from what American billionaires and their pet urban theorists have proposed. He’s the opposite of Quicken Loans owner Dan Gilbert or Zappos CEO Tony Hsieh, each of whom has bought dozens of properties in downtown Detroit and Las Vegas, respectively, to build company towns in their images. In Westbury’s words, “We don’t build anything, we don’t buy anything, we don’t own anything.” Renew’s annual budget barely cracks six figures.
Because of this, however, his approach has proven remarkably adaptable. And this has helped the approach expand to 20 communities across Australia—ranging from Melbourne’s waterfront to bush towns of only a few thousand people—along with offshoots in Toronto and Copenhagen. “It’s every Main Street,” Westbury said as we toured Newcastle. Indeed, the images of shuttered storefronts could just as easily have been taken in my own hometown of Kankakee, Illinois. “It’s most small or midsize cities in Australia or the States. And I think that’s kind of the point.”
In Newcastle, Westbury has grappled with the questions that have consumed struggling cities for decades: How do you turn a place around without money or resources, and by empowering residents rather than displacing them? Renew’s success has made Westbury a minor celebrity on these issues at home. In August, he published a book, Creating Cities, recounting the lessons from Newcastle’s transformation, and the following month he hosted a national television series, Bespoke, asking whether Australia’s maker movement contains the seeds of a new economy. But his vision for pairing people with places isn’t just applicable in Australia. It has the potential to transform how we think about conventional urban development, how cities are used, and who they are for.
Failure is one of Westbury’s favorite subjects, one on which he holds forth in a torrent of nasally inflected idioms while squinting hard behind his horn-rimmed glasses: market failures; the price of failure; failing fast; giving yourself permission to fail. He credits his obsession with having grown up in Newcastle, which lies several hours up the coast from Sydney and is roughly the size of Cleveland—with which it shares a Rust Belt victim’s mentality.
His parents also failed. His father first lost his car dealership, then his marriage, and finally his mind. Westbury stayed with his mother, whose job at a health-food store disappeared after the 1989 earthquake. He enrolled in college several years later, dropped out, and then was kicked out before helping to start Newcastle’s first Fringe Festival in 1996. In a matter of weeks, he organized hundreds of artists and scores of acts while using empty shops as exhibition spaces. One festival led to the next until he moved to Melbourne in 2002 to direct the city’s Next Wave Festival.
It was there he came into his own as an impresario. Over the next few years, he hosted radio and television shows, launched a web site advising 150,000 Australians how to vote in the 2007 federal elections, consulted for various think tanks and blue-ribbon panels on the arts, and visited 15 Australian Football League teams before choosing one to root for. (He picked the Richmond Tigers.) Westbury’s omnivorous tastes, wonky gregariousness, and infectious enthusiasm made him the perfect person to attempt a turnaround in Newcastle. Drawing upon his experience as a festival director, his contacts in government and the arts community, and local roots, he could bridge groups and transplant ideas.
Five years after moving to Melbourne, he returned to the city of his birth with the much simpler idea of opening a bar. The sorry state of downtown shocked him. What he remembered as blocks of busy shops sat gutted and abandoned; he counted at least 130 vacant properties. “I think if you live somewhere and it falls apart in front of you, you don’t really notice it,” Westbury said. “But if you go away and come back, entire places that you remember being vibrant and vivid and active—that you remember from childhood—are suddenly gone.”
Still, he was undaunted. He began contacting landlords and leasing agents, expecting to be overwhelmed with offers, but no one returned his calls. Some buildings had been purchased on the cheap by speculators, who expected to cash in when government redevelopment funds finally arrived and who were happy to leave them vacant while they waited. Others were owned by family trusts that couldn’t agree on anything except doing nothing. More than one landlord demanded rents the market couldn’t possibly bear. Westbury learned that lowering the asking price often meant writing down the value of the building, which risked triggering foreclosure. Landlords were incentivized to stand pat, while downtown fell into ruin. “No one was even trying,” Westbury said.
Westbury soon abandoned his plans for the bar and became obsessed with how to unlock the potential of Newcastle’s empty buildings. “It’s not about the land, but how you can use it,” he told me. “Ownership is one tool with which you can solve that problem, but it’s not the only solution.”
Cities, he knew, tend to move slowly. Changing the urban fabric through traditional means—planning, development, construction—would be a contentious and expensive process. Westbury wanted to move more quickly, at the speed of one of his festivals. Instead of trying to upend the existing structures, he felt it would be easier to simply hack the system and work around the perverse incentives keeping the storefronts vacant.
In late 2008, Westbury launched Renew to test a new approach: Instead of signing leases on empty spaces, it would simply ask the landlords for permission to access their buildings for free. In exchange, Renew’s artists and artisans would clean and maintain the properties, pay for utilities and security, and man them regularly. If the landlords found paying tenants, they could have their storefronts back with 30-days’ notice. And because they technically hadn’t signed a lease, their financial arrangements were protected. It was the fringe festival approach to urban revitalization, trading ownership and permanence for energy and attention.
One of Westbury’s earliest and more unlikely allies was the GPT Group, an Australian developer that had quietly acquired much of downtown as part of a proposed half-billion-dollar redevelopment. The company loved his idea, since it would take years to bring their own plans to fruition. In the meantime, Westbury would be doing them a favor by helping to generate buzz.
The experiment began with a dozen storefronts and studios, including some tucked inside a former ophthalmology clinic and a vacant church. They soon housed photographers and animators, toy makers and web designers. Not every idea was viable—an art gallery in a menswear store didn’t last long—but since they were using these spaces rent-free, start-up costs were low and the risk of failure negligible. The point was to lure passion projects into the open and use their energy to catalyze the street. “There’s a gap between a creative idea and action. What do you need to do to take a creative idea and turn it into something you actually do?” Westbury asked me.
The changes to downtown Newcastle were immediate and dramatic. First, vacancy began to fall. The number of vacant properties has fallen by 60 percent across downtown Newcastle and by as much as 90 percent in the blocks where Renew has been active the longest. Neighborhood crime plummeted in turn, as the downward spiral of blight reversed. Commercial-property damage in Newcastle has declined 25.7 percent per year since the program launched seven years ago. Next, incomes began to rise. Early participants received an average annual increase of $20,941 (AUD) in their new digs.
An audit commissioned in 2011 by the state of South Australia attributed to Renew a rise in property values, an outpouring of volunteer work, and even an increase in tourism. In 2010 Lonely Planet highlighted Newcastle as a global destination. All in all, the auditors found, Renew had generated a nearly elevenfold return in benefits on an annual budget of just $117,000 (AUD). The program has grown to encompass 74 properties and has hosted more than than 200 projects in Newcastle since its inception, of which 27 have graduated into full-fledged businesses with leases. Renew is what happened while developers and city officials were busy making other plans.
Instead of Starbucks, there’s Graham Wilson, “the second stonemason in the world to have a web page,” he told me with a mixture of pride and self-mockery. He keeps a shop in the former department store selling T-shirts and bric-a-brac alongside his smaller pieces (“bearded hipster shit,” someone called it) when he isn’t accepting larger commissions through his web site or flying to Norway for stone-carving competitions.
Down the hall, Alison Sobel-Read, a ceramicist, sat in her one-woman kiosk polishing tiles. She’d moved to Newcastle the previous July from Raleigh, North Carolina, where she had run her own studio for a decade. “Renew was a godsend,” she said—a one-stop shop for restarting her business. “My friends in the States are amazed,” she said. “Why isn’t this happening elsewhere?”
Their presence has caused city officials to reconsider downtown’s future. Newcastle Lord Mayor Nuatali Nelmes credits Renew “with changing the mindset of what a city can look like and how it works.” In 2014, the city council approved a $90,000 (AUD) grant that will cover a quarter of the project’s budget for the next three years. But old visions of luxury condos and high-end chain stores die hard. Nelmes insisted there was no conflict between Renew’s bottom-up approach and top-down urban renewal. “It’s not an either-or option,” she said. “While it’s taking time for billion-dollar developments to get off the ground, you have to make sure you’re creating interesting, vibrant spaces young entrepreneurs feel they have ownership of.”
What happens when a billion dollars eventually lands on those places? Westbury and I had a glimpse of that future on my first night in Newcastle. On the same street as the former zombie apocalypse, a raucous party spilled out of the Newcastle New Projects real estate office that was selling apartments sight unseen. “Is that you, Marcus?” asked a sales agent, tottering toward us in a cocktail dress and heels. “Don’t quote me on this,” she told us conspiratorially, “but the GPT Group—the whole town, really—owes Marcus a huge honor. Newcastle wouldn’t be where it is today without these projects: Renew and ours.”
When he started, Westbury struggled to explain Renew in terms people understood. Today, however, “pop-ups,” “placemaking,” and “tactical urbanism,” are common terms in city planning circles. In cities around the world, flea markets and beer gardens suddenly occupy vacant lots, and pocket parks filled with brightly colored chairs and tables replace windswept plazas.
Westbury draws a clear, bright line between pop-ups and Renew. For one thing, pop-ups are often isolated interventions, whereas Renew is a platform for launching pop-ups by the dozen. As the result of its support, many projects have enjoyed a shelf life that far exceeds the typical stand-alone. For another, Westbury was always more interested in hacking the legal fine print than any particular outcome. Renew Newcastle’s real legacy isn’t a cool café or even a dozen of them, but learning how to transform the street with a tweak to the lease agreements.
This also means that Renew travels well. Less than a year after Newcastle’s launch, one of Westbury’s peers on the festival circuit borrowed the idea for Adelaide. In 2010, Westbury stepped back from Newcastle to start Renew Australia, an umbrella organization for the dozens of cities and suburbs that started contacting him for advice on their own projects.
Finally, Renew was never about curating his own personal Newcastle. As a festival director, Westbury’s job is to provide the scaffolding for someone else’s vision. This is what sets his program apart from the projects that have become mascots for billionaires openly remaking cities to fit their idea of cool. In Detroit, Dan Gilbert has spent five years and more than $1.5 billion acquiring the rights to 78 downtown properties, which he protects with a private security force. The epicenter of “Gilbertville” is the all-new Campus Martius Park across the street from the Quicken Loans headquarters. Redesigned in 1999 by the nonprofit Project for Public Spaces, it has since added an urban beach where Gilbert’s millennial workforce can take a break from selling mortgages for him and wriggle their toes in the sand before they return home to apartments he has helped finance.
Likewise, in Las Vegas, Zappos’ Tony Hsieh has embraced the pop-up lifestyle in an effort to re-create San Francisco’s tech bubble. He pumped $350 million of his fortune into the Downtown Project. At its heart is the Container Park, a village of shipping containers—the architectural symbol of transient chic—filled with craft cocktail bars and other handpicked businesses.
Westbury’s approach, by contrast, isn’t about creating something new to attract the creative class—that amorphous group first defined by the sociologist Richard Florida in 2002. Florida’s Darwinian theory is that the only prosperous places will be those that make themselves attractive to itinerant creatives and amenable to the capital required to remake neighborhoods to their satisfaction, as Gilbert and Hsieh have done with mixed results. This formula may have predicted the trajectories of Williamsburg in New York City and the Mission in San Francisco, but Florida’s prescriptions for struggling cities like Toledo or Detroit have been criticized as placebos at best.
Westbury has spent the past few years formulating an alternative. “The lessons from Renew Newcastle are not about how to transform your community into a global centre of the creative industries,” he warns in his book. “They are about what to do when you can’t.” In this way, even small communities might tap into the latent talents of their residents.
Digging into census figures, Westbury was shocked to find the number of Australians working in craft-related fields had more than doubled in the six years immediately preceding Renew. They had found customers for their wares through web sites like Etsy. And it wasn’t a circular economy, either—70 percent of Australia’s Etsy sales were to buyers overseas. This, he argued, was the germ of Newcastle’s recovery—an artisanal manufacturing base breathing new life into downtown while exporting the city back to health one tchotchke at a time.
There are limits to this vision, of course. Renew can do many things, but repairing, rezoning, or even owning the spaces it occupies isn’t among them. That requires capital, and Westbury knows it. In Sydney, I listened to him beseech a roomful of corporate developers “to think about how you create a physical infrastructure for these phenomena, how you create cities to allow people to grow out of that space and into being the catalysts, the businesses, the community activities,” as if this was in their shareholders’ interests.
The alternative is gentrification. This has been the central criticism of Renew since the beginning—that it could vanish on 30 days’ notice to be replaced by chain stores. To an extent, these fears have been lessened by the success of Renew’s graduates, which demonstrates that the model can be viable at market rates. A better solution would be for the city or a philanthropy to step in and acquire properties to be held in perpetuity by a trust, a model that’s been successful in the U.S. and U.K. But convincing institutions to bury money in the ground is easier said than done.
Ironically, two of the more successful American pop-up platforms were designed to ameliorate the effects of gentrification, not jump-start it. In New York, an architect named Eric Ho turned to pop-up activism in 2012 after counting more than 200 empty storefronts dotting Manhattan’s East Village and Lower East Side. By his calculations, this amounted to roughly 120,000 square feet of space off-limits to the cash-strapped creative types still trying to make a go of it there. He deduced that the storefronts sat empty for the same reason they did in Newcastle—because it was better for landlords to wait for a large retailer like American Apparel to make an inflated offer than to sign a small business at market rates on a short lease. (And with American Apparel filing for bankruptcy and closing its Lower East Side store in October, just look at how that turned out.)
That year, Ho started Made in the Lower East Side, now a network of more than ten retail, studio, and event spaces lent to him by like-minded landlords and tenants. In turn, he packs them and the calendar with art exhibitions, gelato shops, and artisanal pet stores. “Gentrification is nothing we can stop,” he said. “We’re all here, we’re all in this neighborhood, and what can we do about it? We’re trying to create the mini-infrastructure allowing us to co-exist.”
The city of San Francisco has been dealing with similar pressures. In 2013, a consultant and self-styled “culture hacker” named Mike Zuckerman launched a “freespace” in a vacant property on Mission Street. It lasted for three months and hosted more than 200 community events drawing 5,000 participants. Given the success of that experiment, Zuckerman hopes to replicate the project on a larger scale in other properties around the city. “We need informal gathering spaces where people can share ideas,” Zuckerman told me. “Especially here, where it’s too expensive to do anything. We need to make the most of these underutilized assets.”
Near the end of our time in Newcastle together, Westbury took me to meet Renew’s current general manager, Christopher Saunders. In his cramped office, Saunders pointed to a series of maps illustrating the program’s evolution. What started as a means to fill storefronts has all but run out of them. As we pondered the endgame—would they gentrify themselves out of a job?—Westbury was pragmatic. “Did we leave it better than we found it? If the answer is yes, I’m not particularly bothered,” he’d told me earlier. “I would be concerned if we were an elaborate way of the city ending up like a shopping mall.” Saunders wondered aloud when that would happen. “I’m making a calculated bet it never arrives,” Westbury reassured him. For 30 years, every major plan by developers had faltered. Renew would outrun the next one, too, Westbury predicted. “While we’re creating a reality,” he said, “other people are making plans.”
On the flight home, I wondered: Why not us? Why should Renew stay Australia’s secret when America’s need for something like it is just as great? In Detroit, for instance, around 421,000 square feet of retail space—nearly a fifth of the city’s current total—is sitting vacant, just waiting for someone to flip a light switch. What could Renew do with these assets, to say nothing of those in Rust Belt cities across America that lost their Main Streets to the mall a generation ago?
In May, I had a chance to ask Westbury this question, as he joined me for a visit to my hometown an hour south of Chicago. Much like Newcastle, Kankakee had once been a factory town making tractors, furniture, and dog food, with street cars carrying residents downtown to shop. I am just old enough to remember the factories burning, the stores closing, and the Kankakee Hotel being demolished for a parking lot. Westbury, however, saw a small, historic city with good bones a short distance from one of the planet’s wealthiest metropolises—he knew how to work with this. There was an old theater with a warren of tiny basement spaces, a cavernous former furniture store, and a vacant building on the corner of the most trafficked intersection in town. All seemed ripe for a Renew-like intervention.
Inside the city’s cultural center, 20 civic leaders, landlords, and business leaders had gathered to hear Westbury speak. He started from the beginning, before the zombie plague or the mills imploding, and when he flashed images of Newcastle’s mid-century heyday—“My grandmother would dress up to go shopping there,” he said, pointing the David Jones department store in all its commercial glory—the audience began nodding and murmuring in recognition.
He soon settled into a refrain: “Activity creates activity, and decay creates decay.” Both were feedback loops, one virtuous, one vicious. Renew might not be a perfect program, I thought, but perhaps it was the lightest, quickest, and cheapest way to start cities like Kankakee on a path back to prosperity.
Following Westbury’s talk, the audience members peppered him with questions about building codes and insurance. Others were unclear on the concept. “You get the owners to lend them to you?” asked a banker in the front row. Westbury smiled. “This is starting to sound weird, isn’t it?” he said. Gradually, however, Kankakee’s civic leaders appeared to recognize that there might be an opportunity here. The president of the county’s Community Arts Council listed for me 34 artists off the top of her head searching for studio space. The owner of a landmarked building down the block wondered if this could fill the offices he’d never finished retrofitting.
Later, Bill Yohnka, the executive director of the Kankakee Development Corporation, the nonprofit charged with revitalizing downtown, buzzed about starting his own version of Renew Kankakee. “I just want to generate more activity and try to get something going,” Yohnka said in June. (The high didn’t last, unfortunately—the landlords got cold feet.)
“I don’t pretend this fixes all the problems,” Westbury had said in Kankakee. “But instead of waiting for that big company, that big development … this is about going building by building, block by block, and rolling up your sleeves. I talk about initiative. There are a lot of people who want to do things, but it becomes: How do you get that ‘want’ into motion? No one wants to be the first.” Now’s your chance.
I almost didn’t notice I was wearing it, at first. The plastic box strung around my neck was roughly the size and weight of a deck of cards, lighter than I expected. It was only when I spotted the occasional flash of blue light that I remembered this “sociometric badge” was listening to everything I said, where I said it, and to whom—especially if they were wearing a similar device around their own necks. In those cases, our conversations were captured for analysis—ignoring what we said in favor of how long we spoke, and who did all the talking.
I started to turn painfully self-conscious around my first visit to the bathroom: Did the badge know I was in there? Would it listen? Would it freak someone out that I was wearing a giant sensor in the stall next to him? By the time I left the building for lunch, I had zipped it beneath my jacket, less concerned that it was counting my every step than having civilians think I was some new species of Glasshole.
Like Google Glass, sociometric badges were prototyped in Alex “Sandy” Pentland’s Human Dynamics Lab within the MIT Media Lab—a place where his cyborg doctoral students once wore keyboards on their heads and no one thought it strange. Unlike Glass, the badges are still a going concern—five years ago, Pentland and several former students spun out a company now called Humanyze to consult for such companies as Deloitte and Bank of America. Just as Fitbits measure vital signs and REM cycles to reveal hidden truths about their wearers’ health, Humanyze intends to do the same for organizations—only instead of listening to heartbeats, its badges are alert for face-to-face conversations.
For two weeks in April, Fast Company was one of those subjects. (Humanyze provided the badges and analysis for free.) Twenty Fast Company editorial employees—and me, as a visiting observer—agreed to wear the badges whenever we were in the building. Our goal was to discover who actually speaks to whom, and what these patterns suggest about the flow of information, and thus power, through the office. Is the editor in chief really at the center of the magazine’s real-world social network, or was someone else the invisible bridge between its print and online operations? (Or worse, what if the two camps didn’t speak at all?) We would try to find out, though we would be hampered somewhat by the fact that not everyone was wearing a badge, and we didn’t give Humanyze the full range of data, like integration into our email and Slack conversations, that would allow the company to truly understand our work relationships.
More importantly were the questions we chose to not ask: How did these patterns impact performance? Should editors and writers talk less or more, and what did it mean when they talked amongst themselves? Did it result in more posts on Fast Company’s website, or more highly trafficked ones? Demonstrating and understanding these relationships are what Humanyze’s clients pay for; perhaps we were too scared to learn.
For the better part of two weeks, staff members suffered the badges in silence. Some people found wearing them uncomfortable and awkward. “It was oppressive,” says associate news editor Rose Pastore. “I think it ruined my posture.” “It does not play well with statement necklaces,” says senior editor Erin Schulte, who, like many others, resented needing to wear the badge on her sternum for maximum audio fidelity (and so the infrared sensors that establish the wearers’ identities have a clear line of sight). Several wished it could be a pendant or lapel pin or wristlet—anything less intrusive.
Others complained about the user interface, or lack thereof. The blue twinkling I’d noticed was only one of several colors, none of which had been explained during orientation. Some found this Orwellian; others reported being lulled into complacency by its low-tech appearance and cheap plastic casing. Still more wanted feedback: Was this thing on? Was I doing this right? Cognitive dissonance soon manifested. Writers and editors who complained in one breath about opaque surveillance suggested in the next that only if the badge could replace their Jawbone UPs and Fitbits—in the process capturing their quantified selves for their employer—would the exercise be worthwhile.
Co.Exist editor Morgan Clendaniel took this idea to its logical conclusion, proposing that flat-screens mounted around the office broadcast our interactions in real time, à la the visualizations produced by the likes of Chartbeat, which depicts the performance of individual online stories on a moment-by-moment basis. (A Los Angeles-based startup named Rexter does exactly that.)
Humanyze CEO Ben Waber understands their concerns, from the interference with statement necklaces to the deliberate lack of clarity from the badges. “Lights blinking all the time is distracting,” he says. “It’s a difficult line to manage.” As far as the wearer’s comfort goes, he’s confident that Moore’s Law will reduce the weight of sociometric badges until they are indistinguishable from standard-issue IDs. (The latest version of the badge, which we did not wear, is half the size of the previous iteration.) But he’s adamant that the badges will always be worn on the chest, as it’s the only way to guarantee conversations will be heard clearly.
Humanyze prides itself on privacy. Several weeks after our badges had been shipped back to Boston for analysis, we each received a link to our individual results. Not only was this data shielded from our employer, we were assured, but Fast Company was also contractually forbidden to ask us what was in our reports. Which explains why Laura Freeman, the “quantitative social scientist” who prepared our reports, was audibly dismayed when I announced my intentions to reverse-engineer them.
In my own case, the results confirmed what I already knew: that I was a marginal figure in the office, which I rarely visit. While I may have spent more time moving and speaking than most participants in order to gin up conversations about the badges, the extent of my connections would be considered subpar at best. (“You can increase your face-to-face network breadth by making an effort to meet new colleagues,” my results helpfully suggested.)
The true org chart of Fast Company, based on whom workers interact with.
This made it easier to locate my likely position on the periphery of the network map created by the badges (pictured above). My best guess is that I’m the node at the very bottom, confined to speaking with my fellow “digital writers.” We were a chatty group; one of the few surprises was that the seven writers talked more amongst ourselves than any other group (which included an equal number of digital editors, along with a smattering of magazine editors and developers). “Surely, they must be complaining,” said Cliff Kuang, Fast Company’s director of product.
The other surprise had to do with Kuang himself, who was revealed to be the center of the network. He was the only participant with strong ties to multiple members of the other groups. Editor-in-chief Bob Safian, it turned out, had stopped wearing his badge after only a few days and was likely on the fringes. Executive editor Noah Robischon’s position as one of several highly connected digital editors was impossible to determine. But Kuang’s central role makes perfect sense in retrospect: As director of product, he straddles multiple domains, and as a former editor of Co.Design, he has prior relationships that aren’t reflected on the org chart.
Humanzye also measures how much people on each team move.
Unearthing those relationships, understanding and visualizing them, is perhaps the most potent thing sociometric badges can do. For more than 30 years, the sociologist Ronald S. Burt has mapped and described what he calls “structural holes”—the naturally occurring gaps within organizations. Those who bridge these holes, he has found, produce more ideas, make better decisions, and prosper accordingly. But they aren’t necessarily the ones in charge.
To demonstrate, Burt recently mapped the relationships between top managers at one of the largest pharmaceutical giants in the world. He discovered a relative nobody several rungs below the CEO who appeared to be the only person keeping the company’s Asian leadership tethered to the mother ship in Europe. When the results were published, Burt told me, the company immediately began grooming him for leadership.
Our experiment had no such tidy ending, however, which leads to the questions posed by critics of the trackers and the quantified workplace: What can this data be used for besides squeezing more work out of its users? There are few use cases outside of fixing the bottom line. If we had a specific business goal, perhaps the data could have been used to make changes to achieve that, but the information didn’t do much to improve individual workers’ understanding of their jobs.
Their thoughts might best be captured by a stray thought of Clendaniel’s as we paged through Humanyze’s analysis: “There are few use cases for personal improvement here, and many more for productivity and efficiency.” He wasn’t being particularly positive.
Imagine if, a few years from now, you’re in a meeting. (Even in science fiction, we spend most of our time in meetings.) Everyone’s phones are on the table; your employee badges hang taut around your necks. You start to interrupt your coworker when all the phones chime at once. Without glancing, you know the Meeting Mediator has called a foul on you: it’s someone else’s turn to speak. While checking your email in a fit of pique, you receive an automated request from HR to introduce your colleagues Kavitha and Sasha over Slack. Evidently, they’re working on the same project but you haven’t met—despite sitting down the hall from each other.
Messages like this were creepy at first, but most of the changes to your office have been for the best. Whoever has been rearranging the furniture at night has made it easier for teams to gather and chat. You’ve met more peers in the last six months than in the first three years of working here, thanks to the rotating coffee machines that replaced the single kitchen for the entire company—a dumb idea inspired by an apocryphal story that the placement of Pixar’s bathrooms was designed to create more human interaction. Amazingly, without you really noticing, your once-burning itch to quit has finally cooled.
If this future comes to pass, it’ll be thanks to the box of sensors slung around your neck masquerading as your ID. These “sociometric badges” already exist, created by a Boston-based company called Humanyze. Using a combination of microphones, infrared sensors, accelerometers, and Bluetooth, they measure wearers’ movements, face-to-face (and badge-to-badge) encounters, speech patterns, vocal intonations, and even posture to measure office statistics, like who’s really talking to whom, for how long, and where.
THE QUANTIFIED ORG
Armed with this information, clients such as Bank of America and Deloitte are in turn mapping these office behaviors to the metrics that matter: sales, revenues, retention rates. You may have already met your quantified self; now say hello to the quantified org.
Humanyze is hardly alone in bringing sensors to bear on the office, but its pedigree and approach stand out in a crowded field. The badges are the product of nearly a decade of research at the MIT Media Lab into the nearly subliminal signals buried in our speech. They represent a massively counterintuitive bet that what we say to each other is much less important than the tonality, pitch, and body language of how we say it, a proposition borne out over hundreds of published papers and experiments.
True to the spirit of Moneyball, Humanyze specializes in debunking conventional wisdom around performance, although typically in an office rather than an arena. Its favorite example comes from one of Bank of America’s call centers, which suffered form the usual problems of burnout and higher turnover. A stint wearing badges revealed that the most productive workers frequently shared tips and frustrations with their colleagues. So the company recommended ditching individually staggered breaks in favor of 15 minutes of shared downtime. This supposedly less efficient arrangement—no one is manning the phones—led to shorter calls and lower stress while increasing productivity by more than 10%. “If you can use data to figure out things that are pinpoint small and easy to implement,” says Waber, “they can have order of magnitude effects.”
Two of his favorite tools are cafeteria tables and coffee machines. In one case, simply increasing the size of table from four people to 12 and instituting company-wide lunch hours led to individual productivity increases as high as 25%, thanks to better communication within teams and larger social networks. In another engagement, Humanyze helped Cubist Pharmaceuticals (since acquired by Merck) increase sales by 20 percent, or $200 million. Badge data revealed when Cubist’s sales force increased their interactions with coworkers on other teams by 10%, their sales also grew by 10%. To increase mingling among teams, the company replaced many small coffee stations with several larger ones, imperceptibly seeding the encounters it hoped to see.
YOUR ORG CHART IS WRONG
What separates Humanyze’s work from just-so stories about office layouts or policies that make workers more productive is linking behaviors with the underlying metrics. Sometimes more coffee machines are necessary, and sometimes they aren’t; it all depends on your objectives. In one instance of best intentions gone astray, Waber’s team was asked to analyze the new open plan office of an unnamed furniture manufacturer. The company had switched cubicles to unassigned seating in hopes of goosing collaboration across teams. It worked, sort of. Interactions increased 17%, but workers’ movement levels also dropped by an average of 14%, indicating that few were standing up and walking around. With teams now scattered around headquarters, this meant that communication between team members had actually crashed by 45%, taking productivity and revenue along with it.
That study was performed with just 65 badges, which has been typical of Humanyze’s short-term consulting engagements thus far. That’s about to change, however, as the five-year-old company begins large-scale, open-ended deployments. Instead of loaning out a few dozen badges for a few weeks at a time—as Fast Company did this year (more on that here)—it will continuously collect data from thousands of workers at its largest customers. Waber is cagey about their identities beyond the handful of public examples we’ve discussed here, although he will allow that they include a number of U.S. banks, some Japanese companies, and Deloitte’s Canadian operation, which is currently using badge data to inform the layout of its new headquarters.
The implications of a sociometrically quantified organization are profound. It’s a given that the hierarchical org chart-as-we-know-it doesn’t begin to describe who’s really working together, and how effectively. Hidden in the spaces between reporting lines are informal peer networks that typically manifest themselves in office politics. Efforts to identify, recognize, and promote these networks range from communities of practice 15 years ago to the current fascination with holacracy. With sociometric badges, these “invisible colleges” are plain to see—at least for management, who can scramble to repair fraying ties. Waber points to the billions of dollars wasted annually on failed M&A as the technology’s most valuable use case: every unhappy corporate marriage is unhappy down to the cellular level. Spot it early enough, and you might still have time to save it.
Taking full advantage of these capabilities will require the reinvention of traditional human resources and facilities management into something more along the lines of Google’s much-touted “people analytics” group, which subjects workplace experiments to the same sort of rigorous A/B testing Marissa Mayer once applied to the color of the logo. “These companies are so data-driven when it comes to their customers, but when it comes to their own people, they’re incredibly lax on that,” says Waber.
Not for long, and not necessarily for the better. While digital surveillance tools are typically described as Orwellian, in this case the better comparison is Frederick Winslow Taylor, the early 20th-century management consultant whose stopwatch-timed dissections of assembly lines led to the de-skilling and ultimately de-humanization of labor. Applied to the office, Taylorism produced factories for paperwork where the emphasis was on throughput and desks were arranged to both minimize interruptions and internalize the watchful gaze of superiors from their offices ringed around the periphery.
Critics have already coined the phrase “digital Taylorism” to describe the kinds of practices documented by Esther Kaplan in the March issue of Harpers, including an all-consuming focus on quotas and efficiency that compels UPS’ delivery truck drivers to cut corners on safety in order to make their numbers. The New York Times’ recent deep dive into Amazon’s toxic culture of highly paid burn-and-churn illustrates how the quantified org will be brought to bear on knowledge workers as well.
“That’s the fear, and it’s a legitimate one,” Waber says. “Most of these applications aren’t aggregating data in a way to make substantial changes in companies; they’re being used to micro-manage people.” They’re also self-defeating, he believes. Tesco’s employees may re-stock the shelves a little faster when they’re wearing armbands that track their every move, but the corresponding plunge in morale and increased turnover ultimately isn’t worth it. Neither is Amazon’s talent hemorrhage by design in pursuit of a faster competitive metabolism—the gains of which Facebook and Asana co-founder Dustin Moskowitz has criticized as illusory.
Humanyze makes the opposite pitch: now that we have the tools to measure what was previously immeasurable, we can manage for values other than efficiency or productivity. When it comes to workspace design, for example, sociometric badges can reveal which layouts are conducive to the kinds of collaborations that matter to actual performance, rather than simply lurching from one fad to the next. (Full disclosure: Waber and I made exactly this argument in the October 2014 issue of Harvard Business Review.)
The badges are roughly the size and weight of a deck of cards, although each iteration has been smaller than the last. They’re worn at sternum height to guarantee clear sound and sight lines for the sensors. (Your conversations aren’t being recorded, they assure you, but your metadata is.) Data is collected and stored locally until the badges are shipped back to Humanyze, where it is then anonymized and analyzed. Results are delivered twice, once as a private readout to each participant—contractually screened from management’s prying eyes—and again as an aggregated report indicating which behaviors or encounters make a difference to the bottom line.
CEO and co-founder Ben Waber describes his company’s approach as “Moneyball for business,” a catchphrase with special resonance for the analytics-obsessed owner of the NBA’s Sacramento Kings. Vivek Ranadivé made a fortune in Big Data before it was big, as the founder of analytics company TIBCO, and while his team floundered on the court last season, he searched for an edge elsewhere. To that end, last October the Kings sent their sales staff into the stands before and during games while wearing the badges. They discovered two things: the reps who spent the most time and energy in motion (both through the stands and in front of customers) sold twice as much as their peers; and the less they talked, the more they sold. Taking these lessons to heart, the Kings tripled their in-game sales last season compared to the previous year. The team has since abandoned cold-calling for face-to-face interactions, quadrupled its sales staff, and started a mentoring program to teach new recruits.
A NEW DEAL ON DATA
When it comes to privacy, Humanyze has tried to take a stand by not only anonymizing and withholding individual wearers’ data from their employers, but also threatening litigation should they violate the terms of service, which prohibit trying to reverse engineer that data to figure out, say, which employee is the one skewing the break data by taking two hour lunches. This will become moot, however, once sociometric badges are commodities and organizations bring their own analysts in-house—at which point they can force employees to sign any policies they want. From there, it’s not difficult to imagine a neo-Taylorist office of continuous performance reviews in which bathroom breaks are subject to rigorous statistical analysis and unproductive office friendships are discouraged with the threat of termination. Which is why Waber is one of the few in his nascent industry openly calling for outside regulation before some drastic breach of trust kills the industry in its cradle.
Another is Alexander “Sandy” Pentland, whose Human Dynamics Group at the MIT Media Lab invented sociometric badges nearly a decade ago. Best known as the “godfather” of wearables, including Google Glass (which evolved from prototypes in his lab), Pentland is credited as a co-founder of Humanyze along with his former Ph.D. students Waber, COO Daniel Olguin Olguin, and chief scientist Taemie Kim. But the idea to capture subliminal signals with sensors actually predates them. Working with another named Nathan Eagle (now the CEO of Jana), Pentland distributed special sensor-packed phones to 100 students and faculty living on MIT’s campus and tracked their movements, relationships, moods, and health for nine months in 2004. By the time they were finished, they could predict daily commutes and detect when two people were discussing politics or getting sick.
Pentland has since spun this research into several companies and two books, including last year’s Social Physics. “Social physics seeks to understand how the flow of ideas and information translates into changes in behavior,” he writes in the book’s introduction. He aims to create a “computational theory of behavior,” one that suspiciously sounds like “psychohistory,” the fictional science of galactic-scale probabilistic prediction-making introduced in Isaac Asimov’s Foundation trilogy. (Pentland’s childhood hero was Foundation’s protagonist, Hari Seldon.)
Doing so will require a lot more data, which is why Pentland has championed what he calls the “New Deal on Data,” a proposal to give Internet users complete control over their personal data, which they could then opt to give to services such as Google for Facebook for customization, withhold completely, or sell. Originally developed at the behest of the World Economic Forum in 2008, Pentland has since worked with with Telecom Italia and Telefónica to pilot the scheme in Trento, Italy. But comprehensive legislation has yet to materialize.
Even if strong legal and ethical protections are put in place, the fear persists that our voices will go unheard if we privilege the unspoken. This is the critique of sociometry leveled by British sociologist William Davies in his recent book The Happiness Industry: that the same companies obsessed with employee satisfaction and engagement would never dream of giving them a real voice in how the company should be run.
Waber’s not so sure. “The thing that dominates our work is that what you say, while important, is not that important,” he says. “Who talks to who and how much they talk—now that is powerful.”
“I have 6,000 contacts. Which ones should I be talking to?” asks Andy Wilson, co-founder and CEO of Pasadena, California-based startup Rexter. “It used to be answered by intuition, but intuition doesn’t scale.” Rexter’s answer is to plug into users’ social media profiles, Microsoft Exchange servers, and phone conversations and start listening. There, running silently, it reads emails, logs chats, and keeps tabs on calendars. Once you program Rexter with stated objectives—find new hires; raise more funding—algorithms that analyze the quality and frequency of your communications hunt for patterns buried in your exchanges with connections and suggest whom you should contact. Who’s relevant to your latest deal—and when were you last in touch? Who on your team has an in with a potentially valuable target?
Rexter—which costs $30 for individuals and $50 per interlinked user in group settings—also gathers formidable intel on your operations. “This gives you a deep dive into what [employees] actually do,” says Ted Simpson, a Los Angeles-based managing director of real-estate firm Avison Young. “Are they spending too much time cold-calling instead of relationship-building?” He describes Rexter as “the missing link between Salesforce.com, Outlook, and your Rolodex.”
That’s the newest sweet spot in the $20 billion-plus customer relationship management market, in which Salesforce tracks pending transactions, LinkedIn traces whom you know and how, and group-chat programs such as Asana and Slack seek to replace email as the best way to follow tasks and conversations. If those are partial maps of how work gets done and by whom, Rexter aspires to be Waze, and offer turn-by-turn directions to accomplish specific tasks.
Wilson was inspired to start Rexter after struggling to manage relationships as he helped launch more than a dozen startups as a founder and director of Momentum Venture Management, a Los Angeles tech accelerator. No tool could handle the pace and scale of tackling his many tasks, he recalls: “There was simply no good way to manage your social network for the benefit of a team.” In 2010 he set out to invent one, and he’s since raised $2.3 million from such angel investors as the former CEOs of Ticketmaster and paid search pioneer Overture. Today, Rexter’s competitors include RelateIQ—which was bought by Salesforce last year for $390 million—and Humin, a new app that adds context to your contacts list.
One seductive possibility for entire businesses using Rexter: comparing outcomes (deals closed, products launched) with the flurries of messages preceding them, revealing successful strategies that can be copied. That’s what Mark Madigan hopes. He’s the national sales director of the privately held insurance firm Risk Strategies. “We have very high hit rates when we get in front of clients or prospects,” he says. “But our struggle is getting enough meetings. How do we get more?” Rexter, he believes, will help.
Wilson readily admits that, within groups, the intelligence his software collects could be abused, but stresses there are protections in place to prevent managers and teammates from, say, reading others’ email. He’s hopeful customers will choose enlightened self-interest over undermining internal competitors. “In organizations where you eat what you kill,” he says, “we can help you kill more.”
If you’re still pondering whether to head to Silicon Valley for your next startup, you’re not thinking big enough or far enough. Over the coming decade, the 600 largest and best-connected cities on the planet will contain a fifth of the world’s population, capture almost two-thirds of its economic growth, and encompass more than half of global GDP, according to the McKinsey Global Institute. And, as great as the Bay Area and Boulder and Austin are for launching a startup, you’d be only scratching the surface here when it comes to corralling talent, tapping the world’s next big market (hint: they speak Arabic), or being present for the next tech breakthrough.
America’s entrepreneurial spirit is too big to be contained by borders. Here, we present five global alternatives to traditional hotbeds of startup creation and growth. Each city offers unique advantages to American entrepreneurs, and each is a regional—or even global—hub in its own right. Some are great places to launch a business or expand into new markets. Others offer access to expertise or technologies that may not yet be available in the U.S. Many are home to some of the world’s best workers, as well as to partners who will help you scale.
For example, Istanbul and Dubai are gateways to the modern Middle East, a market that is growing faster than (and is younger and bigger than) that of the United States. Santiago, Chile, has made a name for itself as one of the most foreign-entrepreneur-friendly cities on the planet, and as a test bed for launching into Latin America. Tallinn, Estonia, is one of the world’s most internet-connected cities, with a deep pool of technical talent thanks to all the Skype alumni running around. Shenzhen, China, aspires to be the Silicon Valley for hardware makers, a place where accelerators are eager to help you build, test, refine, and make a million of something all in the same day. If these cities aren’t already on your radar as lands of opportunity for your company, let this serve as notice that they should be.
1. Gateway to a Megamarket
DUBAI • UNITED ARAB EMIRATES
Population • 2.1 million
Most famous startup • Souq.com
Only the kingdom of bling would kick off a recruiting drive for entrepreneurs with a $1.5 billion “innovation hub.” Announced last fall, this mammoth expansion of Dubai’s Internet City is poised to be the launchpad for a new generation of Arab-owned companies looking to partner with the emirate’s deep-pocketed conglomerates and to expand across the entire region.
Widely written off after the global financial crisis, Dubai has lost none of its swagger—and none of the advantages that made it the region’s best business hub. Entrepreneurs willing to endure scorching summers, punishingly high housing costs, and a dearth of local tech talent are able to exploit the emirate’s unmatched investments in infrastructure, low taxes, and tolerance for expatriates. It’s one of the world’s “few truly connected global cities,” according to the McKinsey Global Institute, and one that’s a crossroads for North Africa and the Middle East.
Dubai’s monarchy can also think like a startup when it wants to. The inaugural U.A.E. Drones for Good competition awarded more than $1 million in prizes in February as part of an effort to seed the Middle East’s drone industry, with more than a dozen such startups launching in the emirate. A similar initiative, the U.A.E. 3-D Printing Innovation Alliance, brings together local universities, 3-D-printer companies, and regional entrepreneurs in an attempt to cement Dubai’s status as the leader in an industry that’s still searching for its killer app.
2. Betting on Startups
SANTIAGO • CHILE
Population • 6.3 million
Most famous startup • ComparaOnline
Santiago is so eager to attract entrepreneurs that it will pay you to move there. In 2010, Start-Up Chile began offering émigré entrepreneurs one-year visas, free workspace, and $40,000 cash (now down to $33,000). The government-run program was a hit, attracting 16,000 applicants. (More than 1,000 startups from 75 countries were accepted.) Most founders use their time in Santiago as a sabbatical, during which they learn the startup ropes from previous participants who have stayed put in Chile—132 graduates so far, according to Start-Up Chile’s executive director, Sebastian Vidal.
Start-Up Chile was meant to teach Santiago a lesson as well: how to think entrepreneurially. Although Santiago is regarded as one of the best spots in South America to do business—with its California climate and none of the megacity dysfunctions of places like São Paulo—its economy was built on mining and maritime commerce. It lacked a tech-startup scene. Start-Up Chile’s creators realized that “to change the culture, you’ll need to bring foreigners in,” says Vivek Wadhwa, a fellow at Stanford Law School and adviser to Start-Up Chile. They were right.
Today, the program’s headquarters in the city’s leafy Providencia neighborhood is packed with locals and foreigners learning from one another. That mix will change as the program recruits more local companies eager to expand across Latin America, where the 10 largest cities, including Santiago, make up nearly a third of the region’s GDP. “U.S. companies don’t realize they can test their technology locally and expand from there,” says Wadhwa.
3. Launch From Home Here
TALLINN • ESTONIA
Population • 434,426
Most famous startup • Skype
Want to relocate to Estonia? It’s so easy. You don’t even have to move here. Earlier this year, the Baltic nation began issuing the world’s first “e-residencies,” granting foreigners the same digital identities that are Estonians’ birthright. With that comes the ability to hold bank accounts, register businesses, sign contracts, and gain access to more than 4,000 local services.
This platform is emblematic of “E-stonia’s” ambition to build a nation of digital natives. With fewer than half a million actual residents, Tallinn is the smallest city on this list, but it offers entrepreneurs one of the deepest pools of technical talent per capita of any European capital. In the decade since Skype launched in Tallinn, the company has spawned legions of startups, venture capitalists, and executives known locally as the “Skype mafia,” offering emigrants (digital or otherwise) a built-in set of co-founders, funders, and partners.
Estonia’s tech prowess helps local startups punch above their weight in other ways, including innovative public-private partnerships that—thanks to the country’s E.U. citizenship—have the chance to become industry standards across the Continent. For example, after a cyberattack hobbled Estonia’s communications network in 2007, the government and private sector joined forces to create a state-of-the-art security system known as keyless signature infrastructure. That in turn evolved into Guardtime, a Tallinn-based data security firm, used by companies such as European mobile giant Ericsson. Guardtime’s impressive growth—to about €3.6 million ($4.1 million) in revenue in 2013—landed it on the Inc. 5000 Europe list, which debuted this year.
Mirroring its U.S. counterpart, the Inc. 5000 Europe ranks the fastest-growing private companies over the past three years, with revenue of €2 million ($2.3 million) or more in 2013 and €200,000 ($227,000) or more in 2010. This year, five Estonian companies were among the 500 fastest-growing in Europe. That number is likely to grow in future years, especially as e-residents get into the game. “Tallinn is a fantastic place to do business,” says Guardtime co-founder and CEO Mike Gault. “Every government on the planet comes here to learn about e-government and cybersecurity.”
4. Where Markets Meet
ISTANBUL • TURKEY
Population • 14.2 million
Most famous startup • Gittigidiyor
Istanbul transcends the cliché of being the hinge between East and West. Europe’s largest city is also the gateway to 76 million Turks and the Turkic populations of Russia and Central Asia—a vast, underserved market. Here, many entrepreneurs who take their cues from successful U.S. startups are striking gold.
Food-delivery service Yemek Sepeti, for instance, started as Turkey’s answer to GrubHub before expanding to Greece, Lebanon, Jordan, Saudi Arabia, and other countries. Today, the company partners with 10,000 restaurants and takes 90,000 orders daily from 3.2 million users. HemenKiralik (known as Flat4Day) is Turkey’s Airbnb; Trendyol is its Gilt Groupe; and its eBay is GittiGidiyor (which, in 2011, was acquired for $218 million by eBay itself).
Human capital is plentiful and relatively cheap. “Turkey’s strong STEM universities are churning out high-quality technical talent, and Turkish students from top-tier global schools are keen to return to their bustling hometowns,” says Cem Sertoglu, a partner at Earlybird Venture Capital who invested in Yemek Sepeti and GittiGidiyor.
But Istanbul’s blessing as an entrepreneurial hub is also its curse, with a rising cost of living, epic traffic jams, and a glut of smaller players. Sertoglu worries that startups chasing low-hanging fruit domestically will ultimately stunt the local scene.
More worrisome is the political climate under President Recep Tayyip Erdoğan, who continues to crack down on criticism nearly two years after the Gezi Park protests. Erdoğan’s defiance has left Turkey’s E.U. candidacy on life support and dampened Istanbul’s prospects as a creative capital.
5. Maker Paradise
SHENZHEN • CHINA
Population • 10.6 million
Most famous startup • Tencent
Shenzhen is the archetypal megacity. Thirty-five years ago it was a fishing village, but today its miles of subtropical sprawl sprout skyscrapers and huge malls across the border from Hong Kong. Wages are no longer low, and neither is the cost of living, but China’s original “instant city” can hold its own with any metro in the world, especially when it comes to entrepreneurship.
Shenzhen is increasingly attracting startups that may have previously only outsourced their manufacturing here. It has become a global magnet for hardware companies eager to learn from the world’s biggest (and often best) manufacturers of mainstream electronics. Many land at Haxlr8r, an accelerator that has graduated more than 50 companies using a now-familiar model: Learn the basics of manufacturing and develop a prototype; raise funds (and build buzz) in the United States through Kickstarter; manufacture the product; and drop-ship it anywhere in the world through the Pearl River Delta’s unparalleled logistics networks. By launching products this way, startups “win a tremendous amount of time in getting to market and avoid the costly mistakes that come with ‘parachute manufacturing,’ ” says Haxlr8r founder Cyril Ebersweiler.
Partnerships are critical. The first company to master the Shenzhen model, years before Haxlr8r existed, was PCH, an Irish-run middleman between Western brands and invisible Chinese contract manufacturers. PCH rose to prominence as an integral part of Apple’s supply chain, and today offers its services to hardware startups looking to scale. Entrepreneurs who aren’t willing to relocate to Shenzhen can sign up for the company’s incubator in San Francisco, in which entrepreneurs build prototypes and wire their orders to China.
Those willing to take the plunge and set up shop in China, however, will discover a vast universe of technical expertise. Inside the 10-story SEG Electronics marketplace, for example, are wall-to-wall stalls of vendors hawking every conceivable component, including Bluetooth-connected low-energy chips and sensors not even on the market yet in the U.S. And each of these vendors is backed by its own factory. In other words, Shenzhen is ground zero for technological serendipity.
(Global Solution Networks, a research initiative of the Martin Prosperity Institute at the University of Toronto, in collaboration with The Tapscott Group — an international think tank headed by Don Tapscott — asked me to prepare a report on new approaches to urban mobility in an era of mega-urbanization, economic austerity, and climate change. The introduction to the report is below; the complete report is available for download at the GSN Website.)
Catalyzing urban mobility in an era of mega-urbanization, economic austerity, and climate change demands new approaches to transportation planning and policy, especially in the megacities of the Global South. Tackling traffic congestion in such cities as Nairobi, Manila, Delhi, and Mexico City is essential to reducing carbon emissions while increasing the scope of inhabitants’ opportunities and quality-of-life.
Tackling traffic problems will require marshaling untapped resources and recruiting unlikely allies. Conventional transportation planning by public- and private-sector actors alike ignore the informal transportation networks ferrying millions of commuters daily, whether they’re dollar vans in New York or matatus in Nairobi. New technologies and services will play a pivotal role in discovering, integrating, and delivering more inclusive, more fluid, and less polluting transportation networks comprising existing modes, from metros and bus rapid transit (BRT) to rickshaws and unlicensed jitneys.
In this context, Global Solution Networks are emerging around what has been called the “new mobility” — a shift away from private motor vehicles toward multi-modal networks mediated by information. Some of these networks are generating and safeguarding the new data standards and protocols enabling these networks; others are introducing and lobbying for more sustainable and more equitable transportation policies around such networks; and still others are delivering services that are neither traditional public transit nor private operators, but a more resilient hybrid.
Hot, Broke, and Gridlocked
Mobility and congestion have become paramount issues for cities facing an unprecedented wave of rural-to-urban migration. More than half the world’s population — 3.5 billion people — now live in cities, and their numbers are expected to nearly double by 2050 at a rate of more than a million migrants weekly.
An enormous quantity of infrastructure is required to house, employ, and transport these new arrivals — an estimated $350 trillion worth, of which $84 trillion should be earmarked for moving people and goods. Arguably, transportation is the most important investment cities can make, given its impact on land use, labor mobility, energy consumption, and air pollution, all of which in turn have profound implications for both accessibility and sustainability.
The speed and scale of mega-urbanization — and with it, epic traffic congestion and its accompanying climate impact — has overwhelmed policymakers. They struggle to understand new patterns of informal transit, are unable to finance large investments due to austerity, and have largely been unable to reach consensus on how to integrate existing investments into a more coherent mobility system.
An example: Brazilian officials were dumbstruck last year when a $.09 increase in Sao Paulo’s transit fares triggered months of violent demonstrations. President Dilma Rousseff’s pledge to spend $22 billion on improving the nation’s transit infrastructure failed to mollify protestors and triggered a slide in the Brazilian real on fears of a widening budget deficit. Nor is money a sufficient answer — a lack of political will, a shortage of experienced project managers, and unrealistic financial expectations have prevented the construction of high-speed rail between Rio de Janeiro and Sao Paulo despite existing financing. That may be for the best —The New York Times reported in April that despite billions spent, Brazil is littered with unfinished infrastructure projects in the wake of hosting the FIFA World Cup.
Meanwhile, Manila’s traffic is considered so intractable that policymakers and business leaders alike have impractically called for “decongesting” (i.e., de-populating) the megacity. (A call echoed in Nairobi. ) This is impossible. Urbanization has historically been driven by the desire for economic opportunity. Cities began as nodes of exchange and trade and today they might functionally be defined by the size and scope of their labor sheds, i.e., the ability to live and work anywhere within them. For this reason, efficient transportation systems are vital to residents’ health, wealth, and well-being, whether measured in terms of productivity, income, or social mobility. Polycentric cities such as Manila feel the strain of congestion acutely, as traditional linear public transit systems (e.g., metros and BRT)are ill-suited for lower-density sprawl.
Instead, residents have turned to informal and semi-regulated transit services such as auto-rickshaws and motorcycles. Manila, for instance, is home to an estimated 3.5 million “trikes” — motorbikes with metal passenger sidecars welded to their sides. Dangerous, noisy, and dirty, such vehicles are also among the most polluting on a per passenger mile basis. This is especially significant in that the Intergovernmental Panel on Climate Change has found transport to be responsible for 23% of world energy-related greenhouse gas emissions, with about three quarters coming from road vehicles. Transport has been the fastest growing energy sector for twenty years, relying on a single fossil fuel for 95% of its energy.
With oil prices hovering around $80 per barrel despite hydraulic fracking and new fields coming online in Iraq and elsewhere, it would appear ground transportation faces persistently high (and eventually higher) fuel costs for the foreseeable future. If that weren’t enough, the IPCC’s increasingly dire warnings about climate change have reinforced the need for more sustainable forms of transportation. As events like COP 15 and Rio+20 have demonstrated, nation-states and traditional political actors have made little headway on addressing the underlying issues of climate change, leaving it to local forms of governance and non-traditional actors to adopt and implement policies for sustainable transportation.
As with other global issues such as climate change, gender-based violence, and the prevention and management of global health pandemics, the gridlock plaguing urban centers will not be solved by governments alone. Nor can it be satisfactorily addressed by individual private enterprises or non-profit organizations. Instead, the world needs bold new approaches leveraging contributions and resources from all sectors of society. In short, new global solution networks are needed to design and implement sustainable transportation solutions, transfer knowledge and best practices, and bridge the governance gap between governments, corporations, and citizen stakeholders.
As defined by the GSN program, a Global Solution Network consists of diverse stakeholders, organized to address a global problem, making use of transnational networking, with a membership and governance that are self-organized. Given the lack of leadership and funding across much of the Global South, GSNs have a significant role to play in designing, advocating for, and delivering inclusive, low-carbon transportation schemes. Aiding them are new technologies — from smart phones to electric vehicles to low-sulfur fuels — to compensate for a lack in traditional infrastructure investment.
This report is an analysis of four such GSNs to illustrate how traditional approaches to transportation planning and transit are changing. Nairobi’s Digital Matatu effort mapped the city’s semi-formal bus networks, providing the information for what has become an entire generation of real-time transit apps.
G-Auto has reinvented auto-rickshaw service in five Indian cities using call centers, text messaging and apps. Drivers joining its network are held to higher performance standards in exchange for health insurance, access to credit, and educational allowances for their children. The net result is better service for passengers, a higher quality of life for drivers, and fewer empty rickshaws, which in turn reduces congestion and emissions. G-Auto is the 2014 winner of the Grand Mobi Prize recognizing innovation in sustainable transportation.
The prize, in turn, is the creation of SMART (Sustainable Mobility & Accessibility Research & Transformation), a GSN at the University of Michigan creating knowledge and building capabilities around what it calls the “new mobility ecosystem.”
The fourth example is EMBARQ, an initiative of the World Resources Institute operating five research centers around the world drafting and implementing sustainable transportation policies, including Mexico City’s BRT system and national fuel efficiency standards.
In the taxonomy of GSNs, Digital Matatu is a hybrid of a Standards and Knowledge Network; G-Auto is an Operational and Delivery Network; SMART is a Knowledge Network; and EMBARQ is a hybrid of Policy, Advocacy, and Operational and Delivery Networks. Considering each example in turn, this report will explore the ramifications of GSNs when it comes to urban mobility and congestion, concluding with lessons for network leaders.
I’d like to tell the story of a paradox: How do we bring the right people to the right place at the right time to discover something new, when we don’t know who or where or when that is, let alone what it is we’re looking for? This is the paradox of innovation: If so many discoveries — from penicillin to plastics – are the product of serendipity, why do we insist breakthroughs can somehow be planned? Why not embrace serendipity instead? Because here’s an example of what happens when you don’t.
When GlaxoSmithKline finished clinical trials in May of what it had hoped would be a breakthrough in treating heart disease, it found the drug stank — literally. In theory, darapladib was a wonder of genomic medicine, suppressing an enzyme responsible for cholesterol-clogged arteries, thus preventing heart attacks and strokes. But in practice it was a failure, producing odors so pungent that disgusted patients stopped taking it.
Glaxo hadn’t quite bet the company on darapladib, but it did pay nearly $3 billion to buy its partner in developing the drug, Human Genome Sciences. The latter’s founder, William Haseltine, once promised a revolution in drug discovery: After we had mapped every disease to every gene, we could engineer serendipity out of the equation. Darapladib was to have been the proof — the product of scientists carefully picking their way through the company’s vast genetic databases. Instead it’s a multi-billion-dollar write-off.
Big Pharma is hardly alone when it comes to overstating its ability to innovate, although it may be in the worst shape. By one estimate, the rate of new drugs developed per dollar spent by the industry has fallen by roughly a factor of 100 over the last 60 years. Patent statistics tell a similar story across industry after industry, from chemistry to metalworking to clean energy, in which top-down innovation has only grown more expensive and less efficient over time. According to a paper by Deborah Strumsky, José Lobo, and Joseph Tainter, the average size of research teams bloated by 48 percent between 1974 and 2005, while the number of patents per inventor fell 22 percent during that time. Instead of speeding up the pace of discovery, large hierarchical organizations are slowing down — a stagflationary principle known as “Eroom’s Law,” which is “Moore’s Law” spelled backwards. (Moore’s Law roughly states that computing power doubles every two years, a principle enshrined at the heart of technological progress.)
While Big Pharma’s American scientists were flailing, their counterparts at Paris Jussieu — the largest medical research complex in France — were doing some of their best work. The difference was asbestos. Between 1997 and 2012, Jussieu’s campus in Paris’s Left Bank reshuffled its labs’ locations five times due to ongoing asbestos removal, giving the faculty no control and little warning of where they would end up. An MIT professor named Christian Catalini later catalogued the 55,000 scientific papers they published during this time and mapped the authors’ locations across more than a hundred labs. Instead of having their life’s work disrupted, Jussieu’s researchers were three to five times more likely to collaborate with their new odd-couple neighbors than their old colleagues, did so nearly four to six times more often, and produced better work because of it (as measured by citations).
The lesson? We still have no idea how to pursue what former U.S. Defense Secretary Donald Rumsfeld famously described as “unknown unknowns.” Even an institution like Paris Jussieu, which presumably places a premium on collaboration across disciplines, couldn’t do better than scattering its labs at random. It’s not enough to ask where good ideas come from — we need to rethink how we go about finding them.
I believe there’s a third way between the diminishing returns of typical organizations and sheer luck. In Silicon Valley, they call it “engineering serendipity,” and if that strikes you as an oxymoron (which it is), perhaps we need to step back and redefine what serendipity means:
1. Serendipity isn’t magic. It isn’t happy accidents. It’s a state of mind and a property of social networks — which means it can be measured, analyzed, and engineered.
2. It’s a bountiful source of good ideas. Study after study has shown how chance collaborations often trump top-down organizations when it comes to research and innovation. The challenge is first recognizing the circumstances of these encounters, then replicating and enhancing them.
Any society that values novelty and new ideas (like our innovation-obsessed one) will invariably trend toward greater serendipity over time. The push toward greater diversity, better public spaces, and an expanded public sphere all increase the potential for fortuitous discoveries.
The flip side is that institutions failing to embrace serendipity will ossify and die. This is especially true in our current era of incessant disruption, as seen in rising corporate mortality rates and a surge of unpredictable “black swan” events. (Nassim Taleb’s advice for taming black swans, by the way? “Maximize the serendipity around you.”)
Finally, the greatest opportunities for engineering serendipity lie in software, which means we must take great care as to who can find us and how, before Google (or the NSA) makes these choices for us.
It’s no coincidence Silicon Valley is obsessed with serendipity. Everyone is familiar by now with the origins of the Post-it Note, Velcro, corn flakes, and Nike’s waffle sole, to say nothing of Teflon, Kevlar, dynamite, and vast swaths of modern chemistry and medicine. The Valley’s contributions include microprocessors and inkjet printers, while Steve Jobs didn’t discover desktop computing or the mouse until a reluctant visit to Xerox PARC in 1979 — which beget the Macintosh and everything after.
When Yahoo banned its employees from working from home in 2013, the reasons the struggling company gave had less to do with productivity than serendipity. “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings,” explained an accompanying memo. The message from new CEO Marissa Mayer was clear: Working solo couldn’t compete with lingering around the coffee machine waiting for inspiration — in the form of a colleague — to strike.
Google and Facebook have gone Yahoo one better. Rather than sit back and wait for serendipity to happen, the search giant has commissioned a new campus expressly designed, in the words of its real estate chief, to maximize “casual collisions of the work force.” Rooftop cafés will offer additional opportunities for close encounters, and no employees in the complex will be more than two and a half minutes away from one another. “You can’t schedule innovation,” said David Radcliffe, but you can make introductions — as both Googlers and Mayer know well. The latter attributes the genesis of such projects as Gmail, Google News, and Street View on her watch to engineers meeting fortuitously at lunch.
Meanwhile, Facebook has hired architect Frank Gehry to build “the perfect engineering space: one giant room that fits thousands of people, all close enough to collaborate together,” founder Mark Zuckerberg explained. The goal of each company is the same: to create the best conditions for spreading the most valuable kind of ideas — the hunches locked inside our skulls until a felicitous combination of circumstances sets them free.
Mayer’s demand for proximity ignited a debate that’s still raging: What’s the best way to work, together or alone? Finally breaking her silence on the matter in the spring of 2013, she conceded “people are more productive when they’re alone,” then added, “but they’re more collaborative and innovative when they’re together. Some of the best ideas come from pulling two different ideas together.”
She’s right. (Not that Yahoo has many ideas to show for it.) We experience moments of serendipity daily, each with potentially huge payoffs down the road. But because we can’t predict which ideas will collide and fuse, we cling to boring productivity and efficiency. We not only run our lives but our entire economy this way, using GDP and even grosser statistics to measure progress that has never unfolded in a straight line. Life is emergent and unknowable — we’re just terrified to manage it that way. And because we only attribute our success to serendipity after the fact (if at all), we typically consign it to anecdotes (e.g. Post-it Notes), turning to them only when the numbers don’t add up. The problem is that more and more of the most important numbers — including patent applications, R&D budgets, and even economic growth — have stopped adding up.
We take the pace of innovation for granted. We assume that like Moore’s Law, the rate of scientific discoveries and inventions is smoothly accelerating. But we’re wrong. A growing body of research suggests the opposite is true; Eroom’s Law rules. That this is happening in nearly every industry means something deeper is at work — that the corporation itself is reaching its limits when it comes to invention. Like the long-dead societies he’s excavated, Joseph Tainter — who’s most famous for his book The Collapse of Complex Societies — believes companies have become too rigid and hierarchical to survive disruption, seeking only to discover what they already know. What’s missing is serendipity.
The same phenomenon that produced a gusher of new research papers at Paris Jussieu once produced the laser and transistor at Bell Labs and breakthroughs in linguistics and acoustics at MIT. It’s still happening in places like IBM’s Thomas J. Watson Research Center in Yorktown Heights, New York, where a chance meeting of a physicist and biologist in a hallway a few years ago led to a tiny microchip able to single-handedly sequence long strands of DNA. It’s no accident that the Watson Research Center produces more patents per year than any other building in the world, and IBM more than any other company.
In all of these cases, serendipity was responsible for the bridging of what the University of Chicago sociologist Ronald Burt calls “structural holes,” which appear when org charts and other formal structures create gaps in the informal network of experts floating through a company, campus, or city. In a landmark study a decade ago, Burt found that managers who straddled holes between teams and domains consistently produced better ideas than those who did not (and were rewarded accordingly). “This is not creativity born of genius,” he wrote. “It is creativity as an import-export business.” The easiest way to discover an idea, it would seem, is to borrow one.
Burt’s findings have been borne out again and again; in one study, a slight increase in serendipity generated more revenue and projects while speeding up their completion. (Contrary to Mayer’s mea culpa, it appears bumping into people makes you more productive, too.)
There’s a rich vein of research running through sociology, anthropology, network science, and management theory explaining how serendipity increases one’s “absorptive capacity,” i.e., our ability to recognize, assimilate, and put to use knowledge from outside our personal experience. Other studies demonstrate how successful firms harness serendipity to lower the costs and barriers to collaboration. And still others suggest that how we share “non-redundant information” across a social network is more important than the experience or credentials of any one person in the network itself, which explains how scattering scientists across a campus at random could vastly improve the quality of their work.
But perhaps the most interesting thing about all of these examples is that they were unintentional. Serendipity may not be luck after all — there is a hidden order to how we find new ideas and people — but we will never realize more than the tiniest fraction of its potential as long as we treat it that way. So how do we go further and actually plan for serendipity?
The first step takes place in our own minds. A few years ago, an Australian psychologist named James Lawley realized that no one had mapped the experience of serendipity before. Upon re-reading the letter in which the British aristocrat Horace Walpole coined the word in 1754, he noticed the fabled Three Princes of Serendip “were always making discoveries, by accidents and sagacity, of things they were not in quest of.” Today, all anyone remembers are the accidents. But equally important is sagacity, which the chemist Louis Pasteur famously called “the prepared mind.”
“What kind of mind is it?” Lawley asks. “One that thinks more systematically than simple cause-and-effect.” In other words, it’s a mind that’s open to the unexpected, to thinking in metaphors, to holding back and not jumping to conclusions, and to resist walls between domains and disciplines. It’s a mind that looks a lot like Joi Ito’s.
Ito is a former DJ, venture capitalist, and entrepreneur who moved to Dubai on a whim to get a better feel for the place. (That’s when he wasn’t traveling 300 days a year.) “My job was running around mostly making connections,” is how he describes it. That was before he was picked to run the MIT Media Lab, despite never finishing college himself.
Headlining a panel at 2013’s South by Southwest titled “The New Serendipity,” Ito talked about the qualities he’s cultivated within himself — being “antidisciplinary” and retaining his “beginner’s mind” — which he hopes will guide the Media Lab. “We aim to capture serendipity,” he said. “You don’t get lucky if you plan everything — and you don’t get serendipity unless you have peripheral vision and creativity.”
That’s also true for the next step, which is engineering serendipity into organizations. For all the talk of “failing faster” and disruptive innovation, an overwhelming majority of companies are still structured along predictable lines. Even Google cancelled “20 percent time,” its celebrated policy of granting engineers one day a week for personal projects. To capture serendipity, the company is looking at space instead of time — hence the design of its new campus, in which everyone is just a short “casual collision” away.
But how can we do a better job of bringing people together than installing bigger cafeteria tables, adding another coffee machine, or locking all the bathrooms but one? A start would be to tear down the walls preventing colleagues in one department or company from bumping into peers from another. That’s what AT&T has done with its worldwide Foundry network, where selected startups and entrepreneurs work alongside its own engineers as well as those from partners such as Intel, Cisco, and Ericsson. One of these startups, Intucell, improved AT&T’s call retention and throughput speeds by 10 percent and was later bought by Cisco for $475 million. In general, Foundry teams have cut the development time of new products from three years to nine months.
It’s telling that the Foundry outpost in Silicon Valley is stationed in downtown Palo Alto, where the chances of someone dropping in on their walk back from lunch are substantially greater than in some exurban office park. Cities are the greatest serendipity engines of all. They began life at crossroads as places to exchange goods and later ideas with others you would never encounter on the farm.
Only recently, we’ve come to recognize great ones for what they are — not as collections of skyscrapers (which China can build but can’t fill), but as the sum of their dense, rich, and overlapping networks of people. “They’re not a set of people, they’re not a set of roads; they’re a set of interactions,” says Luis Bettancourt, a physicist who describes cities as “social reactors.” Like the sun, they’re places where strangers collect, collide, and fuse — releasing tremendous heat and light in the process. What makes a city great, in other words, is how well its people are connected — to the city itself and to each other. And to make a city better, you have to engineer serendipity.
Which is what Tony Hsieh is trying to do in Las Vegas. Much has been written about the Zappos CEO’s flailing efforts to terraform downtown into a desert facsimile of Brooklyn or the Mission district, but his instincts are correct. He envisions every bar and coffee shop around the company’s downtown campus as an extension of its conference rooms, inviting strangers to work alongside his employees. He fervently believes blurring the line between the city and his company will make people in both smarter, happier, and more productive. “If you accelerate serendipity,” he says, “you’ll accelerate learning.”
To ensure that happens, he’s imported dozens of tech startups for his employees to learn from. Stipulated in their contracts is a promise to spend “1,000 hours per year of serendipitous encounters” downtown, searching for collisions and conversations. While it remains to be seen whether Hsieh can build a successful creative class company town, he’s right to believe the energies of the city are greater than any one company.
The final piece is the network. Google has made its ambitions clear — as far as chairman Eric Schmidt is concerned, the future of search is a “serendipity engine” answering questions you never thought to ask. “It’ll just know this is something that you’re going to want to see,” explained artificial intelligence pioneer Ray Kurzweil shortly after joining the company as its director of engineering.
One antidote to this all-encompassing filter bubble is an opposing serendipity engine proposed by MIT’s Ethan Zuckerman. In his book, Rewire, he sketches a set of recommendation and translation tools designed to nudge us out of our media comfort zones and “help us understand whose voices we’re hearing and whom we are ignoring.”
As Zuckerman points out, the greatest threats to serendipity are our ingrained biases and cognitive limits — we intrinsically want more known knowns, not unknown unknowns. This is the bias a startup named Ayasdi is striving to eliminate in Big Data.Rather than asking questions, its software renders its analysis as a network map, revealing hidden connections between tumors or terrorist cells, which CEO Gurjeet Singh calls “digital serendipity.”
IBM is trying something similar with Watson, tasking its fledgling artificial intelligence software with reading millions of scientific papers in hopes of finding leads no human researcher would ever have time to spot. Baylor’s College of Medicine used it this way to identify six new proteins for cancer research in a month; the entire scientific community typically finds one per year.
Baylor’s experiment — much like Paris Jussieu’s unintentional one — tells us something profound about the potential for new discoveries. Rather than compiling ever-bigger data sets or throwing more bodies at a problem, we need tools, organizations, and environments geared less toward efficiency — which is suffering from decreasing returns — and more toward what John Hagel III and John Seely Brown call “scalable learning,” in which serendipity is crucial.
So, what if we borrowed Ayasdi to power a social serendipity engine — one to identify who’s nearby, parse our hidden relationships, and make introductions? How would it work? We’d want it to be as easy as Tinder, which now owns half the mobile dating market. Next, we’d need context — why do I want to meet this person? Tinder works because its logic is binary: Swipe right or left. Everything else is harder.
That context exists somewhere in our data exhaust. For example, Relationship Science has mapped the connections between 3 million members of the 1 percent using publicly available information from more than 10,000 databases. Its customers use it to trace paths to their quarry via colleagues, corporate boards, and alma maters, with each link graded into strong, medium, and weak ties. Meanwhile, a startup named Rexter mines users’ email, calendars, and contacts to calculate the value of their connections and assign tasks accordingly. And, of course, there’s no shortage of sensors available — from smartphones to beacons to “sociometric badges.”
Now, take all of that and run it through Ayasdi’s digital serendipity engine. We could conceivably perform the equivalent of Baylor’s Watson experiment with the researchers of Paris Jussieu, plugging hundreds if not thousands of structural holes in months or even weeks, rather than fifteen years. What would we find then?
Usually, when I describe this vision, someone will reply, “But that isn’t serendipity!” I’m never quite sure what they mean — because it isn’t random or romantic? Serendipity is such a strange word; invented on a whim in 1754, it didn’t enter widespread circulation until almost two centuries later and is still notoriously difficult to translate. These days, it means practically whatever you want it to be.
So, I’m staking my own claim: Serendipity is the process through which we discover unknown unknowns. Understanding it as an emergent property of social networks, instead of sheer luck, enables us to treat it as a viable strategy for organizing people and sharing ideas, rather than writing it off as magic. And that, in turn, has potentially huge ramifications for everything from how we work to how we learn to where we live by leading to a shift away from efficiency — doing the same thing over and over, only a little bit better — toward novelty and discovery.
This essay was made possible with the generous support of the John S. and James L. Knight Foundation.
(This essay was commissioned by New York University’s Rudin Center for Transportation Policy and Management as part of its 2014 research initiative “Re-Programming Mobility: The Digital Transformation of Transportation in the United States.” It is republished here in full.)
Las Vegas, 2016: It’s another sunny 103º day in Henderson — and the first of mandatory “dry-outs” without water service after five years of drought. Instead of driving his SUV to work — these days, it’s really just for weekend excursions — the lawyer opens the Shift app on his phone and enters his destination: Zappos’ headquarters. Seven minutes later, a chauffeured Tesla S sedan is ferrying him to work downtown, which has boomeranged from one of the poorest neighborhoods in Nevada to one of the wealthiest, thanks to Tony Hsieh.
Zappos’ CEO invested his $350 million personal fortune in creating an entrepreneurial utopia, perhaps the most ambitious piece of which was Shift — an all-inclusive car-, ride-, and bike-sharing service combining aspects of Zipcar, Uber, CitiBike, and RideScout. Instead of checking traffic or wondering when the bus will arrive, members ask the app for the fastest modes between A and B. The attorney didn’t choose a Tesla today; Shift’s “decision engine” chose for him. And while this trip is a simple pick-up and drop-off, there have been times when he’s been ordered by the app to park his Smart car in a designated spot along the curb and finish his journey on a Social Bicycle (SoBi) chained next to it — locking and unlocking both with his phone. Five hundred dollars per month is a small price to pay for mobility-as-a-service, and he knows it, because the payments on his other car had come to $750 a month before he sold it…
Milton Keynes, 2017: “The pods are naff,” the consultant’s husband had huffed when she mentioned at breakfast she had reserved one for her visit to Milton Keynes that morning. Upon arrival on the train from London, she had to admit he was right. Seeing them lined up empty outside the station, strobing in different shades of neon — looking down at her phone, she saw it was flashing the same garish shade of purple as the third one from the front — makes her reconsider her earlier enthusiasm. Approaching the two-wheeled self-driving pod resembling something out of Minority Report (a film that’s now fifteen years old, she remembers), she opens it with a tap of her phone. After placing her bag in the second seat, the door silently swings shut and then glides smoothly not onto the street, where traffic is zooming by at 70 mph, but onto the Redway pedestrian path — and without her steering.
On her way to the headquarters of Transport Systems Catapult — really, she could have walked, had she felt like traversing parking lots and dodging cars on Grafton Gate — the pod quietly creeps along the path, until it doesn’t. Whenever pedestrians, dogs, and other pods draw too close, it alternately slows, stops, or accelerates, depending on whatever algorithmic rules it silently consults. The ride lasts no more than a few minutes and is pleasantly uneventful, but by the end she’s resolved to use the city’s “mobility map” to hail one of its electric taxis after her meeting — after all, Milton Keynes had been designed for cars….
Are these competing visions for the future of mobility, or two sides of the same coin? Despite the differences in locales and autonomous pods versus Tesla S sedans, the similarities are more compelling: the smart phone interface; the multi-modal system; the algorithmic “decision engine” and “mobility map,” etc. What sets these scenarios apart from the four offered in “Reprogramming Mobility” is that they are real — or would very much like to be.
The pair occupy a middle ground between the present reality of such startups as Uber and Lyft on one side and the proximate future of Google’s autonomous cars. In comparing and contrasting their inspirations, visions, models, and implementations, we can begin to tease out the assumptions buried in their premises and address the tensions between their multiple missions. Is Shift (which is scheduled to launch this month) designed to convince Las Vegas residents to give up their cars, or to boost the value of Hsieh’s properties by making it easier for suburbanites to navigate downtown? Are Milton Keynes’ pods an experiment in sustainable transportation or a stealth effort to build a domestic autonomous car industry? The answer in both cases, of course, is both.
They also raise some of the more pressing questions facing elected officials, planners, entrepreneurs, and citizens everywhere. Is connected mobility best provisioned as a public or private good? (And what role does government have to play if it’s the latter?) Is transit information more valuable than transit itself? If so, are cities better served by linking existing modes in new combinations, or by introducing new vehicle types designed to mitigate the car’s shortcomings? Will these networks disrupt current patterns of land use, or be deployed to uphold the status quo?
Interestingly, the projects in question differ on these points more often than they agree, which is to be expected when one is a self-consciously disruptive startup in the desert and the other an ambitious public-private partnership with the support of both the U.K. government and its domestic auto industry. The remainder of this essay will compare Las Vegas and Milton Keynes in key areas — the aims of each project, the histories of each city, and the respective roles of technology and governance — before offering a few guesses as to which project may prove more influential in the long(er) run.
The Downtown Project(s): Shift and LUTZ Pathfinder
When Tony Hsieh launched the Las Vegas Downtown Project in late 2011, he announced his intention to invest $200 million in real estate, $50 million in start-ups, $50 million in local businesses, and $50 million in schools. He also planned to move Zappos from its campus in suburban Henderson to a new headquarters downtown in the former Las Vegas City Hall, seeding the landscape with its 1,500 employees. In the meantime, he and his deputies got to work terraforming the area into a creative class company town replete with restaurants, bars, co-working spaces, and a “Container Park” guarded by a 40-foot-long metal praying mantis spitting fire from its antennae.
Despite Hsieh’s best efforts at social engineering, the majority of Zappos employees still commute by car from the suburbs. This doesn’t fit with Hsieh’s image of downtown, which is based on what he calls the “three Cs:” collisions, co-learning, and connectedness. Basing his theory on a close reading of Harvard economist and Triumph of the City author Edward Glaeser, Hsieh believes increasing the density of encounters will in turn accelerate the diffusion of good will and good ideas, making downtown more attractive to talented individuals in the far-flung corners of Las Vegas and beyond. In light of recent layoffs, resignations, and rumors widespread disarray, implementation of these ideas may be a different matter. One thing holding people back is the costs — real and psychological — of movement to and within downtown. “No one knows what people would do if those costs didn’t matter,” says Shift’s co-founder and CEO Zach Ware. The assumption is that they would do more of it, boosting the value of Hsieh’s investments.
Announced in March 2013, its original code-name, “Project 100,” referred to the quantity of each vehicle the membership service intended to offer. The headline-grabbing centerpiece was 100 Tesla S sedans — the electric carmaker’s largest single order at the time — coupled with shuttle buses and bike-sharing. An app and underlying algorithms yet to be written would not only steer members to the nearest share station, but also assign which mode to use (to prevent them from hogging all the Teslas). Within a year, the startup had added Daimler Smart cars and Chevrolet Volts to its fleet, as its mission crept from providing an amenity for downtown residents toward aiming to replace the car of any commuter within the entire 500-square-mile Las Vegas Valley.
But that wasn’t the limit of its ambitions. In May 2014, the company raised $10 million in venture capital led by Tony Hsieh, who had previously been its sole investor. Before it had even launched, Shift was being built to scale — first within Las Vegas, and then to cities beyond. “By the end of the year we will not only replace your car, but we’ll deliver so much more than your car could ever deliver,” Ware wrote in a blog post. And we’ll be far more affordable than you might think.”
While Shift was scheming to replace your car, a consortium in the U.K. had set out to reinvent it. In November 2013, the city of Milton Keynes announced it would host a five-year project to release 100 autonomous pods on its pedestrian paths as an experiment in point-to-point public transportation. Dubbed the LUTZ (Low-carbon Urban Transport Zone) Pathfinder program, the specifications called for a vehicle carrying two passengers at maximum speeds of 12 mph without the benefit of any tracks or embedded guidance systems, meaning they would be required to identify and respond to almost anything in their path – including pedestrians, pets, and other pods. Whereas Shift was content to write an app, Milton Keynes and its partners would create both a new vehicle type and the operating system to run it from nearly scratch.
Those partners included the Transport Systems Catapult (TSC), one of seven industry-specific technology incubators around Britain bringing university researchers together with private industry and investor networks to spawn new technologies, companies, and especially jobs. (Signaling the importance of the Pathfinder project, TSC moved its headquarters to Milton Keynes simultaneously with its announcement.) The larger Catapult network is in turn an initiative of the Technology Strategy Board, a government advisory group tasked with channeling the flow of knowledge from Britain’s research universities to the private sector, and then transforming it into new businesses and products. While Shift is a millionaire’s inspired gamble, the initial £50 million in public funds for Pathfinder came down from the very top of U.K. leadership.
Representing the universities in this collaboration is Oxford University’s Mobile Robotics Group, led by Professor Paul Newman. Newman’s team is responsible for the pod’s telemety and autonomy, including its sensor array and operating system. They demonstrated their ability to design both with last year’s RobotCar U.K., a self-driving Nissan Leaf equipped with £5,000 worth of lasers, cameras, and controllers — roughly a tenth of what Google’s test cars cost.
While Oxford’s researchers handle the software, Britain’s automakers have been tasked with building the pod itself. The Automotive Council UK was established in 2009 as a public-private effort to guide and strengthen the industry in critical areas, including “intelligent mobility.” In May, the Council chose RDM Group — a boutique automotive supplier and one of its members — from a public competition to design and manufacture the pods using components sourced almost exclusively from the U.K.
The schedule calls for three to be delivered in January 2015. The first year will be spent testing the autonomous systems on designated paths; assuming they are successful, the next year will be spent refining the pods and scaling up to 100 on the paths of Milton Keynes by 2017, available to anyone with a smartphone willing to pay £2 for trips within the city’s CBD.
The Machine in the Garden City
The choice of Milton Keynes as Britain’s testbed for post-car mobility resonates with ironic destin; as Geoff Snelson, the city’s director of strategy, reluctantly admits, the city “was designed on the assumption that the future would forever belong to the automobile.”
One of the last of Britain’s “new towns” planned under the New Towns Act 1946, Milton Keynes was intended to be the largest, with a target population of 250,000. Borrowing its name from an existing village, the new city was established on January 23, 1967, when responsibility for its creation was passed from local elected officials to the Milton Keynes Development Corporation, which was charged with its planning and execution. The principal consultants appointed by the corporation — led by architects Richard Llewellyn-Davies, Walter Bor and John de Monchaux — alternately looked to the past and to the future for inspiration in drafting a master plan.
In one respect, the Development Corporation’s plans harkened back to the “garden city” movement of seventy years earlier in that they called for a low-slung, low-density forested city requiring millions of trees to be planted on the site. But the planners were heavily influenced by the Californian urban theorist Melvin Webber, who argued that freeways and telecommunications augured a high-speed, random-access metropolis enabling what he called “community without propinquity.”
The application of Webber’s ideas in Milton Keynes produced several distinctive features, the most notable of which was a devolved grid of many local centers arrayed around a central shopping district. They were connected by a high-speed road network segregated from cyclists and pedestrians, who were relegated to a network of paths dubbed “Redways.” The combination “makes public transportation very difficult,” says Snelson, and in fact, it was always meant to. The master plan advanced by Llewellyn-Davies was aimed at defeating a competing proposal for high-density transit-oriented development around a series of monorail stops.
Despite — or more likely because of — its dependence on the automobile, Milton Keynes has achieved its goal of 250,000 residents, quadrupling in population in less than fifty years. Expansion plans ratified in 2013 call for 38,000 new homes to be built by 2026, bringing with them a projected influx of 50,000 new residents and a 57% increase in journeys by car at peak travel times compared to 2001. Although the original master plan stressed decentralization, central Milton Keynes has emerged as a regional employment center attracting 35,000 daily commuters, mostly by car. The intentional void at the city’s center has become “a dark star,” in Snelson’s words — “a center of gravity drawing in more and more people.”
Combined with stubbornly high petrol prices and broader concerns about climate change and carbon emissions, the city is facing what Webber once defined (with Horst Rittel) as a “wicked problem” — a tangle of complex interdependencies resisting a straight-forward solution. From Milton Keynes’ perspective, the aims of the LUTZ Pathfinder project’s aims are two-fold — to decrease its dependence on fossil fuels, and to implement the decades-old dream of personal rapid transit (PRT) as a new scale of transport between the car and mass transit, one capable of operating point-to-point in a low-density environment where the roads are largely off-limits.
“We believe there’s a place in the future for urban mass transit systems that are small, autonomous, agile vehicles capable of operating in pedestrian space,” says John Miles, chair of the Automotive Council’s intelligent mobility sub-group and a resident of Milton Keynes. He envisions a scenario in which public spaces — whether in low density suburbs like his or in megacities such as Tokyo — are intensified through the use of such vehicles, leading more cities (and perhaps his own) to ban cars from their centers. To alleviate traffic on the streets, cities will move it onto the sidewalks.
• • •
Downtown Las Vegas was already dying by the time Milton Keynes was born. The city had sprung to life in 1905 with the auction of 110 acres of land around the junction of two railroads, producing a classic grid. Nevada’s legalization of gambling in 1931 led to the licensing of the state’s first casinos along Fremont Street, but the city’s center of gravity irrevocably tilted away from downtown with the opening of the Flamingo Hotel in 1947 on unincorporated land south of Las Vegas, paving the way for what is now the Strip. The opening of the Boulevard Mall east of the Strip in 1968 triggered what eventually became an exodus of retailers from downtown.
While the population of Las Vegas surged from 125,787 in 1970 to 606,762 in 2013, its suburbs grew faster. North Las Vegas, Henderson, and unincorporated Clark County were collectively equal to the city in population forty years ago; today they are twice its size. When Tony Hsieh decided to relocate Zappos from San Francisco to Las Vegas in 2004, he simply followed the rooftops to an office park adjacent to I-215. Before he arrived, a succession of Las Vegas mayors had unsuccessfully pursued downtown’s revival.
The Fremont Street casino corridor was pedestrianized in 1994 and enclosed by an LED canopy, creating the “Fremont Street Experience,” which stabilized downtown tourism but did little to revive blocks further east. A decade later, mayor (and former mafia lawyer) Oscar Goodman pushed through the redevelopment of several parcels west of downtown into an exhibition center, medical research center, and even a Frank Gehry-designed Cleveland Clinic complex in a faint echo of the “Bilbao Effect,” all to virtually no effect.
It wasn’t until 2010, near the nadir of the subprime mortgage-triggered financial crisis and housing price collapse, that Hsieh considered moving Zappos headquarters from the suburbs. By then, the east side of downtown (bisected by Las Vegas Blvd.) was marred by decrepit motels and vacant lots interspersed among locally-owned businesses. The median household income of the 89101 ZIP code (which includes downtown) was $23,166 in 2010 — barely half the state average.
“There weren’t any people walking around,” Michael Cornthwaite told the Las Vegas Review-Journal last year. “You would walk down the street during the day and scary people, just homeless people or whatever, would probably outnumber the average person 30-to-1. At night it would probably be 50-to-1.” Cornthwaite’s bar near Fremont Street, the Downtown Cocktail Room, was the model and early headquarters for Hsieh’s vision of a walkable downtown in the desert packed with lifestyle amenities. Over the next few years, Hsieh would invest heavily to realize it, seeding the landscape not just with bars and restaurants, but also schools and medical clinics. But the “scary” locals Cornthwaite described were less welcoming.
Zappos employees resenting the end of their short suburban commutes soon complained to the Las Vegas Sun about the “serious safety concerns” posed by homeless individuals along the four-block walk from downtown parking garages to the company’s temporary offices. The company responded swiftly, hiring additional security and even starting a shuttle bus between the two, despite the short distance. After the company’s City Hall headquarters opened, it became possible for employees to never set foot on the street at all. Talk of encouraging employees to move downtown was quietly discarded in favor of stimulating “collisions.” To that end, in 2013, Shift was born.
The project’s original goal was similar to Milton Keynes’: to increase pedestrian use and street life intensity by collapsing distances downtown — in both cases, roughly a mile. While Milton Keynes’ dearth of density was intentional, downtown Las Vegas suffered as its grid decayed into vacant blocks. Shift would fix this by solving what its founders referred to as “the last-mile problem,” providing a system for easily traversing downtown to residents and commuters alike, summoning bicycles, buggies, shuttles and the occasional Tesla with the touch of an app.
But by early 2014, Shift’s mission was expanding. Rather than limit itself to movement within downtown, the company began to rethink accessibility to the core from the fringe, imagining a hub-and-spoke model encompassing metropolitan Vegas. “How can we incorporate the inner ring suburbs into the city?” Shift’s business operation lead, Josh Westerhold, rhetorically asked at the time. “That’s a nut no one has cracked.” In conversations, he described a system in which suburban members drove (shared) Chevy Volts or Smart cars from their homes to denser nodes where bike-sharing and other modes were available. It was an implicit rebuke to Webber’s notion of community-without-propinquity, one made explicit in Ware’s May 2014 announcement of new funding.
“Our aspirations are large but we see the path clearly,” Ware wrote on the company’s blog. “We will enable cities to develop themselves differently. No longer will you necessarily need to live in the middle of an active urban center to experience it as you would if you did. If we can equalize the time it takes for you to get to a place you care about from your home a mile or two away with the time it would take for you to walk there, imagine how a city could change. Imagine how many more people could live ‘in the heart of the action’ if the pressure on centralized real estate were lessened.”
Imagine erasing the time/cost equations defined forty years ago by the car and the suburbia it spawned; now imagine writing new ones favoring your downtown real estate investments instead. Not only would Shift redefine accessibility within Las Vegas in its own image, but it could also identify and invest in future hubs of dense local mobility. The company would hardly be alone in thinking this way; Google executives have privately conceded that the biggest financial opportunities surrounding autonomous cars will stem from changes in land use patterns — changes it will have the data and the cash to capitalize on, should it choose to. Shift is already ahead of the curve.
A common thread running between both projects is the emphasis on software, information, and intellectual property. Especially in the case of Shift, which is simply melding bike-sharing, car-sharing, and other vehicles into a single service, its value proposition is built less on the type of transportation on offer than its ability to manage the whereabouts, status, and availability of each vehicle in real time, using that information to deliver an attractively seamless customer experience. This is true of LUTZ Pathfinder as well — despite the attention given to the pod’s design and its onboard systems, the project’s deliverables include an app that can dynamically provision the pods’ usage to break even at a price of £2 per ride.
When Shift’s order for a hundred Tesla S sedans was announced, a number of observers questioned why Hsieh was effectively paying retail — $62,400 for the basic model — despite the his volume purchase. Instead of a discount, Hsieh and Ware bargained for an unprecedented degree of telemetry data for a car-sharing service, seeking to maximize such features as keyless entry, driver and passenger seat sensors, environmental sensors, and of course, its wireless modem, to track each vehicle’s speed, location, occupants, and battery status. While Shift has emphasized the sustainability aspects of using all-electric vehicles (with the exception of the hybrid Volt), the choice of each mode ultimately had more to do with information, including the fact that each type — even the bicycles — is equipped with GPS. This is essential to Shift’s success in two respects.
First, as a membership service ranging in price from an estimated $25 to $450 per month, Shift’s revenues will be capped, while usage is theoretically unlimited. This places a premium on Shift’s ability to shape demand and manage assets. For example, bike-sharing programs in New York, London, and Paris have all struggled with redistribution, while Barcelona’s reportedly loses 17 million euros a year doing the same. Although Shift expects to post losses at the outset, it cannot afford to write them off indefinitely (as Barcelona does) as a public good. One method of coping with pockets of high and low demand is to steer members to the nearest/easiest/cheapest option at hand, courtesy of its smartphone app. Rather than redistribute vehicles after the fact, it can attempt to regulate their usage beforehand.
To that end, Shift is building what is known as an “agent-based model” — essentially a stylized game of SimCity populated by algorithms instead of people — capable of simulating members’ travel patterns and projecting where they might go. What sets ABMs apart from traditional models is their bottom-up approach; complex behaviors emerge from the interactions of relatively simple actors. (Until recently, their complexity and computational intensity had largely restricted their use in transportation planning.)
In this way, the system might organically plan its own expansion. “We’ve become a transportation planner in some ways,” Westerhold explains, “but we’re trying to do it in a way that’s real-time and flexible as opposed to a fixed bus line or train route.”
Once again, Shift is not alone in this. In Boston, a startup named Bridj has begun a “pop-up bus service,” using chartered buses to ferry commuters for $6 per ride (compared to a city bus fare of $1.50), using data gleaned from Google, Facebook, Foursquare, Twitter, municipal records and the U.S. Census Bureau to algorithmically calculate profitable routes not currently served by the city. In September, the startup raised $4 million from local investors and hired former Chicago and Washington D.C. Transportation chief Gabe Klein as its COO. Uber has also explored agent-based simulations to model the optimal behavior of drivers within a given city radius. Unsurprisingly, it found that “drivers with access to intelligent, central dispatching earn 25-50% more than drivers who need to drive around looking for a passenger,” hence the need for Uber.
But what sets Shift apart from such startups as Bridj is what Ware calls its “decision engine” — a software layer between the model and the app that crunches the optimal path (for members and the company alike) from A to B. It’s a real-time operating system of potentially staggering complexity, and Shift was originally in talks with two companies — including an offshoot of McLaren’s Formula One racing team — before deciding to build it in house. Given the complexity of the system, however, it’s an open question whether they can.
This hasn’t deterred their counterparts in Milton Keynes from dreaming of the same engine — what Snelson calls a “city mobility map.” “It would give you a live, up-to-the-minute maps of where all the traffic is,” he says, “and build the fastest route through the city, of which there would be thousands of permutations.”
But the core of the LUTZ Pathfinder program is, of course, the pod — its design, autonomous systems, service delivery, and supply chain represent a potentially massive new industry, with a majority of the IP held by British companies and universities. While program director Neil Fulton downplays this mandate, RDM Group CEO David Keene asserts his intention to eventually not just build the pods at its UK manufacturing facilities, but also its own autonomous systems. (The group already boasts its own telematics arm.) “There is no doubt that somebody working in the U.K. is going to do this,” he says.
Given Google’s scale, scope, and first-mover advantage, challenging the search giant in the area of autonomous systems (whether for cars or pods) will require either significant advances in technology or a remarkable decrease in cost… or preferably both. Oxford’s Mobile Robotics Group eschews Google’s expensive LIDAR sensors in favor of camera- and laser-based visual recognition, matching live video imagery with a database of objects to understand where it is, where to go, and what to avoid. Oxford’s RobotCar faces the same limitation as Google’s in that it can only operate across previously mapped terrain, but this should be a non-issue for pod deployment within central Milton Keynes. The larger challenge will be upgrading the RobotCar’s system from “restricted full autonomy” — its propensity to hand control of the car back to the driver when faced with unfamiliar territory or ambiguous signals — to full autonomy, which is necessary in a pod lacking manual steering.
The great advantage Oxford — and by extension, the U.K. autonomous car industry — has over Google is the costs of its system, which is nearly an order of magnitude less than Google’s prototypes, and Newman has set a goal of driving down costs down to $150 per vehicle within fifteen years. Similar technology developed by the Israeli firm Mobileye — whose driver assist software is already installed in 3.3 million vehicles — has inspired breathless reports of a “driverless car utopia” and a 73% increase in the value of its stock a month after its July listing on the NASDAQ. RBC Capital Markets forecasts that 80% of cars in Europe and 55% in North America will be equipped with camera-based assistance features by 2020 — excellent news for U.K. automotive manufacturers and suppliers.
To tap this market, in July the U.K. Department of Transport approved the use of autonomous vehicles on public roads beginning in 2015. In tandem, the Technology Strategy Board announced it would invest as much as £10 million in their development, selecting as many as three towns or cities to start trials in January. While separate from the LUTZ Pathfinder program, “I think there will be some similarities in the data generated from each program,” says Fulton. “But the focus for Milton Keynes is not only seeing how the pods perform, but also winning social acceptance for vehicles on the pavement.”
Fulton’s comments underscore the greatest challenge facing the program: users’ hesitation and resistance to not one, but two technological paradigms — autonomous cars and personal rapid transit. Despite the seeming inevitability of the former — the product of breathless hype, persistent lobbying (Google outspent ExxonMobil and all but one company in U.S. Congressional lobbying in 2012) , and the automakers’ bold timelines — less than half of Americans say they would want to ride in one. (And according to a separate study, more than half would refuse to pay extra for autonomous features. )
Compounding the problem is the historical legacy of PRT, a onetime transportation-of-the-future that galvanized significant top-down government investments in Europe and Japan, attracted interest from transportation companies such as Boeing, and relied on algorithmic decision engines to balance supply with demand on point-to-point journeys. The abandonment of Paris’ Aramis system in 1987 (after seventeen years of testing) was the subject of Bruno Latour’s book “Aramis or the Love of Technology, ” which concludes with the narrator describing the system’s “fragility” before deducing why it failed. “The demand for it is undefined, the feasibility of the vehicle is uncertain, its costs are variable, its operating conditions are chancy, its political support — like all political support — is inconsistent,” he summarized. “It innovates in all respects at once — motor, casing, tracks, chips, site, hyperfrequencies, doors, signal systems, passenger behavior.”
Too many technologies made Aramis weak, Latour decided — too weak to succeed without actors committed to seeing the project through. How committed are Milton Keynes’ constellation of public and private actors? And how much technology is too much?
While Milton Keynes and the LUTZ Pathfinder team navigate pitfalls endemic to technocratic projects, Shift faces a different dilemma: how much to disrupt? The default mode for ride-sharing services is “everything,” thanks to the runaway success of Uber, which has lobbied relentlessly and successfully to smash what it calls “the Big Taxi cartel” and bash in regulatory doors preventing it from operating. To persuade reluctant governments, in August the company hired former Obama presidential campaign manager David Plouffe as its policy and strategy chief. Even when the service is outright banned — as it was in Germany in September by a temporary injunction imposed by a Frankfurt court — it continues to operate anyway, gambling that given enough time and enough customers, it can defeat any resistance. Except in Las Vegas.
Uber met its match in 2010 when the Nevada Transportation Authority (NTA) classified it as a livery service, requiring passengers to book rides at least an hour before pickup, at an average price of $46 — neither of which are conducive to its business model. The company’s appeals to sidestep Nevada law were rebuffed, thanks in large part to pressure from the Livery Operators Association of Las Vegas (LOA), the Big Taxi cartel ruling the Strip. Uber has publicly complained about being frozen out of the multi-hundred-million-dollar market ever since; regulators remain unyielding. [On October 24, Uber began offering its UberX ride-sharing service in Vegas despite a lack of regulatory approval. A hearing has been set for November 7; until then, Uber continues to operate illegally, electing to pay fines while Taxicab Authority officers issue tickets and impound vehicles.]
Shift has had a front-row seat for this passion play, which has played out in cities across American and around the world as self-styled disruptors such as Uber and Lyft have spent their war chests of venture capital on lobbying. Although Shift’s ultimate ambition is to expand beyond Las Vegas, it is also inextricably entwined with the Downtown Project, and thus in Vegas and Nevada politics — scorched earth campaigns aren’t an option. How do you make the priorities of a public agency mesh with a private service conceived as a sweetener for those living or working downtown — especially when that agency has its own plans to accomplish the same goals?
That would be the Regional Transportation Commission of Southern Nevada (RTC), the entity responsible for planning and funding the metro area’s buses, roads, and traffic management. The RTC carried nearly 60 million passengers on 38 fixed bus routes in 2013, including several BRT lanes terminating downtown. In recent years, the RTC has created 364 miles of bicycle lanes, opened a 2,000 square foot Bike Center with free indoor parking, showers and lockers at its downtown Bonneville Transit Center, and added a network of bright green lanes running through downtown as a forerunner to bike-sharing stations along those routes.
Bike-sharing in particular has proven successful in cities such as Washington D.C. as a means for expanding the catchment area of transit. The 2013 Capital Bikeshare Member Survey Report found that 54% of members had used them in tandem with trains, and 23% with buses — which is why Ware and his Downtown Project colleagues once talked with the RTC about collaborating on Las Vegas’ own public bike-sharing system, which is on track to launch in early 2015.
By then, Shift’s own stations will be up and running on private land controlled by the Downtown Project, using bikes provided by Social Bicycles. (The RTC has not yet selected a system.) While RTC officials are optimistic about integrating the two — perhaps with “super-user” privileges for Shift’s members — Ware and his team are far more circumspect. “The best case scenario would be that SoBi bids on it and we find some interoperability,” says Jude Stanion, who oversees the bike-sharing component. “The key thing is to not get tied to their timelines.”
Stanton’s wariness underscores the fact that project doesn’t answer to the RTC. Before it can launch, however, it must file an application with the NTA. Neither bike-sharing nor Tesla rentals should raise any alarms — Zipcar is perfectly legal in the state. It’s only when you stick your own driver behind the wheel that things get a little dicey — just ask Uber.
Ware and his colleagues have taken great pains to avoid a similar fate. “I don’t necessarily believe can happen overnight, and I don’t expect it to,” he said in May. “I don’t believe in protectionist laws, but I do believe there are ways to do things that don’t involve telling a regulator you’re going to war with them.” Shift representatives have met repeatedly with NTA and RTC officials, both of which will publicly attest to the project’s good intentions. “I think it’s more productive to spend an hour with them now than to receive a cease-and-desist order a year from now,” Ware said.
Despite their apparent deference, the “D” word — disruption — keeps creeping into Shift conversations. “It is a very fine line between reading the statutes and finding a way to fit, versus also toeing that line to demonstrate there are other options that are going to be good for the community,” says J.J. Todd, Shift legal counsel. “We can make transportation better, and it may not fit with existing regulations in the state, but we’re going to provide a benefit. ‘Where do we push and how much do we push it?’ is a question I ask myself every day.”
• • •
In September, The Atlantic’s urban affairs Website, CityLab, asked why U.S. cities “still haven’t figured out how to deal with the most important, most obvious innovation in transportation: the smartphone. ” Transportation officials had failed to take the lead in creating a transit app enabling riders to plan, book, and pay for trips combining any number of modes. While Helsinki is charging ahead on its plans to create exactly that, even New York City — which has the largest taxi fleet and transit ridership of any city in America — has surrendered the initiative to Google and Uber summoning cars, which today include drivers and tomorrow may not. Any private networked transportation system (like Shift) is by definition incomplete, and risks balkanizing ridership across public and private services. And any system (public or private) responding to issues of congestion by adding more vehicles — especially an entirely new class of autonomous PRT — is perhaps missing a greater opportunity, if not the point.
“Too often in transportation we attempt to address the symptom of a malady instead of the infection itself,” says John Tolva, former CTO of the city of Chicago and currently CEO of the engineering firm PositivEnergy Practice. “When we look to smart, driverless cars we think we’re addressing the problems of congestion and road safety. But the problem is too many vehicles on the road; traffic backups and collisions are byproducts. Looking at population growth alone in urban areas, it’s clear that a future where we’re whisked about in hermetic cocoons means more cars on streets.”
Or will it? Lawrence Burns, director of the Earth Institute’s Program on Sustainable Mobility at Columbia University, estimates a shared fleet of 9,000 autonomous vehicles could replace New York’s 13,000 yellow cabs at a cost of $1 per trip in Manhattan versus a taxi’s $7.80, with wait times of less than a minute. Buttressing Burns’ findings is an agent-based model created by the University of Texas’ Kara M. Kockelman unleashing shared autonomous cars in Austin . She found that substituting just 5% of weekday trips with the vehicles in question would replace roughly 20,000 private vehicles with 1,700 shared ones.
Buzzcar CEO and Zipcar founder Robin Chase has described an autonomous-driven world as “heaven or hell, ” heaven being the optimistic projections described above, and hell reserved for “zero-occupancy vehicles” circling the block endlessly while their owners run errands. Will LUTZ Pathfinder’s best intentions pave the road to hell? Does Shift point the way to heaven from the purgatory of private car ownership amidst endless urban sprawl? Considering neither has even launched — Shift only began soliciting beta members in mid-September — the answers remain to be seen.
Both projects would like to be a model for future urban mobility, but the reality for most cities will be more complex. Helsinki excepted, perhaps, no city can hope to enclose every mode into a single mobility offering. Instead, Tolva insists, “the solution is smarter transportation systems: the sum of the actual vehicles and rolling stock, the roads and tracks they travel, and most importantly the people who use them. Buses that can ask a traffic light to stay green a bit longer; commuters who know exactly their transportation options in real-time; cities full of privately-owned, networked jitney cabs; unified fare collection across all modes; street design that actually invites mixed use — these are the systemic ways to scale smart transportation, building on existing infrastructure, adding intelligence strategically, and empowering people to get around more efficiently.”
This is a messier but maybe more achievable vision, one that neither brushes the public sector aside for being hopelessly sclerotic, nor seeks to solve a dependency on one mode with a checkered past (the car) by simply supplementing it with another (PRT). As an evolving nexus of land use, energy, sustainability, and even inequality, urban transportation is arguably one of the wickedest problems of our time — we need as many answers as we can get.
In Silicon Valley the tight correlation between personal interactions, performance, and innovation is an article of faith, and innovators are building cathedrals reflecting this. Google’s new campus is designed to maximize chance encounters.
Facebook will soon put several thousand of its employees into a single mile-long room. Yahoo notoriously revoked mobile work privileges because, as the chief of human resources explained, “some of the best decisions and insights come from hallway and cafeteria discussions.” And Samsung recently unveiled plans for a new U.S. headquarters, designed in stark contrast to its traditionally hierarchical culture. Vast outdoor areas sandwiched between floors will lure workers into public spaces, where Samsung’s executives hope that engineers and salespeople will actually mingle. “The most creative ideas aren’t going to come while sitting in front of your monitor,” says Scott Birnbaum, a vice president of Samsung Semiconductor. The new building “is really designed to spark not just collaboration but that innovation you see when people collide.”
Faith is nice, but do executives have proof that this works? Social space like Samsung’s could be just another in a long line of fads and broken promises in workspace design: The “action office” becomes the cubicle. Cubicles are torn down for open plans, which leave introverts pining for private space. Quads. Hotel space. Couches. Rotating desk assignments. Standing desks. Treadmill desks. No desks. With apologies to Mark Twain, there’s no such thing as a new office design. We just take old ideas, put them into a kind of kaleidoscope, and turn.
How do we know whether any of these approaches is effective? The key metric companies use to measure space—cost per square foot—is focused on efficiency. Few companies measure whether a space’s design helps or hurts performance, but they should. They have the means. The same sensors, activity trackers, smartphones, and social networks that they eagerly foist on customers to reveal their habits and behavior can be turned inward, on employees in their work environments, to learn whether it’s true that getting engineers and salespeople talking actually works.
We’ve already begun to collect this kind of performance data using a variety of tools, from simple network analytics to sociometric badges that capture interaction, communication, and location information. After deploying thousands of badges in workplaces ranging from pharmaceuticals, finance, and software companies to hospitals, we’ve begun to unlock the secrets of good office design in terms of density, proximity of people, and social nature. We’ve learned, for example, that face-to-face interactions are by far the most important activity in an office. Birnbaum is on to something when he talks about getting employees to “collide,” because our data suggest that creating collisions—chance encounters and unplanned interactions between knowledge workers, both inside and outside the organization—improves performance.
We’ve also learned that spaces can even be designed to produce specific performance outcomes—productivity in one space, say, and increased innovation in another, or both in the same space but at different times. By combining the emerging data with organizational metrics such as total sales or number of new-product launches, we can demonstrate a workspace’s effect on the bottom line and then engineer the space to improve it. This will lead to profound changes in how we build our future workspaces. Here are a few:
Recognize office space as not just an amortized asset but a strategic tool for growth. The consulting and design firm Strategy Plus estimates that office utilization peaks at 42% on any given day. By that logic, the best way to manage cost per square foot is to remove “wasted” square feet. But the data we’re generating reveal that investments in re-engineering space for interactions over efficiency can increase sales or new-product launches.
Design offices to reflect how 21st-century digital work actually happens. The buildings we go to every day haven’t changed as much as have the tools we use to get work done. Merging digital communication patterns with physical space can increase the probability of interactions that lead to innovation and productivity.
Re-engineer offices to weave a building, a collection of buildings, or a variety of workspaces into the urban fabric. The office of the future will most likely include highly networked, shared, multipurpose spaces that redefine boundaries between companies and improve everyone’s performance.
Getting there won’t be easy. It will require collecting much more data to inform new design and management principles while engaging urban planners and municipal governments. It will also transform HR, IT, and facilities management from support functions to facilitators. But if companies can change their spaces to reflect how people work, performance improvement will follow. Don’t take that on faith. There are data to prove it.
Strategic Coffee Machines
Jon Fredrik Baksaas, the CEO of the Norwegian telecommunications company Telenor, credits the design of the company’s Oslo headquarters with helping it shift from a state-run monopoly to a competitive multinational carrier with 150 million subscribers. That design, he says, improved communication, accelerated decision making, and even created what he calls “an attacking mind-set.” It was ahead of its time in 2003, when it incorporated “hot desking” (no assigned seats) and spaces that could easily be reconfigured for different tasks and evolving teams.
The design features that make the space effective resulted from a profound shift in mind-set: Baksaas thinks of the offices not as real estate but as a communication tool. Thus strategy, features, and value become more important than cost and efficiency. You’d choose the e-mail provider with the best collaboration and file-transfer features; you can think of space investments the same way.
The improved communication Telenor achieved in its new space can be explained by Alex “Sandy” Pentland’s April 2012 HBR article, “The New Science of Building Great Teams.” Pentland deployed badges (the same kind now used by Ben Waber’s firm) that track how people talk to one another, who talks with whom, how people move around the office, and where they spend time. (Devices were worn on an opt-in basis, and individual data were anonymous and unavailable to employers.) Pentland identified three key elements of successful communication: exploration (interacting with people in many other social groups), engagement (interacting with people within your social group, in reasonably equal doses), and energy (interacting with more people overall).
Spaces designed to promote these activities increase the likelihood of collisions—and the data repeatedly demonstrate that more collisions create positive outcomes. We don’t measure the content of interactions, but that doesn’t matter. When collisions occur, regardless of their content, improvement typically follows.
Spaces can be designed to favor exploration or engagement or energy to achieve certain outcomes. For example, if a call center wants improved productivity, the space should favor engagement—getting the team to interact more. Higher engagement is typically accomplished not with open social space but with tight, walled-off workstations and adjacent spaces for small-group collaboration and interaction. The team’s break area becomes a crucial collision space. At one call center, the company expanded the break room and gave reps more time to hang out there with colleagues. Paradoxically, productivity shot up after the change. Away from their phones, the reps could circulate knowledge within the group.
Then again, for a company that—like Telenor—is trying to innovate or change, increasing engagement can be detrimental, because it takes time away from crucial exploration with other groups and outsiders. Telenor’s open, public, and flexible space values exploration much more than engagement—it begs employees to meet in the open, where they may bump into unexpected people, and allows them to claim spaces and shape them for brainstorming sessions.
Once a company has identified the pattern it’s trying to achieve and how the pattern affects outcomes, it can begin to calculate the value of workspaces, not just their costs. For example, we deployed sociometric badges with about 50 executives at a pharmaceuticals company who were responsible for nearly $1 billion in annual sales. They wanted to increase sales but didn’t know what behaviors would help. Even if sales went up, they couldn’t necessarily say why.
The data collected over some weeks showed that when a salesperson increased interactions with coworkers on other teams—that is, increased exploration—by 10%, his or her sales also grew by 10%. An elegant correlation.
So the executives asked, How can we change our space to get the sales staff running into colleagues from other departments? In this case, the answer lay with coffee. At the time, the company had roughly one coffee machine for every six employees, and the same people used the same machines every day. The sales force commiserated with itself. Marketing people talked to marketing people.
The company invested several hundred thousand dollars to rip out the coffee stations and build fewer, bigger ones—just one for every 120 employees. It also created a large cafeteria for all employees in place of a much smaller one that few employees had used. In the quarter after the coffee-and-cafeteria switch, sales rose by 20%, or $200 million, quickly justifying the capital investment in the redesign.
Managers might be tempted to simply build big social spaces and expect great results, but it’s not that simple. Companies must have an understanding of what they’re trying to achieve (higher productivity? more creativity?) before changing a space. For example, what worked at the pharma company didn’t work at a large furniture manufacturer that transformed its headquarters from classic cubicles to an open-plan office in which approximately 60% of the workforce had unassigned seating. To test the plan, we deployed badges with 65 sales and marketing team members on a single floor before and after the reconfiguration.
The call center’s goal was to get the members of one team talking to improve productivity. Telenor and the pharma company needed space that encouraged people to collide with other groups. The furniture company’s success required something in between: tight integration across the sales cycle, which meant some exploration and then high engagement among specific groups that needed to communicate more.
The company had hypothesized that fewer desks and a smaller footprint would move people closer together, increasing the likelihood of interaction. Unassigned seating would make interaction between people in different groups more likely. Such interaction did increase, by 17%—but energy levels (the number of individuals’ encounters during the day) dropped by an average of 14%. This suggests that the space simply reshuffled stationary workers rather than creating movement. Someone from marketing might bump into new people because their temporary desks happened to be close by, but none of them were leaving their workstations once they got there. As a result, team communication dropped by 45%. The company saved money on space by reducing the number of fixed workstations, but both revenue and productivity plummeted.
The type of interaction that’s most valuable changes according to goals; what doesn’t change is that interaction in itself is far more valuable than we realize. Sometimes circulating, exploring, engaging, and increasing the number of people’s collisions is more important than individual productivity or creativity. Imagine, for example, that a worker finds a better way to do her job but never tells anyone else doing the same job what she discovered. She has improved her performance but no one else’s. If she takes time out of her day to tell others about what she’s learned, her productivity drops—but she has increased theirs. We’ve shown that in some cases even a 5% drop in personal productivity can have a positive outcome on group performance.
Think of the implications: First, most employee performance reviews are based on individual productivity and don’t take into consideration how group productivity can grow through more interaction. Second, untold amounts of money are invested in tools to increase individual productivity, but the money might be better used to design a workplace that promotes collisions that will make the organization—not individuals—more successful.
Lobbies as Offices
One factor complicates all this: Office buildings are no longer the sole locations for knowledge work. In fact, research from the consulting group Emergent Research suggests that two-thirds of it now happens outside the office. Consequently, no matter how precisely we design office space to create collisions, the design is incomplete if it doesn’t take into account digital work and collaboration that are independent of space and time and for which immediacy is more important.
In some ways the digital workspace enhances in-person collisions with file-sharing and communication tools such as chat, e-mail, and archiving. It can gather more ideas from more places: Research indicates that interactions and engagement decrease as the physical distance between work groups gets bigger, whereas online engagement increases with the number of users. However, data show that digital communication can’t replace face-to-face interaction and may actually be enhanced by it (see the sidebar “The Allen Curve Holds”). Studies with sociometric badges confirm that remote teams don’t perform as well as those in physical proximity.
Furthermore, the upgrade cycles of buildings and technology don’t mesh. Telenor’s state-of-the-art campus, which smartly integrated digital features such as a wireless file-sharing system—was built four years before the iPhone was introduced and before Wi-Fi became ubiquitous. Just a few years later, Telenor’s then-novel proprietary wireless network would have been designed radically differently—if its features weren’t obviated by cloud storage and other developments. All of which is to say that understanding how digital and physical spaces work together is crucial to improving workspace but also an incredibly complicated design challenge.
Workers themselves have been the first to take on this challenge. Just as IT has been consumerized over the past decade, digital-savvy employees are beginning to demand that their spaces adapt to how they work, rather than vice versa. This shift began in earnest in 2005, in San Francisco, London, and Berlin. Technologists, programmers, and creative professionals wanted to work outside confining office environments but also to avoid the isolation of home offices. They chose to work side by side, in what are known as coworking spaces.
Early examples were organic, built by users rather than by design professionals. They were accessible to anyone and sometimes free. People who chose to work in those spaces intentionally sought members from different organizations, thus reproducing the community, social interaction, learning, and energy typical of their online work, while adding the benefit of physical proximity to others. Unwittingly, they were engineering spaces to create the exploration that we know enhances creativity. And it worked. Studying 45 coworking spaces around the world, one of us, Jennifer Magnolfi, discovered that people had chosen them because they believed that their performance would improve more rapidly in such spaces than in an office building or at home. A 2011 Deskmag survey of more than 1,500 coworkers in 52 countries supported her findings:
• 75% reported an increase in productivity since joining their space
• 80% reported an increase in the size of their business network
• 92% reported an increase in the size of their social circle
• 86% reported a decrease in their sense of isolation
• 83% reported that they trusted others in their coworking space
By 2013, according to data from Emergent Research, more than 160,000 people were using several thousand coworking spaces in the United States and Europe. The organization forecasts that in five years more than one million people will be using 12,000 coworking spaces globally. Another survey showed that by 2014, 72% of participants were forecasting an increase in their income.
The growth of coworking and surveys of coworkers demonstrate that given the choice, people will choose workspaces that support their digital style while giving them access to new knowledge, exposing them to different kinds of expertise, and accelerating their learning. Coworking’s success has helped some teams “graduate” out of their coworking spaces. Although the model clearly provides the exploration that independent workers and very small groups need, when teams reach a critical size, usually around 10 members, they need to up their engagement with one another. Private office space and conference rooms become necessary parts of their workday.
This has led to the scaling of coworking space. What started as small spaces for a few independent workers grew into start-up accelerators—groups of start-ups sharing some of the private collaboration space available to them. Eventually large corporations mimicked the idea by creating shared space where their employees could work with partners, researchers, and customers. The first floor of Amazon’s new campus in Seattle is mostly coworking space. Ace Hotel actively markets the lobby of its New York flagship as a workspace. AT&T has created Foundry, a network of research centers in which its engineers work side by side with handpicked start-ups, corporate partners, and third-party developers to bring new products to market faster. Even bankers are doing it: ING Direct built seven cafés (now called Capital One 360 Cafés) where its workers could set up shop and interact with customers who could also use the space for work. Perhaps less surprisingly, and true to form, Airbnb has made one of the conference rooms at its new headquarters bookable (through Airbnb, of course) by anyone in San Francisco, free.
What’s Happening in Vegas
Coworking is succeeding because it successfully integrates good workspace design that enhances exploration with the digital work habits of individuals and small teams. In some cases it’s possible to scale the benefits of coworking—such as high collision rates and accelerated learning—to build an entire neighborhood.
The Downtown Project, in Las Vegas, is an early example of the concept. Tony Hsieh, the CEO of Zappos, is investing $350 million in the area around the company’s new headquarters, which is the former city hall. Hsieh’s goal is to grow the local start-up and entrepreneurial community in a way that will organically attract talent to the area, benefiting both Zappos employees and the neighborhood.
Jennifer Magnolfi participated in the development and analysis of coworking space inside Zappos headquarters and led a local coworking experiment that launched in early 2012 and eventually grew to include nearly 200 stakeholders, among them Zappos employees, area residents, start-ups, independent workers, and others. The spaces were improvised from a network of existing ones: a coffee shop, the courtyard of a Thai restaurant, an old church hall, the lobby of a casino, and an empty corporate apartment.
Early results show that the small, shared nature of the neighborhood fostered mobility that created collisions on a greater scale. Exploration and energy were very high. After six months, data revealed a 42% increase in face-to-face encounters, a 78% increase in participant-generated proposals to solve specific problems, and an 84% increase in the number of new leaders—participants who initiated work and collaboration and developed project scope and objectives. Ten new civic and local community projects were launched—including the Sunday Reset Project, a monthly event to promote healthful living.
Zappos and the Downtown Project have continued experimenting with the area and are using a new metric: “collisionable hours,” or the number of probable interactions per hour per acre. Hsieh’s goal is to reach 100,000 collisionable hours per acre in the neighborhood—about 2.3 per square foot per year.
The Downtown Project is still a controlled experiment. It doesn’t capture the complexity of getting companies and civic entities to cooperate, routinely and continually, while also adapting to inevitable technological change. Nor does it address the complexity of getting a multinational to integrate coworking space when it’s already managing a global office portfolio. (See the sidebar “What About the Global Company?”) But it points to a new model for the corporate campus of the future that weaves together public and private spaces, employees and partners, living and working. Hsieh and others believe that companies designed on this model will be more productive and innovative—as businesses and as communities—and in the long term will gain a strategic advantage over companies that cut off their employees from the exploration that improves performance.
More than a century ago, Frederick Winslow Taylor brought his stopwatch and principles of scientific management to the office, instilling efficiency as the highest calling in what was then a factory for processing paperwork. Today we have the means to measure the performance of modern idea factories. Even these early insights suggest a future in which we must aggressively change the definition of what workspace is, from where work is done to how it’s done, and then design spaces—physical and digital—around that. The office of the past was a literal box of cubicles and desks, meeting rooms and common spaces. In the office of the future, we’ll be thinking and working outside it.
Maybe you know Neal Goldman. Or maybe you know someone who does. A minor celebrity in both Davos and Big Data circles, Goldman sold his first company for $225 million, back when less than a billion dollars was actually worth something. Tonight, I am meeting him for the first time, sharing a train ride to Philadelphia, where I’ll get to hear him pitch his latest company, Relationship Science.
While waiting in the maelstrom of NYC’s Penn Station, I run through what I’ve learned about him: where he went to school, where his sister-in-law works, and how much cash he donated to Rudy Giuliani’s presidential campaign ($6,900). I also go over a mental list of people in his circle—including, crucially, the ones we have in common.
I’ve learned all of this because before I met Neal Goldman, I stalked him, using his own software. So when I finally pick him out of the swarm, I’m able to drop the name of a mutual friend: “Parag Khanna sends his regards,” I say, referring to the foreign-policy wonk and author. Goldman, wearing the tech exec’s standard-issue scruffy beard and horn rims, rocks back on his heels, eyes vaguely searching, trying to put the pieces together. And the fact is, I don’t have a clue whether my old friend Khanna and Goldman are drinking buddies or mortal enemies. I’m about to find out.
Relationship Science—or RelSci—is an online platform built with profiles drawn from the 1 percent. It’s not some free-for-all social network full of selfies and botspam, like Facebook or Twitter. Nor is it LinkedIn, whose metastatic expansion threatens the integrity of the entire system. And unlike net-worth-obsessed virtual clubhouses such as A Small World, RelSci isn’t for swapping houses in Gstaad or getting tips on a fabulous butler in Ibiza. In fact, the point of RelSci has nothing to do with expanding your circle of friends. The point is to use the people you do know to find a pathway to the rich and powerful ones you don’t.
Goldman likes to call RelSci “the Death Star of business development.” The company’s software gives users a simple, graphical view of how members of the Establishment are connected and how those people may be connected to you. The enterprising Machiavellian can then use that map to plot a route to new relationships. And new customers.
RelSci says it already has three million-plus people in its database, but that number is less important than expanding the number and quality of links among them. “We’ve chosen not to be user-generated,” Goldman insists en route to Philly. “Users can fluff anything.” That’s why you don’t join RelSci, you can’t quit, and there are no endorsements. RelSci—not you—decides who’s in and who’s out. If you’re one of the thought leaders, decision makers, or entrepreneurs who matter in RelSci’s world, you might have a profile on its database and never know it; Larry Page, Marc Andreessen, Jeff Bezos, and Tony Hsieh are there whether they want to be or not.
And odds are, you aren’t there: Pay your individual $3,000 annual access fee and you’ll likely find you don’t even rate a spot on RelSci’s list. (For-profit enterprise fees begin at $9,000.) “We’re not a social network,” Goldman explains. “We’ve built a matrix of how the world really works.”
Already, universities and nonprofits are using the system to identify new donors; bankers, lawyers, and headhunters prefer it for burrowing into prospective clients; and investors scour it for insiders who can satisfy due diligence ahead of deals. The model is apparently so enticing that Goldman won hundreds of clients and, the company says, nearly eight figures’ worth of business in 2013, which was RelSci’s first year since coming out of stealth mode. Equally impressive, he raised approximately $90 million from such old school moguls as Henry Kravis, Ron Perelman, and Home Depot co-founder Ken Langone—men whose deal-making prowess is largely a function of their contact lists.
Much of what RelSci is selling is the accuracy and objectivity of its data. RelSci isn’t built from the kinds of self-reported delusions or exaggerations that lie at the core of social nets. Instead, Goldman and his team of several hundred engineers, editors, and data scientists (many based in India) have quietly spent years constructing their network using only publicly verifiable information. This not only requires constantly scraping the Web for updates but also building rich profiles from tens of thousands of databases, ranging from SEC filings to paparazzi photos to tax records. These pieces have in turn been joined to link everyone through past and present employers, board memberships, investments, donations, politics, and even siblings, children, and spouses.
Relying on news reports and databases—rather than the users themselves—has obvious strengths and weaknesses. At its best, RelSci is a fine-grained, fact-checked compendium of the world’s most influential people and the web of affiliations that binds them together. In practice, however, relying on editors and public documents leaves the database riddled with holes, especially in areas outside its core of finance.
RelSci may have the full measure of a man like Ken Langone, but luminaries in Hollywood or Manhattan media circles may have skeletal profiles, if they exist at all. Goldman counters that the database is gaining resolution all the time. He’s betting he can digitally reconstruct the interpersonal links, upload them to the cloud, then leverage Big Data’s ability to connect dots invisible to the naked eye. He sees his software as a tool for mining the value buried in our latent connections. If Big Data is the new oil, Goldman likens RelSci to fracking: “We knew it was there, but we couldn’t tap it. Now we have the technology to bring it to the surface.”
Using RelSci is a bit like using the New York City subway map. When you’ve identified your destination—in my case, one Neal D. Goldman—the software produces a color-coded schematic of the various routes to get there. Each station represents a person, and each line between people defines their relationship. For Goldman, RelSci presents me with 300 choices, all within three degrees of separation. Its proprietary algorithms sort each link into strong, medium, and weak ties; mousing over a name or track reveals the details of our connection.
There is no contact information on RelSci. If I have to ask how to find my friend Khanna to get an introduction to Goldman, then I don’t really know Khanna. This last point is crucial: RelSci doesn’t open any doors. It doesn’t make introductions. It makes clear the connections you might exploit, but leaves the exploitation up to you—which explains why even Goldman’s backers are equally horrified and gleeful about his product. “Most of them told me, ‘I hate it! I love it! I have to have it!’ ” he says.
“What he’s selling here is that we’re all interlinked,” says Langone, who sits on the board. “And damn it, it’s scary! What used to take two or three days of calling around now takes 15 minutes. And all of the information is totally public, so if you have a problem with how I got to you, don’t bitch at me; bitch to the SEC.”
As with any network, RelSci’s utility rises with the breadth and depth of one’s connections. Machers with a vast global web, such as Langone, are much more likely to find a short, strong path to their prey than the poser who lofts a Hail Mary on the basis of a shared alma mater or long-ago internship. The Chinese call it guanxi; we might call it juice (or Klout). And as quickly becomes clear, I have very little of it.
To put the RelSci software through its paces, I decide to use it to find Reid Hoffman, the semi-reclusive LinkedIn co-founder and Greylock partner. The software charts an easy path for me through Mark Gilbreath, the amiable CEO of an office-space startup called LiquidSpace in which Hoffman is an investor. Gilbreath is happy to help, but his emailed introduction is promptly batted away. It doesn’t matter that Hoffman trusts Gilbreath; there’s still no upside in talking to me. So I try to track down Y Combinator’s Paul Graham. Again, RelSci illuminates an easy line, this time through PopTech impresario Andrew Zolli. Alternately amused and aghast by my call, Zolli confirms he knows Graham, but declines to help anyway, as passing me along would draw down his own stock of juice.
“It’s not about who I can introduce you to,” he says, “but who you genuinely know. I think [YouTube comedian] Ze Frank said it best: I think about someone who has 2,000 friends on the Internet the same way I think about people who have 2,000 sexual partners.”
Goldman has come to Philadelphia this morning to address his peers in the information business, those whose databases form the backbone of RelSci. Dressed in his backwoods preppy uniform of a down vest over khakis and a rumpled shirt, he starts by wishing for “a tool that would exponentially increase my ability to sell.” Then he lists the challenges facing professional networkers like himself: “Who should I be talking to? How do I create serendipity?”
At breakfast, our conversation had quickly veered toward serendipity, a current Silicon Valley obsession. And it turned out that Goldman had profited from it once before. He had been a junior investment analyst at Lehman Brothers, killing nights filling spreadsheets, when he decided there must be a better way. In 1998, at age 27, he quit to start Capital IQ, peddling what amounted to an analyst-in-a-box to his former employers. A few years later, he sold the entire company for $225 million to Standard & Poor’s after a routine sales call.
But when it comes to meeting people, Goldman believes that what we call serendipity is merely the random expression of dormant connections all around us. To make the most of those possibilities, networking must become systematized and ultimately productized. “It’s all about the combinatorial possibilities emerging from these unknown but already existing relationships,” says Josh Wolfe, a managing partner at Lux Capital and personal investor in RelSci who’s also a complexity-science maven. “I guarantee you and I probably have five things in common we’re really passionate about.” (One of them, it turns out, is our mutual friend Parag Khanna.) “If I have a tool that helps me discover those things…that’s immensely valuable.”
Talk to Goldman long enough, and it’s clear that for all the hype around “social business,” we’ve barely begun to visualize, much less methodically exploit, the social networks everywhere around us. In one survey, nine in 10 of the executives polled agreed that the strength of customer relationships was essential in hitting revenue targets, but only a quarter bothered to track them, and less than 5 percent pursued them strategically.
If every business is now a relationship business, then of course Goldman hopes that every company will ultimately need Relationship Science. He likes to illustrate that point to prospective customers by taking them on a scavenger hunt through his database. His favorite was the skeptical private equity exec who challenged him to get her kid into a particular private school. Goldman obliged, delivering with one click all the paths between her, her company, and the school’s trustees, as she furiously scribbled them down. Her firm signed on, joining Guggenheim Partners, Jones Lang LaSalle, Perella Weinberg Partners, Nasdaq, Yale, and Duke as just a few of RelSci’s first 300 customers last year.
RelSci suggests the future of networking—and of social networks—will radically reduce the role of luck. If social media today, a decade after Facebook’s founding, presents a warped, cracked reflection of the world around us, RelSci is trying to map that world, especially the professional part of it, with increasing detail, precision, and context. One crucial early step—although possibly an unsettling one—is to collectivize our individual Rolodexes. RelSci already does this: Companies with multiple subscriptions can run searches against all their users’ connections, vastly expanding the likelihood of extracting some value from the network. The more rainmakers whose frontal lobes are uploaded to the cloud, after all, the more paths emerge at that click.
Networking’s next logical step is to move beyond purely public information into richer troves of private data. In one of our conversations, Goldman mused about asking subscribers for permission to passively read their emails in the hope of more accurately gauging the strength of their relationships. And once the algorithm knows you better than you know yourself, the step after that is to let the software quietly mine those “combinatorial possibilities,” engineering serendipity for you—even while you sleep.
As a growing body of research demonstrates, we usually can’t even tell who the most important person in the room is. Not even RelSci has cracked that one yet, but it has come the closest and is still improving. One feature, for example, is a helicopter view of entire companies as the sum of their relationships, and how those relationships lead to people in other companies and industries. Where are their connections strong? Where are they weak? And where are the strategic opportunities 95 percent of corporate executives overlook? If they can’t see them, perhaps RelSci’s algorithms can.
Goldman’s focus on fine-grained “medium data” is what sets RelSci apart from its biggest and most obvious competitor, LinkedIn. With more than 277 million profiles worldwide, LinkedIn is nearly a hundred times RelSci’s size and intends to get bigger. Its long-term goal, according to senior director of data science Jim Baer, is to build the “economic graph,” a totalizing representation of “every opportunity in the world, and every worker, every school, and every entity.”
LinkedIn’s size is RelSci’s opportunity, as expansion drives LinkedIn’s increasingly iffy signal-to-noise ratio even lower. Casual users like me roll their eyes at the random friend requests and misleading endorsements that are hallmarks of the site these days. “None of that shit,” mutters Langone. “I have guys emailing me every third day with LinkedIn requests.” (Users will fluff anything.) Still, not everyone is on LinkedIn. Goldman says that half the names in RelSci’s database have no presence on social media.
Former Thomson Reuters CEO Tom Glocer, also a RelSci investor, believes LinkedIn and other large public gardens will get better at filtering, and that more niche competitors will inevitably spring up. (Bloomberg, for example, has long talked up the idea of a “people index.”) But Glocer is confident RelSci has a three- to five-year lead, thanks to what he sees as the depth and elegance of its database.
Goldman expects that most customers will eventually experience the service as an integrated feature of Salesforce (another investor) or some other CRM system. But that’s thinking small. Imagine adding Google Glass to the picture, with a RelSci-powered facial recognition app matching the wearer’s profile against people in the room, suggesting targets for sucking up to, along with the optimal pathways.
If RelSci’s model of reality has a crippling flaw, it’s in encouraging users to assume that the name on the door is the one with all the juice. Mapping true influence isn’t that simple. Ronald Burt is a sociologist in the University of Chicago’s Booth School of Business who for more than 30 years has studied the phenomenon of “structural holes,” i.e., gaps within organizations. Those who bridge these holes, he has found, produce more ideas, make better decisions, and prosper accordingly. But they aren’t necessarily the ones in charge.
To demonstrate, Burt brandishes a network map of one of the largest pharmaceutical companies in the world. Among its top executives, he explains, a single person is all that ties the group together. The irony is that he’s a relative nobody—several tiers below the CEO and the heirs apparent. Burt’s point is that the boldfaced names are not always the ones we should be chasing. “RelSci doesn’t answer the question of ‘why them?’ ” he says. “It assumes you know.” That assumption, he makes clear, is often wrong.
The combination of ubiquitous sensors, Big Data, and social networks means we’ll soon be able to spot and seal structural holes in something close to real time, in line with Goldman’s dream of fracking our networks’ full potential.
MIT’s Alex “Sandy” Pentland is the leading prophet of relationship science, which he calls “social physics.” By understanding how ideas and information flow, Pentland says, “you can reinvent organizations to make dramatically better decisions.” A few years ago, his team in the Media Lab’s Human Dynamics Laboratory invented “sociometric badges” that record a person’s movements, posture, and conversation patterns. Using these badges, organizations can not only tell who’s working together, where, and for how long, but also how seemingly banal measures like face-to-face conversations correlate to performance and creativity. He also found the natural “charismatic connectors” who straddle Burt’s structural holes.
If Burt and Pentland are correct that the social dynamics of business are becoming subtler and more formalized, the inevitable next step is to try to make them automatic. A pioneer in this area is a Silicon Valley-based startup named Ayasdi, which has developed an entire subfield of mathematics—topological data analysis—that renders any Big Data set as a network derived from hidden patterns. CEO and co-founder Gurjeet Singh calls the emerging surprises “digital serendipity.” The software works just as well examining promising drug compounds or cancer research, but the most interesting uses are in social networks. Just ask Ayasdi’s incubators, the National Science Foundation and DARPA.
Maybe the clearest and most dystopian glimpse of where all of this is headed comes courtesy of Tim Hwang, who breeds artificially intelligent “socialbots” as co-founder and chief scientist of the Orwellian-sounding Pacific Social Architecting Corporation. In 2011, he and his co-founders trained fake Twitter accounts to tweet at several thousand humans, deceiving them into tweeting back at the bots and eventually at one another.
When the experiment ended, they found the bots had effectively wired their human targets together.
Now Hwang is teaching his socialbots to translate online influence into real-world influence. He’s working with clients in public health and politics to put his experiments to work, whether that means fighting disinformation about vaccinations or selling a candidate. In the case of the latter, that entails identifying the most influential supporters in a target’s circle, then nudging them via socialbots to steer their friends on a particular political race or issue.
All that’s holding socialbots back “is that [online] social networks haven’t become important enough to established politicians and policymakers,” says Hwang. “But as an entire generation grows up on these networks, you’re going to see a much broader impact.” After social media comes social engineering.
Goldman is way ahead of Hwang: RelSci’s data scientists are already filling in the next quadrant on its map of the Establishment: Washington lobbyists. Following his speech in Philadelphia, I bump into his principal supplier. Bruce Brownson runs a database called KnowWho, specializing in politicians all the way down to the county level, with histories going all the way back to high school. His data power Facebook’s and Microsoft’s own lobbying campaigns. “We’re all lobbyists now,” he says, “we just won’t admit it. We lobby people while watching our kids on the ball field; we lobby in the PTA.”
Brownson has a point. And as Big Data grows inexorably bigger, we’ll spend less time stumbling in the dark, searching for a connection, and more time actually connecting. But there is an obvious pitfall: An algorithmic arms race is already under way. As Glocer, the ex-Thomson Reuters CEO, puts it, “the danger is that the tools get to be so prevalent, everyone is on the tools.” And that will be the last time anyone talks about forging a genuine human bond.
Even now, using RelSci is not without its perils. It’s tempting to do what I did with Goldman in Penn Station—just take whatever names the database offers and throw them around, hoping to capitalize on any legitimacy they provide. But the software doesn’t know everything. The flip side of using public information is an inherent degree of uncertainty. It can’t tell me if my friend Khanna, who travels in the same Davos circles as Goldman, recently crossed him in a business deal—or dated his ex-wife. (At one point, RelSci’s editors considered adding an Adversaries button, before realizing they could never keep up.)
Feeling a little guilty, I finally confess to Goldman that the first words out of my mouth were a lie. He’s more amused than disappointed, pointing out that I only went astray by passing along Khanna’s non-existent regards. A more truthful way of phrasing it would have been simply, “I think you know my friend Parag.”
And that’s more or less exactly what happens with Lux Capital’s Wolfe a few weeks later: Moments after hanging up, he calls back to tell me excitedly we have Khanna in common. We bask for a moment in a sunbeam of engineered serendipity, but I can’t help thinking: I really wish I’d known that before we talked. From now on, I will.
LAS VEGAS—When your boss is Tony Hsieh, it’s not unusual to wind up in a bar for your last meeting of the day. This is the case one January night in downtown Las Vegas, where the CEO of Zappos is investing his personal $350 million fortune in building an entrepreneurial utopia in his company’s image. Maybe the most ambitious piece of his vision is “Project 100,” the code-name for a private car-, ride-, and bike-sharing service combining aspects of Zipcar, Uber, CitiBike, and RideScout scheduled to launch this summer.
While Hsieh holds court at Atomic Liquors, project leader Zach Ware debates with his team at a nearby table whether to keep a short-range electric car in its lineup, or switch to the larger (and more expensive) Mercedes-Benz Smart car. At stake is the project’s vision: Will it be an amenity for downtown residents and Zappos employees, or should it aim to replace the car of any commuter in the entire 500-square-mile Las Vegas Valley?
In either case, Ware argues for the short-range electric — a light vehicle for zipping around a mile or so downtown — and when his colleagues counter that bike-sharing is better for those distances, he explodes. “I’m never going to fucking ride a bike!” he yells, more in emphasis than anger. After more fruitless back and forth, Ware stalks off to yet another meeting, demanding they reach a decision in his absence.
“Who are we?” asks Josh Westerhold, the company’s head of business operations, over another round of drinks. “Are we a company that changes how people move, or a company that changes how car-ownership works? We may be trying to solve two different things.”
When Hsieh launched the Downtown Project in late 2011, he told anyone who would listen he would invest $200 million in real estate, $50 million in start-ups, $50 million in local businesses, and $50 million in schools. He also planned to move Zappos from its campus in suburban Henderson to a new headquarters downtown in the former City Hall, seeding the new landscape with its 1,500 employees.
In the meantime, he and his deputies got to work terraforming the area into a creative class company town replete with restaurants, bars, co-working spaces, and a “Container Park” guarded by a 40-foot-long praying mantis spitting fire from its antennae. When Zappos finally moved into its new digs last fall, employees found an urban playground waiting for them — and for the dozens of start-ups Hsieh’s money has lured from other cities.
But despite Hsieh’s best efforts at social engineering, the majority of Zappos employees still commute by car from the suburbs. This doesn’t fit with Hsieh’s image of downtown, which is based on what he calls the “three Cs:” collisions, co-learning, and community. Basing his theory on a close reading of Harvard economist and Triumph of the City author Edward Glaeser, Hsieh believes increasing the density of encounters will in turn accelerate the diffusion of good will and good ideas, making downtown more attractive to talented individuals in the far-flung corners of Las Vegas and beyond. One thing holding them back is the costs — real and psychological — of movement to and within downtown.
“No one knows what would people would do if those costs didn’t matter,” says Ware.
Project 100 intends to find out. Its name was derived from the quantity of each vehicle it intended to offer. That is, 100 Tesla S sedans equipped with professional drivers (a la Uber), 100 short-range electric vehicles you drive yourself (e.g. Zipcar or Car2go), 100 bicycles for sharing, and shuttles with 100 stops across the area. At launch, however, the service will be much smaller. No drivers, no shuttles — only a trolley car on an infinite loop and a handful of Teslas rentable by the minute or hour.
Pricing will follow a three-tiered structure with a la carte mobility options costing around $50-$100 a month and all-you-can-move usage pegged at around $500, roughly $250 less than the monthly cost of car ownership including gas and insurance, according to AAA. An app and underlying algorithms yet to be written will not only calculate where the nearest share station is, but also assign which mode to use. The latter is necessary to prevent members from hogging the Teslas; it’s also such a daunting piece of software that, if it works, would give the project a considerable edge over competitors if and when it expands to other cities.
“Nothing has been built on this scale before,” says Ware. That’s not quite true; in Germany, Bremen successfully combined mass transit with car- and bike-sharing stations more than a decade ago through its mobil.punkt program, which today boasts 48 stations offering 180 cars to 7,600 members, taking 2,000 cars off the city’s streets as a result, according to its website. Still, for American cities, Project 100 represents a strong step toward what has variously been called mobility on demand, mobility-as-a-service, and transmobility — a seamless mesh of modes comprising a single, fluid system.
Project 100 aims to control the entire multi-modal experience, from the vehicles operating on Vegas streets to the eventual drivers — who will be full-time “concierges.” Still, it wants to play nice with local agencies, including the Regional Transportation Commission of Southern Nevada (RTC), which is responsible for planning and funding the metro area’s buses, roads, and traffic management. The project’s original vision, after all, was a last-mile solution for commuters arriving from the suburban periphery. How do you make the priorities of a public agency mesh with a private service conceived as a sweetener for those living or working downtown?
One afternoon, I joined Ware, Westerhold, and J.J. Todd, the project’s legal counsel, as they discussed the finer legal points of the trolley service they intended to offer as a sort of beta test. The idea of a downtown “circulator” bus had been floated with the RTC and ultimately had been incorporated into the project. As Ware and Westerhold pondered various aspects — should it be free, and invite-only, and make scheduled stops? — Todd considered the feasibility of each and either dismissed it out of hand or suggested legal tweaks.
One issue was where the trolley would stop; a nest of regulations narrowed their options. Someone suggested using RTC’s own stops, pending permission. But would that require a usage fee, a la Google’s $100,000 deal with San Francisco? No one knew. (And neither does the RTC: “I don’t think we’ve looked into it in detail as a way to capture value,” says David Swallow, RTC director of engineering for capital projects. “But in general, we look at ways to partner with the private sector, given that it doesn’t interfere with our regular routes.”)
At the end of the day, the project doesn’t answer to the RTC. Still, before it can launch, it must file an application with the Nevada Transportation Authority (NTA), which regulates motor transportation. A stand-alone trolley won’t be a problem, says Todd; that will only require approval from the Nevada Department of Motor Vehicles. Neither will bike-sharing nor Tesla rentals — Zipcar is perfectly legal in the state. It’s only when you stick your own driver behind the wheel that things get a little dicey.
Just ask Uber, which attempted to kick the regulatory door down here two years ago. Classified as a livery service, its appeals to sidestep Nevada laws requiring passengers to buy at least one hour at an average price of $46 were rebuffed thanks to pressure from the Livery Operators Association of Las Vegas (LOA). The company has publicly complained about being frozen out of the multi-hundred-million-dollar market ever since.
Taking pains to distance themselves from Uber, Todd and Ware insist Project 100 won’t compete with the city’s taxi companies and limousine services. “Their bread and butter is the airport and the Strip,” says Todd, not downtown residents or suburban commuters. He says he’s cordially discussed the project with his counterpart at the livery association (representatives of the NTA and the LOA did not return calls in time for publication).
Despite their apparent deference, the “D” word — disruption — keeps creeping into Project 100 conversations. Todd was hired in part thanks to his compulsive habit of renting a different fuel-efficient car from the airport each evening at rock-bottom prices, replacing his gas-guzzling SUV while earning enough airline miles to fly his wife everywhere for free. He and his colleagues bring a similar glee in gaming the system to the task at hand.
“It is a very fine line between reading the statues and finding a way to fit, versus also toeing that line to demonstrate there are other options that are going to be good for the community,” says Todd. “We can make transportation better, and it may not fit with existing regulations in the state, but we’re going to provide a benefit. ‘Where do we push and how much do we push it?’ is a question I ask myself every day.”
Which returns to mind the question of which “community” Project 100 will embrace. Well-to-do start-up employees capable of footing $500 a month for membership in a sharing system are one thing, but a third of the city’s downtown population lives below the poverty line. The equity of running a private mobility scheme that leverages public infrastructure is another outstanding question running beneath Project 100. In treating Las Vegas like a transportation tabula rasa, the project might be wiping the slate of many residents who make up the city it hopes to improve.
Later that afternoon, Matt Dengler and I took one of the company’s pair of Teslas out for a spin. Our smooth, nearly silent ride down empty streets was punctuated on occasion by Dengler mashing the accelerator to the floor, producing the gut-churning torque electric cars are known for.
Dengler, the twenty-something in charge of the project’s auto lineup, explains that his other car is with Tesla at the moment being outfitted with sensors. When Hsieh’s order for a hundred of the cars was announced, a number of journalists (myself included) made hay of the fact he was paying list prices — $62,400 and up — despite his volume purchase. Instead of a discount, he bargained for a degree of telemetry data unprecedented for a car-sharing service. If one of Project 100’s members were to replicate our stunts on I-15, for instance, it would instantly trigger alarms back at headquarters. And even during normal operations, it will log the car’s conditions and whereabouts in real-time.
For all the attention given to the project’s choice of electric vehicles, the decision ultimately had less to do with sustainability than information. Every mode is a rolling data collection device — even the bicycles have on-board GPS. This is essential in two respects.
First, as a monthly subscription service, the project’s revenues are capped, while member usage is theoretically unlimited. This places a premium on the ability to shape demand and manage assets. For example, bike-sharing programs in New York, London, and Paris have all struggled with redistribution, while Barcelona’s reportedly loses 17 million euros a year doing the same. Although Project 100 expects to post losses at the outset, it can’t afford to simply write them off indefinitely as a public good. One way to cope with pockets of high and low demand is to steer members to the nearest/easiest/cheapest option at hand, courtesy of its smartphone app. Rather than redistribute vehicles after the fact, it can attempt to regulate their usage beforehand.
In the same way, the system might plan its own expansion. As Westerhold explains, the project intends to construct an “agent-based model” — essentially a stylized game of SimCity populated by algorithms instead of people — capable of simulating members’ current travel patterns and projecting where they might go. “We’ve become a transportation planner in some ways,” he says, “but we’re trying to do it in a way that’s real-time and flexible as opposed to a fixed bus line or train route.”
Project 100 was in talks with two companies to build such a system at the time of my visit in January. Westerhold was leaning toward McLaren Applied Technologies — an offshoot of the Formula One racing team — but had also given consideration to BoldIQ, whose modeling software was the result of more than a decade of work at the failed air taxi service DayJet. The decision has since been made to develop it in-house. Given the enormous complexity involved, it’s an open question whether the project can.
Add it to the list of the project’s open questions, still none bigger than one Westerhold raised at Atomic Liquors that night: Who will the project serve? Hsieh’s hand-picked downtown residents? Or potentially anyone? Especially as the project expands to other cities, Westerhold can imagine a series of hubs and spokes, with cars-and-drivers ferrying members to dense nodes where bike-sharing and other modes are available. Then again, if the answer already existed, Project 100 might not need to.
“How can we incorporate the inner-ring suburbs into the city?” he asks. “That’s a nut no one has cracked.”
(This article was taken from the November 2013 issue of Wired [UK] magazine.)
Silicon Valley’s latest management fad is to not manage. “Some of the best decisions and insights come from cafeteria discussions, meeting new people, and impromptu team meetings,” said Yahoo! when it revoked working from home. Marissa Mayer, ex-Google, knew that hits such as Gmail and Street View were the product of engineers meeting serendipitously over lunch.
Google’s new campus is designed to encourage “casual collisions” at its rooftop cafés, and Facebook has hired Frank Gehry to build “the perfect engineering space: one giant room that fits thousands of people, all close enough to collaborate together,” Mark Zuckerberg explained.
Study after study has demonstrated the power of proximity when it comes to birthing ideas, and network theorists have shown how bridging “structural holes” between teams and disciplines consistently leads to better and more innovations. What’s ironic is how the world’s largest search companies and social network appear to have no better ideas of how to plug these holes than to toss everyone into a room with an espresso machine.
Google is obsessed with “engineering serendipity”, combining users’ search history, location and context to answer questions before they’re asked. What would it take to build a social serendipity engine—one that could identify who’s nearby, mine your hidden contexts and relationships and make the necessary introductions? After all, not everyone drinks coffee.
The first step is finding people, which location-based dating services such as OKCupid and Grindr manage well. They’ve been joined by “social discovery” apps such as Sonar and Circle, which link users’ networks to their smartphone’s GPS.
“Ten years from now, you will look at your phone or through Google Glass, and know everyone in the room,” says SocialRadar founder Michael Chasen. “I haven’t met anyone who disagrees with that.”
The next piece is harder. It’s not enough to know who’s in the room—you also need to care. Facebook “likes” aren’t accurate predictors of a match. What’s missing is context—why I want to meet this person now. Grindr works because its consideration is binary. Any serendipity engine with higher aspirations must grasp deeper motivations than social media supplies.
One solution is to build rich profiles manually. That’s the tack taken by Relationship Science, which maps potential connections between 2.3 million members of the 1 percent. Customers can trace the shortest path to their quarry via colleagues, corporate boards and alma maters, each link graded into strong, medium and weak ties—captions Glass might someday flash over their faces.
Another approach is to collect data using sensors. An MIT Media Lab spin-off, Sociometric Solutions, equips office workers with “sociometric badges” to measure movement, speech and conversational partners, using the results to plot maps of organisations. Its findings suggest Yahoo! should invest in large cafeteria tables: workers who eat at tables for 12 are more productive than those at tables for four.
The last step is the trickiest: given enough context about the strangers headed towards you, can an algorithm crunch enough data in time to spot connections? Another startup, Ayasdi, does that by rendering every big data set as a network map, revealing hidden connections that CEO Gurjeet Singh labels “digital serendipity”.
If yoked together, these approaches could help fill in the blank spaces on the org chart where work actually happens and new ideas are spawned. Although luring them into the same room with an espresso machine would probably speed things up a bit.
On the third floor of Paul Robeson High School, a weathered pile of bricks in Crown Heights, Brooklyn that’s closing next spring due to failing graduation rates, an IBM consultant named Ann McDermott is lecturing to a 10th-grade class of mostly poor, mostly black, mostly boys about the history of the Web.
“Does anyone here know what Tim Berners-Lee did?” she asks, referring to the British computer scientist who invented it.
“World. Wide. Web,” one student murmurs, seemingly bored by the question’s ease.
McDermott nods and continues. “He created it so scientists could communicate. Now we use it to watch cat videos.” The class cracks up. “Who knows how a webpage works?”
It’s not an academic question. These students are enrolled in P-TECH — New York’s Pathways in Technology Early College High School — a new model vocational school designed in collaboration between New York City Schools, the City University of New York and, most notably, IBM, for whom McDermott sells servers. The city, one of McDermott’s clients, provides the funds, facilities and students. CUNY applies a curriculum borrowed from its Early College Initiative, in which students earn degrees without ever leaving high school. IBM supplies internships, mentors and volunteers such as McDermott, as well as the promise of a well-paying job upon graduation.
Five years after the world’s second-largest publicly traded technology company began urging mayors to build “Smarter Cities” using Big Data (at correspondingly big prices), Big Blue has taken it upon itself to reinvent one of any city’s pivotal institutions: public schools.
WHEN Yahoo banned its employees from working from home in February, the reasons it gave had less to do with productivity than serendipity. “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings,” explained the accompanying memo. The message was clear: doing your best work solo can’t compete with lingering around the coffee machine waiting for inspiration — in the form of a colleague — to strike.
That same day, Google provided details of its new campus in Mountain View, Calif., to Vanity Fair. Buildings resembling bent rectangles were designed, in the words of the search giant’s real estate chief, to maximize “casual collisions of the work force.” Rooftop cafes will offer additional opportunities for close encounters, and no one in the complex will be more than a two-and-a-half-minute walk away from one another. “You can’t schedule innovation,” he said, as Google knows well, attributing the genesis of such projects as Gmail, Google News and Street View to engineers having fortuitous conversations at lunch.
Silicon Valley is obsessed with serendipity, the reigning buzzword at last month’s South by Southwest Interactive Festival. The term, coined by the British aristocrat Horace Walpole in a 1754 letter, long referred to a fortunate accidental discovery. Today serendipity is regarded as close kin to creativity — the mysterious means by which new ideas enter the world. But are hallway collisions really the best way to stoke innovation?
As Yahoo and Google see it, serendipity is largely a byproduct of social networks. Close-knit teams do well at tackling the challenges in front of them, but lack the connections to spot complementary ideas elsewhere in the company. The University of Chicago sociologist Ronald S. Burt calls these organizational gaps “structural holes.” In a 2004 study of 673 managers at the defense contractor Raytheon, Mr. Burt found that managers who serendipitously bridged such gaps were more likely to generate good ideas (and advance professionally as a result). “This is not creativity born of genius,” he wrote. “It is creativity as an import-export business.” In such cases, serendipity is the spontaneous plugging of these holes, over which good ideas flow.
Whereas Mr. Burt painstakingly assembled his analysis by hand, today sites like Facebook and LinkedIn contain enough information to do so automatically. Last month, researchers at Israel’s Ben-Gurion University detailed how they were able to construct social network maps of a half-dozen technology companies — including one with more than 50,000 employees — in a matter of hours using readily available data. Armed with such maps, says Michael Fire, the paper’s lead author, managers can spot isolated teams and structural holes, tweaking the organizational structure in real time. Rather than wait for their employees to cross paths, they could simply make the necessary introductions.
One reason structural holes persist is our overwhelming preference for face-to-face interactions. Almost 40 years ago, Thomas J. Allen, a professor of management and engineering at M.I.T., found that colleagues who are out of sight are frequently out of mind — we are four times as likely to communicate regularly with someone sitting six feet away from us as we are with someone 60 feet away, and almost never with colleagues in separate buildings or floors.
And we get a particular intellectual charge from sharing ideas in person. In a paper published last year, researchers at Arizona State University used sensors and surveys to study creativity within teams. Participants felt most creative on days spent in motion meeting people, not working for long stretches at their desks.
The sensors in the A.S.U. study were supplied by Sociometric Solutions, a spinoff company of the M.I.T. Media Lab’s Human Dynamics Laboratory that uses “sociometric badges” to measure workers’ movements, speech and conversational partners. One discovery, says Ben Waber, a co-founder of the company and a visiting scientist at M.I.T., was that employees who ate at cafeteria tables designed for 12 were more productive than those at tables for four, thanks to more chance conversations and larger social networks. That, along with things like companywide lunch hours and the cafes Google is so fond of, can boost individual productivity by as much as 25 percent.
“If you just think of serendipity as an interaction with an unintended outcome, you can orchestrate pleasant surprises,” says Scott Doorley, a creative director at Stanford University’s Institute of Design. He and his colleague Scott Witthoft have instituted simple measures like positioning couches near doorways and stocking rooms with multiple types of seating to encourage lingering conversations.
Dr. Waber goes further in his forthcoming book “People Analytics,” envisioning a sensor-strewn office that reconfigures itself each morning courtesy of algorithms that plug any nagging structural holes by reassigning seats. “We’re still in the very early stages of engineering serendipity,” he says. What comes next may make the data-driven Googleplex look touchy-feely by comparison.
Greg Lindsay is a visiting scholar at the Rudin Center for Transportation Policy and Management at New York University and co-author of “Aerotropolis: The Way We’ll Live Next.”
Rising beside an industrial canal near Stratford, the site of last summer’s Olympic Games, a slender wooden tower marks the spot of London’s most ambitious redevelopment scheme. At its base is Dane’s Yard Kitchen, a smart new restaurant tucked inside a former ink factory,filled this afternoonwith a multi-ethnic throng of families enjoying a late lunch.
“This place was abandoned for 60 years before Ikea put money into it,” the bartender says, waving at the concrete walls and minimalist fixtures. “They’re going to build shops, schools, theaters, a hotel,” along with flats to accommodate 6,000 people in the 26 acres of what will come to be known as Strand East, all at an estimated cost of around a half-billion dollars. Clearly, this is Ikea on a different scale than anything we’re used to.
Strand East will indeed be wholly owned and operated by the Inter Ikea Group, the closely held parent company of the $34-billion-a-year home furnishings giant that colonized our living rooms with Lack side tables and Billy bookshelves. The company now aims to do the same for cities by replacing derelict hulks with privately managed, all-rental neighbor hoods of vaguely Scandinavian provenance. And while the houses won’t be assembled with Allen wrenches or landscaped with lingonberry bushes, company executives insist they’ll be offered in the same spirit as the furniture—with high (enough) quality and low prices for all.
The new project is only the first step of Ikea’s journey into urbanism. Inter Ikea’s LandProp division has acquired a second parcel north of London and has initiated talks for a $1.45 billion project in Birmingham twice the size of the one in London; it has reportedly shopped for sites in Hamburg, Germany, too. LandProp also intends to build a hundred budget hotels across Europe and is considering a push into student housing, all covered by the stores’ bottomless cash flow. “Once we decide to do something, we go like a tank,” said LandProp’s chief, Harald Muller, at Strand East’s unveiling in 2011. (Citing overwhelming media interest, LandProp refused repeated requests for an interview.)
But why is Ikea charging into Europe’s sluggish real estate markets when its flat-pack furniture is still flying off the warehouse shelves? Sales keep climbing (up 7% each of the past two years) and it has plans to open hundreds of stores (and nearly double sales) by the end of the decade, expanding in China and planting the Swedish flag in India. Strand East and any sequels are sideshows by comparison.
In fact, these urban experiments may mostly be a legacy-building exercise by Ikea’s controversial founder, Ingvar Kamprad. Now 86, Kamprad has spent decades building an increasingly labyrinthine series of tax shelters to ensure family control after his death, transforming Ikea into a vast conglomerate comprising wind farms, office parks, and even a line of electronics.
A typical maneuver last year involved Interogo, a Liechtenstein-based foundation Kamprad established in 1989 to act as a holding company for Inter Ikea (itself a holding company), both for tax reasons and to guarantee control of the Ikea brand. Inter Ikea quietly disclosed in its 2011 annual report (the first in its history) that Interogo had sold Inter Ikea the chain’s own intellectual property assets (most notably the trademark for the Ikea brand) for $11 billion, all in the name of transparency (previously Ikea had to pay Interogo a licensing fee). Building your own neighborhood as a place to park your cash is easy compared to those machinations.
The property move also follows several scandals that have rocked Kamprad’s retirement years, ranging from 1994’s disclosure of a youthful Nazi flirtation to last summer’s revelation that Ikea executives in Germany may have knowingly used East German suppliers that were exploiting political prisoners as labor. Strand East serves as both an investment designed to outlive him and a final gambit to restore his reputation.
The new town within a town pursues this dual goal by putting the Swedish vision of the folkhemmet (the “people’s home”) to the test. It’s a utopian dream that dovetails nicely with the aim of London officials to use the Olympic legacy to address historic inequalities in the city’s East End. Plans for Strand East depict car-free streets lined with low-slung multifamily town houses, while smaller homes face the back alleys in an echo of London’s beloved mews. Of the 1,200 homes and apartments, LandProp promises that 40% will be large enough for families; another 15% will be set aside for affordable housing, for which London has considerable pent-up demand. The remainder of the site will consist of public squares and parks, with mid-rise commercial districts along the edges.
So far, urbanists are impressed with what they’ve seen of the project. “Compared to the towering cities popping up around the world, Strand East is a quaint, pleasant surprise, mixing old and new in a way that gives the area an uncommon sense of history and place,” says Paul Kroese, strategic adviser for the International New Town Institute. The plans are of a piece with Ikea’s other ventures, too. “Ikea wants to build a world that leverages its knowledge of how people live,” says Steen Kanter, a former top Ikea executive in the United States who today runs his own consultancy, Kanter International. “And it’s a good way to gain expertise installing kitchens and wardrobes and other large environments.”
Indeed, some retail analysts suggest that Strand East is both a branding exercise for Ikea and a living laboratory for a renewed drive into housing. The company has been trying to crack the U.K. market since 1997, when it intro duced a flat-pack home. The BoKlok comes in three configurations (none larger than 800 square feet), with prices starting at about $112,500. (The houses are assembled by Ikea’s construction partner, Skanska.) More than 4,900 BoKloks have been built to date in Scandinavia, but it hasn’t caught on in the United Kingdom despite recently renewed interest in prefab housing.
Yet some wonder whether Ikea is assuming an unacceptably high level of risk by investing brand equity in products that aren’t designed to lead a relatively short, peaceful life and retire to a landfill. “Personally, I think they’re a bit insane, because there’s nothing with a longer shelf life than a house,” says Euromonitor senior retailing research analyst Antonia Branston. “What if, in 20 years’ time, Strand East is known for crack houses?”
Ironically enough, for someone whose company has chopped Russian old-growth forests into particleboard, Strand East’s longevity may be its greatest appeal to Ikea’s founder. “Nobody can guarantee a company or a concept eternal life, but no one can accuse me of not having tried to,” Kamprad told the Financial Times last fall by way of explaining Inter Ikea’s diverse portfolio.
The company will likely survive Kamprad’s conflicted history. Whether he has laid the foundation for the city of the future remains to be seen.
In 2011, when the electronics firm Plantronics redesigned its headquarters in Santa Cruz, California, executives decided to remove the desks for a third of the firm’s 500 local staff. Employees were given a choice: They could work daily from home; they could commute to headquarters; or they could join one of three Bay Area locations of NextSpace, a four-year-old company that runs a chain of work spaces buzzing with freelancers, salespeople, and entrepreneurs. A dozen or so opted to work regularly at a NextSpace branch tucked inside a former bank building in downtown San Jose, where a sign outside screams working alone sucks. Inside were all the comforts of a typical Silicon Valley office, including strong Wi-Fi, stronger coffee, plush couches, individual workstations, communal tables, and the keyboard clatter of 70 people working alone together.
Plantronics is engaged in “coworking”—that is, toiling alongside someone who isn’t a colleague. In the past few years, the population of these spaces has moved beyond assorted freelancers and the newly unemployed to something far less marginal. “People are burrowing into their social networks in addition to their organizations,” says Chris Mach, a global workplace strategist for AT&T. Mach is placing dozens of his company’s best researchers, product developers, and technologists in coworking hubs across the country, and he has invited startups and partners such as Ericsson to work alongside them. The goals: spot talent, inspire creativity, and get products to market faster.
There are now an estimated 90,000 coworkers worldwide, nearly half of whom are in the United States. The number of dedicated spaces for them has doubled every year since 2005, to more than 1,800 locations, reported Deskmag, as of last summer. NextSpace plans to open 25 offices across the United States over the next five years. A startup named Serendipity Labs in Rye, New York, will offer corporate memberships in more than 200 U.S. locations. WeWork, with 3,000 members in nine buildings across three cities, tags itself as “The Physical Social Network.”
Plantronics and AT&T are part of a vanguard of corporations placing employees in such spaces. According to the Deskmag survey, nearly one in 10 coworkers are employed by large or medium-size businesses. Accenture, PwC, and Capgemini have all deployed teams to various spaces; so has Twitter in Detroit. In London, Google is backing Campus, a seven-story complex that reserves one floor for Google employees and two for coworking facilities. Google is less interested in saving rent than in meeting smart people. “For companies that seek to acquire a lot of talent, something like this makes a lot of sense,” says Elizabeth Varley, CEO of TechHub, an entrepreneurs’ collective and another Campus tenant.
Proximity also seems to stimulate innovation. A recent study of some 35,000 academic papers found that the best, most-widely cited research came from coauthors sitting less than 10 meters apart. “How closely they worked mattered as much, if not more, than their affiliation,” says the study’s author, Isaac Kohane of Harvard Medical School. Coworking’s combination of casual relationships and shared spaces, he suggests, can lead to some of an employee’s most fruitful collaborations.
Coworking generally falls into one of three categories. The most typical is the NextSpace model—a big, well-appointed office where the employed and self-employed go to make contacts, stare at a laptop, and sip coffee. A second, newer iteration is sometimes called company-to-company sharing, in which a group of companies pool space, employees, and ideas. The third and arguably most radical type might be described as private-to-public sharing—in effect inviting outsiders to work inside your company building or campus.
At the moment, the world’s largest experiment in company-to-company coworking sits at the end of a row of handsome brick warehouses in downtown Grand Rapids, Michigan. The teams stationed in the lofty offices of GRid70, as they’re called, have been charged with plotting their employers’ futures. The fourth floor houses the growth initiatives team of Steelcase, the world’s largest office furniture manufacturer, and Amway, the $10 billion multilevel marketer. The test kitchens of Meijer, the Midwest grocery chain, dominate the ground floor, while the third floor belongs to the footwear designers of Wolverine Worldwide, owner of such brands as Hush Puppies, Keds, and Sperry Top-Sider.
GRid70 is an exercise in engineering serendipity, or “happy accidents,” in the words of Wolverine CEO Blake Krueger. The hope is that these disparate residents will use their expertise to help one another in their struggles. To that end, an open-door policy reigns. Amway’s Post-it-Note-strewn space has no doors at all. Steelcase eschewed cubicles for a long, double-wide table and a few videoconferencing pods. Downstairs, accessible through an atrium staircase, Wolverine’s 50 or so designers wade through shoe samples in their open-plan office, while Meijer’s food scientists spend their days sampling vendors’ baby-back ribs, candy, and macaroni and cheese in a spotlessly clean kitchen the size of a nightclub (which happens to have been the ground floor’s former tenant).
All are encouraged to linger in the office kitchen or in one of the building’s many airy conference rooms, including a lounge in which they’re invited to crash each other’s meetings. Residents have shared trade secrets, trend forecasts, materials science, and even recipes for kielbasa. Steelcase reportedly has given Wolverine tips on controlling odors from cement (a problem plaguing the manufacture of both shoes and furniture) and, in turn, has received Amway’s proprietary research on India’s emerging middle class. None of the companies are in competition with one another. Thus Steelcase can take Amway’s advice without parsing it for office politics.
The setup in Grand Rapids is decidedly different from a coworking experiment now under way in Las Vegas. There, architect Jennifer Magnolfi hit upon the idea of inviting Sin City’s 2 million metro area residents to work from Zappos’s new headquarters. It is almost certainly the world’s largest example of private-to-public sharing. It is also the centerpiece of Zappos CEO Tony Hsieh’s Downtown Project, a $350 million bid to catalyze both the city and the company by deliberately blurring the lines between the two.
Hsieh’s thoughts on corporate evolution borrow heavily from the Harvard economist Edward Glaeser, who has described cities as the greatest serendipity machines of all. To Glaeser, as cities grow larger they encourage more chance encounters among citizens, sparking innovation and productivity. With companies, though, the bigger they get, the more sclerotic. For Zappos to avoid a similar fate, Hsieh reasoned, he needed to make the company more like a city, so in August he relocated 200 of his 1,400 employees from a suburban campus to downtown Las Vegas, with the rest to follow this year. As part of Hsieh’s plan to make Vegas “the Coworking Capital of the World,” Magnolfi proposed creating a coworking space on the building’s ground floor, essentially a membrane through which strangers and Zappos employees will pass and hopefully collide. Eventually Hsieh wants to turn the company inside out, transforming every downtown bar and restaurant into an extension of its conference rooms, drawing hundreds of startups, students, and small businesses into the Zappos orbit.
The next step may be learning how to rearrange office space at will. Perhaps the greatest failing of the corporate office has been its inability to change as quickly as the nature of work. Companies often neglect office layouts for years at a time. Compare this with Grind, a year-old coworking space in Manhattan, which constantly monitors the head count and positions of its members, reconfiguring the room when necessary. Cofounder Benjamin Dyett can tell you Wednesdays are peak and Fridays are dead, and that at more than a hundred occupants, “the room falls apart” as members hunker down under the onslaught of arrivals. Ryan Anderson, director of future technology at Herman Miller, imagines bringing new tech to bear on such spaces, perhaps tracking physical movements of workers with sensors or using social media apps to see which acquaintances are nearby. “A data-driven, highly evolutionary work space is where we’re headed,” he says.
The challenge will be to accommodate everyone who wants a desk. According to the U.S. Bureau of Labor Statistics, by 2020 about 65 million Americans will be freelancers, temps, and independent contractors—40% of the workforce. That fact inspired the creation of LiquidSpace, which wants to make every coworking space, conference room, and spare cubicle searchable and bookable online. “There is $8 trillion worth of office space worldwide,” says CEO Mark Gilbreath, and at any given moment, two-thirds of it is empty because the occupants are elsewhere. Why not fill that space with outsiders? With so many of our coworkers already strangers, it can’t hurt to let the right ones in.
Eight years ago, before the TSA began scanning passengers’ privates as a matter of course, Wade Eyerly was working as an advance man for Vice President Dick Cheney, traveling 27 days a month on last-minute, one-way tickets. Naturally, that buying pattern put him at the top of every screener’s watch list. So even though he could get close enough to the vice president to hug him (assuming the veep did hugs), he couldn’t board a plane without a pat-down. “Clearly, something was wrong with the system,” Eyerly says today. “And when something is that wrong, we should fix it.”
In Eyerly’s mind, fixing air travel meant starting an airline that opts out of the TSA and tickets altogether. The result is Surf Air, the first all-you-can-fly carrier. For $1,000 a month, members will be able to travel anywhere on Surf Air’s system as often as they’d like. Beginning at the end of 2012 (pending FAA approval), the airline will link four California regions—Los Angeles, Santa Barbara, Monterey, and the San Francisco area—using eight-seat planes outfitted like private jets. From there, it plans to expand regionally and then nationally, connecting short-hop city pairs such as Seattle-Portland or Dallas-Austin and avoiding congested hubs in favor of small airfields with no waits and no bureaucrats.
With its regional focus and fleet of puddle-jumpers, Surf Air poses little threat to the current titans of the skies. Despite a growing number of consumer complaints, the past three years have been among the best in the U.S. airline industry’s history—it raked in a record-breaking $10.5 billion in operating profits in 2010, according to the Bureau of Transportation Statistics, and $7.1 billion last year. But Surf Air does raise a big question: In a hopelessly sclerotic industry that nevertheless produces billions in profits, why aren’t more companies taking a run at the incumbents?
Working in Surf Air’s favor is that unlike previous upstarts such as JetBlue—whose founder raised $128 million at the outset to buy jets—it’s the first airline launched like an app. Eyerly and his brother Dave (a pilot and former TSA employee) took their idea to MuckerLab in Los Angeles and graduated last spring with $4 million in venture capital, led by Santa Monica’s Anthem Venture Partners. They borrowed their business model from Netflix, and all bookings will be handled via apps and online. The actor-musician Jared Leto, who has invested in Surf Air, compares the airline to Uber, the taxi-summoning service.
Technically, Surf Air isn’t even an airline. The FAA considers it a charter service with permission to fly on regular schedules, so it will be exempt from TSA scrutiny. Surf Air will fly where airlines don’t—from Santa Monica Municipal Airport, say, rather than LAX. As Eyerly points out, 90% of America’s nearly 20,000 airfields operate well below capacity. “It’s an interstate highway system without any cars,” he says.
Surf Air clients will encounter no friction before flights. An iPad-wielding concierge will greet them at the airfield. Then they will walk to the plane—a Pilatus PC-12, which has the legroom of a Learjet but consumes considerably less fuel. Besides flying as often as they wish, members can travel at the last minute without penalty. Echoing Netflix’s DVD subscription model, the only limit is the number of one-way reservations members may hold at a time (six).
Surf Air plans to launch with no more than 500 members, each paying $1,000 a month. Membership will be capped for three months as the airline gets a handle on passenger behavior. “You’re looking at an airline built for frequent fliers,” says Eyerly. “There’s no data that says what will happen when their per-flight costs drop to zero. The only way to get it is to fly.”
There does seem to be a market—nearly 50,000 “supercommuters” regularly fly or drive between the Bay Area and Los Angeles, according to New York University’s Mitchell Moss. And even cynical aviation analysts concede the all-you-can-fly model has merit. “It’s an interesting experiment,” says Teal Group vice president Richard Aboulafia, although the price doesn’t make sense to him. “Profits would be eaten up fast,” he says. Other analysts predict the price will rise as Surf Air tweaks its model.
Cutting costs is what created an opening for Surf Air in the first place. The major carriers are saving money with what is, at the moment, a winning formula: fewer routes, tighter planes, and hidden charges. As the experience for passengers has worsened, profits have swelled. U.S. carriers effectively break even on airfares while earning nearly all of their profits from nickel-and-diming passengers; in the first half of 2012, ticket and baggage fees totaled more than $3 billion. These are a textbook example of what Bain & Co.‘s Fred Reichheld has labeled “bad profits”—the kind earned from abusing customers rather than creating value for them. The upside of bad profits, Reichheld writes, is that sooner or later they will inspire someone to disrupt them—consider how Blockbuster’s punitive late fees created an opening for Netflix. Yet few entrepreneurs are trying to take advantage of the pent-up frustration with air travel.
The reason is that major airlines pounce when they see turf worth having. As ill-fated air-taxi pioneers like Pogo, DayJet, and SATSair learned nearly a decade ago, once an upstart begins having success with an underserved route, larger carriers will come in, often operating at a loss, and push them out. “Your model has to scale immediately and be disruptive out of the box,” says DayJet founder Ed Iacobucci. “Otherwise, the airlines will come down hard on you.”
Surf Air may soon discover this for itself. Already, a former Google engineer named Shawn Simpson has quietly formed Boutique Air, relying on the same FAA loophole, the same market (northern California and the Pacific Northwest), and the same strategy (flying to small airports with small planes).
Perhaps a new model of air travel requires a more fundamental disruption. Bruce Sawhill, a physicist who worked for Iacobucci, suggests that one cost bottleneck is in the cockpit—two pilots for a half-dozen passengers is too expensive. “Something like DayJet will work under certain circumstances,” Sawhill says, “but it will only work big-time when planes are electric and robotic.” Anyone want to book a ticket on Drone Air?
THE WORK OF 48-YEAR-OLD JEANNE GANG may at last herald the end of the starchitect era. The founder of Chicago’s Studio Gang Architects puts more faith in her raw materials—and the purposes they can be put to—than in the pursuit of iconic shapes or the mind- bending possibilities of computer-aided design. That’s not to say her buildings aren’t expressive in form. The rippling concrete balconies of her 82-story skyscraper, Aqua Tower, flow in gentle undulations. But they’re also functional: Their shape disrupts gales off Lake Michigan, allowing residents to sun themselves eight hundred feet in the air.
Gang designs slowly, buying time to consult her team of ecologists, hydrologists, artists and engineers. She also delves deeply into the limits of her materials, first exploring their physical capabilities in her Wicker Park studio, then allowing their attributes to dictate her projects’ form. Gang is the rare architect who loves nature and tall buildings, classical techniques and new technology. She sees herself not as an artist, but as a dot connector, a problem solver. Her other Chicago works include the Nature Boardwalk at Lincoln Park Zoo, which inserted a wild urban habitat adjacent to the city’s Gold Coast, and plans for Northerly Island, which will transform the former Meigs Field airport into a waterfront park with a reef. Among her most recent projects are a proposal to reverse the flow of the Chicago River to restore its polluted banks, and reimagining suburbia in “Foreclosed: Rehousing the American Dream,” an exhibit at New York’s MoMA this spring.
Gang receives the museum treatment herself this fall with “Building: Inside Studio Gang Architects” at the Art Institute of Chicago (September 24–February 24, 2013). It isn’t a retrospective—Gang is young by architecture’s standards—but an intimate snapshot of “a practice that’s just hitting its stride,” she says. The same is undoubtedly true of Gang herself, who last fall was named a MacArthur Foundation Fellow—the first architect to win the so-called “genius” grant in more than a decade. “Gang is setting a new industry standard,” the foundation remarked about its pick. Translation: These times call for buildings that are inexpensive, beautiful and sustainable.
I’M IN AWE OF NATURE and its incredible variety and creativity, but we’ve been messing with it since the beginning of time. We design nature these days. We learn from it and then intervene. In one instance, we proposed reestablishing the natural division between the Great Lakes and the Mississippi River watersheds (essentially disconnecting them) in order to restore the banks of the Chicago River. But it’s been altered so many times—and so destructively—that it’s not as though we’re restoring a pure state of nature.
The truth is that cities and nature are completely intertwined, and we should find ways to make them seamless. With the human population now at seven billion and climbing, cities have become huge territories that don’t allow the passage of other species through them. What’s interesting to me is figuring out how closely we can get these two communities to intersect, so that animals can have their territory while at the same time increasing and concentrating the human population. We can bring seams of nature—like veins—through the middle of the city. We need to.
At the Lincoln Park Zoo, we turned a 19th-century picturesque pond into a real habitat. The number of species has soared; coyotes visit on a nightly basis. It’s really buzzing and wild, right smack in the middle of the city. I’ve always been worried about the loss of bio-diversity, which is partly the result of sprawling cities. If we can find a way to build these habitats within them, it will make cities better and more exciting.
Biomimicry—borrowing ideas from the natural world—is a valuable tool, but I’m not interested in just mimicking forms. If you start there, you run up against the limits of your materials. But if you start with your materials, you unlock so many potential ways the architecture can take shape. For me, starting with the materials is nature. It means basing your design on what the material is naturally capable of, and how you can push it. It’s a lot different than settling on an iconic form that looks natural and then trying to figure out how to build it.
We’re at the end of a boom that demanded architects focus on iconic buildings that prized shape over structure and form. On the plus side, it pushed forward our understanding of both. Some of the buildings completed in the last 10 years would not have been possible at any other time in history. The fact that the Burj Khalifa in Dubai exists blows my mind—it’s just awesome. But now we’re at the dawn of a new mode of work requiring cross-collaboration, and somebody who can see all the different facets of a problem is critical. We see it in science all the time, where none of the most important problems can be tackled by a single discipline.
For our work exploring the future of suburbia, we asked, “How can we deal with a polluted postindustrial landscape while making room for more residents and giving them space to both live and work?” In Cicero, a Chicago suburb with thousands of foreclosures and a booming immigrant population, we interviewed local residents, real-estate developers, housing, immigration and financial-policy experts and even the owners of the freight rail lines that run through town. I assembled a team that knew their way around the suburbs, including people like Theaster Gates (see page 98), an artist who knows how to start dialogues with communities. We synthesized our ideas into a proposal: select an abandoned factory site, salvage its materials and reuse them to build à la carte housing that better fits the needs of extended immigrant families. The project is a completely new way of envisioning the suburbs, integrating all aspects of life instead of separating them into live, work and play.
Architects have a powerful role to play in solving some of society’s most pressing issues, like urbanization. The design of a city can either make life exciting or pure hell. I think we have something important to offer. That’s probably one reason a lot of us at Studio Gang still work into the late hours of the night. What drives us is the possibility of making a breakthrough. That’s my adrenaline: To think that, one of these nights, we might end up changing the world.
—Edited from Greg Lindsay’s interview with Jeanne Gang.
Twenty-two kilometers east of the booming Chinese city of Kunming, a giant bird sits on a dusty plateau. Its golden wings stretch hundreds of meters out, as if ready to take flight. Soon it will, at least figuratively: This bird-shaped structure is the Skidmore, Owings & Merrill-designed terminal of Kunming Changshui International Airport, which, after its June 28 opening, will serve 27 million passengers a year (roughly on par with Boston’s Logan and New York’s LaGuardia). Changshui’s two runways will be long enough to handle huge A380s and B747s. But mostly, you’ll find the tarmac filled with smaller single-aisle flying workhorses better suited to shuttling to and from other Chinese boomtowns—A320s, Boeing 737s, and, if Beijing has its way, Chinese-built C919s.
Thanks to strong growth in emerging markets, sales of such aircraft should be robust over the next two decades. Airbus and Boeing both project sales of about 20,000 single-aisle commercial jets over that time, worth almost $2 trillion. The two aerospace titans have long enjoyed a near duopoly. But state-backed firms in Brazil, China, and Russia want in on that lucre, and they’re working to offer their homegrown airlines a compelling, locally built alternative to A and B.
Brazil’s Embraer is out in front, having established its cred with its E-Jets, more than 800 of which have been sold since 2004. The slender aircraft, which seats up to 120 passengers, is a fixture in the fleets of airlines including Air Canada, JetBlue, and US Airways. Late last year, Embraer announced plans to build on that success, developing a new generation of E-Jets with bigger engines and more seats that could take off in the next five years.
Contrast Embraer’s relative ubiquity with Sukhoi, which is best known for Cold War fighter jets. The Sukhoi Superjet 100, produced through a joint venture with Italy’s respected Alenia Aermacchi, is Russia’s first new commercial airliner since Soviet days, when it churned out crash-prone Tupolevs and Antonovs. But since the 100-passenger jet entered service last year—Armenia’s Armavia was the first buyer—it has found few takers outside the ex-U.S.S.R. and was only recently approved to fly within the EU. That hasn’t stopped Sukhoi from announcing the even more ambitious 130NG, a stretched 130-seat version that will compete directly with Boeing’s 126-seat 737-700 and the 124-seat Airbus A319.
Russia’s Superjet and China’s Comac C919—which will be a similar size—are both dependent on government backing. Russian leader Vladimir Putin has strong-armed domestic airlines into ordering the Superjet, and most of the Comac C919’s 235 orders come from Chinese state-owned companies. There’s a rich tradition of this kind of thing in the jet business; while Washington and Brussels haven’t officially pushed their airlines to buy local, Boeing and Airbus have benefited from billions in public aid, including subsidies and tax credits.
Boeing spokesman Doug Alder accepts that “the duopoly is over,” but the true magnitude of the threat will depend on the new jets’ quality, which is still far from uniformly superior. Only Embraer, which isn’t controlled by Brazil’s government, has shown that it can produce world-class aircraft, and traditionally, says aviation analyst Richard Aboulafia of the Teal Group, “state-owned companies make terrible airplanes.” In other words, we’ll see if the golden goose that these countries seek can actually take flight.
UPDATE: On May 9, after the magazine edition of this story went to print, a Sukhoi Superjet 100 carrying 50 airline representatives and journalists crashed into the side of an Indonesian mountain volcano after losing contact with ground controllers halfway through a 50-minute test flight across Jakarta. The fatal accident, which interrupted Sukhoi’s six-country tour for potential Superjet buyers, is the most serious in a string of cited incidents since the aircraft went into service.
EMBRAER E-JET, BRAZIL
Length: 118 ft. 11 in. Height: 33 ft. 9 in. Wingspan: 94 ft. 3 in.
// Embraer’s new-generation E-Jet will boast a new engine, likely from the U.S. builder Pratt & Whitney, whose geared turbofan model decouples the turbine from the air-intake fan at the front. That allows both to operate at optimum speeds while cutting fuel burn by up to 15% and emissions by 35%.
// Size does matter: Embraer is aiming for the historical no-man’s-land of a 90- to 120-seat aircraft. Demand for that niche alone is 4,125 planes over the next two decades, it says—a market worth at least $154 billion at list prices.
// Embraer is also considering cockpit updates, including a full fly-by-wire flight-control system, for the revamped E-Jet. This would replace conventional manual controls, relying on computers to run almost everything up front.
Sukhoi Superjet 100, Russia
Length: 97 ft. 10 in. Height: 33 ft. 8 in. Wingspan: 91 ft. 2 in.
// In 2010, Russian leader Vladimir Putin publicly criticized Aeroflot’s CEO for not buying domestic jets. “You want to dominate the domestic market, but you don’t want to buy Russian technology,” Putin said. “That won’t do.” Aeroflot has since ordered 30 Superjets.
//The stretched 130-seat Superjet 130NG model will boast composite wings, reducing operating costs by 10% to 12%.
// The Superjet 100 is a remarkably global project. While Russia’s Sukhoi and Italy’s Alenia control the joint venture, the landing gear is made by France’s Messier Bugatti Dowty, and the wheels and brakes come from America’s Goodrich.
// Passengers will notice the Superjet 100’s signature feature by its absence: noise. Russian airliners are notoriously loud—to the point where some have been banned from European airspace. Superjet makes a selling point of its uncharacteristically quiet Franco-Russian engines.
Comac C919, China
LENGTH: 126 ft. 6 in. Height: 41 ft. Wingspan: 116 ft. 7 in.
// Comac will supply the airframe; foreign partners such as GE Aviation, Honeywell, and Rockwell Collins will provide everything else, from the engines to entertainment systems. “Technology transfer” to their Chinese partners is the price of admission to a jet market estimated to be worth $40 billion through 2030.
// One advantage of state-controlled capitalism is a captive market. The largest customers to date for the C919, which won’t enter service until 2014 at the earliest, are China’s state-owned airlines, including Air China and China Southern, and leasing companies.
// Comac’s likeliest foreign buyer is the budget carrier Ryanair, whose CEO, Michael O’Leary, has spoken publicly about his desire to break the Airbus/Boeing duopoly. He’s pushing Comac to squeeze in more seats—and Ryanair is considering asking Comac to add standing-room “seating.”
On a bright November morning in Manhattan, several hundred luxury goods executives filed into the basement auditorium of the Morgan Library expecting to hear Paul Romer speak about China and innovation. Courtly, earnest and reserved, Romer is an academic economist by training, and it shows. Before the crowd’s caffeine could kick in, he offered a modest proposal: Rather than start the next Louis Vuitton, we should knock off Hong Kong. Cities can be startups too, he said. “We can build new ones much faster than people think.”
That’s what China’s paramount leader Deng Xiaoping thought in 1979 when he designated Shenzhen as the country’s first special economic zone. In less than 30 years, Romer explained, the fishing village across the border from Hong Kong had become a capitalist enclave larger and more populous than New York. Shenzhen, in turn, kicked off China’s transformation from a rural backwater to an export-driven powerhouse. Hong Kong and its copies, Romer likes to say, have done more to eliminate poverty than all the foreign aid put together, and he may be right. China lifted 660 million of its citizens out of absolute poverty between 1981 and 2008 — more than the rest of the world combined.
Romer’s appearance that morning was a favor to the hosts, his new colleagues at New York University’s Stern School of Business. A year ago, Stern lured the eminent economist back to academia with a $10 million gift for the Urbanization Project, a personal think tank devoted to creating new “charter” cities and massively expanding existing ones, thus planting the school’s flag in what dean Peter Henry believes will be a $20 trillion market in financing urbanization — and the next line of work for Stern graduates.
“We will do more urbanization in this century than we’ve done in all of history,” Romer said from the stage. “Whatever we do will establish the pattern that will last forever.” Expecting a day of social media tips and fireside chats with CEOs, the audience sat stunned — who decides that what the world needs now are mega-cities built from scratch in the its poorest places?
The rest of this story can be purchased at Next American City.
RECENT efforts to fix the housing market — including Thursday’s $26 billion settlement with five of the nation’s biggest banks — have focused purely on the financial aspects of the slump. A permanent solution, however, must go further than money to address issues that have been at the core of the crisis but have been wholly ignored: design and urban planning.
Too often during the bubble, banks and builders shunned thoughtful architecture and urban design in favor of cookie-cutter houses that could be easily repackaged as derivatives to be flipped, while architects snubbed housing to pursue more prestigious projects.
But better design is precisely what suburban America needs, particularly when it comes to rethinking the basic residential categories that define it, but can no longer accommodate the realities of domestic life. Designers and policy makers need to see the single-family house as a design dilemma whose elements — architecture, finance and residents’ desires — are inextricably linked.
Take Cicero, Ill., a Chicago suburb that we studied as part of a new exhibition on the housing crisis at the Museum of Modern Art. The town may be infamous as the base of Al Capone or the site of anti-integration protests in the 1950s and ’60s, but today 80 percent of its residents are Latino, half of them foreign born.
Cicero is representative of a suburban transformation that went little noticed during the housing bubble and bust: suburbs have replaced inner cities as the destination of choice for new immigrants.
Indeed, nearly half of all Hispanics now live in suburbs, and new arrivals favor them over cities by two to one. Immigrants are one reason the number of suburban poor climbed 25 percent nationwide between 2000 and 2008. They’re also why Cicero was hit so hard by the housing crisis, with 2,049 foreclosures in 2009 alone — the second highest in Illinois, after Chicago.
Here’s where design comes in. Most of Cicero’s housing is detached, single-family homes. But these are too expensive for many immigrants, so five or six families often squeeze into one of Cicero’s brick bungalows. This creates unstable financial situations, neighborhood tensions and falling real estate values.
Too often, we see such mismatches as a purely financial issue. But instead of forcing families to fit into a house, what if we rearranged the house to fit them?
This doesn’t mean bulldozing Cicero’s housing stock. Instead, it means using existing, underused properties that might be renovated to provide a better fit. In Cicero’s case, that might mean turning to the scores of abandoned factories around it.
Such buildings are often no man’s lands thanks to fears of industrial contamination, which have left older suburbs pockmarked by blight while jobs and homes sprawl outward. But new techniques like “phytoremediation” — using plants like poplar and willow trees to absorb toxins — open the door to safer, less-expensive rehabilitation.
What remains is a wealth of steel, masonry and concrete that could be recycled into flexible live/work units. Rather than force Cicero’s residents to contort themselves to fit the bungalows, their homes can expand or shrink to fit them.
There’s one problem with such a plan: it’s illegal under Cicero’s zoning code. The town’s rules are typical of most suburbs, including the segregation of residential, commercial and industrial facilities; prohibitions on expanding and reusing buildings for new homes and businesses; and tight restrictions on mixed-use properties. Cicero’s code also defines “family” in a way that excludes the large, multigenerational groupings now common across the country.
This has been an issue for urban planners for years, but many of the proposed alternatives to suburban zoning merely swap one restrictive code for another. Only by loosening zoning to allow new combinations of home and work will we be able to bring innovative design to bear on the single-family house.
But new housing forms also demand new types of financing. Starting in the 1990s, subprime lenders targeted low-income and minority suburbs like Cicero, even when many residents would have qualified for prime loans. Latino homeowners tend to disproportionately invest savings in their homes, and as a result they lost two-thirds of their wealth between 2005 and 2009.
One long-term solution would be a type of co-op in which residents buy and sell shares according to their changing needs and circumstances. Unlike traditional co-ops, residents could purchase shares corresponding only to the units they occupy, not the land beneath, which remains in the hands of a “community land trust.” Such a structure would keep housing costs down while limiting residents’ exposure to the market. It would also provide a backstop for struggling homeowners, since the trust would have the legal right to step in and assist residents in the event of foreclosure.
Land trusts have thrived on a small scale in New York City and Chicago, among other places. The federal government should now scale up the efforts by transferring some of the nearly 250,000 foreclosed homes acquired by Fannie Mae, Freddie Mac and the Federal Housing Administration into a national trust or a series of local trusts.
Even after the housing crisis is over, we will need to build connections among local government officials, policy makers, financial institutions, residents and architects. Solving the slump requires a multidisciplinary approach combining new design, new paths to homeownership and new zoning to support both — in Cicero and beyond.
Jeanne Gang and Greg Lindsay are, respectively, an architect and a visiting scholar at the Rudin Center for Transportation Policy and Management at New York University.
Two years ago, developer Stan Gale cut the ribbon on the world’s newest city—a man-made island in the Yellow Sea named New Songdo. The chairman of New York-based Gale International had pledged in 2001 to borrow $35 billion to build a city the size of downtown Boston modeled on Manhattan, complete with a hundred-acre “Central Park” fronted by South Korea’s tallest building. Songdo won’t be finished until 2016 at least, but Gale isn’t waiting around. These days, he’s pitching China’s mayors on his “city-in-a-box”—a kit to build their own smart, green city of the future in as little as three years. “We’re going to be the special sauce of city-building,” he vows.
Is it even possible to build a city from scratch, at least one we would want to live in? This may be the defining challenge of our era—Earth’s urban population will nearly double by 2050, requiring the construction of hundreds of new cities. China is already building the equivalent of a Rome every few weeks to absorb another 400 million peasants streaming from the countryside in search of work. The question facing us as an urban species isn’t whether to build cities tabula rasa, but how. And nowhere is this dilemma more pressing than in Asia.
The archetypal Asian city isn’t Art Deco Shanghai or post-war Tokyo, but the “Overnight City” of Shenzhen, which was still a fishing village when it was tapped to be Communist China’s capitalist enclave more than thirty years ago. Today, it’s a sub-tropical metropolis of 14 million sprawling for miles, sprouting clusters of skyscrapers from an impenetrable canopy of factories and elevated highways. Unplanned and uncontrollable, Shenzhen and its neighboring cities represent 20th-century urbanism at is worst—ugly, inequitable, and unsustainable. Surely we can do better in the 21st?
Plans for utopian cities date back to the Renaissance, although a modern example is Brasilia, the Oscar Niemeyer-designed, made-to-order capital built in 41 frenzied months during the ‘50s. Following Brazil’s lead, Malaysia started construction on its own new administrative center in the late ‘90s. The domes and spires of Putrajaya and its sister city, Cyberjaya,, were hacked from rubber and palm plantations and linked to Kuala Lampur, 15 miles to the north, via a fiber-optic “Multimedia Super Corridor.”
But what was supposed to be Southeast Asia’s answer to Silicon Valley turned out to be too much of a backwater to attract the country’s entrepreneurs, who preferred Kuala Lumpur. Instead, with a current population of around 68,000, Putrajaya ended up a quiet, manicured campus for technocrats—a Washington, D.C. without the tourists. South Korea is heading for the same situation next year with Sejong,, a “multifunctional administrative city” two hours’ drive south of Seoul. Originally envisioned as a new capital, it will become the home of several exiled government ministries. (An epic power struggle over its fate last year threatened to split the ruling political party in two, and its critics doubt whether anyone will actually move there from Seoul.)
More than politics, sustainability is the driving force behind these developments. While half of humanity now lives in urban areas—whether high-rises, suburbs, or slums—cities consume 75 percent of all energy, suggesting that building cleaner ones is the key to combating climate change. This goes double for China, the world’s biggest polluter and burner of coal. What’s missing is a prototype for the cities environmentalists have in mind. Lying west of Beijing—the home of weeklong traffic jams—Mentougou Eco Valley, aims to be the first.
Designed by Helsinki’s Eriksson Architects, Mentougou is the brainchild of Finnish designer Eero Paloheimo. Scheduled for completion by 2020, the imagined city will have floating geodesic domes and solar panels dotting the hillsides, hiding the scars of former strip mines. Nestled in the valley will be nine research institutes, each devoted to some aspect of the city’s sustainability, whether water treatment, traffic, or geothermal energy. Mentougou’s 50,000 residents will double as the subjects in a larger experiment—“the idea was to develop the perfect ecological city,” says Eriksson founder Patrick Eriksson, “which may be a utopia, but the closer we get it, the better it will be.” Its creators will settle for carbon emissions a third of those normally produced by a city its size.
On the far side of Beijing, the city of Langfang, has hired the architects of international firm HOK and Australia’s Woods Bagot to retrofit it as an “eco-smart city” using a technique known as “biomimicry.” First settled 4,000 years ago, Langfang (population: 800,000) is caught between the converging megalopolises of Beijing and Tianjin. But it could be “the Sonoma of Beijing” according to Janine Benyus, a co-founder of the Montana-based Biomimicry Guild, which is also involved in creating Langfang 2.0. Benyus’ plan would create canals running throughout the city and a skyline mimicking the triple canopy of an old-growth forest, using hardwood veneers on buildings and fresh plantings of trees and ginseng below. “Langfang didn’t have a elegant entrance to the city, so we created one — a patchwork of forest and wetlands,” Benyus says. Highways will be replaced by streetcars connected to the city’s dominant feature—a station on the new Beijing-Shanghai high-speed rail line threatening to subsume it into the capital’s anonymous suburbs.
China’s biggest-ticket green city lies further east on the outskirts of Tianjin, Beijing’s grittier answer to Newark or Long Beach. As its tongue-twisting name implies, Sino-Singapore Tianjin Eco-City, is a joint venture between the two nations—an audacious effort to build the cleantech industry’s Silicon Valley, once again using an entire city as a laboratory. Slated to be larger than Pittsburgh or New Orleans on completion in 2020 (residents, mainly middle-class Chinese, are scheduled to begin moving in this year), the Eco-City will replace a brackish wasteland with a “Lifescape” and “Urbanscape” of terraced hills and high-rises, all comprised of swooping arabesques suggesting Zaha Hadid trying her hand at landscaping.
Like its nascent cousin Sino-Singapore Guangzhou Knowledge City, (the planned home of 77,000 software developers due to open in 2015), the Eco-City’s actual goal is to write an instruction manual for bright, green cities any bureaucrat can follow. In Knowledge City’s case, this translates into an obsession with cities’ “software”—not the digital code humming beneath their screens, but the policies, practices, ways and means of building and managing one (assuming “quality of life” is something you can achieve by ticking the right boxes off a checklist.) Smart, green credentials aside, their purpose is help China’s cities look and feel a lot more like Singapore.
“Despite Singapore’s minuscule size, it’s the role model of the world’s largest state—China. And China’s not the only one,” says Parag Khanna, a senior research fellow at the New America Foundation and author of How to Run the World. “Every time diplomats from other cities travel to Singapore, they leave copying everything Singapore has done right,” whether it’s water, traffic or citizenship. “Many of Singapore’s ministries have set up consulting arms selling their own brands and services,” he adds. The city of the future, in other words, will be franchised.
The most ambitious instant city of all remains New Songdo, which aims to be the template for dozens to follow. Originally commissioned by Korea’s government to lure multinationals from Singapore and Hong Kong, Songdo is less of a Korean city than a Western one floating just offshore from Seoul. Eschewing the sci-fi trappings of Tianjin or Mentougou, Songdo’s architects at New York’s Kohn Pedersen Fox chose to cherry-pick the signatures of beloved cities and recycle them as building blocks. In practice, this means its streets and Central Park are modeled on Manhattan’s, its canal inspired by Venice, and its gardens borrowed from Savannah’s. (The golf course is courtesy of Jack Nicklaus.) This model has proved wildly popular with middle-class Koreans, who bought the first 1,600 apartments in a wild weekend scramble in May, 2005. Roughly a third of Songdo’s 65,000 envisioned residents now live there; the rest are expected to move in by 2017.
Songdo, too, is being touted as the greenest, most energy-efficient city in the world. All of its water and waste will be recycled and buildings will boast solar panels and sod on their roofs, specially glazed windows, and superefficient fixtures for efficient heating, cooling, and ventilation. It’s also meant to be “smart” in the sense that every square inch of the city will be wired with digital synapses—from the trunk lines running beneath the streets to the filaments branching through every wall and fixture. To what end? Stan Gale and his partners at Cisco Systems aren’t sure, but imagine if a city operated like an Apple iPhone—they would like to sell you the apps for everyday life.
Once again, it all comes back to the “software.” This is what Gale is referring to when he touts his city-in-a-box—a step-by-step guide to cloning Songdo using his architects’ plans and his partners’ products, run from the top down. Whether out of greed, prestige, or sheer necessity, instant city-builders of all stripes believe new cities should conform to Moore’s Law—faster, better, cheaper. Just as this mentality produced the high-speed rail crash that has shaken China’s faith in progress to its core, it has also produced a municipal debt bubble running into the trillions of dollars—nobody knows for sure. Will the desire to build the perfect city produce the perfect economic storm instead? “A major feature in all of these projects is that they start out with high hopes and goals, and then the money starts talking and we’re back to basics,” says Patrick Erkisson, one of the designers of Mentougou.
Even Songdo, which is widely perceived as the most successful of these instant cities, nearly sank under the weight of its financial burdens. “The third owner typically makes the profit on these projects,” says Gale, referring to the track records of mega-developments like Reston, Virginia, or The Woodlands, Texas. “I’m trying to buck that trend.”
Whether any of these projects will be as smart or as green as they promise remains to be seen, but their creators are convinced that the world needs a better model than the urban free-for-all of Shenzhen — “Less land, less energy, more recycling, and more reuse,” in the words of Ko Kheng Hwa, CEO of Singbridge, the Singaporean developers of Guangzhou Knowledge City. Building an instant city may sound crazy, but not as much as the alternative.
In 1970, the proto-futurist alvin toffler published Future Shock, adding information overload to the lexicon when he posited that the pace of change itself was speeding up. As proof, he pointed to our newfound tendency to stay in motion. In 1914, the average American traveled 88,560 miles in his lifetime. By Toffler’s day, many frequent fliers covered that in a single year. “Never in history has distance meant less,” he wrote. “We are breeding a new race of nomads.”
Toffler didn’t foresee the half of it. “In 2050, there will be nine to ten billion people on the planet, and one in two will travel abroad,” says Ian Yeoman, one of the many self-styled futurists who have followed in Toffler’s footsteps. “That is, if growth continues, and if the world has enough resources to support that growth.”
And therein lies the rub. To accurately predict the future of travel is to predict the future itself. No wonder the assignment was catnip for the futurists we reached out to. They envision a world that’s still recognizable from our own, notwithstanding fringe events such as the “gray-goo problem” (when microscopic machines run amok). Here are a few of the terms that may define travel in the years to come—assuming gray goo doesn’t swallow us first.
THE Southwest is famously fertile territory for ghost towns. They didn’t start out depopulated, of course — which is what makes the latest addition to their rolls so strange. Starting next year, Pegasus Holdings, a Washington-based technology company, will build a medium-size town on 20 square miles of New Mexico desert, populated entirely by robots.
Scheduled to open in 2014, the Center for Innovation, Testing and Evaluation, as the town is officially known, will come complete with roads, buildings, water lines and power grids, enough to support 35,000 people — even though no one will ever live there. It will be a life-size laboratory for companies, universities and government agencies to test smart power grids, cyber security and intelligent traffic and surveillance systems — technologies commonly lumped together under the heading of “smart cities.”
The only humans present will be several hundred engineers and programmers huddled underground in a Disneyland-like warren of control rooms. They’ll be playing SimCity for real.
Since at least the 1960s, when New York’s Jane Jacobs took on the autocratic city planner Robert Moses, it’s been an article of faith that cities are immune to precisely this kind of objective, computation-driven analysis. Much like the weather, Ms. Jacobs said, cities are astoundingly complex systems, governed by feedback loops that are broadly understood yet impossible to replicate.
But Pegasus and others insist there’s now another way — that, armed with enough data and computing muscle, we can translate cities’ complexity into algorithms. Sensors automatically do the measuring for us, while software makes the complexity manageable.
“We think that sensor development has gotten to the point now where you can replicate human behavior,” said Robert H. Brumley, the managing director and co-founder of Pegasus. These days, he and others believe, even the unpredictable “human factor” is, given enough computing power, predictable. “You can build randomness in.”
Mr. Brumley isn’t alone in his faith that software can do a better job of replicating human behavior than the humans themselves. A start-up named Living PlanIT is busy building a smart city from scratch in Portugal, run by an “urban operating system” in which efficiency is all that matters: buildings are ruthlessly junked at the first signs of obsolescence, their architectural quality being beside the point.
To the folks at Living PlanIT and Pegasus, such programs are worth it because they let planners avoid the messiness of politics and human error. But that’s precisely why they are likely to fail.
Take the 1968 decision by New York Mayor John V. Lindsay to hire the RAND Corporation to streamline city management through computer models. It built models for the Fire Department to predict where fires were likely to break out, and to decrease response times when they did. But, as the author Joe Flood details in his book “The Fires,” thanks to faulty data and flawed assumptions — not a lack of processing power — the models recommended replacing busy fire companies across Brooklyn, Queens and the Bronx with much smaller ones.
What RAND could not predict was that, as a result, roughly 600,000 people in the poorest sections of the city would lose their homes to fire over the next decade. Given the amount of money and faith the city had put into its models, it’s no surprise that instead of admitting their flaws, city planners bent reality to fit their models — ignoring traffic conditions, fire companies’ battling multiple blazes and any outliers in their data.
The final straw was politics, the very thing the project was meant to avoid. RAND’s analysts recognized that wealthy neighborhoods would never stand for a loss of service, so they were placed off limits, forcing poor ones to compete among themselves for scarce resources. What was sold as a model of efficiency and a mirror to reality was crippled by the biases of its creators, and no supercomputer could correct for that.
Despite its superior computing power and life-size footprint, Pegasus’ project is hobbled by the equally false assumption that such smart cities are relevant outside the sterile conditions of a computer lab. There’s no reason to believe the technologies tested there will succeed in cities occupied by people instead of Sims.
The bias lurking behind every large-scale smart city is a belief that bottom-up complexity can be bottled and put to use for top-down ends — that a central agency, with the right computer program, could one day manage and even dictate the complex needs of an actual city.
Instead, the same lesson that New Yorkers learned so painfully in the 1960s and ’70s still applies: that the smartest cities are the ones that embrace openness, randomness and serendipity — everything that makes a city great.
Greg Lindsay is a visiting scholar at the Rudin Center for Transportation Policy and Management at New York University and the co-author of “Aerotropolis: The Way We’ll Live Next.”
Greg Lindsay is a journalist, urbanist, futurist, and speaker. He is a senior fellow of the New Cities Foundation — where he leads the Connected Mobility Initiative — and the director of strategy for LACoMotion, a new mobility festival coming to the Arts District of Los Angeles in November 2017.
He is also a non-resident senior fellow of The Atlantic Council’s Strategic Foresight Initiative, a visiting scholar at New York University’s Rudin Center for Transportation Policy & Management, a contributing writer for Fast Company and co-author of Aerotropolis: The Way We’ll Live Next.
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