Silicon Valley has forgotten to solve problems for everyday people and the backlash is coming
A $700 juicer. A delivery app that lets you pay $10 to get your $8 burrito faster. An app to valet your car.
These are the kinds of innovation that Silicon Valley has recently poured billions into building. Our industry that once was lauded for bright, young talent taking on the world’s biggest problems now seems to be forgetting about the people that need solutions most. Over $160bn in venture capital are going into startups each year — and yet most of the new innovation is driven by the latest hype cycle, not the real problems we face.
Is Xi the most powerful man in the (sort of) free world?
China is dominating this week’s news, thanks to the canonization of its communist party leader. Xi has taken the mantle as “the most powerful leader in the world” — note the lack of the word “free” in that statement. Thanks, Trump. Money quote: “China is quickly growing into the world’s most extensive commercial empire. By way of comparison, after World War II, the Marshall Plan provided the equivalent of $800 billion in reconstruction funds to Europe (if calculated as a percentage of today’s GDP). In the decades after the war the United States was also the world’s largest trading nation, and its largest bilateral lender to others. … Now it’s China’s turn. The scale and scope of the Belt and Road initiative is staggering. Estimates vary, but over $300 billion have already been spent, and China plans to spend $1 trillion more in the next decade or so.”
If this isn’t building hotels, I don’t know what is. It’s interesting to see how non-traditional disruptors eventually end up being in the same business as those they disrupt. The Florida-based building is not a hotel, per se, but an apartment complex optimized for sharing (it still has residents). Money quote: ““Right now we’re focused on Florida, but we’re considering other markets,” he says. “We are looking to be present in many other cities across the U.S.” That makes sense. The very cities where rents are high also tend to be places where tourism is robust. Armed with a building offering that helps residents offset their rents, Niido may provide the edge that Hernandez would need to expand his business across the country–while helping Airbnb with a new source for listings.”
Moy Eng has a market-based answer worth understanding
Moy Eng, Executive Director of the Community Arts Stabilization Trust, gives one of five Shift Ignite talks earlier this year at the Shift Forum. Our cities are losing their artists as the flight back to urban centers has driven rents beyond their reach. What can be done? This five minute Ignite talk has some answers.
Moy Eng: Hi. They say that you are who you really will be, at the age of seven. Here I am at the age of seven, bright, eager to please, and wanting to make parents and my teachers proud at my first Holy Communion.
The new mayor of Oakland on President Trump, Uber’s move, the gentrification and housing crises, and why cities are the antidote to Presidential politics
The Bay area has added half a million jobs since 2000, but only built 54,000 new units of housing. Therein lies the root of the region’s affordability crisis: Lots of new tech-related jobs, but not a lot of places to put those new employees. That means workers have to commute much longer distances, and an already overstressed transportation infrastructure now groans with commuters stuck in endless congestion.
Traffic and sky-high housing prices mean the best paid workers will spend top dollar to live near a city center — and that means gentrification. Blue collar workers, artists, and pensioners are pushed out and marginalized, sometimes moving into unsafe spaces not meant for communal living. Such was the case in Oakland earlier this Fall, when a deadly fire broke out in a warehouse occupied by artists and young people, killing nearly 40.
Never mind the disruption — giants run the world. Now more than ever, The Economist writes, colossus companies rule the global economy. Some, like GE, are old-line standbys that have reinvented themselves; others are upstarts like Samsung; others are the familiar kings of the Silicon Valley hills, like Apple, Google, and Facebook. All have become experts at giving customers what they want and improving their lives, often (particularly in the digital economy) for free. But there are two big problems with their ascendancy: First, they’re awfully good at squashing competition, and second, their scale gives them extra leverage to evade taxes and manipulate governments and global bureaucracies. Much of the populist noise you hear from different points around the world stems from resentment at these outsize advantages. If we want to keep such revolts from turning ugly, we need to devise a digital-age update for the principles of antitrust. “The world needs a healthy dose of competition to keep today’s giants on their toes and to give those in their shadow a chance to grow,” the Economist says. Amen.
That census report? It’s even better than you think. Last week’s economic report from the U.S. Census Bureau, with its news of rising household income and reduced inequality, gave cause for cheer. But if you really want to understand the numbers and why they may actually underreport the economic progress we’re beginning to make, read Matthew Yglesias’s analysis in Vox. Yglesias points out a number of flaws and problems with the census numbers: It measures inflation too harshly, it gauges income too strictly (missing out on increases in healthcare coverage), it fails to take into account changing norms in what makes up a “household,” and more. Yglesias’s conclusion: If we corrected for these issues, we’d have an even rosier picture of where the economy stands. In particular, we’d find that median household income has in fact surpassed its 1999 peak, meaning that “The American middle class is richer than it’s been at any previous point in history.” Something to ponder as you listen to the next election-season jeremiad.
These homes were all found in the Potrero Hill neighborhood of San Francisco, all within a mile of my own house. To me, they demonstrate a creative spirit and determination to make a life in this very expensive city.
The thousand faces of monopolies. Monopolies are villains because they charge “monopoly rents” — they can and often do hold purchasers hostage and jack up prices. To their owners and investors, however, monopolies can also be heroes — they make people rich (as Peter Thiel reminds us). How many of the tech-driven, city-based institutions now being built by NewCos will end up as monopolies? And should we be rooting for that — or trying to shape the rules of the game to encourage competition? For an overview of that issue, see this collection of long-form links (Redef). In the age of hyper-competitive market-winners like Amazon and sharp-elbowed platforms like Uber, antitrust law might well be outdated and ineffective. But if we want to let a thousand Ubers bloom (City Observatory), a few strategic market interventions could make all the difference. When Uber made good on its threat to pull out of Austin after the city passed regulations the company opposed, customers were upset and inconvenienced in the short run. But now, Austin has become a lab for Uber alternatives. We can’t stop innovative companies from winning new monopolies, but we can try to stop them from squashing the next round of innovation.
The rent is too damn low. Traditionally, rent is the price the owner of some scarce asset — land, an apartment, or a service no one else can provide — charges others to use the asset. But there are more creative ways of thinking about rent: You can take some commonly-owned resource, raise its price, and share the resulting income widely — as Alaska did with its oil reserves. Peter Barnes call this “virtuous rent,” and it has applications beyond public lands and natural resources. You can also imagine charging it for collectively owned digital abstractions like namespaces and other kinds of virtual real estate and goods.
Dear City Council Members and Palo Alto Residents,
This letter serves as my official resignation from the Planning and Transportation Commission. My family has decided to move to Santa Cruz. After many years of trying to make it work in Palo Alto, my husband and I cannot see a way to stay in Palo Alto and raise a family here. We rent our current home with another couple for $6200 a month; if we wanted to buy the same home and share it with children and not roommates, it would cost $2.7M and our monthly payment would be $12,177 a month in mortgage, taxes, and insurance. That’s $146,127 per year — an entire professional’s income before taxes. This is unaffordable even for an attorney and a software engineer.
