đ Essential City + Tech Stories: 1.4.21
Urban gentrification, Softbank companies face huge obstacles, NYC's new train hall
Hello! Happy first Monday of 2021. Hope itâs a great one for you. đ
If youâre reading this note, you likely already know it will be a big year for cities and tech. But if youâre newer, youâre in the best place to find out why and how innovation is changing our cities more by the day.
On Thursday, weâll publish a conversation with Russ Rosenband, principal of The Lot Next Door. The discussion focuses on topics including:
The future of food retail for local eateries and big tech players
Ecommerce and virtual restaurant brands
Ghost kitchens and similar trends supporting the movement of food in cities
It was a fantastic conversation. Iâm excited for you to listen. An abridged transcript of the discussion will run in Thursdayâs edition. Youâll need to listen to the podcast to hear our full conversation and all of the insights Russ shares.
Okay, letâs dive into the urban tech stories you need to know to start the week.
Last Mondayâs most popular stories:
đ„ The Real Deal: 10 biggest proptech funding rounds of 2020
đ„Axios: 2021 could be the year automation and AI truly accelerate the economy
đ„ CNBC: Covid pandemic: Restaurant revenue has fallen, despite delivery boom
Essential City + Tech Stories: 1.4.21
đ The New York Times: The Year Inequality Became Less Visible, and More Visible Than Ever
đ° The Wall Street Journal: SoftBank to Get Majority Stake in Katerra With $200 Million Bailout
đ The Wall Street Journal: Oyo Hotel Chain Suffered Ailments Beyond Pandemicâs Travel Slowdown
đ Curbed: I for One Will Miss the 70 Duane Reades That Closed This Year
đ The Atlantic: The Anti-growth Alliance That Fueled Urban Gentrification
đ Streetsblog: Eyes on the Street: All Rise for the New Moynihan Train Hall (Because You Canât SIT There!)
The New York Times: The Year Inequality Became Less Visible, and More Visible Than Ever
Even with 2020 done, the bifurcation of economic returns and a narrative of haves and have nots seems only like to continue in 2021.
Emily Badger, a writer for The Upshot, summarizes how urban inequality changed in 2020. She also connects how tech is playing a role in it all.Â
Instead, people who could afford it retreated into smaller, more secure worlds during the pandemic. And that has made it harder to see all the inequality that worsened this year: the unemployment that soared even as the stock market did, the eviction threats that grew as home prices hit new highs.
In another way, however, the inequality already present in the economy became more visible than ever this year. With delivery services, restaurant couriers and personal shopping apps, low-wage workers were now â in far larger numbers â coming right to the doorstep of the well-off. Standing there in masks, their economic precarity was exposed.
âWhat these apps do is force people who live stable lives to confront the instability of working-class lives â very directly and for their own benefit,â said Louis Hyman, an economic historian at Cornell. âBefore these apps, it was easy to pretend that wasnât really happening,â he said of the yawning gaps in the economy. âThere were ways to imagine those delivery people were not emblematic of anything.â
âŠToday, the companies that are thriving â some with eye-popping I.P.O.s â have harnessed both the particular circumstances of social distancing and the longer-term trends of a society pulling apart. These companies enable you to hold a meeting without visiting the office, to buy a home without glad-handing a real estate agent, to eat restaurant meals without entering a restaurant, to enjoy entertainment without theaters, to shop without retail.
2. The Wall Street Journal: SoftBank to Get Majority Stake in Katerra With $200 Million Bailout
Last week, Konrad Putzier at The Journal scooped that Softbank is saving construction startup Katerra through a new infusion of cash:
Founded in 2015, Katerra has been trying to compete with established builders by assembling building parts in factories and offering services such as plumbing and architecture under one roof.Â
But some of the companyâs projects were plagued by delays and cost overruns, while its aggressive growth strategy and a high debt load depleted its cash reserves. The Covid-19 pandemic, which delayed construction projects in some cities, added another challenge.
SoftBank, the worldâs largest technology investor, was an early backer of Katerra. The bailout marks the second time this year that SoftBank has increased its investment in the firm. In May, when Katerraâs board tapped Mr. Kibsgaard to be CEO, the startup secured an additional $200 million investment from SoftBank.
While the company has obstacles, its technology, focus, and mission certainly make me optimistic about where it could go. I hope the company can figure out how to create a sustainable business and model for innovating housing construction.
Construction innovation is just an incredibly hard thing to do. Urban Tech looked at this topic last August if you want to read more on it.
While I try to be optimistic about Katerra, the next story about a Softbank-backed company is one story that I'm more skeptical about, particularly with COVID's economic uncertainty around hospitality.
The Wall Street Journal: Oyo Hotel Chain Suffered Ailments Beyond Pandemicâs Travel Slowdown
The rundown:
Just over a year ago, Indiaâs Oyo Hotels & Homes was among the worldâs hottest startups and the second-largest hotel chain globally. It had billions of dollars from SoftBank Group Corp.âs Vision Fund and others, and a valuation that had doubled in a year to as high as $10 billion.
Covid-19, and the destruction it dealt travel, blew up much of that. But Oyoâs issues run deeper than the pandemic. The company already faced problems from its rapid expansion, issues that wonât be fully solved by a post-vaccine travel recovery.
Why itâs interesting:
The story is another example of how hard it is to scale, appropriately capitalize, and operate physical spaces, even with better innovation.
Oyo is in an industry with significant incumbents, including Mariott and Hilton. While it has scaled rapidly, the more I learn about the hurdles it faces, including the results of COVID, Iâm not super optimistic for its road ahead.
Curbed: I for One Will Miss the 70 Duane Reades That Closed This Year
While itâs easy to hate on chain retail, I enjoyed this piece from Jessica Silvester. She makes a compelling case for being sad about the death of chain stores in NYC because of the utility they bring.
Many chain retail stores, including Duane Reades, are essential to peopleâs lives and are part of the cityâs DNA:
âŠThese chains have, for better or worse, become part of the cityâs DNA, particularly the ones that were born right here: The Duane Reades, even after the company was acquired, were a steady presence on every other corner, reliably gleaming and open 24 hours; the New York Sports Clubs (minus 26); the Golden Krusts (minus 5); the Jimmy Jazzes (minus 26); the Key Foods (minus 7). They were unfancy retailers in a too upscale city, and they were, in a word, useful.
I think you can take her argument, apply it to chains closing in cities across the country, and see how this hurts Americans across income levels and locations.
Streetsblog: Eyes on the Street: All Rise for the New Moynihan Train Hall
Last week, New York City (somehow amid COVID) unveiled a new $1.6 billion train hall that is part of the Penn Station transportation hub.
The new hall exemplifies many of the most significant issues facing modern transportation:
high costs to build public transportation infrastructure;
the impact of COVID on public transportation;
omnipresent issues of equity and access.
Gersh Kuntzman takes a pretty critical, but arguably warranted, view on the hall:
First, the good news: People who arrive to New York by intercity rail no longer experience the city like rats.
Beyond that, itâs difficult to say that taxpayers are exceptionally well served by $1.6 billion they just spent to convert a portion of the James A. Farley Building from postal service into an arrivals and departure hall for Amtrak and some Long Island Rail Road passengers.
The Atlantic: The Anti-growth Alliance That Fueled Urban Gentrification
The last piece for today is a dense, insightful look at multiple urbanism themes by Jacob Anbinder, a Ph.D. candidate in history at Harvard University, where he is writing a dissertation on urban growth and its role in making the modern Democratic Party.
Jacobâs analysis interesting because it encapsulates the complexity of Americaâs conversation about housing affordability.
Read the full piece -- it will make you think a lot about these topics even if you donât agree with all of Jacobâs points.
Hereâs a feel for it and one of my favorite parts of the piece:
Among some leftists and liberals alike, as well as the politicians who court them, the idea that developers of pricey apartments and condo buildings are to blame for high housing prices has long been an article of faith. In this telling, new luxury housing is the reason that former working- and middle-class neighborhoods in their cities have become fancy enclaves. (âYou know exactly what a gentrification building looks like,â read a recent viral tweet.) Fighting the construction of such housing would not only reverse the trend of unaffordability, but from the perspective of politicians and activists would also demonstrate support for working-class residents in the process. Since the spring, the pandemic has prompted a steady flow of stories about how urban life will change forever. But COVID-19âs most lasting impact on cities might be in helping put to rest this most persistent of myths about the relationship between housing supply, the cost of living, and that four-letter word of urban politics: gentrification. Not only is it a simplistic analysis that absolves nearly anyone who isnât a developer of responsibility for the problem, but in portraying new housing as the proximate cause of gentrification, it exacerbates the very housing crisis it seeks to solve.
Several Interesting TweetsÂ
Thanks for reading todayâs edition! Be sure to subscribe to the UT Podcast to hear my full conversation with Russ on Thursday.Â
If youâre interested in topics like delivery apps, the future of retail/e-commerce, or food more generally, then youâll love the conversation. We connect all these trends to cities and innovation.
Talk soon,
âïžJT