Hi everyone, John here. Welcome back to Urban Tech and a big welcome to all the new subscribers. A huge thank you to the Politico Morning Tech team for the shout out on Friday:
A few things before diving into part 2 of my conversation with Alex Nicoll from BI:
I’m moving to LA the last week of July so starting in August, the new time for Urban Tech will be between 8:30-10:30 am ET or 5:30-7:30 PT.
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I hope to run an interview like the one with Alex at least once a month. Email me at john@urbantechnews.net or hit reply to let me know who I should chat with next.
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Yesterday was also my last day working at Mission North as a PR consultant. While I’m thrilled to be able to focus on Urban Tech and school full-time, I feel incredibly lucky to have worked with such a thoughtful team for over 2 years. If you’re a founder, investor, marketing or comms pro, and looking for an agency, I highly recommend connecting with their team. Right now, is when you need a team that understands your business and the crazy media landscape.
Okay, let’s dive into this week’s edition.
A Long Thing: Q&A w/ Alex Nicoll, Business Insider
Last week’s edition included the first part of our conversation. We talk about Alex’s experience covering WeWork, trends he’s seeing on the ground and more. In the second part of our conversation, we discuss housing, tech solutions, and reading recommendations.
JT: Coronavirus is the major thing right now, but I’m curious what other trends you're kind of paying attention to for the rest of the year and going into 2021?
AN: The main one is going to be Coronavirus and really the impact of the virus on the office world is probably the most interesting one. I think the retail impact is, unfortunately, somewhat obvious. We'll see how retail firms adapt to it. And I think that'll be interesting, but there might be somewhat of a longer tail to that. I think the way the office changes is really interesting. I have to say, I'm a little ready to stop writing the stories about what could happen and start to see what is actually happening in offices. I hate to say accelerated, but what has been accelerated by the Coronavirus has been the rent arbitrage model, continuing to fall further out of favor.
In that story I did about Zeus, for example, they weren't able to find funding by sticking to that rent arbitrage model because the appetite for the investors just wasn't there. So they had to change their model. I'm curious to see how that continues and how companies continue to change their models. Some of the biggest companies in these spaces, your WeWorks, your Sonders, are mostly using leases. They're building their own protections into the leases, but it'll be interesting to see how much rent arbitrage stays and how much goes and how that changes.
The last thing, which is kind of underlying, but is coming to a head, is housing affordability. There's a lot of companies that are investing and trying to figure things out there. But it's also just kind of becoming a defining social conflict of our time.
There's even reports now of some of the Black Lives Matter protests merging or working together for housing protests as evictions start to open back up. No one really has a good handle exactly for how to fix the problem of housing affordability. But I think it might be coming up more in the second half of this year and in the beginning of the next year, depending on government responses.
JT: Absolutely. The housing side is an area I'm personally super passionate about and I think one that is crucial and touches so many areas: healthcare, access to work and education, and more. I think you're seeing a housing squeeze in major cities, but you're also seeing it in rural communities all over the country.
The Coronavirus has created a ton of issues with people not being able to afford rent. I've covered this a little bit and I plan to keep covering this. There's a lot of tech companies proposing solutions to help with housing and I don't know if you can necessarily say they caused the housing problem, but they have made the problem worse. There are companies that are doing some interesting things, particularly with modular construction. It's super hard, though and I think hopefully, some encouraging signs are coming out of California, like the ADU use and permit numbers. It's gonna take a lot of things that are gonna be combined since the shortage of housing is just so large.
AN: Totally. I think where it's probably most interesting on the tech side is exactly what you were saying with the construction and modular building side. My dad is an auto mechanic and used to work in building a bit so I have a little sweet spot for that topic. But I think that more than anywhere else, it is probably where the chance for advancement happens. The question then is, you know, is it low cost? Is it going to go to the consumer, aka the person living in a home? or an apartment? Or is the solution going to fund the company?
Can these companies be profitable? There's so many challenges there. Like you said, it's going to be a lot of really small changes over time to kind of deal with that problem. There has been those big investments the last couple of years when you're talking California and tech companies. It’s beginning to overlap with some of the foundational questions about our society.
JT: Is there anything that I haven't asked you that I should have or something you want to speak to?
AN: One thing that'll be interesting, and is a challenge to cover, is diversity in these companies. On the startup side, and on the more traditional real estate side. Real estate has a long history of not necessarily doing the best when it comes to inclusion. I'm reading the Color of Law right now, which I highly recommend to anyone who's gonna end up reading this or listening. I'm still figuring out exactly how to cover that in the industry. I do want to find a way to tell some of those stories because I know there’s more to learn about real estate, and urban texts and technology and more broadly, how tech is handling issues of diversity and inclusion.
JT: Yes, that's a great point that you've made. I actually reviewed The Color of Law in my first edition. The Real Deal also did a story a couple weeks back that is really good. It got into what's going at these companies and it does seem at least that there is some momentum and that hopefully, finally, there is going to be some change to it.
JT: So I'd love to finish it with what books or news do you recommend reading to keep up with the space?
AN: To be honest, I'm pretty boring. The Real Deal is one of my main sources of news. Obviously too, the larger real estate, business press lines like Crains and WSJ. I'm one of the people who has become a newsletter hound. One that I would recommend is Dror Poleg’s newsletter. I never expected to read about Socrates or social housing and communist countries.
AN: I'm gonna be even more boring and say The Power Broker is one of my favorite books of all time. And it's really just an awesome way to both read a really awesome story and learn how large infrastructure is done. It really shows you the ways that there were racist and classist decisions made in building and building infrastructure in New York. The Jones Beach tunnels being certain heights so buses from the city couldn’t come is a great example.
JT: I mean, The Power Broker is crucial to our understanding of these issues. It's a great book, particularly for New York people.
What I’m Reading This Week
The New York Times: Opinion | I’ve Seen a Future Without Cars, and It’s Amazing
NY Times Columnist Farhad Manjoo has seen the future, and it’s without cars — thank god!
In all seriousness, Farhad does a masterful job explaining why we would be safer and get around easier if we didn’t dedicate so much space and resources to cars in our cities.
Frankly, cars are a pretty inefficient way for people to get around and we see that every day with traffic.
Here’s the truth:
Crunchbase News: Rivian Raises $2.5B Investment To Manufacture Electric Truck Line
“Electric vehicle-maker Rivian said Friday it closed on a $2.5 billion investment round led by T. Rowe Price. Soros Fund Management, Coatue Management, Fidelity Management and Research and Baron Capital Group participated in the round, as did existing shareholders Amazon and BlackRock-managed funds, the company said in a written statement.”
“Although Plymouth, Michigan-based Rivian does not have a vehicle on the market yet, it has raised $3.1 billion in total funds since its inception in 2009, according to Crunchbase data. The $3.1 billion does not take account of the $2.5 billion it just raised. Its last raise was a $1.5 billion growth round led by T. Rowe Price in December.”
Remember: Ford just unveiled their 2021 Bronco -- without an electric or hybrid option -- and saw a stock bump. There is real demand for an electric truck and Tesla isn’t going to be the only company making them.
Vox: Joe Biden’s surprisingly visionary housing plan, explained
If you read Urban Tech regularly or are engaged with these issues, one thing is clear: we need a bold, visionary housing plan from our leaders.
The plan needs to have many pieces and will be extremely expensive, but there is no issue like housing that would have an immediate impact and help millions of people.
I was partial to Elizabeth Warren’s plan when she was running, but Joe Biden might have our plan after all.
CNBC: WeWork chairman says positive cash flow due in 2021, a year ahead of schedule
First thoughts: WOW, I can’t believe it. The company has cut thousands of staffers and drastically reduced costs on the path to profitability.
Keep in mind:
I am interested to see what solutions WeWork rolls out once people do go back to the office. From cleaning solutions to touch-less access, they are going to need to make a lot of changes. That said, Softbank which owns WeWork has invested in A LOT of companies.
Venture Beat: Skydio raises $100 million, announces enterprise-focused drone lineup
“Redwood City-based drone startup Skydio today revealed it raised $100 million, bringing its total raised to $170 million. Coinciding with the fundraising, Skydio unveiled a new family of drones — X2 — and software solutions designed to simplify inspections and enterprise-oriented workflows.”
This is super interesting to me. I definitely think a B2B drone will have a better chance at scaling than a consumer drone.
“Skydio — whose customers include Civil Air Patrol, the Ohio Department of Transportation, the North Carolina Department of Transportation, Southern Company, Chula Vista PD, and Japan Infrastructure Waymark — says it plans to use the aforementioned series C funding to accelerate product development and go-to-market expansion in enterprise and public sector markets. Next47 led the round with participation from Levitate Capital, NTT DOCOMO Ventures, and existing investors including Andreessen Horowitz, IVP, and Playground.”
CNBC: Amazon rolls out shopping carts that eliminate checkout lines
“Amazon is launching smart shopping carts at its Woodland Hills, California, grocery store in 2020.”
“Dash Carts are embedded with cameras, sensors and a smart display that automatically track a shopper’s order.”
“Similar to Amazon’s cashierless Go stores, Dash Carts allow shoppers to avoid checkout lines as they exit the store.”
Amazon is increasingly having an impact on the physical world. This topic is one Alex and I spoke about in the first part of our conversation, which you can find here.