economic development | Paul Wallbank - Communications Professional

Do successful cities need to be walkable?

Do smaller cities have the advantage with the new economy?

can Wellington become a global tech hub? raised an interesting question, how big does a city need to be in order to be successful in the new economy?

Does a compact city with a few hundred thousand people have an advantage over several million inhabitants sprawling across a huge metropolis?

The romantic view is the smaller cities should prevail but history, particularly given the wide sprawl of Silicon Valley, indicates the opposite.

While Silicon Valley, and most of the other Twentieth Century industrial hubs like Detroit, were sprawling conurbations it may be this era’s centres are more compact with towns being walkable.

Certainly this is what we’re seeing with the tech industry’s shift into San Francisco as workers find they’d rather walk or cycle to work than spend hours on freeways each day.

So it may be the newer breed of businesses and industries that don’t need massive infrastructure also don’t need to sprawl.

If that turns out to be true then cities like Wellington could do well.

Wandering around Wellington

How New Zealand’s capital is becoming a centre of the new economy

It bills itself as ‘the coolest little capital in the world’ however something is going on in Wellington, New Zealand’s capital city, as its technology sector takes off.

Last week I was in Wellington, partly to attend the Open Source, Open Society conference and also to have a look at how the city is doing so well as one of the leading startup cities.

While I’ll have a number of posts about the city, startup scene and conference over the next couple of weeks, it’s worthwhile noting some basic impressions that came from the visit.

The size of the city, Wellington is a small town with a population of 200,000, brings both advantages and negatives for the business and startup communities.

Small is sweet

One of the advantages of being so small is the business community is relatively accessible, a number of entrepreneurs told me how easy it is for them to find the specialists they need given there’s usually two degrees or less separation between everyone.

Normally having a small business community means it gets insular, particularly in a capital city where the business of government can create a bubble effect. What’s notable about Wellington is most of the businesses are looking outward towards the US, Australia and East Asia.

The city’s intimate business environment also improves trust within the community as one Aussie expat told me, “if you rip off anyone in this town pretty well everyone knows about it by the end of the weekend. It keeps everyone honest.”

Being small, the city makes it easy to walk around which compounds the business networking opportunities. A businesswoman, who is also a lifelong Wellingtonian, observed how she allows an extra 15 minutes to walk anywhere as she finds herself stopping for conversations.

Three dominant businesses

Having three successful businesses in the city – TradeMe, Xero and Weta – has both its upsides and disadvantages with the bigger players tending to dominate the employment market and funding opportunities.

Of the three businesses, TradeMe is the most domestically focused while Xero is growing in the tech sector and Weta is the most diverse with its range of special effects and movie production services.

With Weta, the business is exposed to the vagaries of the global film industry as Statistic New Zealand survey of movie production shows.

The film industry is one of Wellington’s important employers with the sector supporting around two thousand businesses in the city, although I didn’t get time to explore how much of an overlap there is between the tech and film industries.

TradeMe is largely a domestic focused business that provides a steady work and skills base for the local workforce. While it’s the least internationally exposed business of the three, it’s probably also the most consistent.

Xero, like Weta, is a globally expanding business and its success is attracting investors and expats from North America and Australia. While its the smallest of the three it’s probably the business that has done the most raise Wellington’s profile in the tech industry.

Community spaces

What’s particularly notable are the number of coworking spaces in Wellington ranging from the straightforward Bizdojo startup space and Creative HQ through to the quirky Enspiral coworking space.

The availability of shared spaces makes the city attractive to startups and adds to the vibrancy of the local tech community which links into hipster pursuits such as craft beer.

Communities like Enspiral also add another dimension to the local startup and creative industries environment by connecting entrepreneurs with their peers and service providers.

Partnerships with government

One aspect I didn’t get to explore while in Wellington was the relationship between the city’s business community and educational institutions, particularly Victoria University.

Similarly I didn’t get the opportunity to discover how much of a role local and national governments have had in the development of Wellington’s tech scene. It seems to be relatively hands off although some government agencies have supported Weta with co-investment funds.

What I did meet though were plenty of immigrants; from Croatia, Denmark, Holland, the US and, most of all, Australia.

Talking to some of the US and Australian expats it was clear that lifestyle combined with opportunity with lifestyle, as one Aussie emigre told me “I couldn’t get the water views, access to the city and be able to walk to work back home like I can here.”

While these are superficial thoughts that I’ll expand on over the next week as I decipher notes and listen to interviews, there’s no doubt that Wellington is carving a position as one of the global centres of the new economy. How big it becomes will depend on how many other businesses grow to the size of Xero or Weta.

Seizing the agricultural technology opportunity

Can a regional city like Fresno become a centre of agricultural technology?

Does the real opportunity for tech entrepreneurs lie in the agriculture sector? An article by James Fallows looking at Fresno’s startup community for the Atlantic Magazine suggests that might be the case.

Fresno, in California’s agricultural Central Valley, doesn’t have the glamor of the global startup centres but offers a focus on neglected sectors as Fallows quotes Jake Soberal of Bitwise Industries.

“My guess is that 5 to 10 percent of the tech need of the farming industry is now being met,” Fallows quotes Soberal as saying. “You could build a technology industry in Fresno based on that alone, not to mention the worldwide need in agriculture.”

While there isn’t a great need for another coffee app, pizza delivery service or online store, there are far more opportunities in other sectors to address unmet needs.

This is probably where the opportunity lies for cities like Fresno that are trying to create their own mini Silicon Valley – build a technology sector to address the needs of your existing industrial base.

In agriculture there’s a plethora of Internet of Things, Big Data, analytics and other technological applications that addresses issues in the industry. Farming is not the only sector which presents these opportunities.

Fresno’s ambitions aren’t unique but as Fallows points out this is not a zero sum game and there’s no reason why dozens of cities shouldn’t be able to build their own niches with new technologies.

Picture of Fresno from David Jordan via WikiPedia

Why Singapore is building a connected city

Singapore is creating the first connected city to meet the challenges of the 21st Century economy

“What if we were to wire up every corner of Singapore?” Asked Steve Leonard, the Executive Deputy Chairman of Singapore’s Infocomm Development Authority, at the CommunicAsia 2013 Summit.

Two years later that question has been answered as the island state has covered the entire island with a fibre network, putting the country on course to create what Leonard describes as a ‘sensor fabric network.’

Speaking to Leonard ahead of his visit to Australia for the AIIA Internet of Things conference in Canberra later this month, it’s impressive what the IDA looks to do in building Singapore as a connected nation.

“We think we have an opportunity to use some of the natural advantages Singapore has,” Leonard says. “In this case being relatively small and an island. The idea that constraints mean creativity.”

One of the areas Leonard sees as an opportunity with the IoT is in the health care industry where chronic care care can be moved back into the community while hospitals and clinics can be used for acute patients.

One of the challenges for every city rolling out an IoT infrastructure is the plethora of standards, “we’re trying to think about IEEE standards and we’re trying to think about interoperable as possible with technology as it evolves.”

“Whether it’s East or West, Singapore wants to be a place where business can be done and people can be healthy,” says Leonard. “What we don’t want to do is develop a standard that might work for us but exclude us from something that originates in another part of the world. We want to be open to things that evolve.”

Becoming a connected city is key to being a leader in a connected world, “we’re always making sure we seek to have more wireless access points.” Leonard says, “we also have one gig ninety-five percent fibre coverage across the island. We also want to enhance our capabilities through 4G and Wi-Fi.”

“All of those things together in some sort of concert create that fabric that we’re working on.”

Historically Singapore’s place in the world has revolved around being a trading hub which has led it to being one of the world’s biggest cargo shipping ports.

With broadband internet access available pretty well throughout the island, it should open opportunities for entrepreneurs, businesses and government agencies to explore how ubiquitous internet creates opportunities.

As the world becomes moves from physical goods to bytes, Singapore is looking to becoming as much a technological centre as a goods hub. For Steve Leonard and the IDA the task is to make sure the city takes its place in the connected economy.

Copying the Silicon Valley Bubble

Is the Silicon Valley funding model creating a bubble in tech investments

Staying private sucks if you’re a tech company writes Felix Salmon in Fusion magazine.

If you’re giving away stock in lieu of wages to employees or taking early stage funding for equity, then listing, or selling to a larger business, makes sense as staff and investors need to see a return. It’s the unspoken truth of the Silicon Valley funding model.

The Silicon Valley model though doesn’t come without risks, investor Mark Cuban warns a valuation bubble greater than that of the Dot Com Boom has developed as angel investors and early stage venture capital firms have thrown money at startups after Facebook’s massive buyouts of Instagram and WhatsApp.

While Silicon Valley and the US tech market might have plenty of opportunities for buyouts and IPOs, most other places around the world don’t have the deep financial markets and the cashed up software companies to make similar exits possible for local startup businesses.

Again that difficulty in successfully funding exits shows that simply trying to copy the US tech industry model is probably not going to work for most places tying to building their own Silicon Valleys, although it seems China is about to try.

The other message is that the IPO or buyout route is not necessarily the right path for every business, as Salmon says: “Maybe the best solution is not to take any outside funding at all, and not to try to grow too fast.”

“Some family companies have been around for hundreds of years: if you own your own business, and you don’t get greedy, you can build a very pleasant life for yourself. You just won’t end up on any list of young billionaires.”

Connecting the village from outside the grid

Cheap solar power and cellular phone base stations promise to change poor and remote communities.

Villages and small towns in Mexico have a rough deal, the privatisations of government monopolies during the 1990s meant most of them were cut off from the telecommunications networks rolled out at the turn of the century.

It’s taken a while for engineers to find a way to figure out an open source alternative to cellular base stations but now they have and it promises to change the model of economic development in poor regions.

Wired describes how community groups are bringing mobile communications to the poorer and more remote parts of Mexico.

The rollout of Open BSC is an example of how small scale operations can compliment the larger commercial networks – while major operators like Telemex can ignore smaller communities that offer little if any return, local groups can setup their own not for profit services which give villages connectivity.

A similar thing is developing with solar power, with PV cells becoming affordable communities which had little chance of being connected to their country’s national grid are now able electricity.

That poor or remote areas can now be connected to power and communications without massive subsidies or infrastructure investment is a radical change from the Twentieth Century model of economic development, these advantages change the game on many levels.

Imagining a world with fewer cars

How will our society change if cars are no longer important?

Last weekend Uber founder Travis Kalanick told a tech conference in Munich, Germany how his company wants to take 400,000 cars off Europe’s road by the end of the year.

On Monday, the Australian Bureau of Statistics reported the nation’s car sales were at best flat, a trend that’s been apparent for two years and one being repeated around the world as younger adults turn away from automobiles.

The technology that defined the Twentieth Century was the motor car; it reshaped our cities, changed our lifestyles and drove the consumer economy.

Now that economy is changing and the motor car, and consumerism in general, is in decline.

Which leads to the thought of what our communities will look like if the motor car isn’t the defining feature?

A challenge for governments

One obvious answer is we won’t need as many roads and carparks so governments will have to shift their priorities towards public transit and shared car services.

Governments are also faced with voters wanting more services closer to centres as the 1950s model of dad driving an hour to work or the 1970s model of the family driving to the shopping mall are no longer valid. This has serious ramifications for communities were land use has been zoned based upon twentieth century assumptions, not to mention their taxation bases.

That zoning problem has ramifications for property developers as well, it’s possible to argue this is already happening as pressures mount to turn over more inner city areas to high rise buildings.

Redefining retail

For retailers, it means the end of suburban big box stores and more focus on smaller stores with delivery services – a trend we’re already seeing in larger cities.

The finance industry as well is affected by the shift away from personal ownership of cars as automobile loans and leases have been a lucrative business for the last fifty years. If people are no longer fussed about owning a car then then there’s little demand for easy payment plans.

With the motor car not being as important to people, we start to see a society with very different economic underpinnings to that we became used to in the late Twentieth Century. How do you think our communities and businesses will look in a world without cars?

Links of the day: Connected cars and fast trains

CES, Connected cars, fast trains and copyright laws are today’s links

The Consumer Electronics Show in Las Vegas kicks off today with thousands of product announcements at what is by far the biggest technology convention in the world. No doubt news from the show is going to dominate the tech media for the rest of the week.

One of the biggest fields for tech vendors at CES will be Internet of Things with connected cars being in the spotlight with both BMW and General Motors leading the way.

GM unveil their connected car of the future

For some years GM have offered a connected car service with their OneStar system. At this year’s CES they’re showing how they intend to extend the service with more integrated social and navigation services.

Driving the crashless car

While we fixate on the driverless car of the future, the next few years are going to see the technologies be incrementally introduced into our motor vehicles. A good example of this is BMW’s Active Assist that CNET writer Wayne Cunningham claims he could not crash.

The story points out Active Assist isn’t affordable in today’s cars but undoubtedly much of this technology will be standard in many automobiles by the end of the decade.

California starts work on its high speed railway

Cars aren’t the only thing in the news with California turning the first soil in its Los Angeles to San Francisco high speed railway.

This troubled project has been years in the making and it’s not expected to be completed until the end of the next decade at a cost of over 60 billion dollars. An interesting aspect in the story is how communities in California’s Central Valley region are pinning their hopes of an economic resurgence from the project.

Google takedown notices explode

While cars and trains are being reinvented, the entertainment industry is still struggling with its disruption. Torrent freak reports Google is being overwhelmed with movie industry take downs notices.

As the story suggests, this campaign is hurting Google’s relationship with the movie industry.

Tony Hsieh’s field of dreams

Can Tony Hsieh build Las Vegas into a tech hub?

Stepping off the bus at Las Vegas’ Fairmont Street in the early morning is a reminder of how seedy nightlife areas look in the harsh daylight.

The reason for being in Downtown Las Vegas on a warm Monday morning was to tour Tony Hsieh’s Downtown Project, a scheme to revitalise the rundown and neglected town centre of the gambling and convention mecca.

One of the striking things about Las Vegas is how much of it pretends to be somewhere else; The Luxor, New York, New York, The Ballagio. It’s almost as if the fantasy land of the American Dream is a little embarrassed about where it is.

Not that the tourists are embarrassed with millions pouring in every year to enjoy the gambling, entertainment and the pasteurized sin on offer along Las Vegas’ glitzy strip of mega casinos.

Five miles north the mega casinos and bright lights, the luck runs out. The best thing locals have to say about Las Vegas’ downtown district is “it is better than it was.”

One of the reasons it’s better is because of one man — Tony Hsieh, the founder of online shoe retailer Zappos. Hsieh moved his business to Las Vegas because, in the entrepreneur’s view, San Francisco was ‘hostile towards company service.’

The Downtown Project is the result of a promised $350 million investment by Hsieh to invigorate the city centre of Las Vegas.

However the project has hit problems with Hseih recently stepping down from his position, layoffs being announced and community programs being cut back, leading critics to claim the project is in jeopardy.

So a tour of the project during a recent visit to Las Vegas was well timed to judge how things are going.

The tour starts with the small group meeting at The Window, an arts and meeting space on the ground floor of the Ogden residential tower which closed down in September as part of the scheme’s recent cutbacks.

Gathering in the room with our tour leader Maggie is a somewhat spooky experience with all The Window’s furniture, books and exhibits intact as on the day they were left at the end of the space’s six month lifespan.

Leaving the room’s contents intact and unpacked doesn’t engender confidence that The Window will find a new home. In all, starting the tour in the abandoned workspace is an unsettling start.

After a quick explanation of The Downtown Project, Maggie leads takes us around the corner to the Ogden’s residential entrance where we ride the elevator to Tony Hsieh’s upper level apartment.

The building doesn’t have a fourth or fourteenth floor; something familiar to anybody who’s lived in a city where property developers are courting Chinese investors — the sound of the word ‘four’ in Mandarin and Cantonese has unlucky overtones.

On the way up to the Twenty-Third floor apartment it’s also an opportunity to gauge the dynamic between the residents of the building; in reviews of the complex, many residents not associated with Hsieh’s projects have complained they have been marginalised.

Once in Hsieh’s apartment, it’s an impressive look into the domestic life of a modern successful internet tycoon with common workrooms, open plan living and a jungle themed party room featuring a hanging garden.

The most important thing about Hsieh’s apartment is it gives a sense of perspective of the project with views across the downtown district, a panorama of the Las Vegas strip with the huge casinos rearing out the suburbia and the refurbished Goldspike Casino that is becoming a community hub of sorts.

Hsieh’s apartment also gives some ideas of the plans the tycoon has, particularly the Life Is Beautiful festival that Maggie promises will be a “combination of Burning Man and South by South West.”

Returning to street level from Hsieh’s apartment does give the impression there are two breeds of residents in The Ogden; the Zappos and Downtown project crowd who treat the other residents with polite disdain.

The dismissive attitude towards non-tech outsiders is common among the technology startup communities around the world but that doesn’t make it any less jarring for those living with it in their building.

Stepping out into the mid morning heat of Las Vegas, we go around the corner to the Beat Coffeehouse, part of the Emergency Arts Collective that’s based in a disused medical centre and which, interestingly, isn’t part of Hsieh’s downtown project.

A block further along is The Container Park, the retail and entertainment hub of the Downtown Project that welcomes visitors with a giant preying mantis, shown at the beginning of this post.

The container park is an interesting rag tag collection of independently owned food and retail outlets, a test laboratory for hospitality and bricks-and-mortar shopping outlets. In the mid morning heat it’s somewhat deserted.

Unfortunately that’s where our official tour concluded and it was time to explore the dubious delights of downtown Las Vegas on our own. The locals are right, there isn’t much.

Later that evening I returned to see how The Downtown Project and downtown Las Vegas itself do at night. The difference with daytime is spectacular.

Getting off the bus at the Fremont Street Experience with its roofed in mall the boasts the world’s biggest video screen is a great difference from its dowdy daytime appearance.

Fremont Street jumps with the tame bacchanalia that’s the hallmark of Las Vegas; all the false unfulfillable promise of sexual and economic success that defines modern America.

The three block walk from West Fremont street to the Container Park is stark; while the Beat Coffeehouse is packed with drinkers enjoying the live band, the street is dark and quiet; it’s quite easy to feel uncomfortable on the short walk.

At the Container Park itself, things aren’t exactly busy. A few families play on the central green while a band plays. Few of the food stalls are selling anything and most of the shops are closing at 8pm. While it’s a Monday night, it’s not encouraging.

Leaving Downtown Las Vegas on the WAX express bus — fifteen minutes to the MGM Grand down the interstate rather than the hour plus trudge down the strip on the Deuce — it’s a good opportunity to reflect on a superficial tour of the Downtown Project.

For young families wanting to move from the wallet crushing costs of San Francisco and Silicon Valley, Las Vegas could be an option but it’s going to require more business than Zappos and a small cluster of startups.

The city is going to need more drop in spaces like The Windows — something like Google Campus is going to be needed to encourage smart young entrepreneurs to make the journey and try their luck.

Another aspect is more accommodation is needed as right now the housing stock around the downtown district is either run down or overpriced — while cheap by San Francisco or New York standards prices don’t reflect the fact Las Vegas is not an economic powerhouse like the two cities.

The Ogden building is an example of everything that is wrong in the current global property mania with high priced, high maintenance apartments aimed at rich investors rather than ordinary people and their families.

For residents transport also remains a problem although Las Vegas’ public bus system is surprisingly good, one suspects the service is subsidised by the immensely popular Deuce double decker buses carrying crowds of tourists up and down the strip.

To get a San Francisco or Brooklyn type critical mass into the city requires a high density population and a deeper local tax base which is something beyond Hsieh’s power.

Las Vegas also has the problem that it is in a competitive field with towns like Kansas City and Des Moines among others all vying to attract young entrepreneurs to their low cost communities. Just being cheaper than Mountain View or South of Market is not enough on it’s own.

Overall, it’s not hard to leave Las Vegas with a feeling that the Downtown Project is floundering. To build a community like that envisioned by Tony Hsieh takes more that $350 million and a few years work; it’s a lifetime commitment and it needs several generations of funding.

That the Fremont Street Experience and The Beat Coffeehouse are both jumping while the Container Park is quiet also tells us that building a community requires diverse groups and that no one guiding agency, private or public can build a thriving industrial centre.

It is possible that Zappos and Hsieh may plant the seed for Las Vegas to become a technology and business hub, but there’s a long way to go and it will need more than one man to drive it.

“Build it and they will come,” was something I heard constantly about the plans to invigorate the city’s centre from its supporters and Las Vegas residents. Whether the Downtown Project is Tony Hsieh’s field of dreams is for history to judge.

Google expands its campus program

Google expands its Campus program to new cities

One of the reasons for the success of London’s Silicon Roundabout neighbourhood was the Google Campus that provided a drop in centre and community venue for the growing tech hub.

It turns out the success of London’s Google Campus can be replicated, as shown by the Tel Aviv outpost having similar results.

As a consequence Google are now opening new campuses in Warsaw, São Paulo, Seoul and Madrid.

Whether these cities will have the same success as London and Tel Aviv, both had a thriving tech start up community before their Google Campuses opened, remains to be soon.

One thing is for sure, we’ll see other cities’ governments and tech communities lobbying Google to base a Campus in their tech neighbourhood. It may be worthwhile they have a look at the London one to see what works and how they can set their own local hub.

Managing the job shock

We’ve barely begun to contemplate there remains the question of what happens to the communities that depended upon old industries.

One of the mantras of technologists like myself when challenged about where jobs will come from after existing industries are automated or become redundant is “we don’t know where they will come from, but they will.”

Assuming that is true and the jobs will come in industries we’ve barely begun to contemplate there remains the question of what happens to the families and communities that depended upon the displaced industries.

Two stories this week from opposite sides of the world show how how poorly we’re answering that question; in Tasmania the Idiot Tax describes what happens to a region with no economic value while in the UK the ongoing Rotherham sex abuse scandal portrays a community debilitated by unemployment.

In both regions local industries collapsed through the 1970s and 80s and the local working classes became the welfare classes, stuck on benefits with at best poorly paid casual work available.

As the Idiot Tax describes in Tasmania’s Burnie, retired older workers reaped the benefits of a life of full time employment that town’s youngsters will never know.

History has no shortage of examples of cities that disintegrated when their economic reason for existing became no more — a process we’re seeing in Detroit today.

Now we’re seeing almost every industry being changed with far greater potential for job losses and fractured communities.

That we’ve dealt so poorly with the process over the last fifty years means we have to start thinking about how we as a society manage this adjustment.

Jobs will come to replace the ones lost, just as through the Twentieth Century new roles developed to replace those displaced from as nations like the US, France and Australia evolved from largely agricultural economies into industrial and then service industries.

But the human cost is real and there are no shortage of shrunken or abandoned towns that were once thriving market or railway hubs at the beginning of the Twentieth Century.

For technologists, this is an issue that has to be faced as we enter a period of economic and technological change far greater than the one we saw in the 1970s and 80s.

Car wreck photo courtesy of CBR1000 through sxc.hu

Cargo cults and Chinese casinos

China’s economy could be affecting casinos, which is bad news for Macau and Australia

A few days ago this site covered Patrick Chovanec’s views on the changes the world faces as China moves from an export focused economy to one that relies more on domestic consumption.

Chovanec highlighted that some industries will be winners — retailers for instance — while others such as property developers and exporting manufacturers will be losers.

It seems we can add casinos to that list of losers; the big gamblers aren’t spending money as their property collateral falls and the government tightens up on corruption.

As Quartz reports, Macau’s casinos have encountered their second consecutive quarter of revenue falls and gambling stocks are falling.

That’s bad news for Macau’s economy but it’s also not good for those who’ve hitched their fortunes to Chinese gamblers — Steve Wynn and James Packer are two people immediately spring to mind.

In the case of James Packer this is also bad news for the Australian economy as Packer’s Aussie casinos are increasingly focused on attracting Chinese ‘whales’.

For Sydney and the state of New South Wales, this is particularly bad news as the government gifted a prime site of land to build a new casino that was going to be the mainstay of the city’s tourism industry.

Not that Sydney is alone in its cargo cult like hope that building a casino will attract Chinese. In Northern Queensland, the struggling city of Cairns is pinning the future of its tourism industry on a massive complex in a flood mangrove swamp.

Should that project collapse it will be another example of the folly in believing Australia could ride on the back of a booming China for decades and staking everything on that belief.

In the 21st Century, business is more than just building a shiny object and hoping rich Chinese will come.