Agile City

Imagining City as Platform, & the Next Era of Mobility

By Todd Simpson, Sam Pasupalak, Patrick Pichette, and Melissa Mecca

The model that wrought America’s current mass transportation system would be virtually unthinkable in a modern tech startup context. It was, in a sense, a prototype shipped as a flagship enterprise product. With a constrained feature set, it was conceived to promote a single objective: The American Dream — a big house with a yard, and thus lots of roads, highways, and cars. With this centralized, government-driven system came iteration cycles that commonly span decades; ill-suited for adjusting to consumer demands or market needs — and with little facility to achieve lasting economic viability. That was never the goal.

Today, almost every public transit system in the US and every ride taken on them is subsidized. In Washington State, for example, two-thirds of a rider’s fare is covered by subsidies; every $2.75 ride actually costs over $8 to deliver. This ratio is fairly typical. Fares are kept to a minimum to ensure access to as many individuals as possible, but also to incentivize people to actually use the system. With the average cost of automobile use at about 60 cents per mile, what fare could possibly make us overcome the displeasure of the public transportation experience?

The answer is, apparently, almost none. Ridership has been declining since 2014; and in California at least, an obvious tactic of putting housing near transit is literally DOA. From the numbers, it does not appear that altruistic notions of environmentalism are enough to prompt behavioral change either. In a time where headlines rage about the crisis of rising global temperatures, access to autos is only increasing.

TransitCenter, a transportation research and advocacy organization confirms this. In their biennial study of 1700 transit riders across NYC, Chicago, Denver, New Orleans, Los Angeles, Pittsburgh and Seattle, researchers found an 11% jump in individuals who had full-time access to a car, rising from 43 to 54 percent; and those without access to a car at all decreased, from 27 percent to 21 percent. Of those respondents who dialed back their use of mass transit, their number one ask was for greater frequency, safety, and predictability. If cost and convenience win, then fixed systems envisioned 50 years ago are woefully unable to compete with the lure of the automobile.

This trend is not universal. European cities, in general, took different approaches than the US to infrastructure and incentives under the general rubric of making cars less attractive and public transit more so. This has lead to significantly higher use of public transit across Europe, especially outside of city cores, because public infrastructure is more fully built out and the system is more convenient. This highlights the fact that incentives such as convenience and pricing will directly drive behaviors and outcomes.

Those who conceived of the original and bold model for mass transport in any geography can be forgiven for the unintended consequences of their actions. With a quick look back at virtually any technology’s evolution, we can piece together a clearer sense of where we stand in the great trajectory of urban mobility, and imagine our next and wisest investment of time and resources. The clear and proven path we can observe — in everything from phones to circuitry to coding languages, product management schemes and beyond, is a shift from hardwired, fixed formats to conceptually motivated, object-oriented, modular, agile design patterns.

As just one example, the first telephones were hardwired directly to phone cable infrastructure. One needed to be standing within a foot of the phone in order to use it. Eventually, plugs were introduced, which allowed a less prescriptive experience; users could chat while in bed or on their sofa. Soon after, of course, some genius realized they could instead plug non-phone devices to the same wiring systems. This opened up myriad other developments — most critically among them the modem, which inspired the mass adoption of BBSs and later, the world wide web. Ultimately, wireless technology replaced much of the original physical system, giving way to exponentially more use cases and opportunities. Dynamicism fuels the flywheel of growth and opportunity.

Telecommunications may have had a great pivot, but when it comes to public transportation, we are still tightly coupled to a hardwired infrastructure; we are in the era of landlines. It is time for a change.

What can and should that future look like, and what instruction can we glean from decades of patterning in technology’s evolution? This document offers a look at how Inovia sees these changes and charts a vision for why we will continue to make certain investments. It also outlines the leadership role that governments can play in orchestrating our next era of growth. While we are using transportation as a foil, the same logic applies across many urban systems.

Why Now?

We offer these ideas in part because it is our business; we are venture capitalists. However, we recognize that the companies we fund can form deeply ingrained behaviors for generations to come. What investments offer the potential to beget yet more opportunities? What investments will address the core issues of our time? The environment’s “check engine light” has been blinking frantically for a decade, and we must act swiftly and strategically to inspire change.

Core pillars of the changing face of transportation:

Data: From monitoring traffic patterns to guiding autonomous vehicles, to geolocation services and mobile devices to leverage all this data in a practical manner — cities are experiencing a time of unprecedented visibility into their citizenry, and the means to predict and manipulate their movement.

Battery Technology and Light Electric Vehicles (LEVs): There has been an explosion in types, shapes, and costs of LEV’s. The cost/mile of owning an ebike or scooter can be under 10 cents, they are cleaner and more convenient than public transit (at least for shorter trips). Soon, these vehicles will overcome perceived issues challenges of with weather, storage, safety and recharging, which still limit some from using LEV’s (although the citizens of Amsterdam don’t seem to mind riding in the rain).

Pan-City Tech: In the 60s, when America’s mass transit systems were conceived, the government may well have been the one entity that could execute such bold martialing of land, people, money, and technology. Today, however, fostering rapid, quality, global deployment of technology is de rigueur. The land question may still reside in the public domain, and so a collaborative approach is still warranted, but the rules of engagement must change.

Digital/Physical Integration: As software can now eliminate the need for legacy systems such as traffic lights and parking meters, a great deal of infrastructure is about to be disrupted. All of the technology exists to make this it happen — smartphone apps linked to LEV’s could already implement these policies.

History has taught us that top down design may not always result in the best outcomes — and that, in a digital world, we can take a different approach., and instead of designing static solutions, we can implement agile infrastructure and policies that allow cities to iterate quickly towards more optimal outcomes. This approach also allows us to start sooner; the technology exists to begin this model now.

These changes are a great opportunity for cities to become more “people first” as opposed to simply becoming “smart”. It is also something for which an agile approach is well-suited.

City Government as Platform

Stepping back to our phone analogy, it’s valuable to think about the trajectory of the company which provided that original cabling. AT&T, the direct descendent of much of that 100+ year old system, this year reported that the bulk of its revenue — 39% of $170.8B total, came from its infrastructure business. Owning the platform is a timeless and profitable endeavor.

For city governments, we believe that owning the platform means providing an API to service transportation providers for a fee, and allowing it to be completely dynamic and responsive to actual demand. The API ensures “public good” and fast market innovation. Like any API, the Open Data API could offer registration, policies, (privacy protecting) tracking, traffic management, pricing, etc. The technology to accomplish these aims, and to orchestrate traffic, already largely exists. The potential of load balancing, routing, and using a software defined network for managing traffic is a clear analogy to what already happens in the digital world and is directly adaptable. The Open API approach addresses the need to have the market drive the evolution of the service, while providing a quality control layer to ensure the public good.

The Open API approach could also transform a city’s “public transit” business model. Instead of subsidizing every public transit ride with taxes, the city can charge for API access and make a significant profit. With the advent of LEVs, the average trip cost will be significantly less expensive than it is today, allowing cities to provide equitable, safe, and convenient transportation options while still participating in the revenue generated from these services. The API will also schedule and manage legacy systems to the extent possible, giving cities a transition path and an ability to support universal services. Excitingly, the Los Angeles Department of Transportation is an early leader in this approach, proposing an open mobility standard.

There are of course, likely alternative paths — including doing nothing, or simply reallocating subsidies. For example, if a city is spending $0.30 to $1.00 per mile today in subsidies, why not simply provide free ebike / scooter services for the entire city? It will cost taxpayers the same amount (even assuming higher usage of the new services), and provide a truly environmentally friendly, and affordable service.

Next Generation Transportation Principles

What then, are the hallmarks of next-gen mobility devices and applications that would thrive in such a system? Dynamic and happiness-inducing. Here’s how we break that down:

• Convenient and comfortable: For most people, their work day starts at a specific point in time. A one-hour delay due to a mass transit meltdown simply won’t work — making consistency and reliability one of the main selling points of any potential new mode of transportation. The device or service needs to be readily accessible and must generally fit into their commute needs without adding any time. For some, this may mean a dose of fresh air; for others it may mean arriving without needing a shower, or potentially bringing a child along for the ride. There is no one single, right manifestation of “convenient”.
• Little to no fixed infrastructure requirements: We envision a future where technology can adjust roadway use (1-way streets, lane configurations, allowed vehicle types), all depending on demand.
• Safe: We are quickly entering an era where “roadway rules herd immunity” is about to collapse: increasing numbers of individuals without training or licensing are participating in the ecosystem. Without respect for the risks, norms and defense techniques this can lead to disastrous effects, and so safety must be addressed. While it’s true that cities bear a portion of responsibility for fostering safe riding and driving conditions, technology, devices, and equipment should add layers of protection, ultimately making it harder to be unsafe than it is to be safe.
• Cost effective at the mileage level: LEVs such as scooters and ebikes provide an exceptionally low cost per mile. With a confluence of other factors on this list, we can and should continue to source technology that works towards this goal.
• Environmentally net positive: As we have seen in the data, most users are not going to change their transportation mode just to save the environment. The responsibility of crafting massive behavioral change rests in large part on those who are funding and developing the next gen devices. Today, this is an active choice; over time, if we continue to do our work well, it may also be the most cost-effective choice.
• Optimized and optimizable: Technology is moving at an incredible clip, and the migration of people to urban environments is also in a major shift. It’s important for us to remember that our current environment is changing, and our technologies should also be designed for flexibility and changing demand.
• Extensible and inclusive: Government has a different charge than corporations. Governments need to reach all people — regardless of any physical or financial conditions that may impact their access to services, while corporations today must optimize for profit. While technology can and should conceivably overcome this dichotomy, corporations will increasingly bear the responsibility of providing fully inclusive systems and devices if we wish to maintain and even improve social equity.

The evolution of mobile transportation is accelerating. Instead of iteration cycles measured in multiple decades, the system will be updated in years, then months, then days. Every technology has unintended consequences — as the current state of public transportation highlights. Measuring the right outcomes and tuning out the unintended negatives is essential in this evolution. The incentive structures that are applied, of all types, will drive outcomes. That is where the API is essential — it not only directs traffic, it sets the new rules of the road, and allows incentives to be tuned when they are not driving in the right direction.

In Conclusion

Cities are increasingly the economic and social centers of the world, with some major cities having larger populations and economies than some countries. Most of the large scale technology disruption we have seen in the last fifty years has either been below the level of city integration (i.e. silicon, displays, components) or have been pan-city (i.e. the internet, the web, social networks, search, cellular). More recently we have seen technologies directly challenge legacy city systems (i.e. taxi’s), but more often IoT and advanced software is being used to make existing systems more efficient — it has been more adaptive than disruptive.

At Inovia we believe this is going to change. City operating systems are about to emerge; these operating systems will open API’s to third party providers, encapsulate city governance, and ultimately drive how livable cities of the future are. Beyond transportation, this approach will reinvent many urban systems. It should not be essential that cities get this right on day one; it is essential, however, that they build flexible and dynamic platforms with appropriate measurement and feedback loops, so that they can iterate quickly. This is our best hope for the fast integration of LEV’s and the like.

In parallel, this is a great opportunity for cities to become more “people first”, which will be a great advancement in the notion of a happy and sustainable city. It is also an amazing opportunity for startups to participate in, and push, this evolution. From those that provide components of the new operating systems and APIs, to those that attach to the API’s as they are rolled out, the possibilities seem endless.