A Brief History of Urban Tech
A New Era Looms
My perspective of capitalism recently underwent a seismic shift after finishing Carlota Perez’s Technological Revolutions and Financial Capital. The short, but dense book outlines how technological revolutions go through periodic boom / bust cycles fueled by investors first taking risks and then creating speculative bubbles that lead to financial and political crises.
Perez starts with Britain’s Industrial Revolution in the 1770s and walks us up through the 2000 Dot-Com bubble to outline a pattern: technological revolutions normally have an installation period lasting roughly 25 years, in which the core components of an industry emerge, and a deployment period lasting another 25 years, in which the technology evolves and expands to be the basis for how our industries function. If you follow her line of thinking, we are nearing the end of the “Age of Information and Telecommunications”, which started in 1971 and has powered the modern tech economy.
(Note: Chamath Palihapitiya also hints at this in the opening refrains of Social Capital’s 2019 annual letter.)
Why is this important to Urban Tech? The UK’s Urban Land Institute summarizes it nicely: “The evolution of cities has always been shaped by the adoption of new technologies and the value these bring.” The innovations of our current technological revolution have planted the seeds for the growth of new industries, such as Urban Technology.
Here is an example line we can draw to illustrate the evolution:
Tech Revolution
- The microprocessor enabled personal computing →
- Personal computing became networked by the internet →
- The internet has become more accessible in the age of apps.
Urban Tech Revolution
- In turn, computing power has moved closer to the edge →
- Evolutions in industrial design & manufacturing have enabled smart devices →
- Smart devices are beginning to create billions of data points across cities →
- Billions of data points can eventually be accessed, cleaned, and funneled into machine learning algorithms.
The innovations in hardware and software have made it cheaper and more accessible for new players, such as city governments and urban tech startups, to adopt and deploy these technologies in new modes, such as helping citizens navigate public transit, finding and reserving tables at restaurants, and assessing the capacity of city infrastructure.
(Note: I would be doing a disservice to Perez’s theory by saying the next 50 years will be the “Urban Tech Revolution”. If I have to guess, it will be a key subset to the “Age of Automation”.)
Cities, The Original Financiers
The boom / bust cycles of our current technological revolution are important to understand because they help explain how cities became the original Urban Tech investors.
After the 2008 financial crisis, in which the prime occupants of cities — financial, manufacturing, and legal companies — were pummeled, city officials sought new ways to promote economic development. Sharon Zukin, a sociologist at Brooklyn College, notes that, “…since the economic crisis of 2008, city governments have aggressively pursued economic growth by nurturing [tech] ecosystems.” She speaks about this at length in her paper “The origins and perils of development in the urban tech landscape” and later in “Seeing like a City”, where she shows how cities developed an “innovation complex”.
Cities began using different economic and policy instruments to entice technology firms to locate in recently vacated offices. They not only set the rules around developing innovation districts, but organized capital to make it a reality. Cities sought philanthropic and private capital, utilized land grants, and created economic development corporations to repurpose entire districts for innovation.
In New York, this led to Cornell Tech (land grant) and the Brooklyn Navy Yard (private capital + economic development corporation) becoming centers for tech to flourish and innovate around problems in the metropolis. In San Francisco, the city used targeted tax breaks to incentivize growing tech companies to build offices in areas hit hard by the recession (i.e. Twitter, Uber, and Square at 8th & Market).
Network Economies
Capital, economic development policy, and philanthropy thus set the stage for tech companies to create highly networked ecosystems inside of cities. Tech companies moved from the suburbs into more concentrated locales, inviting employers and investors to co-locate in those districts, enabling new businesses that thrived off their interactions and information sharing.
Extending this same network effect, new tech companies have emerged to improve how the city itself operates, devising solutions across the categories noted in my previous post: the built environment, food / water / waste, public health, energy, civic administration, and mobility. All of which contributes to an even stronger network.
This begs new questions about the future:
- How will the tech revolution translate beyond interactions and information sharing into the very fabric of the city?
- Will cities continue to use economic and policy instruments to promote urban technology? Or will private capital take the reign?
- Will cities stay highly networked after COVID-19 or will the networks become more distributed with services operating across locales?
These are all questions I hope to explore throughout this series. Stay tuned and keep following along!
