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An Incubator for Glass #innovation

Over the weekend, I finished How We Got to Now, the new book by Steven Johnson.

The book interweaves technology and history and explores how they interact and shape each other. Specifically, it details the history of the now everyday—glass, cold, sound, clean, time, and light. PBS has also launched a mini-series with an episode covering each topic.

One of the most fascinating chapters is about glass. In 1204, with the sacking of Constantinople, a small group of glass blowers sailed to Venice to find refuge. There they developed their craft, but there was just one problem—the kilns at 1200 degrees would often catch fire and burn down large parts of Venice, which was mostly wood at the time. In an effort to protect the public, the government exiled all the glassmakers to the island of Murano, a mile across the Venetian Lagoon.

There, with talent concentrated, they flourished, giving birth to clear glass and, ultimately, lenses and mirrors. Lenses (from the Italian word for lentil because of their original bean shape) would lead to reading glasses, telescopes, and microscopes. The development of the mirror had the most unexpected consequences. They became pervasive, showing up, for example, in paintings like Diego Velázquez’s masterpiece, Las Meninas. All of a sudden, we could look at ourselves as individuals. We began to analyze ourselves in diaries and to scrutinize our lives. Johnson argues that, debatably, this led to new social conventions, property rights, and other legal customs revolving around the individual rather than the older, more collective units of family or kingdom.

Unknowingly, the Venetians created an innovation hub, not too different than what many cities are trying to do today (think of Chicago’s recently launched Matter). As Johnson illustrated with the example of the glassmakers moving to Murano, innovation seems to follow from increased density. This makes you appreciate city planning and zoning—otherwise seemingly simple zoning decisions have the ability to create pockets of innovation. This is one of the ways government can guide design and development.

 

Increasing Density — Corn, Cities, Fuels and Circuits

Whether it’s the number of transistors on a microchip or the number of bushels of corn per acre, there is an undeniable trend toward increasing density. This creates efficiency and thus leads to an increase in productivity. In fact, one of the key components of successful technology is its ability to be miniaturized. The rate of change, governed by different parameters, is different for each industry, but the trend is clearly up and to the right everywhere you look.

Agriculture: Bushels of Corn per Acre (USDA)

Corn-Chart

Farming productivity has steadily increased. For example, from 1950 to 2000, the average yields of America’s three most important crops (corn, soybeans, and wheat) rose 3.5x, 1.7x, and 2.5x, respectively. (SMIL/USDA 2000) It was the continuous introduction of new technologies that enabled these gains, allowing us to meet the caloric needs of a rising population. The technology came first (before 1950, of course) in the form of draft animals and the use of manure for fertilization; then came synthetic fertilizer, pesticides, and combustion engines to drive harvesters and planters. From here, the transition to automated labor (think the Google car plus a combine) and more controlled environments like greenhouses and eventually vertical farms will inevitably lead to further gains.

Urbanization: From the Fields to the Cities (the Economist)

Urbanization-Chart

The number of Americans working on farms has steadily decreased, and by 2000, less than 5% of the US population were farmers. Gains in agricultural efficiency led to a mass migration of people from rural areas to cities, resulting in a large increase in the density of people per acre. This transition further led to gains in productivity as people lived closer, shared resources, and collaborated more. These advances in productivity mean that places like New York City can have the lowest energy emissions per capita. Cities are now cultural hotspots (see the rise of the Creative Class), not too different than biodiversity hotspots, and this urbanization will continue, mostly in Asia, as the rural become the urban around the world. Urbanization is in effect an increase in the density of people per unit of area, which leads to lower energy usage per capita and a host of other efficiencies.

Energy: US Major Fuel Transitions (EIA)

EIA-Chart

The US has undergone a number of energy transitions, from wood to coal to oil, throughout our history, and each of these was one of increasing density. Wood (16.2 MJ/kg) was replaced by coal (24 MJ/kg), a 1.5x increase in energy density. Coal was then replaced by oil, which was refined into gasoline (46 MJ/kg), leading to a 1.91x increase in density. Recently, methane (55.6 MJ/kg) or natural gas has passed coal. Methane is technically denser by mass than both coal and oil, but storing large amounts of gas in a confined space has its challenges (i.e., it requires extremely high pressures or cold temperatures).

Looking at trends this way can become a good filter. For example, ethanol at 25.65 MJ/liter compared to gasoline at 34.2 MJ/liter doesn’t look like such a great improvement. Hydrogen at 123 MJ/kg and uranium at 83,140,000 MJ/kg would be logical next steps, though. We are a long way from hydrogen-powered cars, and the development of nuclear power has been all but halted due to the recent accidents in Japan, however. Still, it’s interesting to note that each major transition over the last 200 years has been one to higher energy density.

Technology: Moore’s Law

Chips-Chart

Lastly, we come to the one everyone knows — Moore’s Law, which states that every two years, the number of transistors on an integrated circuit will double. This increase in density is what has given us the Internet, mobile phones, and even solar panels (as costs have dropped due to similar production techniques). What’s interesting about this trend is the magnitude of it — in the last 40 years, computers have become 500,000x more dense. There appears to be no end in sight as just when a physical limit appears to be reached, a new technology emerges again. Ultimately, we may find ourselves with quantum or DNA computers, both of which could lead to further increases in density.

Observations and Questions

1. Trends: What’s amazing to me looking at these charts is how smooth they are. Those lines represent the culmination of technology over decades, and yet they are clear, consistently escalating trends. These are trends that you can depend on, that are investible, and that you should be aware of. If you’re starting a business, you need to think about where you’re going to be when you go to market, not just today.

2. Transitions: There are times in each of these trends when there is a major technological shift or leap. And in fact, I think we’re in the midst of one right now with farming as we move towards more controlled indoor environments. These are step changes where there is opportunity and where wealth gets created, but investing alongside incremental changes is a tough business — the solar industry has seen one company after another go out of business as they pursue small incremental changes in panel efficiency.

3. Normal vs. Log: While the lines may look similar, the technology chart is logarithmic. Every unit is a 10x increase as opposed to a 1x increase for the corn chart. This is an enormous difference: in agriculture, a gain of 2-3x over 50 years is huge, yes, but in technology, the gain may be 500,000x over the same period. The physical world behaves differently — has different constraints — than the world of software.

4. Next: You would think there have to be limits to these trends, and we may in fact eventually witness some such barriers, but the trends in yield, the trends in urbanization, the transition to methane, and the trends in technology (chips, solar, sequencing) all seem intact for the foreseeable future. These are all good things — we’ll produce more food with fewer resources, we’ll live on less land, we’ll use more efficient fuels, and we’ll have even more powerful computers in our pockets.

Polis—Cities not Countries are the Organizing Unit of the Future

A look at the trend toward urbanization and its effects on the environment, governance, and development

Background and urbanization rates of cities

The Greeks called the city the polis, meaning city-state, and believed it to be the highest form of governance, one that allowed men to fulfill their potential (of course, men—and not even all of them—were the only ones allowed to reach their potential at the time, but that’s a different discussion). The city-state was more than just a geographic region—it was an ideal.

Cities are the oldest human organization in existence. There are religions that date back 3,500 years, universities that have lasted about 1,000 years, and corporations that have existed for 700 (Stora Enso in Sweden is 700 years old, and Sumitomo Group in Japan is 400). But the town of Jericho has been continuously occupied for 10,500 years and Jerusalem about 5,000. (The Whole Earth Discipline, Stewart Brand, 2009) And not only are cities enduring, they are growing. I’ve quoted the stat before—half of the world’s population currently lives in cities, and that number will reach 75 percent by 2050 (for some perspective, it was 10 percent in 1890). Indeed, we have seen the rise of the megacity:

In recent decades, we have grown a network of megacities; 23 cities with more than 10 million people now compromise 5% of the world’s population. Greater Mumbai’s population is now larger than the population of Norway and Sweden combined; likewise, Greater Sao Paolo’s population is now roughly equal to Australia’s. (The Endless City, Ricky Burdett and Deyan Sudjic, eds., 2010)

We are moving toward a collection of connected city-states—maybe nodes are a better name for them. (This idea of nodes is beautifully represented in the art of Aaron Koblin, work that shows the world’s flight patterns—scroll down to the video.) These nodes will not only be connected to each other as never before, they’ll also produce and consume vast amounts of data, enabling what’s been called intelligent cities.

The trend is clear—the world’s population will live in intelligent connected cities or nodes. This phenomenon, which is accelerating due to increased mobility, will create an unprecedented level of connectivity and a staggering amount of complexity.

How cities mirror biology

What is even more interesting about this trend is that the growth and activity of a city mirror processes observed in biology. Indeed, it seems that we naturally self-assemble into an organism in ways no different than any other biological process that can be modeled and, in theory, predicted.

In the field of biology, Kleiber’s law states that as an animal’s mass scales, its metabolic rate scales at a rate of 3/4 to the power of the animal’s mass. An easier way to say this is as an organism grows, its metabolism becomes more efficient (i.e., if an animal doubles in weight, its metabolism is 1.68 times greater [2^3/4], not twice as great).

In the paper Growth, Innovation, Scaling, and the Pace of Life in Cities, the authors found that certain characteristics of cities follow a power law similar to Kleiber’s law and scale in proportion to population—Mumbai with 20 million people is a much more complex organism than Chicago with 4 million. The really interesting property here is the value of the exponent in the power law and its implications: when the exponent is greater than 1, the characteristic grows and thus is amplified. For values less than 1, there is a minimizing effect, representing an economy of scale.

According to the authors, the fastest growing factors and those with increasing returns or wealth creation were, in order, New Patents (1.27), Inventors (1.25), Private R&D Employment (1.34), “Super-creative” Employment (1.15), R&D establishment/employment, Total Wages, GDP (1.15), and Total Employment (1.01). The neutral-to-declining factors (i.e., those representing economies of scale) were Total Housing (1.0), Gasoline Stations (.77), Length of Electric Cables (.87), and Road Surface (.83). Cities thus have an amplifying and modelable characteristic in relation to wealth, information, and knowledge that follows a power law of roughly 1.2. Conversely, cities have economies of scale in physical infrastructure (following a power law of roughly 0.8). This is directly related to something I wrote about in an earlier post, Information vs. Real Assets—i.e., how there probably won’t be rapid growth or outliers in energy as there was information technology investing.

But here’s the rub, according to the paper:

The character of the solution changes dramatically when growth is driven by innovation and wealth creation…. Growth becomes faster than exponential, eventually leading to an infinite population in a finite amount of time given by…. This solution is characteristic of biological systems…. Thus, cities and, more generally, social organizations that are driven by economies of scale are destined to eventually stop growing.

Therefore, if cities rely on growth from only infrastructure (water, energy, roads), they’re destined to collapse, but if growth comes from innovation and wealth creation, growth is theoretically unbounded. What this means is if cities are not sustainable—i.e., if they are resource-dependent—they collapse. Think Detroit versus Singapore. But if cities can make the transition to sustainability, they end up with waves of wealth creation and innovation (think Silicon Valley, as well as non-city entities or phenomena like the Internet and, lately, social media).

However, to maintain continued growth, major innovations or adaptations must arise at an accelerated rate—not only the pace of life but how fast change occurs (the world has a wicked second derivative). In effect, the city is a form of miniaturization of infrastructure and thus is related to Kurzweill’s Law of Accelerating Returns, which posits that miniaturization and acceleration are the drivers for continuing returns. As the paper states:

Although population increases are ultimately limited by impacts on the natural environment (controlled by resources), we have shown that growth driven by innovation implies, in principle, no limit to the size of a city, providing a quantitative argument against classical ideals in urban economics.

There’s a big limit in there: the natural environment (“controlled by resources”). A certain amount of resources is required to fuel innovation. While on a relative per-capita basis, a city uses less of these resources, it requires an ever-increasing amount of resources on an absolute basis.

The conclusion is very powerful, though—the highest populated and most sustainable cities will continue to outpace the economic growth, innovation, and wealth of their peers. It works on a smaller scale as well—London has created the “silicon roundabout,” an area with very interesting start-ups, and I used to work in the same building as GroupOn, a space that has now become a magnet for all sorts of innovative companies.

Technology is going to magnify this divide even more (in effect, resulting in an increasing Gini coefficient between cities as discussed in Moncultured Man). And this has always been so—cities that adopted the printing press grew faster then those that didn’t (Print Press by Paul Kedrosky).

What questions this raises for development, governance, and the environment

Cities make countries rich. Countries that are highly urbanized have higher incomes, more stable economies, stronger institutitions. They are better able to withstand the volatility of the global economy than those with less urbanized populations. (United Nations Human Settlements Programme, UN-HABITAT, State of the World’s Cities, 2010)

On the surface, there are no real surprises here—the higher up the production food chain you are, the more valuable your economy. Cities are thus amplifiers of economic development—high urbanization leads to innovation and wealth creation. Think about Israel, Hong Kong, or Singapore, the latter of which has a GDP of $217 billion and a population of just under 5 million.

This raises some interesting questions. I couldn’t help but think of my experience in Kibera, the largest slum outside Nairobi, Kenya, when I read this statement: “To accomplish this integration, life at all scales is sustained by optimized, space-filling, hierarchical branching networks, which grow with the size of the organism as uniquely specified approximately self-similar structures.” This really turns the typical assumptions about slums on their head. Slums are really cities in their own right, and cities, as we’ve seen, are wealth creators and amplifiers of innovation. I’ve seen the complex recycling systems and industries that exist in the slums of Kenya and India. Should we not think of slums then as positive amplifiers and work within their structures to amplify wealth, innovation, and job creation? Can we not leverage the community, the network, the node that they represent for positive growth? And thinking beyond slums, should we be encouraging the acceleration of urbanization in general? Would more people come out of poverty faster if we urbanized faster? If so, how do we accomplish this? As Steward Brand said in The Whole Earth Discipline, “nothing changes a city like a cellphone and a road.”

One problem is that many of our political structures are built around nations and states, but our economies and networks are being defined by cities or nodes—the government structure hasn’t kept up with this new geography:

The great top-down nation states will only be cosmetically alive, weakened by deficits, politicians misalignment of interests and the magnification of errors by centralized systems. The pre-modernist robust model of city-states and statelings will prevail, with obsessive fiscal prudence. (Nassim Talib, Economist World in 2011)

This disparity creates far-reaching problems. For example, there are now 14 states where more than half of the population lives within a single metropolitan area, as discussed in this post. The US population was roughly 2.5 million people when it was founded in 1776 and mostly concentrated in the northeast. With a census only every decade, this will create an electorate long emergency in the US as our representation structure lags behind our geographic structure.

Since the trend is toward urbanization, we should pay special attention to how cities grow and how we can influence that process. How we build a city is the ultimate intersection of private interest and public goods. This intersection is critical, as the authors state in The Endless City: “The fact that government intervention is essential, together with the reality that there are multiple possible designs for a city, makes urbanism one of the few remaining realms of ideology.” Therefore, we need a clear agenda and roadmap that will require private and public collaboration. The good news is we can model it, and if we can model it, we should be able to develop good policy, but it will require good leadership.

As we move from nations to nodes, the role of mayors is going to be much more important. They have a defined, governable node that, if well-managed, can amplify wealth and innovation. Was Rahm Emanuel thinking about this when he left the White House? Chicago represents a well-defined governable node where he can have a huge impact.

But what does this mean for the environment? Aren’t cities bad for the planet? Actually, counter to intuition, cities are some of the most environmentally friendly areas in the world—their per-capita consumption of energy is far lower than suburban or rural populations.

Most Americans, including most New Yorkers, think of New York City as an ecological nightmare, a wasteland of concrete and garbage and diesel fumes and traffic jams, but in comparison with the rest of America it’s a model of environmental responsibility. (Green Manhattan, New Yorker, 2004)

But this isn’t about the suburbs versus the city; it’s just biological law—again, back to Growth, Innovation, Scaling, and the Pace of Life in Cities: “Because metabolic rate per unit mass decreases with body size, this relationship implies an economy of scale in energy consumption: larger organisms consume less energy per unit time and per unit mass.” Cities thus represent a path towards environmental sustainability—decreasing our footprint while increasing our wealth.

These trends will fundamentally change development and governance and could have huge positive effects on the environment if handled right. Higher urbanization means higher incomes, more stable economies, and lower carbon footprints. It makes you think about where you live—and where you want to live.

Further Reading & References
Rise of the Creative Class and Great Reset, Richard Florida
The Endless City, Ricky Burdett and Deyan Sudjic, eds.
Kleiber’s Law, Wikipedia
Polis, Wikipedia
Growth, Innovation, Scaling, and the Pace of Life in Cities, Luís M. A. Bettencourt, José Lobo, Dirk Helbing, Christian Kühnert, and Geoffrey B. West
Whole Earth Discipline, Steward Brandt
Green Manhattan, New Yorker
Megacities on the Move, Forum for the Future
The Printing Press & City State Change, Infectious Greed
Intelligent Cities, USA Today
Predicting the Climate-Changed City of the Future, New York Times
The City-States of America, Samuel Arbesman