I was lucky enough to recently attend the presentation of the Pritzker Prize in Architecture at the Rijksmuseum in Amsterdam. This year’s winner was Shigeru Ban, who is probably best known for his work in disaster relief using cheap materials like cardboard tubes. His do-it-yourself refugee shelters have been used in Japan, Turkey, and Rawanda. Check out his cardboard cathedral built after the earthquake in Christchurch, New Zealand.
Romantics love problems; scientists discover and analyze problems; engineers solve problems. —Stewart Brand, Whole Earth Discipline
Science defines the rules of the world — it’s our textbook of life. It tells us what happens when we add X to Y or when we heat a liquid to Z degrees. Science is the sum of all knowledge of the natural world, formed by thought and confirmed by observation. It consists of asking questions — often big questions — and forming and testing hypotheses. It’s pure in the sense that it is governed by facts — it must be observed to be true. And while we’re surrounded by its properties at all times, science seems to largely exist on paper and in labs, making it seem perhaps complicated, esoteric, or unapproachable. Research is out of the purview of the average person as it is performed inside labs in large companies and universities and is often incredibly expensive — the Hadron collider cost $4.75 billion. It has no initial economic utility other than the acquisition of knowledge, which may be the most important pursuit. But science does connect ideas and even people. Indeed, scientific facts can be viewed as a growing web — a series of findings linking to each other, building on previous work, constantly peer reviewed. It gives us “links” quite literally — for example, the physics community created the original World Wide Web to connect people and research papers.
Engineering is the application of science to solve problems and, in the process, to invent technology. Engineering makes science practical — it gives us toilets that flush, light bulbs, cars, and computers. Simply put, engineers build things — sometimes very big things, like power plants or the Burj Dubai; sometimes very small things like an integrated circuit or an iPhone. As technology scales, it creates commerce and industry. Industries — whether the energy, software, or agricultural industries — are thus scaled versions of engineering. Engineers are governed by science, by rules, and are deeply practical, often maximizing utility at the expense of beauty. One utility of engineering is the creation of wealth, sometimes massive wealth, as in the case of Bill Gates and Microsoft, the quintessential engineering firm. And while engineering is usually conducted by private companies, we interact with it each day as we drive over bridges, type on our keyboards, and talk on the phone. In this way, engineering is accessible to all of us through experience, much more so than the more amorphous concept of “science.”
Now let’s cross the boundary from science to the humanities. At the University of Illinois, the engineers were all “north of Green Street” — that was their world. Now we’re heading “south of Green Street” into something different, into the world of design. Design is the application of technology to humanity, and in this process, designers invents products — often beautiful products — for our use. The iPhone, through design, transforms technology, produced by engineers that were governed by science, into something different — a product. To get to us, these products move through identifiable stages: from the lab (science) to clunky technology (engineering) to beautiful products (design). The designer plans and creates, whether it be user interfaces (graphic design that users interact with), everyday products like tea kettles (little banalities raised, through design, some would say to the level of art, but we’ll come back to that later), and buildings and homes (architects, after all, are designers as well, albeit on a grand scale). If engineers build, designers create — they apply art, they seek beauty, and they say things like “good fit” or that a product “has strong lines.” Design is the elegant and original use of engineering to create beautiful products, and in this sense, Apple is a design firm. Consumers identify with Apple products; many believe they are beautiful.
And now we’ve introduced the concept of beauty, moving closer to art and away from cold fact. The introduction of beauty often (but not always) leads to less utility — there can be a trade-off. While beautiful, Frank Lloyd Wright’s houses were not that practical — they notoriously leaked. And while scientific research is performed in the lab, and engineering is often performed in typical office spaces, design is performed in boutiques or studios by the creative class. Even if it looks like an office, it’s a studio (style matters, especially to designers). And if design is the injection of art into engineering, then the studio element is even more appropriate. So is the art metaphor a step too far? I would argue it is not. The iPod (a beautiful piece of design) is in MoMA, after all — Windows 95 (a feat of software engineering) is not.
So now we finally get to art. Asking “what is art” is in itself a loaded question. Art is often beautiful, but it’s more than that. Art in itself is a question, as Duchamp taught us. It can be beautiful, but it also encompasses a thought and provokes a question. The best art, in my opinion, does both — it is a beautiful thought. Art is pure in the sense that it (unlike science, which encompasses a different kind of purity) does not rely on facts — it’s emotional, it wants to make you feel. We use words like imagination, beauty, and originality to describe art and how it expresses ideas and feelings, and in this way, art is subjective, it cannot be “proven.” But like science, there is an element of peer review to art — the auctions, the owners, the provenance, the museums, all linking to each other. Also a form of linking, artists build upon each other’s work, sometimes approaching what some may deem as copying or theft. But in the art world, it is called “appropriation,” though perhaps it’s merely a matter of semantics; after all, as Picasso said, “Good artists copy, great artists steal.” In any event, like science, art thus exists as a web, created by individuals in coffee shops and studios, linking and relinking across geography and time.
Art is not a product — it has no utility in our everyday world — it stands on its own without a “use.” In fact, many artists claim that making functional or commercial products is in fact selling out. Yet it has value, both aesthetically and monetarily. Indeed, the best art sells for far more than any individually designed product or any piece of technology. Most months, hundreds of millions of dollars of art exchange hands through auction houses like Sotheby’s and Christie’s.
And while it may seem that we’ve traveled far from science to get to art, we’ve ended up back at the beginning. We’ve traveled a circle, not a line, converging at both scientist and artist. The best science is beautiful (not in appearance but in meaning, in purpose, in its very exploration), and the best art tells us something about the world around us. They ask the same question — what makes us human — they just use different tools. The scientist’s approach is quite literal — atoms, molecules, and the big bang — while the artist invokes in us wonder and curiosity and gives us a sense of our commonality. While these may at first seem fundamentally different, we’re learning that much of art, in seeking to answer the question of what makes us human, can be explained by evolution.
We live each day surrounded by engineering and design, by products and buildings that we can see and touch, but we don’t contemplate or explore science or art nearly enough. We may visit museums occasionally but not often; we rarely encounter/recognize hard science in our daily lives. This, to me, is unfortunate, because the big, interesting questions are at the beginning and the end; the incremental is in the middle:
We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time. —T.S. Eliot, Little Gidding
I’ve always been interested in real estate and architecture. My original major was Civil Engineering, but after taking the introductory course and discovering that I’d have to learn way more about concrete than I ever wanted to know, I switched to Electrical Engineering. Ever since then, though, I’ve been trying to find ways to be involved—bought a rental during the boom (bad idea), built out our offices, and was super involved in building our house, which was a ton of fun.
Early in 2011, I was going back and forth between companies and wishing everyone could be in the same space. I was working with Matt Garrison and Marc Muinzer on Energy.Me already, and they had an extensive knowledge and great track record in real estate, so we started to look at buying a building for our companies and projects. We ended up settling on a building in Chicago’s West Loop neighborhood and moved everyone into the space—it was open plan with 18-feet ceilings, bright, and well designed. (It took some work, though, including the extraction of a giant fish tank supported by steel beams.)
With the success of our first property, we began to look at similar buildings. We’ve been lucky on timing, but there is a logic to our strategy. Our belief was—and is—that there is limited supply of loft office buildings, particularly open spaces with high ceilings and good windows. Often, you can buy these buildings at far below replacement costs—no one is going to build a brick and timber loft building today; it’s way too expensive. Thus, you’re buying with a margin of safety in a market with limited supply. Also, from a timing standpoint, by 2011 the banks had finally written down the values on these assets to a point they were ready to transact—most of what we bought was from banks or through bankruptcies.
I believe the spaces you live and work in have a significant effect on you mentally. Big, open, bright spaces make you happy and feel more creative, versus a dingy, dark office that makes you want to leave. There is no better problem to solve than your own, and this is probably the easiest way to find an opportunity—be a user and design for yourself. I knew what kind of office we wanted and figured if we want it, other people do as well. We’re nearly fully occupied everywhere we own and can’t find much else to buy, which is the best indicator. Our portfolio has grown to more than 600,000 square feet of mostly loft office, and we’ve assembled an awesome team including leasing, property management, construction management, and acquisitions.
Recently, there has been a shift in how we work, moving from isolated private offices or high-walled cubes to open spaces with more room to collaborate. More and more, the office is where you collaborate, and home or a coffee shop is where you get heads-down work done. There’s also a major trend from the suburbs to the city with some high-profile companies moving back to the city—we think this trend will continue. It feels like every week, someone launches a new co-working space or incubator, which admittedly makes me a little nervous. However, the trends are strong towards the city, towards our neighborhoods (mostly River North and the West Loop), and towards open, more collaborative spaces.
To me, Chicago’s West Loop feels like NYC’s Chelsea did ten years ago, and if it becomes anything close to that in the coming years, it will be a premier neighborhood. And if by some miracle the highway actually becomes a park, the neighborhood will be all the more desirable. From here, we think you’ll see these types of assets become more of an institutional-level asset class as the credit quality of the tenant mix slowly improves.
As for our office—finally—after three moves in the last couple of years, we’ve settled into a great new building (at least semi-permanently) at 1130 W. Monroe. The 35,000-square-feet concrete loft building used to be a manufacturing facility and has a 45-feet-tall atrium that is stunning. We’ve moved our companies there, filling the third floor, and have some exciting new companies moving onto the second floor within the next few months. Over the next year, we’ll build out the rest of the building into a large co-working space filled with companies whose work we admire and whose people we are excited to work with.
If you’re interested in an innovative, entrepreneurial, creative environment and are in the West Loop, hit us up, and we’ll give you a tour.
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)
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)
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)
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
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.
The thing about the flag structure is I didn’t have to invent composition. —Jasper Johns
Imagine that you have a string of 100 interchangeable lights: they have a plug on each end, and you can plug each individual light into any other light. Each time you plug in a light that is off to another light that is off, there is a 50/50 chance it turns on. Your job is to turn off the entire strip.
It’s a problem with 100 variables with two outcomes each. The chance of finding the answer is thus:
2 ^ 100 = 1.267 x 10^30 choices (that’s 1.267 with 30 zeros after it)
Now what if you could break the problem down into 10 sets of 10, and you knew that each set of 10 could be plugged into each other without a problem. You’d have 10 sets of problems each with two variables:
10 x 2 ^ 10 = 10 x 1,024 = 10,240 choices (reduced from an outcome set with 30 zeros)
Maybe we can go one more step; maybe we can actually break it down to 20 sets of 5, or we can break each set of 10 in half. We’d end up with 20 sets of 5 two-variable problems:
20 x 2 ^ 5 = 20 x 32 = 640 choices (reduced from 10,240)
In narrowing the problem into congruent sets, we’ve reduced the possible outcomes from a hopeless number with 30 zeros to a manageable set of 640 choices. This example is from Notes on the Synthesis of Form by Christopher Alexander, an architecture book that defined the language and approach of much of architecture and design since the 1960s. Alexander sets out a process by which we first understand the requirements (the program), we chunk the requirements into sets that are solvable and congruent, and then we work through each set, eliminating the “misfits,” in search of “fit,” which is the unification of form and function. It’s through this process that seemingly complex design problems, like building a house, are solved.
In my art, I deconstruct, and then I reconstruct. —Chuck Close
The trick is knowing how to deconstruct the problem and how to form the sets — and also knowing that the sets are congruent with each other when you assemble them. When you stand back from a Chuck Close painting and realize all those little squares perfectly form a face, you see that the real design trick — the art — is in the deconstruction.
I don’t work with inspiration. Inspiration is for amateurs. I just get to work. —Chuck Close
This process is very different from the idea of starting with a blank slate, that art and design are somehow completely intuitive and spontaneous. The reality is that design is a process, and it’s the deconstruction of that process that allows us to take perceivably inconceivable problems and reduce them to a manageable problem set. That’s not to say that it’s easy, of course. Deconstructing complex problems is hard and often requires synthesizing knowledge on a variety of subjects. But it is certainly manageable and demystifies that which is often perceived as pure genius or ineffable art, and thus unattainable by most of us. And this ability — the ability to synthesize and deconstruct — is more important than ever in an increasingly specialized yet more complex world.