The Urban Stack
A very successful real estate investor recently mentioned that they proudly build “one-hundred year assets”… I raised my eyebrow (knowing very little about real estate to be honest) and quipped “In that case I could almost guarantee those assets are mis-priced as many of them won’t be around in 100 years!”
We, humanity, have conglomerated around the urban environment:
- 1% (ONE) of the world surface is built up (with 50% of land used in agriculture to support the majority of people in that 1%)
- Half the world population already lives in urban environments, 2/3 by 2050 (with the US at 89%, China at 80%). Play with these interactive graphs for insights.
- The urbanization of the world will be driven by “emerging” (and currently less urbanized) countries, with three cities in China (Chongqing, Beijing and Shanghai at or above 30m inhabitants by 2030!)
Cities truly drive the world economy (and environment)
- The top 750 cities by 2030 will generate 61% of the world GDP ($80 Trillion) and 55% of global consumer spending ($40 Trillion)
- But according to intercity-alliance C40, large cities consume 2/3 of the world’s energy and create 70% of global CO2 emissions.
- This does not include the amount of resources (and emissions) that was required to build those cities up. Concrete alone generates 8% of global CO2 emissions (3x more than aviation)…
- …or Steel which generates another 6.5–8% of annual CO2 emissions. In aggregate buildings generate more than half of total greenhouse has emissions.
- And as an industry it’s huge with PWC estimating global real-estate in 2020 to surpass $45 Trillion
So if we were to focus on on specific area where scientific and technological innovation could address a very large TAM, and make a very large dent in climate change, the urban environment would certainly be a good place to start.
But my comment to the real-estate investor, didn’t only refer to the fact that 90% of urban environments are coastal, and therefore at greater risk of water levels rising. But also, because I think of urban enviornments as a “stack” upon which the built world (and those of us who inhabit it) depend on.
As a live example, the government of Indonesia is relocating the capital to a yet-to-be-built city in large part because the underlying stack upon which Jakarta is built cannot support its 9m inhabitants… and the city is sinking.
But I think this notion of Urban Stack goes broader than physical assets and utilities. It incorporates both the platform upon which urban enviornments are built (land and buildings), but also inputs (food, water, energy) outputs (emissions, liquid and solid waste) and the interactions of its residents with that environment (transport, health, employment), all of which generates inmense amounts of data about the interoperability of all of these layers.
If we start thinking about the urban environment as this interconnected stack, we can also start to think about how computation on top of the various inter-related layers can help make urban centres more efficient. As an example, Unacast (NB: I was previously a Board member) is using aggregated location data to turn the City into a “product” allowing city planners, real estate developers, mobility providers to use real-world data to make investment and planning decisions.
To map the Urban Stack and model scenarios and investments, digital twins of each of the layers allow us to model the dependency on each stack on another, and to simulate changes, buildings, bus lanes, and even black-swan scenarios like virus outbreaks or terrorism. Sensat in the UK does just that, creating digital models of the complex urban environments and its intricate, interconnected layers.
A number of companies are applying machine learning to optimise the electricity grids, such as Cosmo Tech from France and Invenia in Cambridge,UK. Others, such as Spire and Planet send stuff (satellites) out of this world to help us make sense of it. As an example Planet Labs is working with the World Bank to help drive sustainable urban development.
Back on Earth, a number of startups are seeking to minimise the massive impact from concrete and steel that we had mentioned before. CarbonCure, backed by Bill Gates, seeks to recycle concrete. Solidia (who has partnered and received backing from LaFarge) has created a new way to make concrete with significantly less water. Architects and designers are involved as well, with some creating buildings out of mycelium (yes…as in the meshy part of mushrooms… super strong as it turns out)
Others are building multi-story apartment buildings (like the one below in Finland) not out of steel and concrete, but out of timber — 13 stories supported completely by wood.
If, as is unfortunately likely, the global temperatures continue to increase, the irony is that we will spend a lot of electricity on keeping ourselves cooler (or warmer as climate change makes the extreme more extreme). A key way to impact our home temperature costs (and help the planet) is insulation. Climate Recovery in Sweden uses recycled glass to help insulate pipes. Treau in the US is seeking to make more environmentally friendly A/C and heaters.
And there are dozens of other sectors (and thousands of companies) seeking to innovate to support the urban stack, from mobility (scooters, bikes, smart parking tech, etc), making food more efficiently -and even within urban environment (vertical farming, in-retail produce, protein-from-thin-air), smart buildings (IIoT, sensors for better use of space and resources, energy-saving elevators, etc), waste management — don’t laugh it’s $330 billion size market in US alone ( Some cool examples here). Etc, Etc, Etc…
So in terms of thinking of an area of opportunity for innovation (and investment), the Urban Stack is a very broad space of Trillions and Trillions of dollars, and one in which more critically, the majority of us live day to day, and is impacting our planet the most day to day.
An obligatory shout out to Shaun Abrahamson who first got me to look into the “Urban Stack” and whose fund Urban.us invests and accelerates companies in the space.
