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Behind Silicon Valley's Latest Push: To Create A New Kind Of City

BuzzFeed News spoke to Y Combinator president Sam Altman about his recent announcement to fund research, and perhaps development, for new cities.

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Sam Altman, president of Y Combinator, arrives at the Hotel Taschenbergpalais Kempinski Dresden for the 2016 Bilderberg Group conference on June 9, 2016.

Last week, Y Combinator, the startup accelerator that has spun out companies like Airbnb, Dropbox, and Reddit, revealed plans for a sprawling new research project conducted by the incubator’s nonprofit arm. “We want to study building new, better cities,” it declared in a blog post. The project’s organizers intend to approach urban development as “a blank slate” in order to venture unencumbered into tactical questions such as “Can we fit all rules for the city in 100 pages of text?” and “Should we have human-driven cars at all?”

The post discussed zoning laws and citizen-led government in particular as areas needing reboots. It alluded, succinctly, to the Bay Area’s intractable housing crisis: “Also, housing prices in many cities have become untenable and we need more housing in places people want to live.” And it argued that while existing cities can be improved, in new cities "it’s possible to do amazing things given a blank slate."

"Designing a dream city is easy; rebuilding a living one takes imagination." --Jane Jacobs https://t.co/USmEOs3a9z

The study will be conducted by YC Research, a newish nonprofit organization that started with a $10 million personal investment from Sam Altman, Y Combinator’s 31-year-old president. Altman’s profile has risen swiftly due to his role at Y Combinator, essentially a feeder system into the Silicon Valley elite. Altman’s first project through YC Research was an artificial intelligence initiative with Elon Musk, Peter Thiel (one of Altman’s mentors, although their politics differ), and others. The combined commitment was $1 billion.

Altman is complicated. This year, he attended the secretive Bilderberg Group conference in Germany, along with Thiel, Henry Kissinger, David Petraeus, and Alex Karp, the CEO of Palantir. Altman has also co-hosted a fundraiser for Obama and spoken out in favor of higher carried interest tax, arguing that venture capitalists should pay more. Altman told BuzzFeed News that YC Research is financed around that belief. “I donate up to the tax amount I think I should pay.”

Since the AI project in December, Altman has pivoted his nonprofit toward civic engagement and curing societal ills. Earlier this year, he announced plans for a pilot study in Oakland to test how humans react and perform if given a basic income, no strings attached. The three inquiries are somewhat interrelated.

Altman believes that humanity will be radically altered by current technological developments, like self-driving cars or AI, and that this could represent an opportunity to rethink how society is structured in a way to make infrastructure more efficient and people happier and more fulfilled. Technology offers freedom, and freedom presents the chance for everything to reach its full potential.

Altman told BuzzFeed News that he’s open to the possibility of investing in studies that have already made headway on these issues, but that approaching urbanism as a literal greenfield is also vital. “If I knew a really good nonprofit with people trying to design a city — with people that I thought were really great — I would still be open to funding them,” he said. “I think in general it is good to have new organizations working on old ideas. There have not been a lot of good new cities built in the U.S. or maybe not even that many cities at all built in a very long time. And so I think clearly there’s a need for some sort of a new look at the field.”

There have been a lot of these new looks in recent years. Last year, Egypt announced plans to build a new capital city. Songdo, a new city in South Korea built on 1,500 acres of reclaimed land, was finished in 2015. Prime Minister Modi has already begun his plan to launch 100 new “smart cities” in India. And both the U.S. Department of Transportation and the National Institute of Standards and Technology are running smart city challenges (although those are not starting from scratch). Amazon is involved with the former, and IBM and AT&T are participating in the latter.

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I'm still stuck on this YCombinator thing. Think abt the massive arrogance to assume you can build a better city than any humans in history.


And in fact, the intersection of tech companies and civic institutions is becoming increasingly crowded.

To take just one corporate example, the same day as the new cities announcement, The Guardian published parts of a proposal from Sidewalk Labs, a division of Google’s parent company Alphabet. (Sidewalk Labs is the arm of Alphabet involved with New York City's network of free Wi-Fi kiosks. Its mission is to work with cities to build platforms and applications that address “big urban problems.”) Sidewalk Labs is trying to offer Columbus, Ohio — winner of a $50 million grant from the DOT’s Smart City Challenge — a free demonstration of a software platform called Flow to enhance its transportation system. Experts warned the paper that proposals to subsidize ride-hailing services such as Uber (a Google investment) could hurt traditional bus services while favoring Google’s own products, like Google Maps. The proposal for Flow notes that the city would be responsible for “clearing policy hurdles” during the demo.

Though these efforts are recent, Silicon Valley is no stranger to this kind of longing for a civic tabula rasa where existing regulation doesn't apply. Thiel dreams of a sovereign seastead. Larry Page longs for a proving ground with no rules. Musk prefers to play in the Burning Man’s “blank slate” sandbox. But where previous musings often took a fantastical approach, efforts like Sidewalk Labs are more market-oriented, while Y Combinator's new city seems to fall somewhere in between. Meanwhile, back in the real world, on the same day the new cities blog post went up, Airbnb — YC’s most successful investment — announced that it was taking “the unprecedented step” of suing the city of San Francisco for making the regulatory process too onerous.

Locals may have noticed a couple other Silicon Valley tics: an allegiance to “first principles” and the cult of the neophyte. The concept of “first principles," which dates back to Aristotle, has been getting heavy play in Bay Area conference rooms recently, thanks in part to everyone’s favorite Martian, Elon Musk, who often says this dialectic helped him form SpaceX. (The term essentially means stripping a problem down to its immutable facts and then thinking fresh from there. In other words, don’t stop at “housing prices are rising”; dig all the way down to the fact that land is treated as an asset.)

YCombinator now going to derive urbanism from first principles. I hope they go full Mormon and settle in the desert. https://t.co/iyHptehMvy

Look no further than Theranos to understand the cult of the neophyte: Before the Wall Street Journal’s exposé, the fact that Elizabeth Holmes did not have a background in medicine was a badge of honor. The idea that a new entrant to a field might know better is a flattering notion, playing to Silicon Valley’s sense of exceptionalism. In the tech sector, these ways of approaching the world have often proven successful — it's why there’s no stigma attached to stunting before you know what you’re talking about.

BuzzFeed News spoke to four urban planning experts who have been involved in smart cities initiatives. All said that they welcomed the disrupting class and its quirks. “The bottom line for me is this is all really good,” professor John Fernandez, director of MIT’s Urban Metabolism Group, told BuzzFeed News. “The fact is that cities are going to be the place where we either succeed in delivering a sustainable society [or not],” he said, pointing out that as the world's urban population doubles in the next 30 to 40 years, urban energy consumption will triple globally. If Y Combinator can get tech talent currently making a gaming app “to focus in on the real problems of cities, nothing wrong with that!”

Lots of criticism about the @nolimits YC city project. Remember, Musk was "crazy" for going to space. #SmartCity https://t.co/4iBKLllytU

That said, the real world looks very different from a dry erase board. YC pointed out that 2 out of 3 people will live in cities by 2015. “What they don’t say is that 90% of that growth will be in [cities] in developing regions of the world,” Fernandez said. Population growth will happen on lower end of the income scale, with potentially some uptick in the urban middle class, both demographics that will be “very difficult to address with tech in the way that Y Combinator [describes].” Without the prospect of impact, “they are high income corporate enclaves, they are not real cities.”

Another patch of fog over New City, USA, comes in the form of new YC partner Adora Cheung, who co-wrote the post and will be in charge of hiring for the urban research project. Cheung was the co-founder of Homejoy, the on-demand house-cleaning startup backed by YC. When it shuttered in 2015 after raising $34 million, Cheung blamed class-action lawsuits for misclassifying Homejoy workers. But the problem turned out to be inability to hold on to customers after the $19 promotional price. Homejoy was sued again while shutting down for allegedly failing to pay wages owed in a timely manner or to give fair warning before mass layoffs.

In interviews with BuzzFeed, both Cheung and Altman emphasized that this was a research project, nowhere near phase one of a grand plan. “I guess what I would say in both of these is that they are research projects and meant in the spirit of that, which means it’s not like YC is going to build a new city, nor is YC going to fund nationwide basic income,” Altman said. (Although in the blog post, Altman and Cheung write, "We’re seriously interested in building new cities and we think we know how to finance it if everything else makes sense.")

Since his initial $10 million contribution to YC Research, Altman said he and Y Combinator have both made further donations. Altman has projected that the nonprofit will one day have $100 million in funding, and he told BuzzFeed News that the budget for 2016 is around $20 million. For new cities, Altman pegged the research budget as close to $500,000, assuming it will be a team of around three researchers, and depending on who gets picked.

In that light, Y Combinator’s project sounds much closer to the Seasteading Institute than Sidewalk Labs. As of 2011, Thiel had reportedly donated $1.25 million to the nonprofit, which is still searching for a host nation willing to give it autonomy. Compared to Thiel’s net worth of $2.7 billion, it was a small donation. But neither Thiel nor Altman need the research they have funded to come to fruition in order to inspire more innovation in these arenas, or enhance the perception of themselves as big thinkers exploring the vanguard of how future humans will live.

Nitasha Tiku is a senior writer for BuzzFeed News and is based in San Francisco.

Contact Nitasha Tiku at nitasha.tiku@buzzfeed.com.

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