Location, location, location: Why cities still matter

April 30, 2014

Cities are where it’s all happening. Almost 90 percent of U.S. GDP and 85 percent of jobs emanate from the nation’s metropolitan areas, California Lt. Gov. Gavin Newsom said during the panel “U.S. Cities Leading the Way.”

In some cases, cities are leading the way because they have to, panelists said. As the federal dollars have dried up, they’ve been left to their own devices to figure out infrastructure issues, affordable housing, even immigration problems, noted Kathryn Wylde, president and CEO of the nonprofit Partnership for New York City. 

Cities are finding some solid partners in businesses — but they have to get over some mutual suspicion. Walter Robb, co-CEO of Whole Foods Market, talked about the importance of reaching out. Mayors like Newark’s Cory Booker and Chicago’s Rahm Emanuel have asked Robb to invest in their cities — and that makes a difference.

“This direct investment in jobs — that’s what matters to these communities and creates the growth. And the mayors have a lot to do with creating that framework and that possibility,” Robb said.

It’s not always easy: Whole Foods faced a great deal of skepticism when it opened in inner-city Detroit; Robb even wound up in shouting matches with activists. But they found common ground. “If community activists are willing to let go of what they think a company or a corporation is, and companies are willing to rethink their responsibility to participate in that community, then magical things are possible.”

Exhibit A is downtown Las Vegas, where Zappos CEO Tony Hsieh and fellow investors are creating a new hub of creativity and enterprise around Zappos’ new headquarters. They started out thinking they wanted a campus like Apple or Google. “Over time, we started to turn that thinking inside-out,” Hsieh said. “Those are great but really insular. What if we took an approach like NYU, where the campus blends into the city?”

The result — in the neighborhood Freemont East — has drawn attention from city and business leaders everywhere. Hsieh and his partners are putting $350 million of their own money into the area, funding small businesses, tech startups, arts and culture, and real estate development.

They want the area to be not only walkable and community-focused but also create serendipitous interactions and spark new ideas. Crazy, right? Not really, Hsieh said. In Harvard economist Edward Glaeser’s book “Triumph of the City is this finding: When a city doubles in size, productivity and innovation go up by 15 percent. For companies doubling in size, the opposite is true: productivity and innovation of employees goes down.

Hsieh even has a metric to define a good investment: “the collision hour.” Since most innovations come from encountering an idea outside your industry, he wants to create places — parks, coffee shops, co-working spaces — where ideas will bump into one another. Specifically 100,000 collision hours per acre per year.

While all the panelists agreed that public-private partnerships are vital for the future health of cities, Hsieh’s ideas stood out: private-private-private partnerships — all happening in a public space and for the community good.