Episode 3: Google, China, & Overnight Cities

If a trillion dollar market opportunity exists, you can bet the people at Google are thinking about it. Within X, Google’s most secretive lab, they’ve been working on solving the problem of how to make building construction more efficient in order to deal with the world’s severe and worsening urban housing shortage. By the year 2050, the global population is expected to grow by 2.2 billion people, and 90% of that growth is expected to take place in cities that are in dire need of new housing. In China, one company has figured out how to deal with this challenge by prefabricating components for skyscrapers inside of a factory.

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Interviewees

Episode Excerpt

Google & Flux

When you hear the word Google, you first and foremost associate it with search. You have a disagreement with someone: let’s Google it. You want to know where to vacation: Google it. You want to know what a company does: Google it.

But if you’ve been watching Google over the years, you know that Google does much more, than well, Google. There’s Gmail and Google Hangouts and Google Apps and Google Drive. The relationship between these offshoots became so obvious that Google just decided to brand them collectively as the “G Suite.” Somewhere along Google’s path of phenomenal success, the company decided to start working on some super interesting and hard problems that are really unrelated to the company’s initial mission of organizing the world’s information. The founders of Google have become so invested in developing other businesses that the company is no longer called Google. In January of 2016, the company was renamed Alphabet, with Google becoming just one of their subsidiaries.

Calico is Alphabet’s biotech subsidiary that is focused on extending human life. Verily is Alphabet’s life sciences subsidiary. One of their projects is to develop contact lenses for diabetics that are able to determine when a person’s glucose levels are running high. And then there is Google X, now referred to simply as “X,” the secretive think tank within Alphabet pioneering projects like the driverless car that will one day make the act of driving obsolete.

On the website for X, the mission statement reads: “We’re a moonshot factory. Our mission is to invent and launch ‘moonshot’ technologies that we hope could someday make the world a radically better place.” Google can be very secretive about their work, and this is ground zero for where their secret projects are born. X’s stealth projects have one of three outcomes: they are elevated to a division within Google and made public, they are spun out to become a separate stand-alone company, or they are killed.

To date, the only company to ever come out of X and be spun out into a separate entity is Flux. I spoke with Jen Carlile, a Co-founder of Flux, who initially joined Google as a software engineer in 2010.

Jen Carlile: “The way that Google X works is they identify what they call ‘world scale problems’ and then put a group of smart people together and say, ‘try to come up with a solution for this that can be tackled within a 10 year time horizon.’ So our big hairy problem was urban population growth. And the Google X leadership recognized that the pace at which we’re building buildings and with the way that we do it now, we’re simply not going to be able to keep up with urban population growth.”

In 1803, just 3% of the world’s population resided in urban areas. I have this romantic image of living in the 18th century in a glamorous European city. But as it turns out, if you lived in a city in the early 1800’s, you were part of a minority. This was before the Industrial Revolution had caused massive migrations from the country to cities where factories were located. The result of these massive migrations? By 1900, 14% of the world’s population was living in cities. In 1950, the percentage of the world’s population that lived in cities was 30%. And then in 2008, for the first time in the history of the world, the percentage of people living in cities equaled the percentage of people who lived outside of cities.

Here’s where it gets interesting. As of 2016, there are 7.4 billion people on the planet. 2.2 billion people are expected to join us by the year 2050, and 90% of this growth is expected to take place in cities.

It’s really hard to make sense of what the building challenge looks like to house 2 billion people. Jen delivered a keynote address in 2015 at the Design Modeling Symposium in Copenhagen where she suggested that we visualize what so many people moving into cities might entail by considering the number of new buildings we need to house them. Here’s my math on the new buildings we would need. If we assume that each apartment contains four people, and each new building has an average of 50 apartments, then we would need to build 495 million new apartment buildings over the next 33 years to house all of these people. This equates to the construction of 822 buildings per day, every day, for the next 33 years. No days off. No vacations. Venture capitalists, are you listening? Now that’s what we call a well-sized market opportunity.

In Jen’s words, the mission of Flux is:

Jen Carlile: “[T]o use technology and data to make the process of designing and building buildings much more efficient.”

What does this mean? The team behind Flux spent 18 months deconstructing the process of constructing a building and identified the design phase as the place where the greatest inefficiencies were found.

Jen Carlile: “Without Flux, a pretty common way that buildings are designed is that much of design is done in silos. You can think of a building as a very complex system that has many different players and different stakeholders. There’s always an architect and then there’s a set of engineers, structural engineers, MEP engineers, people who are focused on things like the building facade, building cores. And usually these are different firms, and they have their piece of the building that they are responsible for designing. So they’ll take that piece and design it independent of all of the other systems. It’s not until pretty late in the process that the different systems actually get integrated, either in a design model or in drawings. And because it’s so late, and because they were all designed kind of in a vacuum, it’s pretty common for there to be these large clashes where redesign has to happen.”

At a high level, here’s how I understood what Jen was telling me: if you’re developing a new property, you can start with a program that has the topology of the land from NASA, the permitting requirements from the local authorities, and every other piece of data that might impact your decision-making.

Jen also said that the integrated software could eventually be used to improve coordination between the architect, the builder, and the building material fabricators during the construction process. Integrated design could let the fabricator produce steel frames for the first floor of the building, and then if you could imagine real-time delivery and assembly, the first floor might be built before the second floor is fabricated. If there was a change in the design because of site conditions or a client’s preferences, the Flux platform would allow the architect to change the drawings that would then be instantly transmitted to the fabricator, where the fabricator could then provide updated cutting instructions to its machines, thereby altering the size of the framing for the second floor made at the plant.

Jen and I didn’t discuss how much money or time could be saved by using their platform. I’m pretty confident that Flux will become a big and important company, playing an integral role in making the entire building process more efficient, but I was a little surprised to learn that Google didn’t have any plans to put their platform and their process to use in their own housing factory and get directly into the construction business.

It’s not really Google’s style to simply facilitate others who are solving big problems. If you think about how they approached smartphones, Google worked pretty closely with HTC to develop the first Android phone. And even after it was delivered, Google kept building phones under its own brand name just to show what they were capable of. In other words, Google was involved with every aspect of production of a smartphone from the software through the finished hardware product.

Here is this incredibly important and pressing problem — developing housing for an exploding population — and Google devotes resources to deconstructing the process of building housing, from start to finish, and then only solves the software component, which they subsequently spin off into a stand-alone company. Wait. Did I get that right?

From what I learned from speaking with Jen, Flux isn’t thinking about getting into the construction business any time soon. But is Google?

Sidewalk Labs

In June of 2015, Sergey Brin announced the creation of another subsidiary under Alphabet called Sidewalk Labs. In Sergey Brin’s words: “Sidewalk will focus on improving city life for everyone by developing and incubating urban technologies to address issues like cost of living, efficient transportation and energy usage.” The company is led by Dan Doctoroff, former CEO of Bloomberg L.P., and then Deputy Mayor of Economic Development and Rebuilding for the City of New York when Michael Bloomberg was Mayor.

Initially, it appeared that Sidewalk Labs was going to focus on using big data to facilitate smarter living and making broadband Internet wirelessly accessible for city people. Sidewalk Labs was one of the principal backers behind the free public WiFi kiosks that started appearing throughout New York City in 2016. In Sidewalk’s vision of the future, public data could be made available for all kinds of applications, from drivers finding parking spots to travelers finding Airbnb rooms for the night.

More recently, it was reported that Sidewalk Labs was considering acquiring land and housing hundreds of thousands of people. Sidewalk Labs has adopted something of Google’s notoriously opaque culture and hasn’t elaborated further as to whether they would get into the business of building buildings. Dan Doctoroff didn’t return my emails to be interviewed for this podcast.

I, for one, wouldn’t be surprised to see Sidewalk Labs or Google taking an interest in modular construction in the near future. It’s certainly consistent with what we know about Google wanting to solve really big problems. But if it’s not Google that is currently at the bleeding edge of factory construction for multi-family buildings, then who is?