Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1002

Matt Levine’s most recent Money Stuff article is classic Matt Levine. It is both entertaining and informative. This one is on WeWork – the coworking startup that has committed to 14 million square feet of office space around the world and will have $18 billion in rent payments due over the next decade.

Here is an excerpt:

WeWork Cos. is a real-estate company with a couple of innovative twists on the model. First, rather than owning its buildings, it rents them: It leases office space from regular real-estate companies, adds … beer? … or whatever, and then subleases the space to tenants at higher rates. And second, rather than being valued like a real-estate company, it gets valued like a hot tech startup — “the sharing economy,” ping-pong tables, etc. — so it can raise gobs of money from SoftBank Group Corp. at a $20 billion valuation without ever getting particularly close to profitability. And look at all these words :

“Indeed, to assess WeWork by conventional metrics is to miss the point, according to [Chief Executive Officer Adam] Neumann. WeWork isn’t really a real estate company. It’s a state of consciousness, he argues, a generation of interconnected emotionally intelligent entrepreneurs.”

Really, what sort of multiple would you put on a state of consciousness?

Vipp is a 3rd generation family-owned Danish company that makes everything from kitchens and lighting to prefab homes. But it all started with a pedal-controlled waste bin that Holger Nielsen – a metalworker – crafted for his wife Marie’s salon in 1939.

I love their design philosophy . It is centered around “fewer but better products” and around lasting function over ephemeral trends.

But equally interesting is what they are doing with their Vipp Hotels . Instead of large hotels, they offer individual rooms in unique locations, such as this 55 square meter design object in the Swedish wilderness (pictured above).

The rooms they have crafted are, not surprisingly, stunning. And that’s because they are deliberately designed as a tool to showcase their kitchens, bathrooms, bins, and other products. 

Here is a quote from their CEO taken from a recent Surface article :

“Traditional retail seems to be losing its power, but what is not losing power is our desire to see or do something interesting. I see our hotels as the experience economy coming alive,” says Kasper Egelund, CEO of Denmark-based Vipp.

Clever.

Image: Vipp

When demographers talk about how educated a city or place is, they often refer to the percentage of the population with a 4-year college degree. This may seem crude, but so far it has been found to be one of the best predictors of higher income levels and overall urban prosperity .

When you add in the fact that people tend to marry people that are similar to themselves – often called assortative mating – you get a driver for income inequality. People with high incomes are marrying other people with high incomes.

In this recent New York Times article they dive into the sorting that can happen even within colleges, including elite colleges. 

According to data from the Equality of Opportunity Project, if you were born between 1980 and 1984, went to Princeton, and came from a family with a household income in the top 20%, you had a 56% chance of being married by the time you hit 32-34 years old.

However, if you came from a family with a household income in the bottom 20%, you only had a 34% of being married by the time you hit the same age bracket. One possible explanation is that if you’re from a lower income family, you simply aren’t privy to the same “clubs”, where people mate, even though you still got into Princeton.

To reinforce this point even further, the above data suggests that only about 1.3% of Princeton students that come from a poor family will ultimately end up a rich adult. About 72% of Princeton students come from a household in the top 20 percent.

When I look at the numbers for Penn, my alma mater, the marriage spread isn’t quite as dramatic. The marriage rates are 55% and 48%, respectively, for the top and bottom 20%. Maybe that makes it more egalitarian. Or maybe not.