Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1200

I just received the September issue of Monocle magazine . One of the features I always read is the “Observation” on the very last page. It reads as the editor in chief’s personal blog.

In this issue he talks about the recent EU referendum and the changes he is making to his business in response to that. Monocle is headquartered in London, but he is now finding it challenging to be “an international media business in a country that hasn’t figured out how it’s going to move forward.”

His response?

They are shoring up the Zürich office. They are looking at the possibility of a second bureau somewhere on the continent. And they are similarly looking to increase staff in both Toronto and Singapore.

When one place closes up, the companies and talent will find other cities that are open for business. 

As someone who is closing one chapter this week and starting a new one, Tyler Brûlé’s Observation also reminded me of the importance of change. Oftentimes change feels uncomfortable. But that’s not necessarily a bad thing. In fact, it’s more likely a sign that you’re on to something.

What have you done lately that made you feel uncomfortable?

Do you believe that human action has caused and is causing negative outcomes with respect to the environment?

The New York Times published a feature piece this week on the flooding of the US east coast. 

Associated with the article is a fantastic infographic that shows all of the NOAA (National Oceanic and Atmospheric Administration) tide gauges up and down the eastern seaboard. It then zooms in to a few locations and shows mean sea level rise (in inches) since 1950 and the number of days of “nuisance flooding.”

Here’s a sample screenshot:

If you don’t feel like reading the full article, at least check out the infographic . The increase in nuisance flooding for some cities – such as Wilmington, N.C. (shown above) and Annapolis, MD – is astounding.

What’s frustrating about the whole climate change debate is that it remains not only a debate, but an ideological debate. Here’s a quote from the article that stood out for me:

“I’m a Republican, but I also realize, by any objective analysis, the sea level is rising,” said Jason Buelterman, the mayor of tiny Tybee Island, one of the first Georgia communities to adopt a detailed climate plan .

In other words: I’m not supposed to think this way, but I do.

Politics.

Earlier this week the Wall Street Journal published an article claiming that the celebrated venture capital firm Andreessen Horowitz was lagging behind its elite peers in terms of returns.

The firm then responded with a well-written blog post explaining why this accusation is off the mark . Their response was simply that you can’t measure returns on “unrealized gains.” Until there is a liquidity event – that is, the company gets sold or goes public – it’s just paper returns. And what matters is cash. 

As the post clearly states: “I can’t spend unrealized gains.”

But beyond just a rebuttal, the blog post is a great primer on how the venture capital industry works. We talk a lot about the tech space on this blog, so I thought some of you might find it interesting. 

One of the reasons I like to follow the VC space is that there are many similarities to real estate development. Not only in the way that the funds are structured, but also in the way that the gestation periods are incredibly long.

The post talks about this as a “J curve.” In the early years of a fund, the returns are negative. Money is going out the door to invest in immature and risky startups. And it’s not until the harvesting period (7+ years later) that the realized gains start getting paid out to investors (LPs).

It’s also interesting to note that the exit timing for companies – at least according to Andreessen Horowitz – seems to be increasing (10+ years). This is yet another similarity to real estate development where it seems to be getting harder and harder to build and deliver new supply.