Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 667

https://youtu.be/FXeANRVTFoM

What We Started is an interesting documentary about the birth and history of electronic dance music (EDM), starting with house music in Chicago and techno music in Detroit.

Personally, I view EDM as being distinct from house & techno, and it's generally not my favorite kind of electronic music. But that's besides the point. EDM is now wildly popular. It has crossed over into the mainstream and bled into many other genres.

What's fascinating about the story of electronic music is that it's a reminder that new ideas and new movements tend to start out on the fringe. Electronic music came from hobbyists experimenting in their garages, basements, and in warehouses. It was people tinkering with something that they were passionate about.

And let's face it, that's the only way this genre of music could have gotten started because no record label would have signed an electronic DJ back in the 1980s. It was weird and underground, and in the early years, the US mainstream media was openly hostile toward it.

It reminds me of a blog post that Chris Dixon wrote back in 2013 called, " what the smartest people do on the weekend is what everyone else will do during the week in ten years ." New ideas start on the margin.

The other fascinating thing about this story is that the emergence of new ideas are often tied to a particular time and place. Think tech and Silicon Valley. In the case of techno, which is often described as being sharper, faster, and more precise than house music, it feels right that it originated in a city like Detroit.

Detroit was extremely musical, but it was also high-tech. It was machines and assembly lines and that clearly created fertile ground for a new genre of music that relied on, well, machines.

If you've been following the housing market (in most cities) over the last year, this chart likely won't surprise you. It is from a recent City Observatory article by Joe Cortright talking about the "k-shaped housing market" that we have seen emerge over the last year. The above is for the US, but I would imagine that the chart would look similar for Canada, as well as for other countries. Here's an excerpt from the article:

There’s an obvious explanation for the different trajectories of house prices and rents:  Low income workers rent; high income workers own and buy homes. High income households have been barely grazed by the Covid-19 recession.  In fact, the combination of low interest rates and enforced savings (because many kinds of consumption spending, including dining, entertainment, travel and even much retail have been constrained by lockdowns), mean higher income households may find housing a much more attractive spending item.  If you can’t go out to dinner, or take a vacation, you have more money to spend on a new home.  Low wage workers are in the opposite situation.  Low wage workers have borne the brunt of the recession; they are also much more likely to be renters than higher income households.

It is perhaps worth reiterating that our fixation on homeownership is not universal. If you live in Switzerland -- a very wealthy country -- you're more likely to rent than own. And if you live in Germany , you're more likely to live in an apartment than in a low-rise house. Still, that doesn't change the fact that the impacts of COVID-19, and our lockdowns, have been felt unequally. This chart is an example of that.

With the recent announcement that Jeff Bezos will be stepping down as CEO of Amazon later this year, there have been countless articles about the legacy that he will be leaving behind, as well as about the next act that is expected to follow. A big part of this legacy is centered around innovation.

Do any of you remember Amazon's Fire Phone? Perhaps not. It was a complete failure. But that doesn't matter because most people only remember the successes -- everything from Amazon Prime to AWS, the latter of which was heavily doubted at the time. Isn't this a distraction from the core business of selling books?

This recent FT article by Dave Lee also makes a good point about another one of Amazon's innovations: thinking long-term and getting the market to buy in to that approach.

But another Bezos innovation has been his relationship with Wall Street, a world he was intimately familiar with, having previously  worked at investment firm DE Shaw .

Starting with his first letter to shareholders in 1997, Bezos consistently warned investors that profits would forever be secondary to growth, in what would become a recurring theme throughout Amazon’s history as it expanded its distribution network from seven dedicated facilities in 1999, to more than 1,500 today.

“Bezos has an unparalleled ability to peddle his vision to Wall Street,” says Stacy Mitchell, from the Institute for Local Self-Reliance, who advocates breaking Amazon into smaller pieces.

“He was given this incredibly long leash, selling books at a loss. Independent bookstores could have multiplied across the country with that business model. But of course, they weren’t allowed to lose money.”

It reminds me of a blog post that Fred Wilson penned at the end of last year, where he argued that speculative frenzies tend to be off in their magnitude, but directionally correct .

The point he was making was that who knows what the market cap of a company like Tesla should be. With its current market cap, it has been able to raise a lot of money without much dilution and that is going to accelerate our shift toward electric vehicles -- a good thing and the right path forward.

Of course, if you're an independent bookstore owner, you may not look at Amazon's approach as being all that innovative. In fact, you may have another word in mind.

But if you look at the parcel room in any condo or apartment building (as I do all the time), it's pretty clear to me that the majority of ecommerce transactions are happening on Amazon. A machine has been built that seemingly renders people what they want, how they want it.