Cities and outsourced infrastructure

2017-07-13 2 min read

    Earlier today I read an interesting piece about the difficulty facing Chinese bike share companies trying to enter the US market. The primary challenge is that many cities have already signed exclusive agreements with ride sharing companies and in many cases subsidized the initial investment. I find this fascinating since it highlights how even in relatively new industries it’s very easy to encounter established players that are difficult to dislodge - especially when they have the backing of the local government.

    It’s great seeing governments trying to improve the quality of life for their citizens by investing in new businesses and technologies but it has to be done right. There will never be a final version of anything since innovation will consistently push newer and superior versions. By investing too much in the current version you may preclude yourself from investing in the improved versions of the future. At the same time if you hold out waiting for the next thing you end up hurting the current experience. It’s a tough balance that’s only getting more difficult as the pace of innovation increases.

    Rather than partnering I’d like to see the government offer time based licenses and leases on the various components of city infrastructure. This would allow companies to evaluate the opportunity and use that to determine the price they’d be willing to pay. It would also encourage them to futureproof their developments as much as possible in order to take advantage of a constantly changing world. This wouldn’t work for major infrastructure investments that would last multiple decades, such as subways and roads, but I do see it working out for improvements that last a decade.