What Would a Modern Company Town Look Like?
Note: I sat on this for a couple of weeks, endlessly tweaking it and really hesitating to publish. There’s a lot of improvements that could be made, but at this point I am opting for getting it 80% of the way there and publishing rather than spending more time getting closer to 100%. I may come back and edit for clarity and brevity in the future.
That newsletter and a subsequent conversation sparked a thought: What would a company town look like today?
As Zach points out in the newsletter, there are several good reasons a company might want to offer this. Most important is the fact that it is better for their employees and therefore their company in the long run.
The value of a tech company is almost entirely driven by the people it employs and works with. Google and others figured this out a long time ago: Generally, the better care you take of the people who build the products, the better the products are. The data bear this out too:
Manufacturers gain a competitive advantage from better investments in machinery and process; software companies gain a competitive advantage from better investments in people.
But how do you do a better job investing in people? The lowest-hanging fruit has largely been harvested as it relates to employee perks and cushy office environments.
Further, those things will only go so far if the larger urban context that people live in makes them unhealthy, unhappy, and consumes an unnecessarily large portion of their income in housing and/or transportation cost.
A nice office doesn’t mean much if the city it’s located in is not conducive to the well-being of its residents.
I want to explore a modern application of the “company town” idea, but not as a town built around a big factory. If a digital-first company decides to establish a physical presence for some of its employees, it can serve as the catalyst to experiment with new forms of urban planning, socioeconomic structures, and an overall better resident experience.
Let’s jump in.
Welcome to Stripetown.
The year is 2028.
Six years ago Stripetown was conceived as an absolutely bonkers idea by a group of innovative Stripe execs and some guy from Alabama. Today, it’s a reality in the making.
Stripetown was founded on two simple ideas:
Thanks to remote work, people can now treat (a) where to live and (b) how they make a living as two completely independent decisions. A less obvious consequence of this fact is that cities can now truly be designed around what’s best for the resident. Residents are no longer captives to be taxed, but customers to be delighted.
Companies can gain a competitive advantage by offering their employees better work environments than other companies, and by clustering near complementary companies.1
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A Walk Down Stripe Lane
You step out of your Uber from the airport at the city’s edge. You notice it has a clearly defined boundary. It is unlike the endless sprawl you’re used to seeing in America: cities that just seem to never really end or begin, with no discernible edge or center.
You begin walking through a series of narrow streets. The buildings on either side of the cobblestone road frame the street into an outdoor corridor.
Suddenly, the buildings part and you emerge into a plaza. You admire the architecture. It’s familiar and beautiful, yet clearly new. It looks nothing like the office parks you’re used to.
As you soak up the refreshing traditional architecture, dozens of ebikes whizz past you. Some have delivery bags, but most just seem to be folks going about their day.
Where is this, Amsterdam?
You can’t see any buildings taller than four or five stories. And you’re struck by how nearly every building has something going on at ground level. Restaurants, shops, service providers, schools, boutiques all blend seamlessly into a delightful experience as you walk through the curved streets.
My God, it really does feel like Amsterdam.
As you walk further, you’re struck by the things you don’t see: the utility lines. The trash piled on the street. It’s all…clean.
This can’t be America, you think to yourself. Our cities are dirty! We pile the trash right on the goddamn sidewalk!
Designing for People
Well, maybe we don’t have to. Maybe the way we’ve built cities in the U.S. for the last 80 years should change. It all starts with Stripetown.
There are some planning decisions made at the beginning that would immediately differentiate Stripetown from anything that exists in the U.S. today.
For instance, it would be designed around the pedestrian and e-bike, not automobiles. Buildings and public spaces would be human scale, not car-scale. Every daily need is within a 5 minute bike ride or 15 minute walk from your front door.
I think most people can find a number of ways in which the place they live falls short. Some of this is human nature because it’s easier to identify what’s wrong than what’s right. Much of it is simply that American cities are, by and large, not very good.
I group the inadequacies of today’s cities into two broad buckets. They are either:
2. Pretty nice/convenient to live in but expensive:
Some places manage to be both unpleasant and expensive.
Even though nice urban environments exist in the U.S., it’s difficult to do what you want when you have to be sure to earn at least $350k per year just to be able to afford housing and food.
Inverting these flaws, Stripetown would be able to offer features that anyone would find compelling such as:
High resident value through sharing the Wealth of the City. This would translate into affordable housing, though not through subsidies the way most people think of it.
Walkability/Proximity/Not having to drive to every damn thing, something pretty rare in the U.S. today
Let’s look at the mechanics of how Stripetown is able to achieve such a great combination of product features for residents. First, the affordability.
Cities for People, Really
“We should build cities for people, not cars” has become somewhat of a rallying cry in the urban planning community. I could not agree more with the sentiment.
Even more important than designing the physical elements of a city for people is ensuring the economic system the city is built on is just and makes sense to people. Is a beautiful city that is economically destructive for those who live there really built “for people”?
Towards this end, Stripetown is organized on a new economic principle: it is a Commonwealth City. Here’s a short description.
The Commonwealth City retains the private use of land through a ground lease system. The land is owned by the city and leased to private developers, who in turn build things on it.
Developers are lined up to build there because the Commonwealth City offers them an unbeatable value proposition: There is no upfront land cost and they can obtain building/planning approvals in 24 hours. This also empowers more people to build things, increasing the rate of experimentation and contributing to the incremental and organic growth of the city.
Show me the Incentives and I’ll Show you the Outcome
So what’s the big deal? How is this system better for the resident? One way to think about a Commonwealth city is as a tool to better align the incentives of residents, landowners, and developers.
In cities today, the only people who benefit from the wealth created are the people who own land. This is great if you’re a landowner as you get wealthier based on the investments and efforts of other people and the government.
If you’re a renter you continually fall further behind as the wealth you create in the city flows to someone else. Even as a landowner, if you financed the purchase with a big mortgage and land values start to slide, well, it ain’t pretty.
The Commonwealth treatment of the land doesn’t mean land can’t become more valuable. It can and it should as more economic activity takes place there.
It just means that instead of the value being appropriated by a few landowners, it is shared with all residents. In the long run it might even mean land is more valuable overall since it will be used more effectively.
This Commonwealth treatment of the land means all ground rent from the leased land flows back to the residents of the city. Then they are free to do some combination of three things after paying operating expenses of the city. Each of these actions can be analogized to corporate actions today:
Reinvest the revenue back into more growth (like Amazon reinvesting all retained earnings into new product lines and expansion)
Invest in public goods for the residents of the city (like Google investing in more perks for employees to make it a better place to work)
Pay a Universal Basic Income to residents to use as they see fit (like Apple paying a dividend from excess profits)
Let’s push the analogy further. Today, the only goal any company can pursue in the long run is the maximization of economic value for its shareholders.
This works okay in the beginning when the employees, shareholders, and managers are mostly the same people. It becomes problematic as the company grows and the interests of the stockholders diverge from those of employees, managers, and partners.
Cities today aren’t much different. There is often a large conflict between the interests of those who own land and those who don’t. Landowners actually have an economic incentive to oppose new development because less new housing means their slice of land is more valuable. (Eventually this destroys value, but the time scale is so long that it doesn’t matter to the individual homeowner).
Not all landowners behave this way, but it only takes a handful of angry residents to stop new construction.
In the Commonwealth City, residents benefit from the growth in value of the city as a whole, not their individual piece of land. That means they are incentivized to encourage as much new development and economic activity as possible.
Every decision about how the city is founded and grows is made with one person in mind: the resident.3 The use of a Commonwealth City to share land value among all residents would provide a just and efficient economic foundation for the city.
Next, let’s look at how Stripetown would manage to create a beautiful, pleasant urban environment.
The Secrets of Great Places
One of the most compelling features a place like this would offer is beauty and walkability, two things hard to come by in the United States today.
The techniques to create pleasant real places aren’t exactly a secret. Most notably, they’ve been well documented by Christopher Alexander in A Pattern Language and by Jane Jacobs’ “four conditions for a vibrant and successful neighborhood”:
Primary mixed uses: “The district, and indeed as many of its internal parts as possible, must serve more than one primary function; preferably more than two. These must insure the presence of people who go outdoors on different schedules and are in the place for different purposes, but who are able to use many facilities in common.”
Small blocks: “Most blocks must be short; that is, streets and opportunities to turn corners must be frequent.”
Aged buildings: “The district must mingle buildings that vary in age and condition, including a good proportion of old ones. (…) Old ideas can sometimes use new buildings. New ideas must use old building.”
Density: “The district must have a sufficiently dense concentration of people, for whatever purpose they may be there. This includes people there because of residence.”
Cities struggle to deliver these environments today because of the complex web of incentives and policy that have evolved over the last century. No matter how bad an individual may want to build better environments, this tangle makes it effectively impossible.
Some developers are aware of Jacobs’ principles and have fought or circumvented zoning laws to build neighborhoods like she described throughout the 20th century. They have been hugely successful4 , but by far they are in the minority of what gets built.
Stripetown would acknowledge these principles from the beginning and ensure whatever building and planning regulations are put in place allow the city to expand in a human-scale manner.
Why were company towns created in the first place? Here’s Zach Caceres from Startup Cities:
J.W. Cannon understood the same thing that companies like Google do today: happy, healthy people make better employees. So Cannon built 1,600 homes, a YMCA, a movie theater, a daycare, a hospital, roads, parks, even an artificial lake.
Cannon endowed schools with land and funding. He even “supplemented the salaries of additional deputy sheriffs” in cooperation with the county. Cannon also pioneered life insurance, possibly the first entrepreneur to ever offer it to employees.
Okay, so I see why big manufacturers created company towns 100 years ago. So what is their relevance today?
The better a knowledge worker’s day to day life, the better he or she will perform5. Not only that, the environment we spend our days in only becomes more important as the type of work becomes more abstract.
How we spend our days is, of course, how we spend our lives.”
- Annie Dillard, The Writing Life
Knowledge work is creative work. Creative work requires some inputs, but also lots of space to walk, sit and think things over, and meet with people, particularly from other fields.
Free meals, nap pods, or remote work will only go so far if the broader urban environment employees live in sucks.
Further, at the risk of sounding obvious, we all have to live somewhere. The truth is most American cities have some serious shortcomings in affordability, environment quality, or both. If a better model can be created with the help of a forward-thinking company, it would be appealing to many more people than just the folks who work for Stripe.
Like any other idea, there are two ways to view this: a cynical and optimistic view. The cynical view is pretty much the same as it was of the company towns of yore. Here’s Zach from Startup Cities again:
There’s no way to deny the paternalistic element to company towns, which many people find gross. But then again, what do you think your enlightened tech company is doing when they give you therapy apps, kale lunches, and a gym membership? What do you think your city government is doing when they ban smoking, make it harder to drive downtown, and rant about “food deserts?”
Couple this with the obvious fact that company towns had huge economic concentration risk:6
[David] Murdock gutted Cannon Mills. It passed between holding companies. Global competition bankrupted acquirer Pillowtex in 1997. 4,340 Kannapolis residents lost their jobs on the same day. The mills were demolished. Kannapolis slumped.
Now the optimistic take.
Instead of viewing remote work as just a nice perk, why not view it as an opportunity to work together and build something really cool?
The vision outlined here is less about building a town around a company and more about using a company to kickstart a town. Not for its own sake, but because experiments with new models of city ownership, development, planning, and governance are desperately needed.
The approach to do this that makes the most sense to me is a partnership with a forward-thinking tech company to provide initial publicity, capital, and residents. This is far from the only option. There can and should be many more experiments like this, and I may even explore them in future issues.
As romantic as all this sounds, it is not at all implausible today (though it was implausible less than 5 years ago). If you partner with a company like Stripe to build a city like this, it could absolutely be a reality. I believe this can be done, and I’m increasingly of the opinion that it must be done.
What excites me about this idea is best summarized by a single quotation from Buckminster Fuller that is familiar to readers of the Jambalaya and has become somewhat of a north star to me:
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
I had fun imagining this and writing this post. The next step is to build it!
What other features would a startup city like this be uniquely able to offer its residents?
Which features would be compelling enough to attract you to a project like this?
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Until next time,
This is an agglomeration effect in action. In this case, instead of agglomeration occurring as a historical accident - a city was founded on a port, for instance - it happens more intentionally.
This might be familiar to some readers as another way to apply the ideas of Georgism. In my view, implementing a broad Land Value Tax seems is a political impossibility. This is a way for the land value to be held in common directly, rather than through taxation.
A great analogy is thinking of the city as the product we are building and the resident as the user. When there is a question about what features to include or how to structure it we must always ask: What is best for the user?
Homes in these developments sell or rent for a premium over homes in non-walkable neighborhoods.
Of course, this is just true of people in general.
This scenario is very unlikely in the scenario I’m proposing here. First, diversified tech companies are much less likely to disappear overnight like a manufacturer. Second, these jobs are location-independent so individuals could pretty seamlessly transition from one employer to another.