last year it took in $7.6 billion, eclipsing
Silicon Valley as well. Boston and Cambridge were close, with $6 billion. Los
Angeles drew $5.5 billion. The likes of
Google, Apple, Microsoft, and Facebook
continue to maintain suburban campuses,
but more than half of venture-capital-financed startups are now in dense urban
neighborhoods. Amazon’s headquarters
are in downtown Seattle, and Google has
now taken over the old Port Authority
building in Manhattan.
The migration of high-tech startups
to cities is less of a reversal and more of a
historical correction. In 2006, the venture
capital icon Paul Graham said that for all
its power, Silicon Valley had a great weak-
ness. The high-tech “paradise” created
during the 1950s and 1960s “is now one
giant parking lot,” he said. “San Francisco
and Berkeley are great, but they’re 40
miles away. Silicon Valley proper is soul-
crushing suburban sprawl. It has fabulous
weather, which makes it significantly bet-
ter than the soul-crushing sprawl of most
other American cities. But a competitor
that managed to avoid sprawl would have
And that’s what happened. Urban
areas provide the diversity, creative energy,
cultural richness, vibrant street life, and
openness to new ideas that attract startup
talent. Their industrial and warehouse
buildings also provide employees with
flexible and reconfigurable work spaces.
Cities and startups are a natural match.
For years, economists, mayors, and
urbanists believed that high-tech devel-
opment was an unalloyed good thing,
and that more high-tech startups and
more venture capital investment would
“lift all boats.” But the reality is that
high-tech development has ushered in a
new phase of what I call winner-take-all
urbanism, where a relatively small num-
ber of metro areas, and a small number
of neighborhoods within them, capture
most of the benefits.
borhoods have been
hollowed out in the pro-
cess. In 1970, roughly
two-thirds of Americans
lived in middle-class
less than 40 percent of us do. The middle-
class share of the population shrank in
a whopping 203 out of 229 U.S. metro
areas between 2000 and 2014. And places
where the middle class is smallest include
such superstar cities and tech hubs as New
York, San Francisco, Boston, Los Angeles,
Houston, and Washington, D.C.
Despite all this, it wouldn’t make
any sense to put the brakes on high-tech
development. Doing so would only cut
off a huge source of innovation and economic development. High-tech industry remains a major driver of economic
progress and jobs, and it provides much-needed tax revenues that cities can use to
address and mitigate the problems that
come with financial success.
But if high-tech development causes
problems, and stopping it doesn’t solve
those problems, what comes next?
High-tech companies should—out
of self-interest, if for no other reason—
embrace a shift to a kind of urbanism
that allows many more people, espe-
cially blue-collar and service workers, to
share in the gains of urban development.
The superstar cities they’ve helped cre-
ate cannot survive when nurses, EMTs,
teachers, police officers, and other ser-
vice providers can no longer afford to
live in them.
Here’s how they can do it. First, they
can work with cities to help build more
housing, which would reduce housing
prices. They can support efforts to liberalize outdated zoning and building codes
to enable more housing construction,
and invest in the development of more
affordable housing for service and blue-collar workers.
Second, they can work for, support,
and invest in the development of more
and better public transit to connect outlying areas to booming cores and tech
clusters where employment is—and to
spur and generate denser real estate
and business development around those
stops and stations.
Third, they can engage the wider
business community and government
to upgrade the jobs of low-wage service
workers—who now make up more than 45
percent of the national workforce—into
higher-paying, family-supporting work.
This last idea might seem outlandish,
but it’s analogous to how the U.S. turned
low-paying manufacturing jobs of the
early 20th century into
middle-class jobs in the
1950s and 1960s. At age
13, my father left school
to work in a factory. It
took nine people—his
father, his mother, six
brothers and sisters, and him—to gener-
ate enough income to support the family.
But when he came back after serving in
World War II and took up work in the
same factory, his old job paid enough to
support a wife and kids, buy a house, and
put my brother and me through college.
For years, economists and mayors
believed that high-tech development
would “lift all boats.” The reality is a new
phase of winner-take-all urbanism.
Middle-class neighborhoods have been
hollowed out. The middle-class share of
the population shrank in 203 out of 229
U.S. metro areas between 2000 and 2014.