This is the third and final part of a series on knowing how to choose which city or cities to travel to and live in for lifestyle design. The first part details why cities form and what makes the existing cities so successful in surviving the test of time. The second part covers extra factors that energise successful cities and explains why you should be cautious about planned cities.
Core functions
What comes to mind when you think of Las Vegas? How about Venice? Or Frankfurt?
Chances are you thought of gambling and nightlife for the first, tourism for the second and finance for the third.
Those associations are no coincidence. They’re the core functions of those cities.
To create an association, those cities need what the investor Warren Buffett calls “share of mind”. To get share of mind, those cities need a strong reputation in a particular domain. This is where specialisation in a core function comes in.
Las Vegas, Nevada was nothing but a desert water stop on the railroads when it was founded as a city in 1905. In the 1930s the local economy was taking a hit from the Great Depression. It needed a way to revitalise itself.
The solution? Become a gambling and entertainment hub.
Nevada became the first state in the US to legalise gambling and to this day remains one of few states to legalise most forms of gambling. Coupled with the development of highways connecting it with the rest of the country, the construction of Hoover Dam, and the passing of lax divorce laws, the city attracted visitors and a growing population. Hotels and casinos sprang up everywhere. By the 1960s, investment in Vegas was so large, it had become the definitive entertainment hub in the US.
Today, Las Vegas’s reputation precedes itself. The city has the moniker ‘The Entertainment Capital of The World’. Openings of new hotels, resorts and entertainment complexes continue. People come to Vegas for one reason and one reason only: fun. This is its core function.
To the west of Nevada lies a place with an entirely different yet famous core function: tech entrepreneurship. It’s the San Francisco Bay Area, better known as Silicon Valley.
Silicon Valley started off as a little-known area with burgeoning companies focused on silicon transistor manufacture. Taking advantage of California’s amenable state laws, more and more IT companies prospered and by the late 20th century it had become synonymous with the US tech industry as a whole.
Today the area contains many of the most famous companies in the world and is responsible for one-third of all US venture capital investment. Housing is so expensive that virtually only people with high-paying tech jobs can afford to live there. People come to Silicon Valley for one reason and one reason only: tech. This is its core function.
Why do some cities focus on a specific core function?
The power of specialisation has been known since the dawn of time. People leverage their personal talents. Collectives strengthen particular interests. It’s easy to picture an individual specialising in a particular domain but it’s hard to imagine millions of people converging upon one. But this is what happens with core function cities for millennia.
When you have a resource that you can produce with ease, you tend to take advantage of it. Regions and sometimes entire countries have based their whole economies around the production and trade of a few goods. This is what the economist David Ricardo called comparative advantage benefiting from greater margins via the specialisation of being able to produce the good easily.
Core function cities have their own comparative advantage that allows them to achieve greater margins. Sure they have lower cost margins from being able to produce their specialty at ease. But the real gains come from the strong network effects the cities get from their core functions.
When there are so many locals working in the industry of a core function, it becomes very convenient and favourable for customers to seek it out there. The network effects inside the city transform into network effects outside—favourable experience in a domain becomes share of mind through branding.
Reputation and word-of-mouth does the lion’s share of the marketing for such cities. You could search for another couples destination with canal rides and romantic restaurants but Venice does the job for you—you know you’re going to find exactly that there without risk.
A city with a core function sends a message out to the world: this is my domain. Its reputation compounds its network effects around the function reinforcing it further still. New inhabitants seek out a life related to the function. Visitors flock to indulge in it for a while. Other nations trade for the good or service the function provides.
With a city benefiting so much from a specialisation, moving to that city to take advantage of that specialisation isn’t a bad move. If you’re interested in a domain, you’d do worse than to place yourself in the path of it on a daily basis by living in an area where it’s thriving.
In the words of the author and venture capitalist Paul Graham:
“How much does it matter what message a city sends? Empirically, the answer seems to be: a lot. You might think that if you had enough strength of mind to do great things, you’d be able to transcend your environment. Where you live should make at most a couple percent difference. But if you look at the historical evidence, it seems to matter more than that. Most people who did great things were clumped together in a few places where that sort of thing was done at the time.”
“No matter how determined you are, it’s hard not to be influenced by the people around you. It’s not so much that you do whatever a city expects of you, but that you get discouraged when no one around you cares about the same things you do.”
This doesn’t mean that core function cities are necessarily one-dimensional. A great city can offer a range of functions. But it’ll always have one or two core functions that drive its economy powering everything else. If a city diversifies its core functions, it might spread itself too thin and fail to reap the benefits that come from specialising in particular areas.
But intercity specialisation does not mean a lack of diversity in intracity functions. Successful cities have a healthy range of thematic areas.
Thematic areas
Have you ever people-watched and associated who you see with certain lifestyles?
A man with a suit and briefcase being a businessman. The student wearing vintage clothing and drinking artisanal coffee being a hipster. The woman dressed head-to-toe in luxury brands being a high-end lady.
Of course stereotypes risk missing the intricate details that make each of us unique and we should be cautious about generalising from appearances. But on average, appearances tend to signal information—information that the person wants us to know.
A suit and briefcase signal a professional capitalist here to do business and make money. That’s how that person fits in and improves their chance of success in that particular endeavour. Likewise, a bohemian fashions themself in a way to fit in with a certain demographic for their own lifestyle goals.
City districts are the same. There’s little point in a London-based graphic designer from Shoreditch being in Canary Wharf unless they’re seeking funding. The financial centre of the UK offers very little to a designer in terms of lifestyle and career in the same way that hip Shoreditch lacks appeal to an investment banker.
This is the concept of thematic areas: places in a city with distinct themes. Certain types of people congregate in these areas for various lifestyle aims.
Thematic areas are microcosms of subculture. It’s easier for a subculture to flourish if there’s a well-known hub to mingle and collaborate at. It makes little economic or social sense for this concentration of people and infrastructure to diffuse out and ‘normalise’. Locals would find it harder to form connections with likeminded others and businesses would find it harder to attract customers with the lack of thematic association.
In general, the more developed a city is the more diverse its thematic areas. This is because the evolution of subcultures requires a foundation of economic success and stability.
Some of the most common thematic areas you can find in developed cities (to varying degrees) are:
– Financial/Business district: the commercial and financial hub comprised of business headquarters and banks. A professional area replete with office buildings, skyscrapers and a few high-end bars and restaurants for businesspeople to wine and dine stakeholders.
– Hipster area: an artsy-neighborhood full of countercultures. Contains lots of artisanal shops, boutiques and independent coffeehouses. Can form in more deprived districts that become gentrified or in already developed parts of town.
– Historic centre/old town: multi-purpose area that’s less about local subculture and more about tourism and historic preservation. Tends to be around the geographical centre of a city and so is close to other thematic areas such as the mainstream consumer area.
– High-end area: upmarket part of town containing luxury goods stores and services. Architecture and infrastructure are also fancy.
– Mainstream consumer/retail area: The major shopping and retail district. Can be a large vicinity with lots of malls, a long shopping street or both. Tends to be located around the centre of a city and close to the historic centre/old town for convenience.
– Academic area: a site with multiple universities and colleges. Student and bohemian heavy.
This doesn’t cover all thematic areas and some cities may have more or less. Cities can have more than one of the same type of thematic area but there’s usually a larger and more distinct version of each.
Thematic areas can be transformative for lifestyle design. Placing yourself in the vicinity of likeminded others can act as a springboard. For instance, if you’re a designer new in town and looking to get involved in the arts scene, frequenting the hipster area or arts academic area may prove beneficial.
There are many ways to find thematic areas in a city. You can discover the city on foot or research before arriving. Along with a general internet search on areas in a city, you can use Nomad List. By choosing a city and clicking on ‘Neighborhoods’, you can see a colour coded map of the city separated into certain themes. These don’t cover all types of thematic areas but they can give you a sense of what to expect which you can supplement with further research.
Whether a city has a core function and/or thematic areas, one thing it cannot go without is technology.
The impact of technology on cities: past, present and future
The world’s population is projected to grow to over 10 billion people by the end of the 21st century. More than two-thirds of the world’s population is expected to live in urban areas by 2050.
This means that the development and adaptation of cities is necessary to accommodate more people on the whole. That development has to be spearheaded through technology.
Cities can only grow in two ways: horizontally or vertically.
Technology has been used in the past for both. The evolution of transportation technology such as automobiles and trains has done more than anything else to expand the radii of cities. People no longer had to live within walking distances of their city workplaces, they could live further out and commute. In the present day, big data is used to analyse intercity transit to improve traffic flows in and out of town.
Technology has also been used to help cities grow upwards. Before the 19th century, most buildings rarely exceeded more than six floors. This was due to a combination of factors: water pressure could only go so high, materials weren’t as robust for tall structures and people preferred the convenience of being close to the street.
But the invention of the lift changed all that. By the mid-to-late 1800s, people could begin to travel up and down buildings faster. Coupled with improvements in building materials, the first skyscrapers were constructed. Soon enough, tall buildings became the norm for offices and apartment blocks, a trend which continues to this day.
Technology even has the power to transform a region from nothing into a cutting-edge metropolis in the space of a few decades.
Dubai was little more than a desert backwater post up to the 1960s. Today it’s a highly-developed city with the fourth-largest amount of skyscrapers in the world and its own indoor ski park.
Technology helped Dubai overcome its poor land geography. Advanced irrigation and desalination tech allowed Dubai to conquer its water supply limitations establishing green belts. Once the foundations were in place, huge investment in tourism and real estate attracted leading architectural and construction firms who used their own advanced tech to grow the city to the metropolis it is today.
Dubai continues to expand vertically with increasing skyscrapers and horizontally via development of more of the adjacent desert as well as through artificial islands.
With urban population density increasing, technology has to play a key role in shaping cities for the future. Cities are increasingly needing to become ‘smart’ to set themselves up for continued success. Some of the ways in which this is happening are:
– Widespread high-speed rail (HSR) networks accelerating transit times across cities and countries including use of magnetic levitation technology already making record-breaking train speeds
– Using AI to improve traffic flows
– Improving energy efficiency such as through streetlight functioning aligned with real-time data
– Automated drones and robots fulfilling business and consumer orders
– Pollution and noise control technologies
and more.
It’s likely that the leading cities of the future will be smart cities. If you enjoy an urban lifestyle but want a reduction in hangups, moving to a smart city is something you’ll want to consider.
Summary
Many successful cities have core functions: specialisations that give them a comparative advantage over other places. Core functions are powerful due to compounding network effects—excellence in providing the core function begets excellence. Cities with a core function send a message that they are the place to be if you want to prosper in the function’s domain.
Successful cities also have various thematic areas, districts where particular subcultures are focused. By frequenting a thematic area for a subculture you’re interested in, you’re likely to get more out of city life.
Technology has resulted in the ongoing transformation of cities. Various types of tech have led to horizontal and vertical growth of cities.
Technology has even allowed certain cities to overcome geographical limitations. Geographical proclivity creates a degree of determinism but not always. For example Istanbul is always likely to remain a major geopolitical chokepoint and intercontinental transit hub but the desert in Nevada was never destined to become the world’s most notorious gambling and entertainment district. Technology and opportunistic thinking changed that.
The future is one of smart cities: digitally integrated cities that use technology and data towards improving dimensions of life.
Keep all these factors in mind as you think about which city to move and live in.
