[Auren Hoffman] Welcome to World of DaaS, a show for data enthusiasts. I'm your host, Auren Hoffman CEO of SafeGraph. For more conversations, videos, and transcripts, visit safegraph.com/podcasts.
Hello, fellow data nerds. My guest today is Dan Doctoroff. Dan is the CEO of Sidewalk Labs. Dan is also the former CEO of Bloomberg and the former deputy mayor of New York City. And before that he was managing partner at Oak Hill Capital Partners. Dan, welcome to World of DaaS.
[Dan Doctoroff] It's great to be here at World of DaaS.
[Auren Hoffman] Oh, thank you. All right. Awesome.
[Dan Doctoroff] Great to be with you. I've always been a huge fan of yours. You are a terrific entrepreneur in many different levels. So I really appreciate it.
[Auren Hoffman] Thank you, Dan. I'm a huge fan of yours as well. Obviously, we've known each other for a while. Now, I want to start with Sidewalk Labs. Because I think it's one of the most interesting companies that most people haven't heard of. It's kind of a super unique company. Maybe you can just like quickly tell us about the mission. I've got a lot of questions for you about it.
[Dan Doctoroff] Okay, well, so our mission is to improve urban life, right? Radically improve urban life. And we do it in a very unusual way. So we're probably best described as an urban innovation company. As many people know, we are owned by Alphabet. We're a bat. We were formed about six years ago. Larry Page and I came together believing that we were on the threshold of a new era in cities driven by digital technology. But what we do is we actually do two things. We engage in placemaking. We work on our own behalf with cities, with developers--
[Auren Hoffman] What is placemaking? Like actually building things?
[Dan Doctoroff] Yeah, yeah. Actually building places, right. But what we want to do is inject innovation into those places across whether it is the buildings themselves, the public spaces, mobility, physical infrastructure, digital infrastructure, or even social infrastructure. So we set with, whether it's people we're working with or on our own, very ambitious goals. And we try and figure out how to achieve those very ambitious goals. Like how do you meaningfully increase the percentage of housing that's affordable to the average or less well-off citizen? How do you get to climate positive? How can you dramatically reduce the percentage of people who actually need a car in a given area? How can you meaningfully improve health care, particularly for the people who need it the most? And we set these really ambitious goals. We try and figure out how to solve them. And out of that, we develop insights that we hopefully turn into products that we can build companies around. So, as an example, very early on we were very focused on health care and how to improve urban health care for the people who are the sickest and the poorest. We developed a concept that combines social care—like how do you provide housing security, food security? How do you get people to appointments, etcetera—with a new model for health care that combined virtual care, clinic based care, and in home care. We all connected with a very powerful data commons, if you will, that whether we as a provider or other providers can actually use. That company is now a company called Cityblock, which in four years has gone from two employees to having in its most recent round value of $6 billion. So we've done that about seven or eight times across this whole range of urban problems. And our goal is to keep incubating new companies based on those insights.
[Auren Hoffman] I noticed like one of the things about Sidewalk Labs is that you are kind of like you are an incubator. Which is which is weird for a company to say, “Hey, we're gonna start these things and spin them out.” You mentioned Cityblock. There's Replica. There's Coord. There's a whole bunch of these other companies that are out there. And it's like, you kind of maybe give them their wings and then you kind of let them go and they go raise some extra money. Then they're kind of spread on their own. What's the strategy of the incubation?
[Dan Doctoroff] Well, you know, interestingly we have in the past, when they were kind of ready to be more independent and going to experience significant headcount growth, we spun them out. We still, in all of those cases, are the largest shareholder of them. But we probably did that too soon. And so as we go forward with a bunch of the companies that we have incubated in the last year or two, we still own 100%. And those include a company called Mesa, which is a really easy to use sensor kit backed by artificial intelligence that lowers energy use in old buildings. We have a company called Delve, which has really taken off. Which is a new approach to planning districts and ultimately buildings that relies on machine learning and computational design that allows players in the development process to optimize for dozens of factors at the same time. Whether those are environmental outputs, financial outputs, or quality of life metrics.
[Auren Hoffman] How do you know like you've spun these things out too soon? Or when's the right time to do it? Is there like some sort of metric like they're at this point or they're solving this problem, and now it's the right time?
[Dan Doctoroff] Our goal, I think, going forward is to keep them longer than we did in the past. But you know, the reality is we'll spin them off when we feel—or we'll bring in other investors—we feel like we need expertise too that we can't provide. So I'll give you an example in Cityblock. In the Series A round, we brought in EmblemHealth, which is a large insurance payer that became our first partner. So we will bring in partners when we feel we need it, or we’ll bring in partners when we feel like we've ascended sort of the value curve and that other capital could be better employed for other people than for us.
[Auren Hoffman] I noticed that like, in addition to creating these companies, you also have like strategic ownership of some super interesting companies. I know Intersection is one that I'm a huge fan of. My theory is only somebody like yourself with like a private equity background would think this way. Where it's like, “Okay, we're gonna do this just with Sidewalk. We're gonna do these other things and spin them out. We're gonna do other things, we're gonna own a piece of them.” Is that correct? Or how do you think about these different types of company formation?
[Dan Doctoroff] So what I would say is, if we've got a point of view on something, a strong point of view that is generally not recognized out there in the world, but somebody else has beaten us to the punch, then…
[Auren Hoffman] They might as well join the party.
[Dan Doctoroff] At a very early stage. So let me give you a couple examples of that. We were focused on our project in Toronto. And we were very focused on getting to climate positive and very focused on the waste stream, solid waste. So we broke it down into six different components. One of them was sorting, right? Sorting is incredibly messy and inefficient. We thought, why doesn't somebody use robotics to do sorting of solid waste? So we looked around, and there was this company that had just been formed called AMP Robotics that was, we thought, ahead of where we would ever get to and from a technology perspective, but they were still sort of at the seed round. So we invested in them. Another example of that is, we believe very strongly that to create more affordable housing, we have to reconceive the way space is actually used. How do you make 500 square feet feel like 650 square feet? So we thought, again, about robotics and about making the walls in the interiors more flexible. Well there was already a company that had just spun out of the MIT Media Lab called ORI—that’s O-R-I—that had developed an early concept for robotic furniture. We invested in the series A with IKEA, actually. Because it was really consistent with our general view of the world that we have that if we're gonna actually find ways to make housing more affordable, we got to think about space differently. So we invested in them rather than start something ourselves that we didn't think we could do as well as the wonderful founders of ORI and AMP.
[Auren Hoffman] Now on cities, since you're kind of this expert, like it seems like in some cases—let’s in America—it does seem like it's pretty hard to make changes, even things that are common sense for the future. Obviously, there's other places in the world, like China, where maybe they're literally building new cities every single year. How should we, as Americans, think about city formation? There's a lot of constituents on all sides. We want to hear these constituents out, but we also want to move forward on progress. Like, how do you think we can do that in kind of a good, productive, but also relatively quick way?
[Dan Doctoroff] Well, I don't think anything in American cities happens in a quick way.
[Auren Hoffman] Okay. All right. That's fair.
[Dan Doctoroff] And that does make it very different than, say China, where things are done from a top down perspective versus what happens in America is it tends to be much more bottoms up. And so, you know, from a smart city perspective, I think it's probably fair to say that on many different dimensions, they are ahead of us. They also, by the way, don't have to worry about things like privacy, which we do, which complicate things. So I think we just have to accept that the way in which cities become more innovative is going to be bumpy. It is going to be episodic. It’s just gonna take lots of time. The good news is cities do copy other cities. When they see cities doing something successfully, they’re eager to adopt it because they have seen it work. And so I think we will see progress. It will just take time. I'm reminded of—I was the person who led the effort for New York City to save the High Line. And, you know, after we opened it up to great fanfare in 2008, there were literally within a year 35 High Lines under development around the world. Now, they all had their own local flavors or whatever. I also, with a group of friends, owned a company called Motivate, which is the parent of Citi Bike and the bike share system in Washington, Chicago, San Francisco, and a bunch of other places. Paris did the first bike share system in 2008 or so, and within a few years there were 800 bike share systems around the world.
[Auren Hoffman] Wow. Okay, so cities are copying machines if it’s working.
[Dan Doctoroff] They're always looking to others. And there's all sorts of organizations that are accelerating sort of the sharing of knowledge. I'm on the board of Bloomberg Philanthropies. They have a spectacular set of programs that cities learn from each other. That acceleration is clearly occurring. People are increasingly open to new ideas. It’s just often it needs a push. And the push is one or more cities doing something successfully, and then others will get on the bandwagon.
[Auren Hoffman] It does seem like this marriage between like technology in the physical world is becoming more increasingly important. Like how do you think we could better leverage data about the physical world to do that?
[Dan Doctoroff] Well, I think—Like you have a company you're involved in, SafeGraph, that that does that. We created a company, Replica, that does that. And it's very interesting to kind of trace the history of Replica. You know when we were working in Toronto, as I said before, you know we wanted to meaningfully lower the cost of transportation for people. Also, the way to do that was to reduce the percentage of people who need a car. So we developed a concept for mobility as a service. That combined a whole set of different transportation options like Zipcar, and we had a shuttle service. There was that sort of going to be like a Via on steroids from a specific site where people needed to go. Bike share, mass transit, etc., package them all together. And we looked around to actually get the information to model kind of what the impact would be, how much would it cost, but more importantly, would it actually be convenient for people? And we couldn't find any good data. It was terrible. The urban mobility models are horrible. They're old. They often use hand counts. They're updated every five to 10 years. We said there's got to be a better way to actually do this. So we came up with a new approach that leverages mobile phone data—all anonymized, by the way; incredibly privacy sensitive—that combines it with census data, with economic data like retail sales data, to get a dynamic picture for a metropolitan area of where people are coming from, where they're going, how they get there, and what they do along the way. That kind of data has never ever been available before. If you think about the long term kind of a capacity of that kind of data, anytime we shut down a street, what's the impact on the surrounding street? What's the impact on the stores? Anytime anybody actually does a development, what's the impact of that going to be? So the use of data, carefully managed data, and privacy sensitive data, is going to enable us to manage our cities dramatically better.
[Auren Hoffman] The cities themself are now producing a lot of valuable data. I know when you were at New York, you were really pushing this. It's really helping like researchers better understand the population. It's helping the public. Where do you see that going in the kind of the cities as the producers of data?
[Dan Doctoroff] Yeah, I think the cities are not only going to be the producers, they're going to be the consumers of it. There's another company I mentioned earlier that we have called Delve, which is this one that enables developers, cities, and planners to optimize for dozens of variables at the same time in the development process. But if we can make it simple enough, then community boards and other people can see the same sort of information. I think we can democratize sort of the development process in a way that it's never been done before. So I think as people get more and more used to having the data, making the data available in forms that are easier to manage, you will see much greater participation in decision making, which for the most part will be a very good thing.
[Auren Hoffman] We work with a lot of cities. And I've personally been super impressed with the data sophistication of the people in government. Anecdotally, it seems like these cities have come a long way in the last few years, let's say since COVID. It’s not just places like New York and L.A., which you would expect to be amazing. Like, we've had great experiences with Providence, Rhode Island, with Johns Creek, Georgia, with all over all over the country. First of all, do you think my observation is true? And second, was COVID the accelerant? Or was this just already happening and just COVID was just there as a means that it could happen.
[Dan Doctoroff] I guess the truism about COVID, which I think is largely true, is it may have accelerated a lot of things that were happening already. I think, you know, you probably saw this move toward cities becoming more sophisticated from a data perspective start about 10 years ago, and it has been building. It probably has accelerated a bit over the last two years or so. People want to manage their cities better. They have the data to do it. They're getting much more sophisticated in the ways in which they produce the data, collect the data, share the data. It’s part of a natural evolution that is ultimately going to be a generally very good thing.
[Auren Hoffman] Yeah, back in the day they would use it for public safety like CompStat for where to put police or these other things, but now it seems it's come a long way where for almost everything. For social services, for where to fix the pothole, traffic flows, to all this. Like data is now becoming the core part of the decision making.
[Dan Doctoroff] Yeah, no, absolutely. When I was deputy mayor, it was like a huge deal to even come up with metrics for each department that we can measure ourselves against. It was hard because a lot of the data just didn't exist. Today this notion of like almost the equivalent of OKRs for cities is becoming much more commonplace. But what makes it possible is having real data to measure how cities are actually doing. Cities really are sort of like the great laboratories of democracy. There tend to be much less political—I forget who said it. Maybe Fiorello La Guardia. There's no Republican or Democratic way to pick up the garbage. It's really true. The way mayors and city council members get reelected by the services improving and becoming more efficient, and everybody knows that. So for the most part what we see is very competent people. That attracts good people into government. We all know, we're all seeing this in sort of the great resignation, that particularly younger people are looking for meaning in their work. And to be perfectly honest, if you work for a competent administration that's actually changing the lives of people, there's almost no more rewarding work. I look back on my time in government still, and I've done some amazing experiences throughout my career. It's just incredibly satisfying to know that you have really improved the lives of thousands or millions of people by what you've done. So government as it gets more sophisticated and can attract better and better people will be, I think, a haven for more and more talented people.
[Auren Hoffman] You think like more and more talented people are now maybe they were not going to government before. They were taking jobs and other places. And now they're choosing more to go into government? Or do you think there's still a long way to go before government can attract that type of talent?
[Dan Doctoroff] I think it's happening. The one rule that I learned when I was in government. I had a truism with I was trying to recruit people to government. I think this is still always going to be the case, which is you cannot attract somebody into government if coming into government will necessitate a change in their lifestyle. On the other hand, if people haven’t established lifestyle.
[Auren Hoffman] So earlier in their careers or something.
[Dan Doctoroff] Then you can attract them, even though they could make a lot more money doing something else. Not everybody, but people who are really mission driven. We as a company at Sidewalk really attract mission driven people too. But I think people are looking for that kind of meaning. Set in a well-run government, you can really make a difference, and you can find that kind of meeting
[Auren Hoffman] You were CEO of Bloomberg. Bloomberg is probably the world's most revered data company. I've studied it a lot. I think it's a hard company to take lessons from because the company itself is so unique. But what do you think other data companies can learn from Bloomberg?
[Dan Doctoroff] Well, the first lesson is the value of data is directly correlated to the amount of money that can be made from the data. That's what makes Bloomberg so valuable is the information that they are providing is used by people to make a lot of money or avoid losing a lot of money. By the way, I think in a government context, that same logic applies, but you add not just financial capital but political capital as well. So that's one thing. The second thing is the reason Bloomberg is so successful is it has built an ecosystem. It has built a true network. If you think about what it does, it not only provides information like data and news that everybody sees, but analytics that people base trades off of or other actions that they might undertake. They communicate with each other. They trade with each other. You're part of a community. So the more from a data perspective that you can actually create that network effect or that sense of community, the more difficult it is to ever displace you. But in order to keep doing that, you have to be paranoid, And you have to always think that someone is going to catch you. You have to add all sorts of functions and features that make you more and more difficult to ever dislodge. One of the great things about Bloomberg—and it was true before I was there, I think we did a good job of maintaining this—is the company is extraordinarily paranoid and obsessed with getting better literally every single day. A third thing, which I don't think people would expect, is the business model was really unique. Like literally back in like 1982, Mike Bloomberg picked out of a hat that for each user for the Bloomberg terminal, he’d charge $1,000 a month, and that's what it was. And he said, “Everybody's gonna pay the same price, and we're only going to increase the price at the rate of inflation every two years.” And he has stuck with that. We stuck with it now for 30 years. They just celebrated the 30th anniversary. So it's increased at the rate of inflation, despite incredible market presence. But what's happened is, is that by not focusing on price, everybody just focused on the quality of the product, and adding more and more features and functions so that a broader universe of people would find it worthwhile to actually get a Bloomberg terminal. That as a strategy, which by the way was contrasted for example with our major competitor, Reuters, was spectacularly successful. So you know, not focusing on price, but instead focusing on quality and opening the market up to a larger audience has been a spectacularly successful strategy.
[Auren Hoffman] It is kind of the classic aggregator strategy. If you think of like the analogy between Bloomberg and Netflix, right, Netflix, they haven't really raised their prices that much. They just keep adding more and more content. Now they've got Bollywood content. They've got content from Italy. They've got all this other stuff. They've got more and more people who can watch it.
[Dan Doctoroff] Who find it worth whatever dollars a month, $10 or $12 a month to pay for it. But the key was not exploiting the market position. Instead having everybody focus on the quality of the product and the value to them. You know when I was CEO, I came in literally in January of 2008.
[Auren Hoffman] Good job.
[Dan Doctoroff] Yeah, exactly. I also came into city government like three months after 911. So obviously over the next several months, the financial crisis ensued. And our time to raise prices was in October of 2008. That was the two year interval. So the question was, should we raised prices or not? We did. We did it at the rate of two year inflation. So it wasn't a huge amount, but we raised prices. I literally sent out letters announcing this price increase to, I don’t know. It was probably 30,000 customers, right. I think I got eight letters back complaining about the price increase at a time of complete havoc in the financial markets because people value the predictability of the business.
[Auren Hoffman] There's also now an increasing number of data scientists, probably the number of data scientists has gone up 10x in the last maybe four years. These people are super hungry for data. And that also there's this whole other set of people who are you know, very data curious, let's say. They're smart people, the McKinsey analysts of the world, who now have all these other tools at their disposal. So they can take in a lot more data, and now they can they've got a lot of other tools to help them. How do you see the business of data itself evolving because of this market evolving?
[Dan Doctoroff] I think it's a natural evolution aided by some of these tools of greater sophistication, more data is. We will just make better, more informed data driven decisions in more and more areas. And for the most part, that will be a good thing. I do think the pitfall of all of this will be privacy. We to do this project up in Toronto. We eventually withdrew. The biggest controversy was overuse of data, particularly data collected in public space. We eventually worked through it and came up with an approach that is now starting to be copied in other places around the world. But that issue about sort of use of data, particularly in public space, forget about it with Facebook, Google, and everything like that. But it's going to be one of the defining issues for governments over the next generation.
[Auren Hoffman] How do we get around that? Can we join the data in anonymous way? Obviously you can imagine like super sensitive data, like your medical data, you would never want that out there. But if researchers could get access to the anonymized data, they could figure out new treatments for cancer. They could help millions of people. So how can we have our cake and eat it too on the privacy side?
[Dan Doctoroff] We were focused more on data, urban data. So data in public spaces. The ultimate solution we came to was to create a trust, a data trust, that government would actually manage. That for the use of public data—the data that was collected in public—you’d have to go through a process of justifying what data was going to be used, whether the benefits were greater than the cost, whether you’d taken reasonable precautions.
[Auren Hoffman] You're not discriminating against a certain group of people.
[Dan Doctoroff] Correct. And whether you minimize the risk of actually using personally identifiable information. I suspect over time we will evolve to that.
[Auren Hoffman] Yeah, that seems very reasonable.
[Dan Doctoroff] It will be messy because something new for government often is not done well. You don't have the expertise. But you are talking about all these people with expertise in data coming into government. Over time, they'll be able to manage it much better and develop a set of principles and policies and precedents that ultimately, I think, will be incredibly useful and give people more comfort than they've got now.
[Auren Hoffman] A couple personal questions. I know that you worked with Michael Bloomberg for at least a decade or so. What did you learn from working with him?
[Dan Doctoroff] So he probably gave me the single best advice of anyone.
[Auren Hoffman] All right, I want to hear it.
[Dan Doctoroff] What he said was, “Show me somebody who has never lost, and I will show you a loser.” Obviously what he meant was if you want to really do ambitious things, if you want to make a name for yourself, if you want to move the ball forward, you’ve got to take risks. Sometimes those risks are not going to pan out. You’ve got to be prepared for that. I'll give you one example of a situation with him and me where that played out in spades. So I had led the effort to bring the Olympics to New York. We were competing against London. The centerpiece of our entire plan was a stadium on the west side of Manhattan. That was going to be an addition to the convention center as well. And it became extraordinarily controversial just as he was gearing up to run for reelection. Literally Madison Square Garden, who didn't want a competitor in their neighborhood--
[Auren Hoffman] Understandable.
[Dan Doctoroff] Spent $50 million in attacks at him, me too. But at one point I said to him, “Hey, look, if the price of getting the stadium and winning the Olympics is you losing the election, it’s not worth it.” And he got furious at me. He said, “I never want to hear you say that again. We got into this. We're doing it for the right reasons. Let's keep moving forward.” A couple months later, a corrupt legislator in Albany defeated the stadium. I was crushed. I thought I'd like ruined his mayoral reelection prospects. So he came up to me said, “All right. What's plan B?” And I couldn't believe he didn't like fire me or anything. Within a week, we turned around and saved the Olympic bid by signing new deals that had not really been on the table from new stadiums for the Mets and the Yankees in one week. People saw that and saw in him sort of this incredible resiliency. But what I also saw was incredible loyalty. And that made me forever loyal to him. And so to me, what I learned a lot about was just incredible leadership.
[Auren Hoffman] All right, last question we ask all of our guests, what's the conventional wisdom or advice that you think is generally bad advice?
[Dan Doctoroff] You know, I'm not sure it’s necessarily good advice versus bad advice. But when you're picking people, I have come to believe that where you're facing a choice between sort of the safe experience bet and somebody who is younger, hungrier, more ambitious, more filled with ideas, never go take the safe route. It's something that occasionally I still violate. I usually regret. And it's not ageist in any way. Because older people like me—I'm an old person—particularly in sort of an innovation game can still be incredibly hungry and stuff. Maybe it's less about being young. But it's all about the ideas and the hunger and the ambition.
[Auren Hoffman] It's always like who wants the job more in a way.
[Dan Doctoroff] It’s not necessarily that. They both can want the job. It is really about who's gonna grow. Take the grower rather than the one fits the bill.
[Auren Hoffman] It's almost the job has to be like a step or a couple steps ahead of where they are.
[Dan Doctoroff] That’s what it is. I look at my career, and this is another piece of advice that is conventional wisdom. You can't plan your career. Right, I started off. I went to law school, and decided in law school to become an investment banker. Then I went into private equity. Then I went into government, then I ran a big company where I had no skills to do whatsoever. And then doing this startup and along the way I've created a cultural institution and a medical research organization. Not a single one of those things if you told me six months before I'd be doing that had I ever even considered. So what you want to do is put yourself by working hard, by doing a great job, by building relationships to have optionality to do things you never thought you could do before. Don't take the safe way.
[Auren Hoffman] Awesome this is great. Dan, thank you so much for joining us at World of DaaS. This has been a lot of fun.
[Dan Doctoroff] Thanks a lot. I'll see you soon.
[Auren Hoffman] Thanks for listening. If you enjoyed the show, consider rating this podcast and leaving a review. For more World of DaaS, and DaaS is D-A-A-S you can subscribe on Spotify or Apple podcasts or anywhere you get your podcasts and also check out YouTube for videos. You can find me at Twitter @auren. That’s A-U-R-E-N, Auren, and we'd love to hear from you.
World of DaaS is brought to you by SafeGraph.
Dan Doctoroff, Founder and CEO of Sidewalk Labs and former CEO of Bloomberg joins World of DaaS host Auren Hoffman. Dan was also formerly the Deputy Mayor of Economic Development for New York City during the Michael Bloomberg administration and Managing Partner at the private equity firm Oak Hill Capital Partners. Auren and Dan dive into how cities are formed and how they can leverage data about the physical world to operate better. They also cover Sidewalk Labs’ unique business structure (including its affiliation with Google’s parent company Alphabet) and how Dan thinks about incubating and forming new businesses.
This episode is dedicated to those who suffer from ALS. We encourage listeners to make a donation to Target ALS at: https://www.targetals.org/donate/
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