(Originally published on NYmag.com, June 28, 2010)

Prince Harry fell off his horse. That’s the closest thing to a SportsCenter highlight from Sunday’s third annual Veuve Clicquot Polo Classic on Governors Island – the reason why Harry was in town and available to toss out the first pitch at Citi Field. He’d been streaking down the sideline looking to score when his mount pulled up and Harry didn’t, somersaulting him onto the pitch. Unhurt, he climbed back in the saddle, and the mishap was immediately forgotten by the swells quaffing Champagne on the sideline, along with the rest of the match.

Despite ending in a 6–5 overtime thriller – with Nacho Figueras’s Black Watch team avenging last year’s loss to Harry’s Black Rock – the sport in this sporting event was largely an afterthought. (Although true to form on Sunday, it was a triumph for Argentina and an embarrassment for England, in the other event.) The match was a friendly for charity, and with tables in the VIP tent going for as much as $50,000, New Yorkers like Mayor Bloomberg and Russell Simmons had finally found a ticket that made the seats behind home plate at Yankee Stadium feel cheap. (Proceeds went to Sentebale, the Prince’s charity for AIDS orphans in Lesotho).

The New York Times described the scene as “a satellite of the Hamptons,” and no doubt many of the revelers were happy to think of it that way: A frivolous afternoon in the sun spent sweating out free bubbly as fast as they could drink it.

Maybe the only one who wanted more was Nacho, who is open about his desire to popularize polo. He’s already his sport’s Derek Jeter – the charismatic captain nowhere close to being its best player – with a modeling contract, team sponsorship, and clothing line from Ralph Lauren. Nacho likes to compare polo to Formula One, an esoteric, stratospherically expensive sport with mass appeal in Europe. Perhaps a better comparison are the U.S. Opens of golf and tennis, which draw frenzied, moneyed crowds to Flushing (and occasionally to Winged Foot and Bethpage Black) to rub elbows with corporate sponsors. Befitting polo’s image, Sunday’s included Ferrari, Piaget, and BlackRock, the largest wealth management firm in the world.

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FT interview: Ahmed al-Tayer, June 24, 2010

FT: Is there a greater focus today on attracting companies from emerging markets?

Dubai International Financial Centre governor Ahmed al-Tayer: From emerging markets, from Europe, from the US. Some companies now are starting to work from Dubai to service Africa. We see this happening. Emirates Airlines covers most countries in Africa. The Chinese use Dubai as a centre for their businesses in Africa. The world is changing and it’s moving east. There’s a lot of attention on the east. We’re a centre that brings together east and west.

(Originally published on FastCompany.com on June 25, 2010)

Russian president Dmitry Medvedev wrapped up his whirlwind tour of Silicon Valley yesterday, and while it’s fun to imagine Steve Jobs giving him the five-cent tour of One Infinite Loop or Ev Williams and Biz Stone teaching him how to tweet, Medvedev’s mission was to round up investors for Skolkovo, his attempt to clone a Russian Silicon Valley and diversify its economy away from oil and minerals.

He succeeded, wrangling a $1 billion, decade-long commitment from Cisco, including promises to make Skolkovo a “smarter city” (or “Smart+Connected Community” in Cisco parlance), creating a second headquarters for its emerging technologies group (based in Bangalore) and teaching Russian startups the ropes. This has become a Cisco specialty. I wrote back in February about its plans to build instant smart cities in China, India, South Korea and Saudi Arabia (pdf), all of which have charged the networking company with creating a culture in addition to laying infrastructure. Wim Elfrink, Cisco’s chief globalization officer, described its smarter city business to me as a $10 billion opportunity, not to mention the chance to up-selling heads-of-state.

This raises the question of whether it’s even possible to build a Silicon Valley from scratch. Many have tried; all have failed. In hindsight, the conditions that created the Valley are obvious, but may be unrepeatable: the presence of Stanford University; the creation of its neighboring research park; the founding of Fairchild Semiconductor and Hewlett Packard; the alumni networks which arose from these and other seminal companies; the Valley’s subsequent reinventions from microprocessors to PCs to Internet software, and the agglomeration economies which made it all possible. Cisco’s job is to help streamline this process and squeeze it into a decade or less.

“Through their practices and through their densities, Silicon Valley companies know how to get to the next great things.” Saskia Sassen explained to me last fall. Sassen is a professor of sociology at Columbia University and an expert on the intersection of cities and globalization. She argues Cisco and other smarter city-builders have been hired to recreate the circumstances of their birth. “They’ve extracted a product from that: smart cities. First you extract it, and then you commodify it.” “They originally tried it in Malaysia and Korea,” she added, “but they were not successful. The results were more like office parks. They were the opposite of the global, fast-moving, powerful cities they were meant to be.”

The list of failures is longer than that. The sociologists Manuel Castells and Peter Hall compiled a list of “technopoles” made in Silicon Valley’s image, including Japanese and Korean “science cities,” research parks in Cambridge, Seville, Adelaide and Boston’s Route 128 (which, while certainly successful, never mounted a serious challenge to Silicon Valley) and Russia’s Soviet-era effort to plant a “Silicon Forest”—Akademgorodok, aka “Academy Town.”

The brainchild of Nikita Khrushchev (sound familiar?) Akademgorodok was founded in 1957 on the shores of a man-made sea adjacent to Novosibirsk, the industrial capital of Siberia. The home of a new, elite university and institutes of the USSR Academy of Sciences, Akademgorodok boasted at its 1960s peak a population of 70,000 people, including 7,500 scientists, 3,500 students, and several thousand technicians and staff. But the failure to escape the long arms of the Communist Party and academic bureaucracies quickly eroded their enthusiasm. Scientists lured from Moscow and Leningrad moved back almost as quickly as they arrived, and the ones who stayed focused on basic research with few practical applications. From an urban planning standpoint, Akademgorodok wasn’t much better, with sharply delineated residential zones setting aside cottages for academics, “upper zone” zone apartment blocks for mid-level scientsists, and tenements for construction workers.

After the Wall fell, IBM and Intel moved in, leading then-prime minister Vladimir Putin to earmark $100 million in state funds for the construction of a $650 business park. “We simply mustn’t waste this chance,” he declared in 2005, following a trip to India. At the time, Fortune declared the city – you guessed it – “The next Silicon Valley.”

This time, the Russians themselves are more skeptical, calling Medvedev’s “innograd” and its tax breaks and half-billion dollar annual budget a black hole and a boondoggle. Without genuine reform, critics argue Skolkovo cannot possibly succeed – not when Russia ranks below Bangladesh in the World Bank’s Doing Business Index, and is tied with Kenya in the Corruption Perception Index.

Medvedev acknowledged as much at a Stanford appearance this week when a Russian in the audience asked him how he planned to protect promising startups from the Russian mafia, insane rivals (i.e. (”crazy Russians with crazy startups”) and bureaucratic obstacles.

“Of course we have plans,” Medvedev said. “In Russia, people hope the government will do something… but we must do it correctly. Russia has its own attitudes and says the task of the government is to create startup conditions, but that’s a very complicated point. Money can’t create it. We have money, but we don’t have Silicon Valley. It has to be money in the right hands, with the correct rules. If performed correctly, I’m sure the project will be a success, but everything depends on people and finally on you – if you’re ready to help.”

If it’s rules Medvedev’s after, he may want to talk to Paul Romer, the former Stanford professor whose “charter cities” concept finally received the feature treatment in the current issue of The Atlantic. As writer Sebastian Mallaby puts it, “Romer’s notion of “rules” includes “patent law, competition law, bankruptcy law, and so on, as well as the softer ‘norms’ that govern people’s behavior. Indeed, these rules could be even more important than technologies, however much the digerati of Silicon Valley might wish to believe otherwise. Without new technologies, an economy might grow slowly. But without decent rules, an economy cannot even make use of the technologies that already exist.”

It’s a shame Medvedev didn’t arrange a meeting with Romer on his trip; it probably would have proved more useful than learning how to tweet.

If you weren’t scared enough by China’s real estate bubble, take a gander at this 1,076 ft. apartment building for farmers rising in the middle of nowhere. From The Money Illusion:

Is there anywhere else in the world where a 1076-foot skyscraper would be built for “farmers” and located not in a city, but in the “countryside?”

Yes, I understand that Huaxi is the richest village in China, and is hardly typical.  But I also think that there is far more wealth being accumulated in the rural parts of eastern China than many people realize.

When I used to hear about 800 million “rural Chinese” I pictured dusty little villages in western China.  I may need to re-adjust my mental images.

”The economic outlook for European airports,”
Centre for Asia-Pacific Aviation, June 22, 2010.

“Now, worryingly, Germany has joined the movement, with another aviation tax disguised as a method of ‘helping the environment’, and one that will even threaten the recovery of the New Zealand tourism industry, if the Tourism Industry Association of that country is to be believed. The German market contributes USD189 million to the New Zealand economy annually and is the nation’s ninth largest spending market. In 2009, 64,564 German tourists visited New Zealand.”

“First they ignore you, then they laugh at you, then they fight you, then you win.”—Mohandas Gandhi

First, Europe’s governments ignored Emirates Airlines, happily signing agreements twenty-five years ago with a fledgling carrier that would later storm the UK and Germany, putting incredible pressure on British Airways and Lufthansa in the lucrative long-haul market to Asia. Then, they laughed last year when Dubai Inc. nearly capsized under its debt load, and rumors swirled the airline would be ransomed to Abu Dhabi. Now they’ve begun to fight, judging by the comments of KLM chief Peter Hartman, who swore Emirates can expect “more and more reluctance [by governments] to grant traffic rights” going forward.

Emirates is already in the midst of regulatory battles with Canada and Germany for increased access to their markets. Hartman’s comments follow those of BA’s CEO Willie Walsh, who has described Emirates as an existential threat to European carriers’ existence, and Lufthansa’s CEO Wolfgang Mayrhuber, who told Bloomberg: “It’s a miracle that Emirates already has more inter-continental seats than Air France and British Airways combined. It took us 40 years to get 30 B747s in the air in one of the biggest global economies, so one must assume that this is an investment for the world.”

But does Emirates’ plans make sense? The Financial Times seems to think so, writing approvingly in yesterday’s Lex column:

But there is method to this madness. Dubai is turning itself into a central hub for air transfer traffic between west and east. New planes fly far enough to give Emirates, which flew 27m passengers last year compared with British Airways’ 31m, a global reach. They are also more efficient, allowing the airline to undercut European flag carriers such as British Airways and Air France-KLM on price. Passengers will always pay more for direct flights but many are willing to transfer if the ticket is cheaper and the wait is not too long. As for profitability, Emirates lacks the legacy costs and rebellious workforces that plague the older flag carriers. And when the oil price goes up, its owners’ pockets just get deeper. Emirates made about $1bn in net profit last year and had an operating margin near 10 per cent.

All that adds up to a potentially disruptive force in the long-haul market, though Emirates will first have to deploy its new planes profitably and secure more slots at major airports. That could lead to cheaper long-haul flights in bigger and greener planes. Airline investors should be worried; consumers might well shrug and grin.

Emirates’ strategy to break into the German market was to order another 32 A380s at the Berlin Air Show a few weeks ago, forcing Merkel’s government to choose between protecting Lufthansa or creating highly-skilled manufacturing jobs. In the long run, Germany will likely opt for the latter. Emirates may repeat this strategy at the upcoming Farnborough air show, Sheikh Mo having already told CNN he expects the airline to announce yet another order there.

(Published at FastCompany.com on June 18, 2010)

Is Dubai the world’s smartest city? Maybe not in the sense that it mortgaged long-term infrastructure with $100 billion in very short-term debt, but “smart” in a way IBM, Cisco and other tech heavyweights would be envious of. One advantage of building a city from scratch is that each of Dubai’s 60,000 modern buildings is equipped with the state-of-the-art in lighting, HVAC, and security systems—all of which can be wired to the Internet.

Last week at the Realcomm 2010 conference in Las Vegas, a Dubai software firm named Pacific Controls revealed it had beaten Cisco to the punch in creating the world’s first “smart city” by connecting 20,000 of those buildings – including the world’s largest mall and largest building – to a cloud-based platform capable of controlling each remotely. Using its software to track and fine-tune electricity usage in nearly half of these buildings (some 9,000 in all), Pacific Controls has managed to cut their power bills by 20%—and is willing to do the same for any building in any city in the world.

The company has succeeded in adapting software-as-a-service to offering cities-as-a-service in the form of “Galaxy,” which uses Java-based middleware and the Internet to connect building systems to its data centers, which can be located anywhere in the world. (One is in its LEED Platinum-certified headquarters in Dubai; the other in downtown Manhattan.) IBM intends to wire Dubuque, Iowa in a similar manner – incorporating municipal utilities into its system – and in instant cities across Korea, China and Saudi Arabia.

But Pacific Controls did it first, thanks in large part to a recent law decreed by Dubai’s ruling Sheikh Mohammed bin Rashid al Maktoum that all buildings in Dubai be monitored remotely in case of fire or public safety hazard. CEO Dilip Rahulan explained to me that building owners have rushed to sign up for Galaxy to be in compliance with the law – in addition to the 20,000 buildings his firm now controls, he is busy adding 120 a day. Those include the Dubai Mall at the base of the Burj Khalifa (which isn’t connected yet, but will be soon, he promises) and Dubai International Airport’s new Terminal 3, in addition to more than one hundred government buildings and four hundred vehicles retrofitted with GPS. In the event of an emergency, Galaxy will not only send an alarm to Dubai’s fire and police departments, but also track their arrival on the scene.

Rahulan founded Pacific Controls in Dubai in 2001, when it was already apparent that “real estate would take off exponentially there,” and also that “the Internet would be the backbone through which city services would someday be delivered.” His engineers in India and Dubai spent three years building Galaxy atop software originally used for transmitting telemetry data from aircraft (such as the last cryptic messages from the doomed Air France Flight 447, which vanished over the Atlantic last summer). For now, Galaxy’s use is limited to monitoring what he calls “the heartbeats of buildings,” but Rahulan hopes it will expand to encompass municipal systems such as Dubai’s power grids in his Quixotic quest to wring cost savings and lower energy use from the least sustainable city in the world.

Perhaps Rahulan’s most important insight, however, is that smart buildings and smart cities can be run from anywhere. For this reason, Pacific Controls has started looking farther afield for customers, starting with the campus of Saudi Arabia’s new King Abdullah University of Science and Technology – the world’s largest LEED Platinum project. The company has signed a deal with the Carrier Company to remotely control ten thousand of its commercial HVAC systems, and in the meantime is busy bringing buildings in China, the U.K. and U.S. online. The ability to expand in every direction at once is the reason the $100 million company is growing at a rate of sixty percent each year.

Why stop there? While in Vegas last week to speak at the annual Realcomm conference (which started discussing smart building a decade before IBM found its “Smarter Planet” religion) Rahulan met with representatives of the General Services Administration – the landlord of 8,500 buildings owned by the U.S. government. Perhaps Galaxy will be coming soon to the federal courthouse near you.

[Photo via Flickr/Christopher Walker]

From YouTube: “The videoclip lasts 1 min 12 sec and represents 24 hours, a whole day of all flights. Each second represents one duration of 20 minutes. Each yellow point is an airplane with at least 250 passengers. Most flights from the USA to Europe start in the night hours, returning flight during the day.”

“No Secrets,” The New Yorker, June 7, 2010:

“...WikiLeaks is not quite an organization; it is better described as a media insurgency. It has no paid staff, no copiers, no desks, no office. [Julian Paul] Assange does not even have a home. He travels from country to country, staying with supporters, or friends of friends–as he once put it to me, “I’m living in airports these days.” He is the operation’s prime mover, and it is fair to say that WikiLeaks exists wherever he does.”

Over at The Atlantic, James Fallows has begun connecting the dots of recent events at factories in China:

—-> This same Foxconn, scene of the suicides, is where the newly discounted Nooks and Kindles come from—plus iPads, iPhones, and lots of other stuff. <--- A reader in China wrote just now to ask: Do Americans even think about the connection? Relentless price pressure on Chinese suppliers, all the more so now that, largely in response to U.S. government demands, the RMB is rising again? Relentless expectation of falling prices in U.S. stores? The Foxconn-suicide story is ambiguous, with many hypotheses about the cause. But the price pressure on these suppliers is unmistakable.