Silicon Valley Innovation Center
We help global corporations grow by empowering them with new technologies, top experts and best startups
Get In Touch
Our Location

Smart Cities: The Trillion-Dollar Opportunity Of The Future?

About the Interview, Past

With half of the world’s population now living in urban environments the question of how we build the cities of tomorrow to address our social and economic needs has never been more pressing. While it’s clear that not just cities but smart cities will be at the center of our economy in the years to come, many questions remain unresolved. What role will technology and data play and what can we do, as global citizens? Dr Jonathan Reichental, an award-winning technology leader and professor, tackles these questions and more in this SVIC Interview.



Dr. Jonathan ReichentalTechnology Leader And Professor

About Our Guest

Dr. Jonathan Reichental is an award-winning technology leader and professor. He has worked extensively in both the private and public sectors. Recently his leadership and teaching focus has been on areas such as urban innovation, blockchain technology, and the fourth industrial revolution.
Rahim Rahemtulla: Hello and welcome to Silicon Valley Innovation Center. Here at SVIC, we promote discussion on technology and innovation through our Executive Immersion Programs and our online events. I’m Rahim Rahemtulla, Brand Ambassador here at SVIC. Today, I’m talking to technology leader and professor Dr. Jonathan Reichental about smart cities. This is ahead of a webinar Jonathan is going to be giving for SVIC on smart cities on September 20th. And now, don’t forget, if you have a question for Jonathan today, you can send that to us in real time. Just use the comment section of whichever platform you’re watching us through. So, Jonathan is with us now. Jonathan, thank you very much for joining us today.

Jonathan Reichental: Hi there, good morning from Palo Alto, California.

Rahim Rahemtulla: [Laughter] I wanted to start up with a really basic question, Jonathan. “Smart cities.” I was hoping we could just unpack that a little bit. It sounds like a big concept, but perhaps you can just distill it for us into a few key ideas.

Jonathan Reichental: Yeah, yeah. The term is evolving, I’ll tell you that. We’ve started to use smarter cities, smarter communities, connective communities, but outside of the term, the genesis is human destiny now is in a city context. Just in the late 2000s, we moved from being a majority rural planet to be a majority urban planet and that’s like over 3.5, 3.6 billion people now live in a city. Over the next twenty or so years, another two billion will join and that means over 70% of humanity will live in an urban context. So, you and I, our friends, our family, our kids – they’re all going to grow up and live in a city. And that’s a very different human experience than what history has shown, where we lived off the land, we lived off farms, lived in small communities. And, really, what I’m saying now is, are our cities ready? Are we prepared for the needs of these massive mega-cities as we go forward? And even small to medium-sized cities, are we ready? Do we have the transportation systems and the clean energy? Are we able to maintain clean air and good drinking water and things like parks and libraries and things for people to do? So, in many ways, how I summarize this concept of the future of cities and the term “smart cities” is it’s a response to the needs today and the needs in the future. It is a reaction to our needs. And it’s about applying technology, new behaviors and a people-centric approach, so that the summary definition is “smart city is the application of technology for improved livability, sustainability and workability.”

Rahim Rahemtulla: And, Jonathan, you’ve talked there about how we’re going to need to meet a lot of challenges going forward because the city population is going to be growing so rapidly.

Jonathan Reichental: Yeah.

Rahim Rahemtulla: And is that why you’ve talked about in the past as these smart cities being a trillion-dollar opportunity? Because apart from, obviously, the many other demands and the other motivations behind doing this – which are ethical, environmental and so on – there is, simply put, money to be made here. So I assume those challenges that you mentioned, we haven’t necessarily met those challenges yet and there are huge opportunities there for those who are willing to be entrepreneurial and think about how we might meet those challenges.

Jonathan Reichental: Yeah, I think that’s right and I love that you mentioned the other reasons why smart cities are important. But solely focusing on the economics, I’m struck almost every day in the work that I do by the gap between our needs and the innovation that’s needed. And so, when I look out and I think about everything from the needs of future public safety or this massive conversion to a non-carbon based energy future, support for self-driving vehicles and the infrastructure for that, like electric-vehicle charging stations and the digital transformation of our cities, really putting more and more services onto smartphones, all of these things are massive economic opportunities for not only the incumbent technology space and providers, but I’m saying it’s wide open for a whole lot of new entrants.

And I speak often to the tech community and the business community and I say, “If you’re looking for work that’s meaningful and where there are going to be millions, billions, and ultimately, over a couple of decades, trillions of dollars of economic value, I would strongly encourage you to look at the urban playing field because if you think out into the future, how many trillion-dollar industries can you – new trillion-dollar industries – can you think of? It’s probably a small handful. And I’m here saying it at the beginning of this phenomenon.” I did this yesterday to a group of Chinese students and industrialists at Stanford University. I said, “Isn’t it great to be told that there’s an opportunity before it happens, as opposed to looking back and saying, ‘I wish I’d been on that train when it left the station a few years ago’? So now I’m saying, ‘Get onboard right now’ and all the opportunity is still ahead of us.” But the first-mover advantage doesn’t last long.

Rahim Rahemtulla: For sure, for sure. And what’s the response been like when you talk to business communities, students? Is there tech talent out there? Are there technologists like yourself who are now being drawn to this problem? Or they’re still all interested in autonomous cars and data analytics? Or are they seeing this now?

Jonathan Reichental: I’m very pleased by the general trajectory. I mean, I started here in government only about seven years ago, which really is more like fourteen years in the private sector because it’s double time here.

Rahim Rahemtulla: [Laughter]

Jonathan Reichental: And I’ve seen a tremendous shift. It’s gone from thinking of cities and maybe government more in general as a place that people didn’t consider for a prosperous, meaningful and technological career. And now I see a big demand, a lot of questions, many more applications, not only to the city of Palo Alto but to a lot of the cities and communities that I talk to often. We’re seeing a very different level of interest from people leaving university or changing careers or looking for a new opportunity. So the momentum is positive, although I’ll always put in a little plug. We need more smart people with specific skills like data science and engineering and software engineers, project managers, business analysts, innovators – we need a lot of continued talent flowing into government.

And then, on the business side, definitely, it’s night and day. It’s 180°. I see a lot of interest from the incumbent players, the big tech and big industrial companies that exist already. The Fujitsus, even the Verizons, the IBMs, Ciscos, Microsofts – they’ll continue to be players and increase their capacity and interest in providing to the city marketplace.

And, for a lot of people, the last point I would make is, it’s a bit of a revelation. I think that’s part of the positive role I can have: to expose people to the opportunity, to inspire them to think that a) not only do we need you to innovate for our cities because it’s critical for our success and the quality of life for the planet, but b) you can good money and build a great business around it. So we’re headed in the right direction but I’ve got to say there’s plenty of room for a lot more people to participate.

Rahim Rahemtulla: Now, I feel like a lot of your role is about raising awareness among various different groups, it could be local governments, national governments, business. Whatever the sector may be, a lot of what you do is really just to get people to think about this, to be inspired by this and then, ultimately, to actually go out and make it happen.

Jonathan Reichental: Yeah.

Rahim Rahemtulla: But on that side, where do you see it coming from more? Do you see it coming from us, the citizens, the grassroots level? Because we’re getting more and more used to using technology in our everyday lives, in business, at work, in commerce, at the home. Is it naturally going to flow out into our civic life where we’re going to be demanding that the government really get on board with this? Because – and you’ve mentioned this as well in the past – we don’t want to go to the government office and sit in line and take a ticket anymore; we just want to tap in on our smartphone and get things done.

Jonathan Reichental: Yeah.

Rahim Rahemtulla: So, are we going to be demanding this? Or do you feel like governments themselves are going to be the ones who are going to lead us on this and in fact should lead us on this because, like you said, it’s the first mover advantage there?

Jonathan Reichental: Yeah, no, great question. And you’ve clearly been observing my videos and talks in the past. [Laughter]

Rahim Rahemtulla: Well, you do plenty of them. You do talks and podcasts. You had your own podcast as well.

Jonathan Reichental: Yeah.

Rahim Rahemtulla: So it’s very good to have plenty to hear and listen to.

Jonathan Reichental: Thank you very much, Rahim. Yeah, on the podcast, it’s Drinking Wine Talking Tech, so I would encourage viewers to check out the podcast. It’s a bit of fun but we also talk about the serious topic of new technology and where things are headed from the front seat of Silicon Valley.

I think there’s momentum on both sides of the economy. There’s the grassroots, as you rightly point out, and then there’s the organization itself, there’s the city saying, “Hey, we’ve got to think of new ways of doing things.” Because, frankly, the way we’re doing it right now is probably a little inefficient, slow and, most painfully, very expensive. And with growing portfolios of things that we have to focus on, we have to become super efficient in how we deliver government to citizens. I do think, though… I mean, I’ll just play a little bit on the example you gave. First of all, nobody wakes up and says, “I can’t wait to go to a government office today and fill out a form and spend my day [laughter] being handed from one person to the next to get a permit to make an improvement to my home or to get a copy of my birth certificate or pay a ticket or something.” Nobody looks forward to that, so right away it’s not a great experience from the desire point of view. And then, when you do participate, it reinforces every stereotype that you have about government. “It’s inefficient. Why do I have to go in person? And why do I have to take a ticket? Couldn’t all this be done in my smartphone?” And I think that’s right, I think we ought to be responsible to that demand as a government entity. We’re beginning to lag in many areas. Not everybody, there are some outliers, cities who are moving forward rapidly, but there’s still, again, a massive opportunity for transformation within government.

So I think community simply does put the pressure on when they talk to their elected officials and they write to us, they say, “This should be a better experience” and then we’re motivated because, yeah, people will enjoy the experience more, they’ll spend less time, it will be less error-prone and then, fundamentally, it will be less expensive because many of the daily tasks that happen with government are perfect for automation. This is what the computing world was built for. There are an awful lot of things that are value-add above that. The important work that a police officer does with a homeowner when they’ve had some crisis – that’s very much a human experience and we should continue that. And by freeing up resources from that more routine, sort of process-driven, low-value work that a government does, by automating that and freeing up staff, we can work on the things that really matter, really getting out into community and talking to people and having very rigorous civic engagement.

I think a little bit will come from the vendor community. We do see some great innovation happening there, some nice startups and, even in the big existing tech firms, they’re spinning out their own divisions and focus on the future of cities. They’re going to be 1) responding to the needs of the marketplace, responding to the cities, but 2) having a point of view and pushing for how their solution or technology domain can be applied in a government context. Right now, there’s a lot of interest in what could be the role, for example, in solving problems of blockchain in a government context. I think that’s a really good conversation and we need all voices – we need the community, we need city hall, we need the vendor space, we need academia, NGOs. Let’s continue and let’s grow that rigorous dialogue between all the stakeholders.

Rahim Rahemtulla: I think, when you talked about dialogue there, it sounds like we’re at a point now where we have a lot of big ideas and there are a lot of technologies that we could apply, but it seems like we’re going to have this sort of thorny problem when we start talking about communities and the states and their involvement, we come into what we might term “politics”. And, in other words, our public spaces, our cities, are, of course, contested, public, they are diverse and any changes that we want to make here where we want to bring in technology, we want to make it data-driven, it is ultimately going to bring about winners and losers. Because, for example, you talk about AI, and I think some of the dialogue we hear in AI is also what we hear in the corporate sphere or in the commercial sphere, where people are worried about losing their jobs or displacing human labor and that can lead to, of course, social consequences.

But I think in the context of smart cities then, how do we come to a consensus about this? Are we even in a place right now where we can come to a consensus about this and have a real debate about what’s the right level of data to be collecting, who owns it, how we use it, how we keep it safe? And these are all questions that are really, it seems, only just emerging and we don’t necessarily have answers to them.

Jonathan Reichental: More than ever, more than ever. Great question in that all the things you ask there and both the frequency of those questions, the complexity of those questions are all growing. We’re not trending away from it, we’re trending into it in terms of it’s getting more difficult. I like to put it all in a really big context, which is we are at the beginning stages of a fourth industrial revolution that will completely transform most of the things we take for granted: how we learn, how we play, how we work, how we live, raise our children, how we get transported around, the energy we consume, the application of medicine, how we build things and on and on. We are in it and now we’re going to see the effects of it and we’ll all be part of participating and be recipients of the consequences over the next few decades.

And cities are at the front of all that because that’s, as I said in my opening comments, humanity’s future is in an urban setting. So not only do we have… I’ll talk about the three big, macro things to think about: urban human future, a fourth industrial revolution that’s reinventing the very nature of living through technology and science and then third is a climate crisis. We’ve rising sea levels and extreme weather patterns and we know all the stuff that’s going on.

Rahim Rahemtulla: It’s been a really hot summer.

Jonathan Reichental: This may be the hottest year recorded in history – 2018 – unfortunately. And so all of these topics are triggers for conversations and triggers for complicated conversations. My observation, having been seven years in government now, is it doesn’t matter what the topic is, there’s at least two sides to it. [Laughter] So even if you believe you’re doing the best thing, there’s another angle which will show you the opposite. And I think that’s, again, just part of what it means to be human and it’s part of what it means to thrive in a democracy. So I think if our goal was to achieve consensus and harmony, it would be a goal we would never really reach. I think we have to embrace the difficulty of the conversation. What we’re not doing so well right now is bringing in a lot of voices. There’s a few noisy people in every community and what I mean by that is not necessarily individuals specifically, but groups of points of view that are being espoused by minarchy. That’s important, but we also need lots of other voices. And these conversations, by the way, are happening in communities and they are happening from the little town hall to the Facebook conversations to city hall and beyond.

Part of solving some of the big but important issues will come down to things like legislation and regulation. If we’re going to really embrace self-driving vehicles, for example, which are coming and now it’s a matter of how do we optimize for them and ensure that we have a good future, and so we have to make some decisions, just like we did when we decided to rule out a national inter-state system here in the United States, or any organization that ultimately determines we’re going to set a standard and we’re all going to work towards and abide by that standard. There is going to be an element of that that exists with things like self-driving vehicles, probably to some degree around artificial intelligence in some level that will come out of some national dialogue and maybe even some global rigor.

The question of privacy and data use – well, that’s a big one. [Laughter]

Rahim Rahemtulla: Yeah.

Jonathan Reichental: I am of the opinion we are in a post-privacy world. The train’s left the station. Any notion that a person can live in the future with complete privacy over all the dimensions of life, I think that’s no longer practical. I mean, living in a modern urban environment today means you basically have to give up some of your privacy. If you’re going to have a credit card or just even walk around a community where there are cameras very often means it’s a calculus, it’s a contract we’ve made with society already. If you’re using social media or a smartphone, you’ve already agree, to some degree, to give away some of your privacy, because you believe that you’ll get some positive return, and I believe that.

Rahim Rahemtulla: It’s a trade-off that we have assented to, essentially, for safety, for security, whatever it may be, convenience, efficiency. We decided that we would like to opt in to that.

Jonathan Reichental: Yeah, yeah. So that means that the conversation on privacy has to be spoken about in that context. And all too often, again, with different points of view, there’ll be people who take the extreme views. “Complete privacy or no privacy at all.” Americans are pretty good at meeting in the middle, eventually. [Laughter] Eventually. And I realize your audience is global, so this is a conversation that is global. I’ve been watching closely GDPR, the General Data Protection Regulations in Europe.

Rahim Rahemtulla: They have just come in.

Jonathan Reichental: Well, let’s see how that progresses. We have some similar legislation here in California that is beginning to roll out, it’s slightly less restrictive, but it’s just one item of the topic and so, we believe, I think, as a city and cities, that there are important ways that we have a responsibility to protect privacy, but there’s an awful lot of gray area that we haven’t yet agreed to within our democracies.

Rahim Rahemtulla: Sure. Jonathan, we’re almost out of time, unfortunately, but luckily we do have you for the webinar next month, so we’re going to get a chance to expand on these problems, which is great. But just, as we come to a close today, I wonder, can you perhaps give us, what is for you the strongest argument about smart cities? Now, as I’ve said, I have listened to some of your previous talks and so on and so I would like to suggest that perhaps it is climate and it is sustainability and it is the environment because we touched upon this earlier but we sort of focused on the potential to make money in smart cities but at the end of the day, these debates, these conversations, these regulations which we’re going to have to bring in, it seems almost like we’re going to have to do it because – I don’t want to get too dramatic to say it’s an existential threat but when you look at pollution, climate change, greenhouse gas emissions and so on – technology is probably going to be our savior here and so we’re going to have to find a way to live with it and to integrate it into our everyday lives, sooner rather than later.

Jonathan Reichental: Yeah, no, it’s hard to disagree with that. I think if you look at the potential for the biggest impact on the planet over the next fifty to one hundred years, if we don’t figure out the climate crisis, we’re in trouble. The temperature of the last one hundred has risen by on 1° C on average, and the Paris Accords said that we should make sure that we don’t exceed another degree to get us 2° over historical averages. And the reason they did that is, when you get to sort of 2.5°, 3° C, all bets are off, it becomes hard to sustain life in the oceans and our plant life and ultimately, then, it impacts us as humans. We don’t have a planet B, we don’t have somewhere else to go, this is it as far as we know, so I think that’s right. Yeah, so that’s the big issue.

I’d say probably the second one, if we were to take, really, more of a succinct, technological focus, would be the future of energy. I’ve got to believe that if we can really innovate around clean, abundant, non-carbon energy, that will help us with a lot, that will help in so many areas. Not only help us to innovate with just make the abundance of energy contribute to quality of life for more people than ever before, but it also means that we would take off the grid the bad stuff, the carbon-based damages that are ultimately messing with the planet big time and polluting our lakes and our rivers and our oceans. So that’s a good story. And, by the way, it’s trending in the right direction. I think the non-carbon energy future is one of the things I’m actually really optimistic about.

Rahim Rahemtulla: Fantastic. Well, Jonathan, I think on that note, that’s where we’ll have to wrap it up today. It’s been really insightful. Many interesting and new ideas, I think. So all that remains, just thank you so much for joining us today.

Jonathan Reichental: Thank you, Rahim. Thank you very much.

Rahim Rahemtulla: And to our viewers, thank you as well for tuning in. Remember, if you’ve enjoyed Jonathan’s talk today, he’s going to be giving a webinar for us here at SVIC on September 20th. That’s happening at 9 am PDT. So do make sure you sign up and check our website for all the details and for registration. But for today, that’s where we’ll wrap things up. So from me, from my guest today, Dr. Jonathan Reichental, goodbye.

Let us help you