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Can Our Cities Adopt The Advantages Of Trillion Dollar Thinking?

Apply 8 factors that made 21st-century businesses successful to your city*33fYkNRsPEmTgPBFKIKu8Q.jpeg

NYU Professor Scott Galloway has created, written, and is teaching about the Trillion Dollar Algorithm. The T-Algorithm is a reverse-engineered playbook that dissects the success of The Four (Amazon, Google, Facebook, Apple).

Scott Galloway continues to apply his T-Algorithm to a variety of businesses and uses it as a template to estimate their potential success.

In this article, I’ve attempted to apply the T-Algorithm to our cities. You’ll not only learn what the T-Algorithm is but we’ll apply business school thinking to our cities and see what comes out the other side.

1. Appeal To Human Instinct

Galloway talks about how successful companies appeal to some combination of 4 essential human instincts: head, heart, stomach, genitals.

Google appeals to the head, a place where we can get all the right answers. Facebook appeals to the heart, a place where we can connect with family and loved ones. Amazon appeals to the stomach, get more stuff for less. Apple appeals to the genitals. Look how cool I am.

The good news is that cities also appeal to human instinct. We are a communal species and inclined to be closer to each other. As individuals and for the sake of our businesses.

The bad news is that every city appeals to human instincts for the same reason. There isn’t much differentiation here. Density is Density.

Differentiation can be gained with the heart. The cathedrals and temples of the past evoke a sense of higher power. Search for, “the city of love” and Paris is the only result on the front page. The same thing with, “the city of brotherly love” resulting in Philadelphia. Honeymoon destinations, same thing.

The question is, “how can my city differentiate itself by appealing to human instincts?” Depending on the city, you’ll have different answers. If you don’t appeal to any human instincts beyond the entry-level, you’re at a disadvantage.

2. Career Accelerant

Galloway discusses how human capital (the collective brainpower of your team) is how you accelerate growth for your organization. Google, Mckinsey, Goldman are places where you’ll see hockey stick growth to your career trajectory.

Cities don’t measure out well in this metric. Typically working for your local municipality will be hard, low-paying, thankless work. There’s a reason the best and brightest go to Goldman and not to work for the local economic planning office.

Salary and benefits, sure. But it’s because working in a local government doesn’t springboard you into much else other than more public service.

The question is, “How can we make working for our cities a career accelerant?”

3. Growth and Margins

Margin is a product's price minus its cost to produce. Hopefully, you raise your price by raising your perceived value.

The perceived value of taxes is extremely low. There are whole political parties focused on reducing and eliminating taxes. So there is likely to be significant political resistance toward convincing people that there is an increase in value.

Typically cities look at growth from a population perspective. If we can’t raise taxes, but we get more people paying them, we’re on track to be a more successful city.

Recognizing that cities have an uphill battle for raising perceived value in taxes the question becomes, “How might we accelerate growth in our city?” See point 1.

4. Rundle

This is Scott Galloway speak for Recurring Revenue Bundle. It’s not enough to have recurring revenue. SaaS is so last business cycle. You need recurring revenue that’s sticky, hard to leave. Hence, the bundle.

Amazon is the OG of the Rundle with shipping, music, video, gaming, photo, wardrobe, whole foods benefits, reading, Audible, Zappos, and more all wrapped into one. It’s a lot easier to cut Netflix (only video) than it is to cut Amazon (it’s so much more than video!)

Cities are so close to this and most businesses never are able to build a defendable moat that cities have inherited. There are only two certainties in life and one of them is the recurring revenue for the city (taxes).

In fact, cities already have created a recurring revenue bundle with taxes. Roads, Police, Fire, Utilities, Library, School. If you were to unbundle all those things, you’re probably going to have an expensive bill and a lot more paperwork.

The problem is that because all other cities offer the same type of rundle this isn’t a differentiator.

The question is, “How can we differentiate our city from others by improving our recurring revenue bundle?”

5. Verticle Integration

Verticle integration is a company’s ability to control the end-to-end customer experience by owning as much of the value chain as possible. Typically this is associated with the steel and oil of the 19th century — control raw materials, manufacturing, then own the railroads.

Levi’s (in the 80s) started the renaissance of vertical integration by going forward in the value chain controlling the in-store experience. Apple is one of the best today: own the device, the platform, the in-store experience, and now they’re getting into content.

I’ve been in conversations with cities where we talk about a concierge desk, the one-stop shop for small businesses, or the one number people can call for information.

We’ve vertically integrated our emergency response in the United States, call 911 for all emergencies. Imagine the complexities if you had one number for police, one for fire, one for health emergencies.

Once again, every community offers this so there’s no ability to differentiate. Another downside to verticle integration is it tends to lead to monopolies.

From an economic development perspective, the question becomes, “How can we deliver a world-class end-to-end experience for the businesses in our community?”

6. Benjamin Button

This is another Scott Galloway-ism. The idea is that you need to build something so that the more people that use it, the better it gets. The opposite of this would be a car (a normal product). The more people that use a car, the less value it has.

The more people that use Netflix or Spotify, the more valuable it is to the next person. Essentially these products can age in reverse. This is the same thing as network effects. But with a narrative, it’s easier to remember the concept.

So how could a city get better the more people that live in it?

There’s a weird paradox with cars, roads, and highways. The more roads we build we actually create more traffic. But for walkable and bikeable infrastructure that isn’t true. And the wear and tear from that use is significantly less.

It’s only truly possible to achieve what Netflix and Spotify are doing by collecting a lot of data. Sidewalk labs tried building a data-driven city. The trust in government is still hovering near an all-time low which makes it difficult to collect data at scale.

Ironically, Facebook offers their platform for free and collect insane amounts of data to then serve highly targeted ads to users. Remember, if you’re not paying for the product, you are the product.

There could be ways to differentiate your city here and have a huge impact on growth. The question is, “How might our city be able to get better as more people live in it?”

7. Visionary Storytelling

This is where public leadership comes into play.

Company’s that have leaders that cast big vision have been able to get access to cheaper capital and have seen more forgiveness in the marketplace (growth matters more than profitability?)

But when people are considering moving to another city they don’t ask themselves, “who is the mayor?” they ask themselves about school quality and crime rates.

How might a local official get the notoriety of a business tycoon like Zuckerburg, Bezos, or Cook? They probably can’t. The scrutiny of the public eye combined with the fact that Facebook and Amazon pay PR companies to airbrush the image of their leaders is not something our local public officials can afford, nor does the public really want.

Peter Drucker once cautioned about finding strong leaders with vision,

“The three greatest leaders of the 20th century were Hitler, Stalin, and Mao.”

So what’s the Goldilocks of visionary storytelling, not too much, not too little?

This is another opportunity to differentiate. The question is, “How can visionary storytelling help unlock growth in our community?”

8. Likablity

Think about cities that are likable. In the United States probably Austin, Portland, some cities in Florida (maybe?) come to mind.

When you think about cities you don’t like, places where there are problems with school, crime, and infrastructure probably come to mind. Not only do these problems make a city less likable, but they also don’t appeal to human instincts (see point 1).

If people like the place, they’ll stay. Again some things are outside a cities control. As a citizen, I like when I have an income and the weather is good. That’s part of the reason why the Rust Belt has struggled and the Sun Belt has boomed.

How do you make your city more likable? This could be a differentiator but probably the most competitive of the other categories.

Every city will cover the following talking points: beautiful parks, access to nature, good schools, weather, awesome small restaurants, some sort of unique character element.

That’s not likable, that’s entry-level.

Let me describe my city: Free college for graduates of its school districts. A budget that’s balanced with the help of a private foundation. That same private foundation intends to invest millions into the city over the coming decades.

The question is, “How might we think creatively about how we can make our city more likable?”

Final Thoughts

Scott Galloway’s T-Algorithm breaks down the success criteria of companies today. How might these 8 factors help build better cities for their citizens? Here are the questions to ask:

  1. How can our city differentiate itself by appealing to human instincts?

  2. How can we make working for our city a career accelerant?

  3. How might we accelerate growth in our city?

  4. How can we differentiate our city from others by improving our recurring revenue bundle?

  5. How can we deliver a world-class end-to-end experience for the businesses in our community?

  6. How might our city be able to get better as more people live in it?

  7. How can visionary storytelling help unlock growth in our community?

  8. How might we think creatively about how we can make our city more likable?

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