We may have reached peak ‘smart city’.  This trend depends on the continued densification of global urban areas and the exponential penetration of the internet into industries that were previously isolated from digitization.  To see the peak in person, it’s best to get a glimpse at the Smart Cities World Congress in Barcelona; an event that brings together 17,000 people from around the world including 600 municipal leaders and over 500 international exhibitors.

At Urban-X, we see a new model for engineering the city as a service emerging; one in which top-down planning meets with bottoms-up participation and design that integrates people, businesses, buildings and other infrastructure. Open data and platforms that encourage creativity and economic vitality are a defining characteristic of the cities we want to live in.

The key to facing the climate crisis, security vulnerabilities and rapid urbanization is real citizen engagement and collaboration between the public and private sector.  Startups have an important role to play, but the true economic potential of this space won’t be fully unlocked until we get good policy change and business model innovation from large companies.

Here are ten key takeaways from the Smart City World Congress in Barcelona that inform our path forward:

1.     The capital, people, creativity, and density that defines cities makes them more important now than ever.  The top 100 cities drive the intellectual, cultural, and economic progress of our world, and pretty much always have.  No matter what party is in power, this won’t change.  Coastal cities in particular are going through a period of profound transformation; they’ll need to get refugee-ready, they’ll need to be bound closer to their surrounding rural and suburban communities, and they’ll need to continue to be sources of new job growth.
2.     How do you collect, use, and share the data needed to improve quality of life? Many tech vendors forget about the penultimate value proposition; does their solution improve the lives of citizens?  Without this, this industry will never get public support for smart cities to surmount fears around data privacy.  Seeing public school students tour the exhibit floor was a highlight of the show for me.  The smart cities dialogue can’t be constrained to the rareified world of industry, academics and policy.  We have to get out of urban planning and research silos, make it relevant to people’s everyday needs and concerns, and figure out ways to use data to make our cities more compassionate and loveable.
3.     Cybersecurity in the smart city needs to be much more prominent, but it’s tricky.  There’s a tough balancing act between the responsive city and the surveillance city.  Life in the panopticon is not conducive to vibrancy.  In 2015, 115 million smart city devices were exported from the US.  By 2025 that number will grow to 1.2B shipped. That’s 1000% growth.  Given the vulnerabilities of our infrastructure and economy to digitization, we have much work ahead to make smart cities secure.
4.     Innovating for citizens is different than innovating for consumers.  Selling to government is hard, like really hard, complex and long. Demonstrating efficacy and ROI, for city officials, citizens, other stakeholders is a must, and the case studies are pretty few and far between.  ( In Moscow, 20,000 sensors reduced travel times by 25% with an ROI of less than 2 months. ) Today, with a few exceptions, there are no standard measurable indicators for ROI (even metrics for how we measure traffic congestion vary, unlike the air pollution index.  Black and Veatch has done some work on looking at smart infrastructure impacts on job creation, competitive for talent.)
5.     There are too many “me-too’s” and not enough real standout innovation.  Smart street lighting, traffic management and smart parking, civic engagement; this is the low-hanging fruit of the smart cities vertical and there’s a lot of fruit.  However, it’s an area where corporates are active and where startups are developing fairly undifferentiated products.  These are generally B2G plays (see point #4 above) with long sales cycles, and will likely become commoditized over time.  Where are the real estate and housing startups?  Who is attacking the massive waste in the construction industry? Who’s developing infrastructure for autonomous cars?  What solutions will make coastal cities more resilient and prepared for adaptation and mitigation? (If you’re doing these things, apply to Urban-X now)
6.     Utilities need to be part of the party.  For the second time in a month, I found myself at a smart cities conference where, at the same venue, a utility conference was taking place in the same venue, but completely separated.  This makes no sense.  The grid is not going away anytime soon.  Utilities are a vital component of more liveable and efficient cities.  Their regulatory regimes need to be changed so that instead of only making money from a guaranteed rate of return on their capital, they can start offering new products and services to their customers, and earning a fee from the market.
7.     Automotive OEMs need to re-think their role in the urban value chain.  If you want to talk about the cars we design for tomorrow, you have to think about the cities we have today and how we design them for tomorrow.  If you agree that the future of the city will be influenced by the future of the automobile and tectonic shifts in mobility, then you’ll understand why everything that MINI has pursued and achieved for decades finds a new expression — and indeed new urgency – in Urban-X.
8.     The competition is fierce at the top.  Cities, states and regions are competing with each other to be ‘the smartest’.  Dozens of municipalities spent major marketing dollars to show off their investments – why? To attract talent, for bragging rights, but also to show off their capabilities as the 21st century locus of the knowledge economy.
9.     Tertiary cities are a massive and underserved market.  Thousands of Tier 2 and Tier 3 cities all around the world representing hundreds of millions of people are calling out for more responsive, empathetic and advanced cities they call home.  In the US alone, there are over 19,000 cities that are in various stages of prioritizing responsive and data centric investments – the vast majority have yet to get started, and will need new financing models to implement smart cities tech.
10.   Diversity of experience, creativity and perspective is what makes cities great (and helps make them centers of wealth).  Cities like Barcelona and NY are amazing because they welcome immigrants and are defined in part by their approach to diversity.  At the Smart Cities World Congress in Barcelona, 60% of attendees and exhibitors were from outside of Spain; this openness to international markets and inventiveness is what makes it great.  We know the facts about immigrant entrepreneurship – some of the most interesting startups and creative approaches to entrepreneurship we met were from Estonia, Finland, Israel, South Africa, Dubai, and Korea.