Intelligent design: how NYC has planned for millions of moving parts

Hello beautiful nerds, this week in MBA in the City, we explore the design choices of NYC’s above ground public infrastructure that have helped the flow of the city. Yes, I’m talking about how the city has made way for the explosion of bicycles. 

In the last decade, the number of daily bike trips in the city has more than doubled. And from the ever-expanding bike lane network to the ever-available bike racks throughout the city, our movement has become a little more perfect. And how has New York achieved this visible transformation? Using the mightiest of modern weapons: data. With New York’s Open Data policy and numerous beta tests and A/B tests, it’s clear our policy makers aren’t afraid of data. And New Yorkers aren’t shy about sharing opinions. This match made in heaven has produced decisions by and for the city’s 8 million residents. Respect. 

Now for the highlights real! The back stories and photo documentary of where we’ve arrived by bike.

Bike racks can be beautiful

A decade ago the City launched an international competition to design the next generation bike rack. The results ranged from elegant to intriguing, producing a series of sample designs that were sprinkled throughout the city. Public comments read like Amazon reviews:

Looks-wise the Y-rack is the only serious contender in the NYC icon stakes. Even though the paint was already a bit scratched, it still stood out from the crowd.

— Public comment, CityRacks Design Competition

Most free opinions are worth their actual weight, but ones from New Yorkers make me feel like I’m watching reality TV: inexplicably mesmerized.

Once the winner was selected, these racks rolled out across the city, with some interesting auxiliary effects.

What I really love more than these elegant DOT racks is the ripple effect it had with private property owners, inspiring bank buildings and art galleries alike to get into bespoke bike racks. For the choosy bikers, there’s something for everyone – sleek or artsy, industrial or modern.

There is a dark side to more cycling, though — with more bikes has come more bike thefts. But as a New Yorker, my inner monologue chimes the classic excuse for everything that is unacceptable in most places, but somehow not here: “That’s New York!”

Citi Bike: onward and upward

In keeping with the city’s green initiative and the growing public love of the sharing economy, a shared biking system was conceived of in 2011. Here the public had it’s say years before launch, but there was no avoiding first contact with reality. From the word go, capacity was put to the test. Malfunctions were common, with stations going dead and bikes not always docking. New Yorkers told it like it was, and Citi Bike put their game face on. New software was rolled out two years later that fixed the glitches and supported the self-sustaining solar units at each station. And new bike models keep rolling out! I personally love the one with no gear – based on the road’s incline, it naturally adjusts the resistance! I also enjoy the shopping catalogue-esque presentation of the Citi Bike design on the official website. It makes me want to go buy one. But I can only buy a subscription. That will have to do.

 Citi Bike docking station in beautiful, sunny Madison Square Park
Citi Bike docking station in beautiful, sunny Madison Square Park

Design + data-driven decision making = intelligent design. NYC is making thoughtful decisions that make life in the city more fluid, more perfect, more true to its people. I give my city a gold star.

Has Amazon become eBay? The new normal for e-marketplaces

There’s a market place with real-time bidding, where all the suppliers with identical products vie to sell their goods to a group of buyers, all with varying willingness to pay. Which market am I speaking of? Is it the stylized market place from Econ 101, the modern financial markets, or today’s primary e-commerce model? In fact, it is all three.

We’ve heard of regression to the mean with stock prices. The past decade has witnessed a regression to the mean of economic models. The difference between the market places academics describe and the ones financiers and commercial platforms implement has rapidly evaporated. In sum, the world has become eBay. 

The great irony in this turn of events is that eBay is one of the few markets where the auction model failed. Although eBay was a classical market, with multiple people selling identical or equivalent items, buyers did not want auctions. So why did eBay’s core model fail where so many others have since succeeded? Two words: buyer experience.

The Wharton course selection process followed a similar arc to that of eBay. Selecting your lineup for the semester used to be the stuff of day traders’ dreams. Speculation and back door deals were required to accumulate enough points and make the right trades to get your dream class lineup. But with the time and energy vortex it created for students, professors decided to swap in a simple system of ranked preferences, that students could set and forget until their course schedule was determined. Both the old and the new systems were based on economic theories, but the new one worked for everyone at a dramatically reduced cost. The selection process went from weeks of game theory strategizing to days of just choosing which courses you were most interested in. Similarly, eBay’s Buy it Now option made it so that you could literally buy peace of mind, knowing that your item was on its way. Now that’s exactly what buyers do 80% of the time on eBay.

Where eBay failed to deploy a streamlined buyer experience to auctions, e-commerce giants and financial markets have succeeded. They ensured that just because they make their markets competitive, doesn’t mean they need to be a hassle. And all with one weird trick: making the sellers compete, not the buyers.

Jet.com was the first e-commerce player to dream the dream of emulating financial markets: one price to rule them all. Jet aggregated all sellers of a single item under one listing, hiding the buyer and just showing the best price. The computer does the comparison for the shopper, bringing them one step closer to a two-click purchase. Amazon quickly riffed on this, showing a list of other sellers for a given item alongside that seller’s user rating. And the bandwagon effect was unleashed. Specialized sellers like Newegg, which formerly focused on technology products, have deployed the same tech to sell across categories, aggregating sellers and drop shipping inventory for a seamless user experience. Other markets are not far behind the curve. Technology has made it so easy to adjust prices that the bidding for hotels and airlines on aggregators like Kayak and Priceline is continuous.

All fields of technology-based commerce appear to be converging to an economists dream: a series of real-time auctions. But is the economists’ dream everyone’s dream — do we want the whole world to be a real-time auction market place? No doubt there is a dark side to a system evaluating actors primarily on price competition. Amazon’s opening the floodgates of international vendors to the U.S. has created a whole underground economy of fake reviews for low quality knockoffs, for example. In other areas, considering price alone has resulted in a number of negative externalities, such as the rash of taxi driver suicides in markets Uber has taken over. As eBay has taught us, without keeping an eye on consumer experience, no market model is sustainable. And as Silicon Valley has taught us, forgetting that these systems affect real people can cause social dislocation. Time will tell how consumers vote with their clicks.