Reid riffs on California Forever and housing

Reid talks about why he invested in California Forever, the ambitious sustainable city project in Solano County, California. He contends with some of the concerns that have been raised about the initiative and states his case for the best way to fix the affordable housing crisis. The answer just might be surprisingly simple. Aria also asks Reid about exciting sustainability projects that aren’t getting the attention they deserve. For more info on the podcast and transcripts of all the episodes, visit https://www.possible.fm/podcast/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Reid Hoffman?

  I'm Reid Hoffman.

• 0:02Aria Finger?

  And I'm Aria Finger.

• 0:03Reid Hoffman?

  We want to know what happens if, in the future, everything breaks humanity's way.

• 0:08Aria Finger?

  Typically, we ask our guests for their outlook on the best possible future. But now, every other week, I get to ask Reid for his take.

• 0:18Reid Hoffman?

  This is possible.

• 0:23Aria Finger?

  So Reid, you decided to invest in California Forever. Can you tell us about that moment that you first learned about the venture and what it most excited in you?

• 0:32Reid Hoffman?

  Well, I heard from a couple of my great entrepreneurial friends that there was this exciting project that was kind of to bring the economic prosperity of Silicon Valley to more regions in California, but also to make it affordable, not just, obviously, people in the tech industry, but firefighters and restaurant owners and restaurant employees and all the rest of this stuff, and to make the whole thing green from the ground up. Wow, that's ambitious. And even though we live in land of ambition, it was like, is this, you know, is this, in fact, doable? And one of the reasons why cities fail to start is kind of the economics.

• 1:16Reid Hoffman?

  Do you have the economic engine that provides the jobs, that provides the prosperity to invest in it? Part of that first conversation I had with Jan was asking every skeptical question.

• 1:30Reid Hoffman?

  It was like, look, is this going to just be the definition of a cold start problem? Is it the same reason everybody wants to live right next to the current place the job is versus commuting? Is this just a, you know, is this actually going to get those jobs and employment there? And he had thought through all of it and had a really good theory, not just of what the mature state looks like when you have an ongoing green city, but what does the first steps look like? If we could have 20 of these Solano County California Forever projects in various places,

• 2:15Reid Hoffman?

  communities would be better off, industries would be better off, networkers would be better off, investors would be better off. It's one of the places where, in this creation of new industry... Everybody wins. It's one of the frequent mistakes of the outside critics of this stuff where they think it's all zero sum. For one person to win, another person needs to lose. And this is one of those things where it only works if everyone wins together.

• 2:45Aria Finger?

  Yeah, I mean, I have to admit, I'm a, I'm a hard person to criticize this project because it has so many things that I'm excited about, to your point, whether it's climate change, or housing prices, or community, or, you know, livable cities, commercial and residential zones together. But this project still has attracted quite a bit of controversy. And so the controversy around California forever is in many ways, just one example of the ongoing tensions between Bay Area locals and the transplants who work in the tech industry. So how do you think ventures like Yon's, how can they innovate and bring about transformative change, but without leaving the existing residents behind?

• 3:27Reid Hoffman?

  Well, look, I think the key thing is, there's a couple of, of understandings that need to be achieved. One is that it's not just, you know, kind of call it, you know, tech industry Parkville. That if you have this city going, you have dry cleaners and restaurants and accountancies and pottery shops and, you know, all of this stuff. And that, that gives you a real range of not just one set of economic opportunities, but many different economic opportunities for all of the families that live there. And so sure, if some of them end up getting, you know, kind of the new manufacturing jobs for the various kind of interesting, you know, companies that have already signed up

• 4:13Reid Hoffman?

  to come provide work in a prospective Solana County city, or anything else, but there's a range of them. And that's kind of one thing is understand it's not, it's, it's a city. And one of the things that when you have industry going, all kinds of interesting economic opportunities and, and pathways come for citizens. The next thing is that people tend to say by reflex, you know, I would like to have, you know, complete control over what's going on, whether it's, you know, current political heads or current poobas in the community.

• 4:48Reid Hoffman?

  And the answer is you'll have some, but not all, because these things take a network to build. There is a whole set of people who have to work together and contribute together. Now, one of the things I think that people misunderstand in the early stages, you had to be quiet about it because you were trying not to, you were trying to make the economics work of even though you were buying the land at a premium to what agriculture would currently buy it at. So you're giving people more money. Once people understand that you're trying to build something larger, suddenly the economics could not work and then it would fail for everybody. So you had to be quiet initially, but the quiet was not, hey, we're not going to involve everybody in the communication

• 5:33Reid Hoffman?

  of how to build this. Cause by the way, you have to have a healthy community. You have to have good relationships with your political figures and so on. The answer to the quiet was only the initial phase. Whereas now it's to get everybody, you know, involved in, in partial participation to kind of what's going on. And, and it's the partial that's important that everyone understands because it's not like, you know, everybody is the master. No one is the complete master architect. Everyone has to kind of work together. But it's one of those places that if you work together, everybody benefits. Like I can guarantee that the existing residents, you know, won't be left behind. Their voices do have a chance to be heard by the group of people discoursing and then that group of people,

• 6:17Reid Hoffman?

  you know, determine where it goes.

• 6:20Aria Finger?

  Yeah, it was actually really fantastic to hear, you know, he was like, well, we made 600 people millionaires. And you were like, oh, well, that's great. And if they didn't want to sell, they didn't and they remained. Or if they did, they sold and then perhaps stayed in the area and bought better agricultural land somewhere locally. So again, I thought to your point, it's like they had to be quiet in the beginning, but they weren't forcing anyone to do anything. And people were sort of choosing what they want for their future.

• 6:44Reid Hoffman?

  Yeah, exactly.

• 6:46Aria Finger?

  So, you know, you mentioned that one of the reasons you invested is because California Forever is this, you know, very ambitious project in the land of ambition, being Silicon Valley. So what are some other non-obvious ambitious projects that are bringing about human progress that we're not deploying enough attention and capital to? Like, what would you like to see the most ambitious among us tackle?

• 7:13Reid Hoffman?

  Well, maybe the most central one is how technology transforms our kind of climate change problems. Like, there's a lot of discussion around, hey, we need to have a carbon market, we need to have agreements about how much carbon we produce, you know, we need to, you know, impose carbon costs as to externality on businesses, they innovate, all of which, perfectly good. But like, part of what changes the possibility curve and the cost curve of these things is technology. So one is, you know, the scope of energy. So like, the reason why I have made a number of fusion investments is entirely because if we, if we

• 7:55Reid Hoffman?

  get plentiful, cheap, safe energy, and obviously, you know, we could possibly get that through solar, and selective ways we get that through air and water, but those are selective and limited, you know, like, clean, plentiful energy is everything from carbon capture to, you know, changing the economics of, or the carbon nature, not just the economics of heating and cooling and all the rest. And a little bit of, you know, we'll hear from Jan about how even the design from a city up with these things in terms of where you locate power relative to sewage and all the rest, all that, all that works. But then, there's also the kind of questions are like, well, okay, how do we do carbon capture? You know,

• 8:40Reid Hoffman?

  how do we, how do we step back this accelerometer that we've gotten into in terms of making things hotter and changing the zones of food production and agriculture and coastal zones? And, but then there's also like, you know, things around in order to bring another several, you know, billion people in the middle class, what are we doing with cement and steel manufacture for, for buildings? You know, well, that's another technology area. And so, it's basically technology everywhere. There's a whole stack of that that I invest in personally, not as, you know, purely, like, I don't know how the economics will play out for me as investor, but as a philanthropist.

• 9:22Aria Finger?

  Land has always been a highly valuable resource and the root of, you know, great contention throughout human history. And, you know, we are seeing in this country, like, a growing housing crisis.

• 9:34Aria Finger?

  Prices are skyrocketing and and one of my frustrations as I consider myself a progressive and yet it is these progressive cities, New York, LA, San Francisco, that actually have the worst housing crisis and the worst prices. And so they're most likely to displace low-income communities. And this is something that, you know, Jan talked about, that this is one of the reasons we're doing this is how can we solve the housing crisis? And so what would you say beyond California forever? How can we make access to homeownership, but also just reasonable housing prices more equitable for people across the country?

• 10:10Reid Hoffman?

  Unfortunately, it's really simple, which is more housing, more stock of housing. Nothing solves that problem like that. People, you know, people who don't understand economics tend to think, well, you could just, you know, we can do price fixing and we can mandate what the prices are. And that breaks in all kinds of different ways. It breaks in quality, it breaks in people not doing transactions, it breaks in, you know, alternative ways that the markets pull together. And so, you know, the people who propose ideas like that literally have no idea of how markets, well, it's kind of a little bit like to say, we will mandate that everybody has high-quality, you know, most nutritious food and everybody has, and

• 10:55Reid Hoffman?

  we'll just mandate it. And by mandating it will be so. And you're like, oh, if only, you know, the world would be much easier. And so the similar thing is, the only way you can do it is through the creation of housing. Now, the creation of housing then means what happens is that most communities tend to be very not in my backyard. So they don't want to have taller, they don't want to have, you know, apartment buildings with more floors in them. But that apartment building with more floors is part of how you get housing. They don't want to enable construction projects. But construction projects are how you get more housing. They don't want to have the economics for residential housing because like one of

• 11:35Reid Hoffman?

  the weirdnesses in California is we have a lot more economics for commercial buildings, partially due to Prop 13 and other kinds of things than we do for residential. So make the residential incentives as you know, kind of substantially as big, but it all comes down to availability of, you know, decent and quality housing. And so everything should be oriented to that. And that's of course, one of the reasons why California Forever is a great project for everyday citizens because essentially everyday citizens are the people who benefit from this kind of, you know, baseline creation of really good housing.

• 12:20Aria Finger?

  I couldn't agree more. Reid, thank you so much.

• 12:23Reid Hoffman?

  Pleasure.

• 12:30Reid Hoffman?

  Possible is produced by Wondra Media Network. It's hosted by Aria Finger and me, Reid Hoffman. Our showrunner is Sean Young. Possible is produced by Katie Sanders, Edie Allard, Sarah Shleid, Adrian Bain, and Paloma Moreno Jimenez. Jenny Kaplan is our executive producer and editor.

• 12:48Aria Finger?

  Special thanks to Soraya Yalamanchili, Sagida Sapieva, Ian Alice, Greg Beato, Parth Patil, and Ben Ralas.