Startups, high-speed rail and California’s infrastructure future
California is home to two very different innovation worlds. For the readers of TechCrunch, there is the familiar excitement of the startup world, with startups working on longevity and age extension, rockets to Mars, and cars that drive themselves. Hundreds of thousands of entrepreneurs, engineers, and product managers are building these futures every day, often on shoestring budgets all in the hope of seeing their solution come to fruition.
Then, there is the “innovation” world of California’s infrastructure. Let’s take the most prominent example, which is the bullet train connecting southern to northern California. The train, first approved in a bond authorized by voters in 2008, is expected to have its first passengers in 2025 — three years after the original target of 2022.
That’s roughly 17 years start to finish, or older than the ages of Facebook (14 years) and the iPhone (10 years) are right now. Given that environmental reviews aren’t even slated to come in until 2020, it seems hard to believe that the route will maintain its current schedule.
The delays are only one part of the problem — the finances are another. This week, the Los Angeles Times reported that the high-speed rail project has increased in cost by $2.8 billion for the Central Valley portion of the route. The revised total budget for this segment is now $10.6 billion, up from $6 billion when the plan was originally conceived. The total target budget for all segments is now around $64 billion, a number that the government authorities last came up with almost two years ago.
That budget is more than 20% greater than all venture capital financings combined in the United States for 2016, which was $52.4 billion.
It’s not just high-speed rail though that is expensive. The cost of infrastructure is outlandish across the state. The new eastern segment of the Bay Bridge cost $6.4 billion, due in large part to the complete inexperience of the panel deciding the design for the bridge. A large water infrastructure project called California WaterFix could cost as much as $26 billion to build tunnels to flow more water to the Central Valley and southern California.
Nor are the challenges that California faces unique. The New York Times has gone in-depth in a series of articles noting the outrageous cost of extending the Long Island Rail Road to Grand Central Terminal (at $3.5 billion per mile, the most expensive in the world), as well as the crazy operational costs and inefficiencies of the NYC subway.
We need better infrastructure, and we needed it yesterday. America’s infrastructure grades continue to be abysmal. The American Society of Civil Engineers (ASCE) gives the country a D+ rating for infrastructure. Even more harrowing, America is projected to increase its population to 400 million by 2051 according to the Census Bureau, an increase of 75 million in just another three decades. With decrepit infrastructure, how will the country accommodate its growth going forward?
The issue here is cost disease, the dramatically increasing costs of areas of the economy like construction, education, health care, housing, and infrastructure. I discussed the challenges of cost disease in the health care space last weekend, looking at how a startup named Avant-garde is attempting to bring better cost controls to hospitals.
If you thought improving the efficiency of health care was hard, then infrastructure is a whole other level of challenge. It’s physical, run by government, owned by unions, and requires in some cases thousands of sign-offs for eminent domain. Then there is the complexity of issues like tunneling, where further exploration might instantly double costs for a project. The ASCE puts the total infrastructure backlog for the United States at $2.2 trillion, a number that only increases as time goes by/
In short, bridging California’s two systems of innovation isn’t an easy task.
That said, there are few places where trillions of dollars will be spent — or can be saved — with better technology. We have all heard at this point about Elon Musk’s Boring Company, which is attempting to massively improve the efficiency of existing boring technology to make digging tunnels exponentially cheaper.
But other startups are starting to get in the game as well. Take OneConcern for example. It’s software is designed to help cities predict and respond to disasters with the help of machine learning. In its ideal form, the platform could allow city planners to prevent disasters through scenario planning, and the startup is initially focused on earthquake simulation. It recently raised $20 million for its Series A.
Or take PipeGuard, which is developing a robot that can accurately scan sewer lines for leaks, without having to shut down water service for customers. The startup, founded by a trio of MIT students, won Boston’s HubWeek demo day pitch contest late last year. There is an enormous opportunity for robots and drones to do everything from sewer inspection to tree censuses to bridge maintenance.
Finally, consider Kaarta, which produces a handheld device called Contour which allows users to scan territory into a precise 3D map. Such tech could be used by city and state officials for everything from scanning the interiors of buildings to mapping the streetscape in a complex urban environment.
Most of these companies are relatively young, and for good reason: few founders have really dived into the infrastructure space over the past decade. Certainly, the kinds of backgrounds required are often quite technical: simulation, robotics, and 3D mapping just to name a few. But the possibilities to improve our lives every day and also make profit to boot should be deeply enticing.
One way or another, California’s startup innovation culture needs to blend over to its infrastructure culture. We don’t have trillions to spend to get America’s infrastructure up-to-speed for the 21st century. Without significant tech innovation, the cost disease around infrastructure will forever consign us to 1970s BART trains and declining water security. It’s time for California’s entrepreneurs to change the future here, just as they have done in so many other industries.