Wylde is one of NY’s top civic leaders, and her organization aims to stimulate innovation here. The Partnership’s Transit Tech Lab is focusing on the transit system, with special focus on the NY subway system.
The following transcript has been lightly edited and condensed for ease of reading.
David Kirkpatrick: Kathy Wilde, please join me on stage. Kathy has led the Partnership for NYC since it was founded, 20 years ago, 21 years ago?
Kathy Wylde: You really want to go into this? I’ve been there since 1982. I went in to rebuild neighborhoods with affordable housing when David Rockefeller started it.
Kirkpatrick: And then it sort of evolved into this, yeah, David Rockefeller being key to the partnership. And it’s really the premiere organization trying to bring business and government together in the city, which has been very effective. And the thing that caused us to be especially interested in having Kathy is that they really have put themselves, put a lot of energy into tech-based innovation, in particular right now around the transit system, but they’ve also had a fin tech innovation lab for some years. So I just would love you to talk a little bit about the partnership’s approach to innovation and where you see the most effective outcomes so far, and we could go specifically into the transit story if we have time.
Wylde: Sure, absolutely. Well, to go from global to local, in New York City in the mid-’’90s, we had Silicon Alley 1.0, which was sort of a joke for everyone and nobody thought anything was going to happen about that. But it ended up building the infrastructure for what New York is today. For the last decade, the tech sector has been our fastest growing sector. It’s still only 8% of our total GDP, but our GDP is $961 billion. We are 5% of the US economy just in the five boroughs of New York City. So it is a small but growing sector. It’s represented over the last decade 76% of the new jobs created in New York have been in tech. So it’s a huge factor in terms of today, and obviously our future. I just got an email before I came in here from John Foley, the founder/CEO of Peloton who was proudly announcing that CNBC just released their world’s 50 disruptor companies for this year and of the top ten, New York City has four, Peloton, WeWork, Rent the Runway, and Casper. And Silicon Valley has one, Airbnb.
Kirkpatrick: Wow. Hey, that’s pretty interesting.
Wylde: So, that’s pretty impressive, right?
Kirkpatrick: That is telling, very telling.
Wylde: And we’re growing our tech sector very broadly. Obviously, we’re more apps than chips, but apps are in and we have—we’ve got 49 Fortune 500 global companies in New York, headquartered in New York City, and in the surrounding region more. So what we’re specializing in, in terms of developing our tech sector is partnerships. We started in—I see Accenture’s one of your sponsors. We started with Accenture co-sponsoring a fin tech innovation lab nine years ago. It has built a huge inventory of fin tech activity in this city. We have 40 of the world’s global financial and insurance leaders who participate fully in vetting and running that accelerator and partnering beta testing with growth stage companies from around the world that are now settling in New York. And of course, it’s time to market, access to market is the key there in the financial tech sector. We’ve done a lot in the health IT area because we’re also a center of hospitals, healthcare activity. And we started this mobility lab. We have the largest public transportation system in the world—in the country, not in the world. We’re close. And we’ve got—third in the world. And we’ve got—
Kirkpatrick: Third in the world?
Wylde: Yeah. So we’ve got a huge system, public transit, of commuter rail, subway, and bus system combined. It’s a very large system.
Kirkpatrick: In the—just quickly on the fin tech innovation lab, the idea there is not to generate new companies so much as technologies that can be useful to New York entities, or how have you thought about that? Has it been built—have you created a lot of product—
Wylde: No, it’s to grow an industry cluster.
Wylde: And it’s really to make sure that New York is—obviously the financial services industry has been transforming itself into a technology industry.
Wylde: And in that process, you want to be at the forefront of what’s new. For many years, that was growing inside of companies and the big companies were very jealous of outsiders and didn’t pay much attention to them. We’ve kind of flipped that in the last decade so that in fact your best partner, acquirer, market if you’re a young fin tech company is to be in New York City where that, where that center of activity is. And we are number one in the world there. Accenture has helped London and Hong Kong start fin tech labs as well, but we are first and foremost.
Kirkpatrick: Well, I love your focus on transit because I think any New Yorker would admit it’s one of the great assets of this city that really differentiates New York, certainly from any other American city and makes it feel more like Europe than probably any other American city because it works so well. Even despite critiques, it’s still an amazing—
Wylde: Better and better. We had a crisis of 2017, but we’re getting there.
Kirkpatrick: It doesn’t feel bad to me. And you’ve got something called the Transit Innovation Partnership, which is an umbrella kind of thing, but within it you have a transit tech lab specifically aiming to help create that—
Wylde: Modeled off the fin tech lab and it’s the first major public transportation system. The MTA, which runs our system for the New York metropolitan region, has become the first public agency to partner with us to kind of create a backdoor. It’s hard for tech companies to get into these public agencies if you don’t have 10 years of experience and track record, et cetera, et cetera, and if you don’t have the wherewithal to put up with three more years of putting up with the bureaucracy vetting your product, it’s really tough. And so what we’ve done is kind of create a backdoor to the opportunity to go and meet the agency. We ran the first lab over the last two months. We chose the—we had a hundred applicants. We advertised last fall, we had a hundred applicant companies saying they had product they wanted to bring into the MTA. We worked with the MTA and outside experts to choose—they chose six of those companies, four for the subway system, two for the bus system, to come in and work with them, all with new innovation to introduce into the system. The focus is improving the customer experience and communications and anticipating breakdowns in buses for example. And how to—so it’s a kind of wide range of activities. So they chose six companies. They went through this beta period where they really kicked the tires. Five of the six are now proceeding to a one-year pilot with the MTA.
Wylde: Which is just unheard of. And we’re getting state financing to help support those demonstrations and put that together. So it’s a very exciting—we really weren’t at the forefront of mobility tech until we were.
Kirkpatrick: It is kind of amazing. It’s just sort of has crept in though, these time signs. Even before you go down into the subway you can see the next train is in four minutes. That’s incredibly useful.
Wylde: Well, yes, but that’s really not much—I mean, other systems around the world have been doing that longer.
Kirkpatrick. I know, but for us, it’s a breakthrough.
Wylde: Well, you have to appreciate how far behind we are too.
Kirkpatrick: Yeah, we were behind.
Wylde: We’ve got—I mean, our MTA has 5.6 million passengers, 78,000 employees. I mean it is a giant monster and we’ve got some great new leadership. Governor Cuomo has embraced it out of necessity, declared a state of emergency. They’re doing things differently and they really are finally introducing innovation. I’ll tell you one of the problems they have is that it’s very hard—I was at a conference this morning on smart cities. It’s very hard to have smart cities if you don’t have smart people, tech-savvy people in government.
Wylde: And that’s been one of the frustrations because they neither pay enough, nor do they have the ability to recruit around the civil service system, which is kind of your 1950s way of choosing and recruiting talent. So that’s been the—these are the kind of issues that we’re now facing. How do we really change systems—if we going to be smart city, if we’re going to embrace innovation, if New York is going to stay at the forefront, we can’t continue to operate with a 1950s mentality and you’ve got to have the talent. So that’s one of the challenges. Aside from the transit tech lab, we’re working on this whole HR thing with the MTA to figure out how is it that they can get an incentive-based system where they can get meritocracy in terms of promotion, how can we do that still working with—they’ve got 30 unions they have to deal with.
Kirkpatrick: Thirty unions, wow. Think of one, but—
Wylde: Well, the TWU is the most visible but it’s a deep—
Kirkpatrick: Well, in terms of talent, you know, we had John Paul Farmer here yesterday in the audience, not as a speaker, and he’s about to step in as CTO of the city after many years at Microsoft. So that’s the kind of people we need. So there’s clearly—
Wylde: At the top, we do pretty good because people like the power of being able to change things. But then you’ve got, as I say, the MTA has over 78,000 people. All of them have to get technology-friendly and we’re finding the same thing in our utility industries and across the board. This is something that it’s a huge change. In New York City today, we have 290,000 open jobs, almost all with tech requirements that we can’t fill. So while we’re a center of talent, we’ve got a huge problem. There are different reasons for that. One of the failures of our education system to keep up and to recognize that the innovation economy requires speed, it requires constant professional development. The other is that in the last two years, immigration to New York City has fallen by 21%, foreign immigration, and that’s a result of national policies, which is tough because our feeder system, particularly 48% of our businesses are owned by foreign immigrants, 47% of our workforce is foreign immigrants. This is a major challenge so we’ve got several challenges on the talent front.
Kirkpatrick: Two things I want to ask you about and then I want to get the audience involved. But, you know, our theme for the conference is collaborating for responsible growth. And the idea of public private partnerships, which is your whole life, is something that we really believe in, we would like to see put on more steroids. I’d like to you to talk about that but I also want to make sure we hear your thoughts on congestion pricing because I know that’s also a big passion of yours.
Wylde: Yes, major victory. New York is the first city in the United States to pass congestion pricing. It took us ten years, but we’re there.
Kirkpatrick: And when is it going to start?
Wylde: Two years from January 1. So it will be—how many months is that?
Kirkpatrick: It’s a while.
Wylde: Twenty months. But the system will be being set up and developed and—
Kirkpatrick: And it takes a lot of tech to make that work, obviously.
Wylde: Yes. No, and that tech is changing constantly, so it’s making sure we have the best possible system and we’re set up for—
Kirkpatrick: So talk about your just whole thinking about how we’re doing with public private partnering in New York, and even broadly in the United States, where I think it should be talked about more at the national level.
Wylde: Definitely it should be. The difficulty we have is of course, particularly in the political environment in New York right now, is that people think of public private partnerships as privatization. And it’s not. And it shouldn’t be. It does require a revenue stream. It does require—but we know how to do that. We’ve certainly done that in affordable housing for the last decades as we’ve used tax credits, privately syndicated tax credits to incentivize and increase the affordability of housing. So we’ve got a good system there. We’ve done it with some infrastructure in this country, but obviously we’re way behind Europe and Asia when it comes to, again, using private sector skills, resources, management capacity, financing sources, and being able to do that in a public works environment. It’s tough. So we’re trying to get with the program. That’s a big piece of what’s going on with the transportation system, to try and figure that out. I do think that the experience—I started my career in community organizing and affordable housing development, and I do think in the housing infrastructure, which we started building in the ‘70s—we have a federal, state, local, public, private, nonprofit community system that really works and I think that’s a model that we should rely on.
Kirkpatrick: Okay, maybe we get the house lights up. But let me ask you one more thing. This whole thing of all these vacant storefronts, you know, you’re—can you just help explain that to us? Why is—
Wylde: Greed. Try greed.
Kirkpatrick: Is that all it is? I mean, it’s—retail seems to be disappearing from the streets of New York and it’s really hurting our city.
Wylde: Well, I was on a panel this morning with head of Hudson Yards, Jay Cross, and he said that they’re getting 50–60,000 visitors a day and all their retailers at Hudson Yards are way ahead of program in terms of their sales. So he says retail is not—brick and mortar retail is not dead.
Kirkpatrick: I don’t see Hudson Yards as future of New York City per se, but anyway.
Wylde: In the ‘80s, if you recall, you used to see this street-level retail and above the residential part of the buildings were empty because we had no residential market. Well, that’s flipped. Our retail market is much weaker and not able to keep up with the price appreciation on the ground floor. So there’s a lot of reasons. Obviously, there’s some big box store stuff, there’s some change in people ordering online instead moving to e-commerce, so there are changes, but the basic economics of the city and the city real estate market have changed so dramatically that people who had a business model based on a mom and pop with a low cost rent are not surviving that. So that’s going to take a while to figure out. There are some interventions that people are talking about. I mean, the city council talks about commercial rent control. Obviously, that drives the real estate industry nuts.
On the other hand are we talking about how do we—there’s a great demonstration, I’m going to forget the name of it, Wallplay, a little company that came out of an art incubator on the Lower East Side that has taken Canal Street and has taken 20 empty storefronts, negotiated with the landlords to put artists and entrepreneur artisans into the empty stores on a month-to-month basis where she’s signing the lease, minimum improvements. Supporting that kind of initiative I think is going to be important in this transition. We’ve got a larger set of issues in terms of affordability in New York City because particularly 70% of our job growth has been in the boroughs outside of Manhattan. In those boroughs, as the experience of Amazon most graphically illustrates, fear of displacement, alienation from the tech economy, because these are kind of what were bedroom communities for the working and middleclass, the folks that worked on the waterfront, et cetera, that are not comfortable with what’s happened in our economy and what’s happening in our city and are threatened by increasing costs. And the mom and pop retailers are in the same situation and it’s going to take a very—and there is a very big effort on the public policy side to try and figure out how can we adjust to this, how can we keep this city thriving and strong and still keep it diverse and make room for everybody and the people that have been here are not forced out in the process and that’s the challenge for the next decade.
Kirkpatrick: Okay. Well, I’m glad you’re focusing on it. We should focus on it too. Okay, over here.
Audience 1: Hi, A__ [IND 16:12], I’m a district leader up in Harlem. I also work with CUNY research and we hosted the first Blockchain in the Boroughs with the NYEDC about two weeks ago. Two questions. One is that we’ve got blockchain-based IOT-type companies up in Harlem that we’re trying to figure out how to get into the MTA and a bunch of other places, counterterrorism and whatnot because the sensor systems are the future.
And two is, in between the city council, the community boards, the bids, and a lot of folks that we have in different organizations up there, we’ve got folks that are getting trained in tech, right. So we have people that are completing 12-month, 18-month, two-year type education. But there’s zero knowledge on how we get them from that last mile of like they’re educated to these types of city jobs. So I guess two questions. One is how exactly do we work to set up the public private partnerships. And two, you know, I’ve got 400,000 potential folks in Harlem all the way up to about 200th street into Washington Heights. How do we start, you know, working with the city to kind of build that engagement?
Wylde: So on the first question in terms of the connectivity with the folks that are being hired and trained, we’ve unfortunately got—we’ve got a plethora of workforce development efforts going on in the schools, and in workforce agencies, et cetera, but they’re in silos. They tend to be small, boutique. They don’t have connections with major employers. So we’re talking to CUNY and to the Department of Education and working on how to figure out—CUNY being the city university, excuse me—how to figure out how to create a system so this doesn’t have to be each group, each neighborhood trying to make their own connections, whether it’s to employers, to recruitment systems, whatever, to certification systems. So there is an effort going on there and I’m happy to try to plug you into that as it evolves.
In terms of bringing the companies that are forming, I think the MTA Transit Mobility Lab is a model for how to do that. Again, I think intermediaries with—it’s hard to intermediate with government. Basically, small organizations can’t do it very well because it’s just so labor-intensive, so expensive, and takes so long that it’s very hard to sustain for the smaller nonprofits or the smaller educational institutions. So that’s got to be organized. And I think the model we’re developing is something—we’re actually meeting next week with—bringing the MTA in with the Port Authority, New Jersey Transit—somebody else—all the transit agencies in the region to try and say, okay, here’s what we’re doing on this one little project with the subways and buses. How can we expand this out, how can we make a bigger—build a cluster? Because I think that’s the way to do it.
The one thing I didn’t mention that I wanted to is, just because I saw J&J is another sponsor here, we’ve been working for the last two years with the city and state on life sciences. And we have S__ [IND 19:31] Harlem is involved with that as well. And there we’re really creating an industry cluster and an ecosystem which answers that question and plugs the small companies in. We haven’t done that in cybersecurity, but in life sciences we got it. Johnson & Johnson brought a Jlabs to New York with state support and a public private partnership.
Kirkpatrick: Talking about them in a few minutes actually.
Wylde: Well, it’s doing terrific. Is Kate Merton here or—well, anyhow, the person who runs the lab is fantastic. So that’s a—so New York has really moved the life sciences thing from something that the academic medical centers do to—
Kirkpatrick: Yeah, she’s here. She is here.
Wylde: Oh, good. Okay. So it’s—you’ll like her.
Kirkpatrick: I’m not doing it, so—oh, there she is.
Wylde: Hi. So anyhow, that’s another example of where we’ve got a real public private partnership with intermediaries that are set up that’s she’s going to talk about to do the kind of thing you’re talking about, to make sure those small companies get connected in.
Kirkpatrick: We’ve got time for one more. Anybody?
Audience 2: K__[IND 20:41] SAP. In the transit labs, you talk about five projects that are going to be piloted. Can you give us an example of what innovation we can be excited about please?
Wylde: Well, SAP has an innovative, diversified incubator lab, so no wonder she asks good questions. They’re doing a good job as well. So there’s one that’s about reading license plates for the purposes of clearing bus lanes and doing that virtually.
Kirkpatrick: You mean sending out tickets?
Wylde: Well, ultimately. But first, it’s to have a system that doesn’t rely on the local policemen thinking it’s his job to patrol the bus lanes. So it’s to clear that. Because the only way we’re going to—we’ve had a big drop in bus ridership in the city, like 20-plus percent drop in ridership because the buses are stopped in traffic. And so they’ve built bus lanes but people block them so that’s—well that’s one of the models.
Another is to be able to tell the MTA what are the activities, how many passengers they have on platforms and who are using stairways and have an app where they can actually direct people to where they can go. Similarly, to direct customers, there’s another one that will inform customers when there is a breakdown in their line, a problem on their line or delay and what their alternatives are both in the subway system and in the bus system and how long it will take et cetera and direct them to it. So stuff like that, that it will try to deal with the reality of this large system that has problems. Some of it is to correct the problems, like helping buses move faster, and some of it is to help the customers have more information that they can use to overcome the problems.
Kirkpatrick: Okay, well, thank you Kathy.
Wylde: Okay, thanks.
Kirkpatrick: You’re doing great work. And I really love to support it and I hope people here will come talk to you.
Wylde: Thank you, David. I’m relatively a low-tech person but—