One City in Pennsylvania is Poised to Crush the 21st Century …
I came to Pittsburgh to see the future.
On a blustery late-winter morning with a light whorl of snowflakes falling near the banks of the Allegheny River, Sarah, a friendly young PR person for Uber, opened the rear passenger door of a Volvo SUV that had so much electronic gear installed on the roof, it looked like it was wearing a crown. She gestured for me to take a seat. We were in the parking lot of Uber Advanced Technologies Group, a converted restaurant-equipment warehouse just north of downtown. I was about to have a very special Uber ride, and not just because it was free.
I buckled up, and the Volvo headed out on a few blocks of 33rd Street that run under a hulking railroad trestle — an unsubtle symbol of the city’s heralded industrial past. The car turned toward downtown and headed into the bustling Strip District. We went a few miles and then circled back on Smallman Street to the Uber warehouse, which is situated in a part of Pittsburgh that recently has become such a magnet for tech research that one think-tank maven described it to me as “where you really feel you’re in the 21st century.”
The ride took maybe 15 minutes and was uneventful except for a needless stop for a double-parked delivery truck outside one of the Strip’s many food stores and some hard braking when an impatient idiot passed us on the right. I can’t say much more about it because Uber wouldn’t let me in the door unless I signed an imposing confidentiality agreement, and Sarah reminded me several times, in her very friendly way, that the whole trip was “on background.” But I think I can reveal this: Though there was someone in the driver’s seat, for most of the trip the car drove itself.
Two years ago, Uber announced it was starting a research facility to develop self-driving cars in Pittsburgh. Though the company said Pittsburgh was an ideal location because of its winding roads, hilly terrain and variable weather, the real draw was the opportunity to collaborate with Carnegie Mellon University’s Robotics Institute, where academic researchers affiliated with the country’s first PhD program in robotics had been working on autonomous vehicles for more than two decades. It wasn’t long before Uber, a company that takes pride in its sharp-elbow ethos, hired away about 40 of the top robotics people from CMU and decided to collaborate with itself.
“Almost all the self-driving car technology anywhere — almost everyone in charge of it went to Carnegie Mellon,” says one of those poachees, Uber’s director of hardware engineering, Eric Meyhofer, whom I spoke with before my car ride. He’s a ’94 CMU grad who spent seven years working in Silicon Valley and then returned to his native Pittsburgh and took a special faculty position devoted to commercializing products developed by the Robotics Institute. The field is ready for its commercial moment. The CMU robotics program began with a grant from Westinghouse, and it’s always been unabashed about commercializing its inventions. In the past five years, the Robotics Institute has spun off 13 companies.
“Robotics went from ‘Is it possible to make a robot walk?’” Meyhofer told me, “to ‘Is it possible to make a business out of walking robots?’”
It seems certain now that we 21st-century humans will share our world with robots. If you interpret the definition loosely and just talk about the array of skills — artificial intelligence, machine learning, speech recognition and vision — we could see everything from bow-tied C-3PO types who mix drinks to roving mechanical security guards to driver-less cars to digital legal counsel.
And somehow, as this brave new world begins to take shape, Pittsburgh is not only right in the middle of it all; it’s one of a few cities poised to lead it. Yes, Pittsburgh — the place out there past the Allegheny Mountains where they talk funny and that just three decades ago was the choking canary in the caving mine of America’s deindustrialization.
“When the steel industry collapsed, 50,000 people a year were leaving the Pittsburgh region,” Tom Murphy remembers. The son of a steel-plant worker, Murphy became mayor of the city as it tried to patch together a recovery strategy in the 1990s. “In the city itself, we ended up losing 60 percent of our population,” he says. “And they weren’t going to the suburbs. They were going to Florida.
“It forced us to rethink ourselves and who we were in a very different way. When I was growing up, 60 percent of the workers here worked in heavy industry. It’s 10 percent today. There had to be a physical transformation, because we had to do something with the old steel mills. There had to be a cultural transformation. You didn’t even need a high-school education to work in a steel mill. Now the universities had to step up and say, ‘We can be the economic engines of the region.’”
The so-called “eds and meds” complex in Pittsburgh might be one of the most successful anywhere, and it’s particularly impressive for a city this size. The University of Pittsburgh, Carnegie Mellon, Duquesne and other, smaller schools add up to the sixth largest concentration of students in the country — over 80,000 of them in a city of about 300,000 people. Academic research funding almost matches what flows into Philadelphia, which is five times bigger. The University of Pittsburgh Medical Center, which was one psychiatric hospital when the city started its downward spiral in 1979, has become a far-flung behemoth. The hard-charging institution that behaves a lot like an entrepreneurial company now has more than 25 hospitals, and it announced in March that it’s starting to move toward Philadelphia. UPMC employs about 56,000 people — more than any other private employer in Pennsylvania. With revenues topping $15 billion in 2016, the company now has executive offices that fill the top floors of the tallest tower in town, which used to be home to iconic local company U.S. Steel.
Like other cities, Pittsburgh has lost some companies — like Lycos — that were hatched at its universities but have moved on. Lately, though, the city’s eds-and-meds sector is attracting what one economic report labeled “landing party” presences from the top players in tech. Google has 450 people working in a converted Nabisco cracker factory that’s helped anchor a redevelopment project changing the part of town called East Liberty. Amazon just moved into a former steel plant on the south side of town to research its voice-controlled products. Apple is in the city, as is Disney. Ford announced in February that it would buy a CMU spin-off company called Argo AI for more than a billion dollars — and spend another billion dollars over the next few years developing its own autonomous-car program in the city. Microsoft is teaming with Pitt, CMU and UPMC to bring Big Data innovations into health-care delivery.
“We started to see this new economy being built on eds and meds,” says Pittsburgh’s current mayor, Bill Peduto, “[and] on top of that, we had a partnership of the foundations and the corporate community to build new buildings downtown. We were going through economic collapse, but the companies that stayed were growing. For instance, PNC became one of the top five banks in the country. We didn’t lose our sports teams. [Instead, the troubled city built two beautiful downtown stadiums on its rehabbed riverfronts, for the Steelers and Pirates.] And we didn’t sell off our cultural assets like the symphony or ballet. In fact, we doubled down on arts and amenities.
“All those things came together in what I call the ‘Pittsburgh Model,’” Peduto tells me. With its collective back against the wall, the community pulled together and struggled to survive. “When we did come back,” the mayor brags, “we came back with everything we had when the city was wealthy.”
If you’ve come this far and are now concerned that you’ve somehow picked up the wrong city magazine, let’s go into the Pennsylvania Convention Center on a morning in October last year when 1,500 people assembled for the annual meeting of the Philadelphia Chamber of Commerce. It was going to be the usual extravaganza of Babbittry and back-patting. Chamber CEO Rob Wonderling would praise pro-growth attitudes. Excelon’s Denis O’Brien would talk about the progress on diversity. But then John Fry came to the lectern. The amiable and energetic president of Drexel was that day assuming the role of chairman of the Chamber. He gave a short speech, and it contained references to his off-stated goal of inclusiveness in the city’s economic progress.
But right off the top, Fry talked of crisis. “Not a crisis of survival, like the fiscal crisis of the early ’90s,” he explained. “Instead, this is a crisis of opportunity.” He cited analysis by the Brookings Institution that predicts a Darwinian world in which cities that thrive will have to be tech and innovation hubs, magnets for investment and talent. There would only be room for about two dozen of these cities around the globe, Fry explained. Philadelphia had all the assets in place except one: “a sense of urgency about competing for the first-tier position that is further complicated by complacency. … ”
“There are other cities as close as Pittsburgh,” he told the Chamber crowd, “ … and they do have a sense of urgency. And they don’t suffer from complacency. And as we sit down to breakfast, they’re planning to eat our lunch.”
Good line. But could it really be true? Pittsburgh? Eating our lunch? This isn’t a padded contact sport we’re talking about here, where being outscored on the ice or the gridiron by our more diminutive Commonwealth cousin is embarrassing but not life-threatening.
“First off,” says Bruce Katz, the Brookings Institution Centennial Scholar whose research on the global economy of cities informed Fry’s Chamber of Commerce speech, “John Fry’s assessment of the competitive environment is completely on point.” Katz cites a recent report by the consulting company McKinsey that talked about 12 general-purpose technologies — like robotics, autonomous vehicles and genomics — that are moving from the lab, to testing, to prototyping, and ultimately to ubiquitous adoption. “The competition at this point is to become a first-mover city around one or several of those technologies,” he says. “Because whichever city gets in on the ground floor is going to get a whole bunch of jobs. There’ll be, let’s say, four cities in the United States with a potential to play at a big scale.
“Both Philadelphia and Pittsburgh can and will compete in this sweepstakes,” Katz adds. “The thing about Pittsburgh is that it’s becoming a playground, a sandbox for innovation there.”
Former Pittsburgh mayor Tom Murphy is now a fellow at the Urban Land Institute. Last year, he spoke in 47 cities. “I get invited to all these places,” Murphy told me, “because Pittsburgh is seen as a city that made it through. We had an intentionality about changing that many cities don’t have, because they’re comfortable.”
Despite his speech, John Fry didn’t want to talk to me on the topic. So I started calling around.
“In other places, like Pittsburgh,” Ajay Raju, chairman of Dilworth Paxson, told me, “new is embraced. Clever is encouraged. In our city, it’s often not the idea that matters as much as who is delivering the idea. A handful of toll keepers decides who gets to cross the bridge, and they have a jaundiced view when judging the new and the clever. And we are proud of that vetting process.” Yes, Philadelphia can be a very complacent place, he concluded: “It’s like a trust-fund city.”
Real estate man Douglas Green, a transplant who now describes himself as “one of Philly’s biggest cheerleaders,” says his strongest sales pitch is that Philly is “an incredibly stable city.” But, Green admits, “Your best attribute can be your worst attribute. Without the stakes being high, it stifles innovation and creativity.”
From Jefferson’s president Steve Klasko, who’s made disruption his personal brand: “What’s missing in Philadelphia is a real sense of urgency about competing for a first-tier position and [being willing] to do whatever it takes to get there.”
Let’s leave some of the policy-wonk stuff aside. Pittsburgh is just plain buzzy right now. Since being named the best place in America to live in the mid-2000s by both the Economist Intelligence Unit and Places Rated Almanac, it has become a perennial overachiever in quality-of-life surveys. Zagat named it the nation’s top restaurant spot in 2015. Lately, publications like Vogue are urging weekend visits. It has an active movie production scene — The Avengers, The Dark Knight Rises, Foxcatcher, The Fault in Our Stars — and the flashbacks for one of TV’s most talked-about shows, This Is Us, are set there.
Add it all up — the robots, the rivers, the restaurants — and the hype about the Pittsburgh Renaissance is getting so loud that it’s almost comical. “I was talking to this guy in New York a couple weeks ago,” a Pittsburgh real estate developer told me, “a very sophisticated real estate guy. And he was saying, ‘Everybody wants to invest in Pittsburgh. In my mind, out there there’s like cars in the sky driving themselves.’
“And I said to him, ‘Have you ever been to Pittsburgh?’
“‘No,’ he said, ‘and I don’t want to go. I just want it to be like the Land of Oz in my mind. Whatever you’re doing out there, you’re doing it right.’”
What’s the secret? The Pennsylvania Turnpike isn’t exactly the Yellow Brick Road, but one stormy late-winter morning, I got into my driver-required car and headed to Oz.
I booked a hotel room in East Liberty, once a kind of second downtown with a large African-American population. The neighborhood was decimated by ill-advised urban renewal efforts in the ’50s and ’60s but is undergoing a rebirth and gentrification — or, perhaps more accurately, technification. I checked into the hipster haven Ace Hotel Pittsburgh, which is just a few blocks from the converted Nabisco factory that now houses Google as well as a health technology research center, run by UPMC, designed to spin off new companies. The Ace occupies a rehabbed YMCA building that had been unused for 24 years.
“When we were starting the hotel project,” one of the Ace’s developers, Matthew Ciccone, told me, “I read an article in the Wall Street Journal that was basically Portland saying, ‘Dear hipsters, stop moving here. We have no jobs for you. Stop coming.’ And I remember trying to figure out what Portland had done to become that kind of place.” Now, Pittsburgh has a distinct Portland-like attraction, except there are jobs. According to recent census data, lately there’s been an in-migration to Pittsburgh from Philadelphia. “Projects like this hotel,” said Ciccone, who’s been developing co-working spaces, “repositioned the city and made it attractive to companies like Google and Amazon and Uber.” And maybe millennials from Northeast Philly.
One morning, I drove to a rather forlorn zone of warehouses and auto-supply companies and walked into a former wood-working warehouse with a fresh coat of paint. Inside, I met a recent migrant from Philly, Dick Zhang, a friendly 23-year-old with a quick barking laugh. He grew up near Princeton, studied engineering at Penn, and did some extra coursework at Wharton. Three years ago, he drove himself to Pittsburgh, setting out at 3 a.m. to make a 9 a.m. meeting to pitch his business concept to an incubator called AlphaLab Gear. His idea was for drones that would fly above large construction sites and sweep the terrain with 3-D sensors. He was developing software to analyze the resulting data to tell the construction companies exactly how much earth they would need to move, how long it would take and how much it would cost. AlphaLab accepted him, and the result is a company called Identified Technologies that now has 25 employees and $3 million in funding from a Pittsburgh-based venture capital firm. Revenues last year grew 900 percent.
Pittsburgh wasn’t Zhang’s first choice; he initially went through every business-plan competition he could enter around Penn. But his hardware technology company couldn’t get traction in Philadelphia, and Zhang perceived a decided bias toward medical companies. “Structurally,” he told me, “there was more support for our technology company in Pittsburgh.”
And what about living there? “It’s been a little bit of a culture shock,” Zhang said. “But living here — I think the right word is ‘delightful.’ We’ve recruited people from the San Francisco Bay area, from Texas cities, from Boston and New York, and it’s noticeable to them, the livability of this city.”
In the year or so that he’s been growing the company and finding new customers — including one of the contractors building a multibillion-dollar ethane cracker plant 30 miles outside of Pittsburgh that highlights the region’s Marcellus Shale assets and opportunities in energy technology — Zhang noticed something else.
“In my world,” he said, “it’s all about customer discovery — who are you going to help? And our mayor here in Pittsburgh is big on understanding the concerns of the customer. One thing I will give Mayor Peduto credit for is that we’ve had multiple conversations where the context is: ‘What can the city of Pittsburgh be doing to support you?’ You’d be surprised how many governments don’t have that mentality.”
Bill Peduto is running for reelection to his second term as Pittsburgh’s mayor. He’s a stocky 52-year-old bachelor with a degree in political science from Penn State. He’s been known to guest-DJ at local college radio stations, and in his 12 years on Pittsburgh’s city council, he regularly hosted a night where he spun records and played music videos at a bar. Though his self-assessment is “I’m so not hip that somehow that turns into being hip,” people who know him say he gets tech and understands the importance of innovation.
Peduto has lately been critical of Uber’s corporate policies (and the company briefly suspended its self-driving program after an Arizona crash), but the mayor opened the door wide when Uber first came knocking. The New York Times later quoted his rationale: “You can either put up red tape or roll out the red carpet. If you want to be a 21st-century laboratory for technology, you put out the carpet.”
Peduto says that attitude isn’t new: “It’s been in our DNA in Pittsburgh to collaborate since the 1940s.” It only takes a shallow dive into Pittsburgh’s civic history to come across tales of the Allegheny Conference, which had its beginnings when rich Republican banker Richard King Mellon and the city’s mayor, the working-class Democratic-machine pol David Lawrence, got together to solve the city’s awful air and water pollution and downtown land-use problems. The conference is credited with pulling in disparate players — business, government, philanthropy — and fostering an unusual level of collaboration. It became a sort of super Chamber of Commerce that actually got things done — often, big things.
By the time the latest crisis arrived, most of the originators of the Allegheny Conference were gone, and the organization had become an institution subject to the laws of inertia. It certainly contributed during Pittsburgh’s existential crisis in the ’80s and ’90s, fostering region-wide cooperation and spinning off the Cultural Trust, which built a downtown arts district. But collaboration now would be more ad hoc. In a relatively small city, the top players simply knew one another better, and it was easier to get important people into the same room. Plus, there wasn’t much choice; the stakes were too high.
“Don’t get me wrong. It’s hard to get people to change. And sometimes it was hand-to-hand combat,” says Tom Murphy, the mayor from 1994 to 2006. But, Murphy insists, “The key piece of our revival is, we formed a very, very close partnership between the business community and the universities and the political leadership. I was meeting every other week with the leadership of the business organizations and the universities.”
Whether such cooperation is DNA-deep in the city is debatable, but informed observers notice something different about Pittsburgh. David Thornburgh, born there, son of a governor, longtime government professor and now head of Philadelphia’s good-government watchdog Committee of Seventy, concludes: “Pittsburgh’s business and civic community has had a critical mass and a focus and a discipline that has been harder to come by in Philadelphia.”
Max King studied Philadelphia closely during his 27 years at the Inquirer, including nearly a decade as editor in chief. He moved to Pittsburgh in 1999 and is now CEO of the Pittsburgh Foundation. “If you look at Pittsburgh’s history,” King told me, “it’s a place that tends to be entrepreneurial, risk-taking and creative. A place that likes to go for the big bet.” Among its surprising assets, Pittsburgh is home to a bevy of well-endowed foundations — Mellon, Hillman, Benedum, Heinz — all of which focus their philanthropy on their hometown. “The money stays here,” King says.
And, he adds, “Different from other places I’ve lived — New York, Boston, Philadelphia — Pittsburgh acts and feels like a community. That makes a big difference.”
The big bet now is on cars that drive themselves and robots that walk and how much they’ll change the world as we know it — and what being in the center of the action will do for Pittsburgh. Eric Meyhofer, sitting in the sleek and futuristic Uber outpost in the converted warehouse on the banks of the Allegheny River, confidently made the connection between his company and his community: “Pittsburgh has always been scrappy and has always been fighting and slowly winning. It’s gotten to a point of vitality, and now there’s going to be a hockey-stick uptick because of tech here.
“With changing the world comes the need to be scrappy,” Meyhofer added. “And I think the sense of urgency is very pronounced in Uber’s culture … and matches Pittsburgh in a lot of ways. It’s a good fit.”
So, I finally ask the city’s mayor, are you folks out there — are yinz — preparing to eat Philadelphia’s lunch?
“After 50 years of being off the global stage,” says Peduto, who still skates in an ice hockey league, “Pittsburgh is ready for its reentry. We want to compete, not as a post-industrial city, but as a 21st-century city. And just like a great Pens-vs.-Flyers game, we always look for great competition with our neighbors to the east.”
I’ve been trying to avoid sports analogies even more than mentioning cheesesteaks vs. french fry sandwiches. But now that I’ve been to Pittsburgh and back, and per Peduto, it seems to me that while Philly lays claim to Rocky Balboa, Pittsburgh is that character’s civic analog — down on its luck, battered against the ropes, but now back in contention and, by all appearances, ready to punch above its weight.
Published as “The Good News Is, One City in Pennsylvania Is Poised to Crush
the 21st Century. The Bad News?” in the May 2017 issue of Philadelphia magazine.