California Forever CEO Explains Plans to Build a New Community | Pivot

1. 0:00 – 15:00

   Jan Sramek is the…

   1. KSKara Swisher0:00

      Jan Sramek is the CEO and founder of California Forever. His company, with the help of some Silicon Valley billionaires, has acquired 62,000 acres in Solano County, California, which is north of, north and slightly east of San Francisco over the last few years with the goal of building a new community. So, we've wanted to have you on for while. We have so many questions. K- Scott particularly has a lot of questions. But there's been a lot of mystery around California Forever. I, I need you to explain exactly what you're planning and, uh, I, and I get a sense of why it was secret at the beginning is you were buying up all, 62,000 acres in this area north-east of San- just north-east of San Francisco, um, centered in, uh, you know, in Solano County. Um, so talk a little bit about what you're doing for people who don't know.

   2. JSJan Sramek0:46

      We are trying to get California to build again, uh, and solve this problem that we have, um... It's still the center of innovation, it's still this economic engine for the whole country, but it's the first time in the history of the country where people are moving out of a place like that. Um, and we're doing that by building a new community in Solano County, about an hour north of San Francisco. Uh, and in some sense, this should be the, um... This is the oldest kind of business model, um, in the world. We run out of houses, we should find some land, um, that is not prime farmland, that is not sensitive ecological habitat, and build a complete community there. And then I think what's different is we're not building a subdivision, we're building a complete community. And so we're building something that someone who grew up in an old neighborhood like Noe Valley or the Marina built a hundred years ago would recognize. A complete community with homes and apartments and schools and shops and jobs and churches, um, and, uh, we believe that this can be a really unique economic engine for Solano County, which is a part of the Bay Area that has been left out of the prosperity that, that's happened here o- over the last 20 years.

   3. KSKara Swisher1:59

      So, most cities just happen, you k- you know, they just sort of occur w- and then the, and then cities build on top of cities, right? That's the whole concept is, like, Rome has 10 different versions of itself depending on the era. Creating something out of nothing, a lot of cities that do this i- in the history have not worked out well. Brazilia, I was thinking lots of different things have, they've been trying to create the perfect city. Why did you, besides California needs more housing which, uh, obviously is, is a big deal, um, why do you think it'll work by just creating it out of nothing where people weren't naturally going to build themselves or settle themselves?

   4. JSJan Sramek2:37

      Yeah, I mean, I, I think that first of all it's a, um... I mean, in America, it's, it's, it's a fairly young country, right? And so almost all cities are new cities.

   5. KSKara Swisher2:49

      Mm-hmm.

   6. JSJan Sramek2:49

      And we have really good examples of cities that were started-

   7. KSKara Swisher2:52

      Mm-hmm.

   8. JSJan Sramek2:52

      ... by a person or a company that turned out to be spectacular. Some of our most beloved cities in America were started this way. I mean, Savannah, Georgia, um, Philadelphia, um, Irvine in southern California. We have a lot of really good examples of places that were basically started by a company. Um, and I think what's, um... The other part of it is, we're building in an area that actually people have said before should be built. Uh, the US Commerce Department, uh, the US Army Corps of Engineers, the Association of Bay Area Governments all said in the '50s, '60s, '70s, that sometime in the 2020s we are gonna run out of space in the Bay Area and we should build somewhere, and they all concluded that this was basically the best place to build. That by that point, we will have run out of space in the, in the Bay Area and this would be a really good place to build. And so there's a lot of precedent for why this would happen, and I think the cities that have, um... The planned cities that have failed, I think they failed for two reasons. I spent, I spent two years before I started working on this kind of going back and reading the history of all of these projects. Brazilia and all, and every project that you can, that you can name.

   9. KSKara Swisher3:57

      Mm-hmm.

   10. JSJan Sramek3:57

       And I think they failed in one of two ways. Either people were building them in a place where there was no demand, which is not the Bay Area, or the developers came in with some kind of singular vision they were going to impose on the city and it's gonna be this perfect kind of, um, master plan. And, and our approach to it is very, very different. Our approach to it is very similar to how a place like San Francisco or New York were built. Or indeed, kind of locally, Rio Vista or Benicia or Vallejo which is, you lay down a street grid and, um, you do a really good job doing that, and then you think of the city as a platform. And it's, it's y- you don't say the houses are gonna be beige and they're gonna have these windows and this is where the residential's going to go and this is where the, um, the small houses will go and this is where the big houses will go. Instead, y- you do the bare amount of correct planning in the beginning and then y- we let the city kind of emerge out of that and a lot of different people and builders and architects and companies and residents come and they build their lives and, and I, I think cities are this unique invention that we have where, particularly in the society that we live in today, and it's, uh, it's, it, there's, there's challenges now, but I think cities are still the place where people with a lot of different values can come together and build something really special and out of that disagreement and c- chaos and conflict-

   11. KSKara Swisher5:19

       Mm-hmm.

   12. JSJan Sramek5:19

       ... something really special emerges, and that's what we're trying to do here.

   13. KSKara Swisher5:22

       Scott?

   14. SGScott Galloway5:23

       Uh, nice to meet you. So, I, I want to try and, if I can, describe the tension around what I think, I think some of the tension you're facing or the questions. So when I first heard about this, I loved the idea of, of creating massive housing such that young people finally have their shot, right? I think that, uh, slowly but surely homeowners have weaponized local governments to restrict housing permits and the American dream, if that's buying a home, is increasingly sequestered from young people, so I like the innovation, I like the idea that they're doing something similar in Florida where they're incorporating a city, tons of new housing units. I love that. The, the thing I think that sent chill down my spine, or chills down my spine when I, was when I read some of the comments from Balaji Srinivasan-... and is... I think people are worried that... Is this, this new techno neo, neo-libertarianism where people who are very blessed want to start their own... want to basically secede from the nation (laughs) and want to create their own government, want to create an... You know, everyone has the right to create local politicians. But I guess this is... My question is, is this rooted in opportunity for young people that haven't participated in the spoils that a lot of these people have enjoyed? Or is it a vision for a different type of society, which quite frankly just makes me very kind of... it scares me a little bit. Can you, can you walk us through that?

   15. KSKara Swisher6:48

       Uh, I'm gonna just put some update for, for... Scott was just referring to former Andreessen Horowitz partner. Uh, this guy is calling for something like tech Zionism. He said his vision is to ethnically cleanse San Francisco of liberals. He has some scheme around colored shirts that people wear. It's demented actually, but a lot of tech people are trying to take over San Francisco government with donations and their own mayoral candidates, which is their right to do so, although some of the things that pop out of their mouth are just so heinous and stupid at the same time, which is very hard to do. Um, so talk about this because a lot of people feel like given some of the investors, which I think does include Marc Andreessen, who is a big backer of Balaji, um, California Forever's connection to a movement that wants to build a place where tech elite can live under their own rules or, or the idea that you're trying to do a different kind of governance, new kinds of governance. And I know Mike Moritz, who has been an investor, has talked about that, the idea of a new kind of governance. So, ch- t- s- perhaps separate yourself from that or not or just say, "What we're trying to do here is..."

   16. JSJan Sramek7:51

       Yeah. No, I mean, I think we're not trying to do any of that and I think there's a lot of baggage that tech has created in building new cities that unfortunately we are on the receiving end of it. But, um, my interest in this from the beginning was very simple. I really care about the built environment. I, I really think that walkable dense places, um, are special. I think walkable cities have amazing impacts on, um, the sense of community and creativity and human health and knowing your neighbors and all of these things. And so for me, the primary interest has always been, how do we build more housing so there's more opportunity? And then how do we make the place walkable? Because if you look at these old neighborhoods like big parts of San Francisco or Georgetown or the West Village-

   17. KSKara Swisher8:39

       Mm-hmm.

   18. JSJan Sramek8:39

       ... um, it's clear that a huge proportion of Americans love them, but they've become these oasis for the rich because we've stopped building them. And so these walkable communities today, working families just can't afford them. And so for me, it was about building a place like that. I have very little interest in innovating on, um, in particular two things that tech has done. And the first one is, there's this, um, tech libertarian kind of floating cities, um, network states and so on. I have zero interest on any of it. Um, Balaji is not an investor. Um, and, um, there's also this kind of smart city component of it, what some other people have tried to do, and I have zero interest in that as well. I mean, we're building a place that actually is, from that perspective, really, really boring.

   19. KSKara Swisher9:26

       Mm-hmm.

   20. JSJan Sramek9:27

       We're building a place where if all we did was build a great combination of some of these old neighborhoods I mentioned like Noe Valley and Marina and Mission and West Village and parts of Philadelphia and Georgia, Savannah, Georgia.

   21. KSKara Swisher9:43

       That are presumably more affordable, correct?

   22. JSJan Sramek9:44

       More affordable, absolutely. Because, because we... They are expensive because we don't have very many of them. If all we did over the next 30 or 40 years was build something that people looked at in 50 years the way that they look at those places, I would be over the moon. We don't need to do anything else.

   23. KSKara Swisher9:57

       But, but you are gonna get saddled with that tech thing because given some of your investors-

   24. JSJan Sramek10:00

       Yeah.

   25. KSKara Swisher10:00

       ... you know, they're very... among the wealthiest people on earth. So it... And, you know, some of them are... have their nonsensical "I'm moving to Australia," some of them, "I'm gonna go in space," like you said, it's a Jeff Bezos thing, the floating city. That's his dream of the world.

   26. JSJan Sramek10:13

       Mm-hmm.

   27. KSKara Swisher10:13

       Um, of course in sci-fi, that's always a bad dream for most people and a good dream for rich people. Um, so you're gonna carry that baggage no matter what. Like, no matter what, given your investors, right? One. Two, they, they feel, um, anti-democratic in a lot of ways. So presumably the governance here, even when Mike, and I happen to like Mike Moritz, um, talking about new kinds of governance, presumably democracy's at the center of that, correct? It's not... What's a new kind of governance?

   28. JSJan Sramek10:43

       Yeah. I mean-

   29. KSKara Swisher10:43

       I don't even unders-... There's...

   30. JSJan Sramek10:45

       I think what, what Mike was referring to-
2. 15:00 – 27:11

   So, what... You wanna…

   1. JSJan Sramek15:00

      in that, um, California has a standard that says affordable by design, and what it basically says is if you can build a walkable community where you have row houses and ADUs and small apartment buildings, they can be affordable by design. You can actually build units that you can buy that are not deed restricted, um, from the beginning. And so I think we would have homes or apartments starting at probably $400,000, um, which even by Solano County standards is really affordable. I mean, you can't buy a new home here for $400,000. And we, we do that by really innovating on what we build and the density and then using the land much more wisely, um, in a much more compact footprint.

   2. KSKara Swisher15:43

      So, what... You wanna get this built presumably, correct? What, what, w- what do you think e- the timing is on this and how it's happening and... is there a chance it wouldn't happen and, and, and that it could- couldn't happen? What do you need to succeed to go forward? Certainly, there's interest in more housing in California. That said, a lot of people are in fact moving back. All those people who insulted California on their way out are now, "AI is back." Like, there's o- there's a lot of, there's... You can see it in San Francisco and the, and the Palo Alto area. There's real growth and, you know, Google killed it. This, in the f- you know, they haven't moved anywhere, you know? There, there's other things. So there's, there's a little more excitement around living in California than there was a year ago even or two years when, r- a couple of years when you started this. What is the prospects and what's your biggest challenge? And if you had to go back and e- repair a mistake you made, uh, what would it be?

   3. JSJan Sramek16:36

      Yeah, I mean, first of all, I, I started this eight years ago, not two years ago. I've been, I've been working on this for eight years.

   4. KSKara Swisher16:41

      Right. That's right.

   5. JSJan Sramek16:41

      Uh, and so we've been through the whole cycle in California of excited, people are leaving, people are coming back. I, I think to your point of people are coming back to California, that, that makes the need for this even more prescient. Because if the AI boom continues and the salaries continue i- in, in, in the Bay Area, that's going to just increase the pressure on the housing market and it's gonna be harder and harder and harder for working families to stay in San Francisco or in, in, in Palo Alto. Uh, and so I think the AI boom is just another huge reason for why, um, this needs to happen because the Bay Area needs more housing. Otherwise, it's just gonna be an oasis of the rich. Um, in terms of what we would do differently, I, I think we, we would have liked to introduce the project to the community differently. We were preparing for that when Conor wrote the article. We were probably a month away from being able-

   6. KSKara Swisher17:32

      He's the New York Times reporter. Yeah.

   7. JSJan Sramek17:33

      Exactly. We were about a, a month away from wanting to talk about it. Um, I, I also wish that some of the elected officials had kept more of an open mind instead of condemning the project in the beginning. I think, um, it's totally fair for people to say, "You know, this looks like a really big idea. I'm not sure it works, but I'm gonna stay open minded and I'm gonna look at it when there's more details." I think a lot of people rush to conclusions, um, um, without merit, and I think that's particularly concerning when they have presided over the situation getting worse and worse and worse for working families for the last 20 years and they haven't been able to do anything about it. And I think we should be a bit more open, to Scott's point about new solutions, because whatever is it that we're doing-

   8. KSKara Swisher18:23

      Mm-hmm.

   9. JSJan Sramek18:23

      ... California is no longer working for working families. I, I don't think anyone is disputing it.

   10. KSKara Swisher18:28

       Yeah, I think that's a very good point. I just think when you're coming in hot with a lot of rich people and you've already experienced some of their behavior, you, you, you, you don't trust them necessarily, even if it's a good idea, um, which I think this actually is. Uh, Scott?

   11. SGScott Galloway18:41

       Do you see this more as... The folks who are funding this, and there's nothing wrong with a profit motive-... but do they see an opportunity to, um, find a place where there's less owning requirements and they want to be in the business of, of development, or do they see this as an opportunity and the two aren't, the two aren't mutually exclusive, a social ill? How important it is, is it a new form of governance or just bringing housing prices down? It, when you're, w- what, what are your investors up to here? What, when they sit down with you, what does success look like for them because these guys have enough, well, not, not have enough money. That's ridiculous. They always want more money. Um, what do you think their objective is? Do they still see this as a social good or do they see this just as a great economic opportunity?

   12. JSJan Sramek19:26

       I think it's both and, I mean, we've been, we've been very clear from the beginning that it's a full profit investment and over the long run, this can be a pretty good investment. It does require kind of a 20-year, um, time horizon which is part of the reason for why, um, I went to the people that I went to to raise the capital. It's much longer term, much more patient capital. Um, I think for all of our investors, it's a, I, I've started to say profit plus investment. And so, if you look at the people who've invested in it, um, they all have causes that they really care about and I think if you ask them, I, I can't speak for them but, um, for someone like Laurene Powell Jobs, I mean, a lot of her work has been about economic opportunity and economic mobility and sustainability and, and, and whenever I talk to, um, um, her or the team, those are the questions I get asked is, "How do we make it more sustainable? How do we make sure that teachers can live in the community?" How- The way you build it.

   13. KSKara Swisher20:22

       The way you build it. Yeah.

   14. JSJan Sramek20:22

       How do we make sure that, um, we have th- that it's not a food desert? How do we make sure that there's really high quality food available for kids in the schools? Um, when we talk to, when I talk to someone like, um, like, like Reid Hoffman. Uh, I mean, for him, Reid is an eternal optimist. I mean, he believes that we can solve things. He believes that technology can solve them, and he believes that, um, a lot of the innovations coming out of the Bay Area have really made the world better. And so, he asks how do we make the opportunity as broad as we can possibly make it? Um, for, um, someone like Nat Friedman or the Collisons, they are really passionate about high quality walkable places. And so, we talk about design and how do we make this an amazing place. Um, uh, I think Mike Moritz has been extremely invested in improving things in the, in the, in the Bay Area. I mean, um, he's spent hundreds of millions of dollars in philanthropy in San Francisco trying to make it better. And, um, so, uh, when I talk to Mike, it's about how do we create homes that people who work in the Bay Area can afford and, and how do we make it e- ... The last discussion I had with Mike about can we help nurses be able to live here instead of flying here from Idaho. I mean, that's starting to happen. It's so expensive to live here that nurses are flying in from Idaho.

   15. KSKara Swisher21:40

       Yeah. Yeah. Yeah. I think it's, uh, you know, I think it is easy to be suspect of some of, some of the people, um, and, and intentions of them, eh, from the get-go, um, 'cause of past behavior.

   16. JSJan Sramek21:51

       Yeah, I mean, per-

   17. KSKara Swisher21:52

       But, you know, I think a lot of... I think that at the heart of the good part of it is believing in California and, you know, one of the reasons I call my book A Tech Love Story is 'cause I do believe in the great possibilities and I hate what they've done to the place, so why don't they use the better parts of their nature to do things which is, um, I'm glad to hear you saying it's not going to be some demented space.

   18. JSJan Sramek22:11

       I, I, I hate the term. I hate the term.

   19. KSKara Swisher22:13

       Like, that's-

   20. JSJan Sramek22:13

       I found the term internally and, uh-

   21. KSKara Swisher22:15

       I really don't want-

   22. JSJan Sramek22:16

       I mean, if, if I, if I can-

   23. KSKara Swisher22:18

       Cities aren't smart.

   24. JSJan Sramek22:19

       If-

   25. KSKara Swisher22:19

       That's why they're doing it.

   26. JSJan Sramek22:19

       Exactly. Exactly. And, and if I can just comment on the investors. You know, (sighs) I, I think when I started working on this in 2016, there was this popular narrative that, um, kind of venture capitalists and billionaires in general are wasting the capital they have investing in dumb messaging apps and they should really do something in the, in the real world-

   27. KSKara Swisher22:39

       Mm-hmm.

   28. JSJan Sramek22:39

       ... to make life better for working families.

   29. KSKara Swisher22:42

       Yep.

   30. JSJan Sramek22:42

       And then three or four years ago during COVID, the popular narrative was how dare all of these people who've made their fortunes in California take the money and go to Texas and go to Florida and just take it away? And I think we found a group of people who really believe in California, who really want to double down and they did exactly what people have been calling for, invest in hard things in the physical world-

Episode duration: 27:11