Well, it’s over. Sidewalk Labs won’t be building anything in Toronto anytime soon.
The explanations are varied for the Google sister company’s sudden abandonment of its plans to develop a smart city on 12 acres of lakeshore real estate.
Officially, Sidewalk blamed uncertainty in the global economy and Toronto’s real estate market amid the fallout from COVID-19. As Ruth Porat, CFO of Sidewalk parent Alphabet, said on an earnings call last month, the pandemic has given the company a desire to “enhance efficiency” to its operations.
Was it also Waterfront Toronto demanding the tech firm backstop the project in the event of things going wrong?
Or was it that the agreed-upon 12 acres was never going to be enough for Sidewalk Labs to build a financially feasible project once it lost the opportunity to commercialize the data from it?
Maybe the real explanation includes all of the above. And though the failure was ultimately one of execution, from the start, a series of public relations and policy blunders helped doom the project. There are some lessons we can learn.
Lesson 1: When you hold a photo op with political leaders, have something concrete to announce
On Oct. 17, 2017, Prime Minister Justin Trudeau, then-Ontario premier Kathleen Wynne and Toronto Mayor John Tory stood at the foot of Toronto’s waterfront, alongside then-Waterfront Toronto CEO Will Fleissig and Sidewalk Labs CEO Dan Doctoroff. They were there to announce a plan––to make a plan––for Toronto’s Quayside neighbourhood.
The visual of the five of them standing shoulder to shoulder sent a powerful message that the deal was done, when it really hadn’t even begun. The global media picked up the story with much fanfare, effectively rendering moot any public notion that the project was not a fait accompli.
Some Sidewalk Labs staff have told me privately that, internally, they called this press conference “the original sin.”
From that point on, Sidewalk and Waterfront officials took great pains to point out they were still negotiating what their partnership might look like, but it was too late. The optics brought into question the selection process; the independence of Waterfront Toronto, the trilateral government agency in charge of developing the city’s lakeshore; and the amount of land that would be part of the Sidewalk project.
Lesson 2: Never underestimate your critics
After the deal was announced, a small group of urban and privacy experts—most notably, veteran Toronto journalist John Lorinc and open-government expert Bianca Wylie—started asking questions about what the project would mean for Toronto’s residents. Privately, Sidewalk officials dismissed them as fringe players, but they used their platforms to build a groundswell of support. Wylie was even profiled in The Washington Post, with some calling her the next Jane Jacobs. Meanwhile, the resignations mounted.
But it wasn’t until a year after the announcement that Sidewalk Labs was forced to really pay attention to its critics. In a scathing Globe and Mail editorial in October 2018, Jim Balsillie, former co-CEO of the company that’s now BlackBerry, called Sidewalk Labs a “colonizing experiment in surveillance capitalism attempting to bulldoze important urban, civic and political issues.” Waterfront Toronto, he wrote, had “[weaponized] ambiguity.”
The editorial was a hammer, and it put Doctoroff and Sidewalk on the defensive.
“Jim’s argument about [intellectual property]—and ‘everything gets sent back to America’—is an incendiary sound bite,” he told a writer for The Walrus months later. Sidewalk hired Toronto crisis-management firm Navigator and a New York-based counterpart, BerlinRosen, to counter criticism of the project. A collection of Sidewalk supporters wrote a joint letter of support and a working group of VIP citizens was convened. The communications strategy became “us versus them.” All this simply led to a greater backlash by further cementing the impression the project was backed by establishment Toronto, with its citizens left out in the cold.
On a personal note, it was during this time I became aware that Sidewalk’s crisis communications firms were also trying to discredit The Logic after its journalism raised questions about the project. Doctoroff refused to sit down for an interview with this publication for more than a year and a half, while doing the rounds at every other news outlet. We weren’t critics; we never were. We were simply reporters. I’d like to think that our relationship with Sidewalk Labs improved once we started being judged on our full body of work, but Doctoroff’s inability to face hard questions was something that haunted his tenure in Toronto. He eventually did sit down with our reporter Amanda Roth for an interview last November.
Lesson 3: All politics are local
Torontonians were being told how their smart city would work by New Yorkers.
Sidewalk Labs was recruiting staff for the Toronto project before the Oct. 17, 2017 announcement. I know of at least two local candidates for roles who were asked to fly to New York City for their job interviews. Once it was up and running, though it had hired many Canadians, the company would still fly staff in every weekend from New York City—as many as 50 at a time—to host information sessions with Toronto residents. Meanwhile, Doctoroff remained in New York City.
I’ve lived in Toronto for much of my life and if there’s one thing I know, it’s that residents don’t take kindly to that sort of thing.
But that wasn’t just a public relations mistake. On the government side, Sidewalk Labs never managed to figure out how Toronto politics was different from New York politics. The aforementioned Lorinc wrote a piece this week that’s worth reading about the strong-mayor system of New York versus the weak-mayor system of Toronto. Doctoroff, a former New York City deputy mayor under Michael Bloomberg, took too long to learn the differences.
Lesson 4: When the field of play changes, change your game
On the day of that first photo op, all three levels of government were united in support of the project. Waterfront Toronto had as its board chair a longtime Liberal supporter in Helen Burstyn, and Alphabet leaders Larry Page and Eric Schmidt were strong advocates for the smart city.
In the intervening 30 months, Ontario’s Liberal premier Wynne was replaced by Progressive Conservative leader Doug Ford, who had his own ideas about the waterfront; developer Stephen Diamond replaced Burstyn at Waterfront Toronto; and even Trudeau was reduced to a minority government. When Schmidt left Alphabet’s board in June 2019, and Sundar Pichai succeeded Page as CEO of Alphabet in December 2019, the Sidewalk project lost two of its greatest internal champions. According to Doctoroff, Page had been “intensely involved” in Sidewalk Labs’ Toronto efforts; the two had weekly video chats, and Page had surprised the Toronto team with a 2018 visit.
In short, the only two people from that initial photo op left standing and undiminished were Tory and Doctoroff.
That was something Sidewalk wasn’t able to navigate. As The Logic reported last summer, tensions between Diamond and Doctoroff grew heated, with Sidewalk insisting the 12 acres Waterfront had earmarked for the development wasn’t enough. Ultimately, the two were unable to work out a deal.
Which leads us back to where we started.
Nobody should be spiking the football over the departure of an innovation partner, especially at a time when Canadians are going to need direct and indirect stimulus projects.
The tragedy of Sidewalk Labs for me will be how avoidable some of its mistakes were, and how Canadians were divided as a result of them.
All the stakeholders shared the goal of a more prosperous Canadian future. They diverged in how to get there.
It’s fitting that Sidewalk Labs pulled the plug in the very same week that Shopify––a 16-year-old made-in-Canada tech company—briefly supplanted RBC as Canada’s most valuable publicly listed company.
So who are we? A colonial outpost that has simply traded a British imperial overlord for another in the United States? Or are we an independent nation, standing on our own two feet and creating world-beating businesses like Nortel, BlackBerry and Shopify? Can we be both?
In the post-COVID-19 era, economic nationalism is becoming the cri du jour, and governments are looking for shovel-ready projects in want of stimulus money. What will become of those acres of prime real estate in Canada’s most populous city? Can Toronto build something great without a giant Silicon Valley tech company’s vision? We’re going to find out.
One final bookend from me: as I write this, on a nearby wall is an award from the Hillman Foundation for The Logic’s exceptional ongoing coverage of Sidewalk Labs. For almost two years, our reporting team of Amanda Roth, Catherine McIntyre, Zane Schwartz, Murad Hemmadi, Fatima Syed and Sean Craig led the way with exclusive, original reporting. In some ways, we will always be defined by our coverage of this story. But we were inspired by the sources from all sides of the debate, who bravely came forward when the prevailing winds were against them. They placed their trust in us—a young, mostly unknown publication—because they believed we would do our jobs. We take that obligation seriously, and will always strive to live up to their expectations.