Is Miami’s tech and innovation scene actually “up and coming”? Some argue that’s the case. I argue it isn’t. My position, for the tl;dr crowd, is that it is better to say that Miami’s tech focused community is condensing, that it is coming together, but that it is disingenuous to suggest or to hold it is rising.
I first want to discuss why that distinction is important, i.e., why it’s even an issue to begin with, and then move onto the analysis distilling the policy proposals and ecosystem-wide pivots that would lend credibility to the notion of an on-the-rise Miami. My main point is that it is important to start with an honest dialogue that deemphasizes the role of “innovation programs” and shifts the emphasis on the importance of developing and funding transformational ideas. To start, we could also separate the role of the technical community proper (let’s say engineers; programmers, coders; etc.) from that of the innovation minded community (visionaries; strategists; business people who understand novel does not always mean innovative, etc.) and then consider how to best fuse them under a shared vision for the city.
Anyway. It’s easy to be seduced by the conflation (i.e., “coming together” &. “on the rise”) for the same reason people fall in love with the idea of magic and magic wands: all problems solved, greener pastures ahead. Paradise is just a flick of the wrist away, and so on. Our very own tech revolution would effectively recharter Miami’s course, position it as a city that captures and develops its local talent (rather than redirect it elsewhere), entertains a vision for the city could turn the raw elements of diversity into a form of currency for new companies, and ultimately repackages the whole of that experience to build a cycle of behavior leaving Miami on equal footing with Boston, New York, San Francisco (and the rest of the heavy weights). Because, you know, tech is essentially magic in the minds of many Miami investors.
And those are not just my musings. By and large, when I’ve asked those who either operate or invest in the tech community here why they do so, or why they consider our future promising, they cite “diversity”, our “geographic endowment”, “relatively low cost of living and lack of state income tax” as signs of a more fertile tomorrow (as if SF or NYC can’t claim the same for the former two qualities). Their logic is that because we have these factors in our favor we are a more attractive market to start and launch high growth, high margin businesses from (this is, by the way, how I define the term “start-up”). And as further support they raise the fact we have the likes of 500 Startups, Endeavor and WeWork now setting up shop here so things can’t be as bad as I often make them out to be. Besides, a couple of years ago Miami had nothing, so now our state of affairs must necessarily be up and to the right.
For locals, it’s a very inviting narrative. (See here) But one that, to me, is symptomatic of an underlying, critical flaw. The proper issue should not concern the intricacies of playing catch-up, so to speak, but rather of leap frogging. Adopting ideas conceived and nurtured elsewhere is not a sign of growth.
“For industrial activity that depends on imported brains and second-hand ideas cannot hope to be more than a vassal that pays tributes to its overloads, and is permanently condemned to an inferior competitive position.” — Frederick Terman
And that’s exactly what’s happening. Look — I have a vested interest in making sure things go “boom”— so it’s not like I get off on being righteous here. The reason the distinction is important is because I think real progress comes from clear-eyed and honest self-assessment. If you want to build an ecosystem that invites investment firms, encourages talent to come and stay in Miami, and builds companies that exit onto the public markets, then you need to invest in transformational, 10–50x, business ideas. You need to squint, look into the crystal ball of your choosing, and decide whether there’s anything staring back at you for you and yours to reimagine. Then take the risk and hopefully hit it big. As a community, we are not having those types of conversations.
Real progress depends on it. Yet our approach is to shoot from the hip, ad infinitum.
Now, I’m no expert. But I would wager there’s a point in the development of any successful movement where the benefits of intuition are outlived, the risks associated with exhaustive recourse to intuition come due, and the penalties for embarking on a search for growth without a vetted strategy are felt. There’s a pinch. I write this because I fear Miami is approaching that point on the time horizon and it doesn’t realize it because “we are on the rise.” I want to be clear I’m not arguing that every relevant strategic decision needs to meet the burdens of certainty (though that would be nice) but rather that a comprehensive prescription needs to be articulated, and execution against that strategy needs to be tracked and measured religiously.
We’re at the point where the conversation needs to start, not end, here. The alternative is to have no conversation at all.
Now, what to do?
The Role of Foreign Cleverness
First, we need to stop equating the Knight Foundation with innovation. The Knight Foundation plays such an outsized role in the system’s development, its involvement is so extensive, it’s tentacles have grown so ubiquitous, one can make the very credible argument it is the system. This is a problem. I call it the “Market of One” issue. Having one organization play such a central role in the development of the system is admitting the system needs a strong regulator; that the market cannot conduct itself. Not a good signal to send to underwriters elsewhere, when you dress this up as market progress — as “maturation.” It’s more like setting up training wheels and should be discussed as such.
Knight typically invests in programs it considers will have a multiplier effect in the market. It’s a hydra strategy: invest in ‘mini-Knights’ (funded startup-accelerators) that will in theory contribute positively to the community by investing further down the line. In the meantime, pray to the Almighty something exciting happens before those programs run out of money. Call this progress for Miami. Last I checked Miami had a couple of accelerators or the functional equivalent of them:Startupbootcamp (full disclosure: I am the COO at “SBC”); Endeavor (link above); VentureHive; PowerMoves, and WinLab. All supported by Knight to some degree. In a way, these programs have to be supported by Knight’s grants because LPs sensibly expect returns — a thorny issue best elided by accelerators breaking ground in an under resourced market. The issue here is that when operators are not motivated to garner returns, wonky things start to happen.
Furthermore, accelerator fatigue is a real thing. The best investors will not likely care who is having so-and-so demo day, or this-and-that pitch night. Neither will the best entrepreneurs, on which the success of the accelerator model depends. Adherence to form without regard to the substantive value proposed (or its absence) will not yield transformative progress for this city. A tech hub it will not create, to echo my inner Yoda. Continuing to back these programs — without more — while branding these efforts as big wins for the community is to continue down a mistaken path. That needs to end. Copying is not creating.
The Pickle. Here’s what I hear in private: What does it mean to have Knight as your ally? What do you owe them for their providence? Why you and not your competitor? (Or vice-versa.) Having a institution effectively pick favorites is not necessarily a bad thing. But we need to be clear it isn’t necessarily a good thing either.
This is why I think Knight Foundation’s thinking needs to evolve. Optimizing at the margin typically provides only a marginal payoff, so Knight should consider sponsoring or investing in 10x ideas that may sound naive early on (see below), but create novel value chains in their development. Most will fail, but that’s kind of the point. You want to buy into Magic Leap early. For a more eloquent exposition of this point, see Sam Lessin’s article. (Note:pay wall). The thinking is applied to companies, but I think it can be applied to burgeoning sectors as well.
Otherwise, all we’ll get is more of the same. And these are typically the concerns associated with a market of one (referred fondly by economists as “monopolies”)— which is deeply ironic given the context, when the entire idea of startup culture is to outcompete, and do it fast.
We may need a new center of gravity for this city. This is why I propose the concentrated pursuit of transformational ideas — it’s the type of investment smart people look to pool funds into. Knight wouldn’t have to architect that result. To beat a dead horse, the risk is greater but so are the returns and that prospect attracts more like minded folks. Setting up satellite offices for transformative ideas that were developed and matured elsewhere, and the labeling that process as “innovative,” are often not. (The horse is surely dead now).
So what do I mean by “transformative idea”?
Seeing Around Corners
I define the phrase “transformative idea” in terms of its ability to articulate and realize a radical vision for the future of Miami: use tech to justify value creation in the healthcare system (reduce waste, reduce fraud). Use tech to curb political corruption (increase respect for the rule of law, help police and enforce commercial agreements), e.g., and other governance issues that plague Latam and the Caribbean.
Double Down on Digital Health and MedTech
(Note: To repeat, I’m the COO at Startupbootcamp, a digital health accelerator partially backed by Knight in Miami. Not that I’m peddling our work, but still want to be clear where I stand to reduce the appearance of impropriety)
I think the first industry of note here is health care. Miami has more than its fair share of the raw inputs needed to make the city a hub for healthcare innovation, and I mean this at all levels. The ancillary infrastructure necessary to develop medtech, biotech, and digital health solutions while also supporting the broader healthcare scene from a more analogue perspective exists already. The issue in Miami is moreso a lack of levers that creates companies generating 10x returns for funds. We need polish. Our best doctors and scientists often leave for better markets, and the good ones who stay are often dissatisfied with the state of things. Here I have some standing to comment more fully, since through our work at Startupbootcamp Digital Health, we pose these same questions to healthcare innovators on a daily basis, and the frustration is the same: “Why is interfacing with the government so difficult?” “How do I get a hold of so-and-so at X hospital so I can get a pilot for my technology?” “Where are the partnerships going to come from?” “How do we get the talent to stay?” “How about the dollars?” “Why is there no locus in the community to have these exploratory but substantive conversations?” [That last one may have been mine]
Our charge is rather simple, and we ascribe to the traditional accelerator paradigm where sensible (i.e., offer the value of a relevant network to smart people who need market access, layer that with structure and regimented KPI monitoring, in exchange for which we take what is typically a 6% equity stake) and deviate when it’s not so sensible (maybe we make a seed investment of $200k upfront rather than $20k one, or call one of our hospital partners, like Nicklaus for a pilot on the basis of little to no initial traction on the company side but a really great, vetted idea).
A big differentiator for us (that keeps me up at night) is that, on top of all of that, we’re also dedicated to funding healthcare entrepreneurs focused on addressing health disparity (for those who are unfamiliar with the term, seehere). We fund these endeavors because it doesn’t seem of interest to other accelerators (given the not-so-promising financial model). Sensible. In those companies, we do not take equity.
Reshape Marine Sciences and Climate Change
The second area is climate change. Very difficult to deal with. I don’t think this one surprises that many people, what with the constant national coverage touching to our Atlantis problem, but Miami is uniquely positioned to serve as home for start-up founders dedicated to building technologies that will help coastal cities successfully address the problems associated with rising sea levels. And charge for those solutions. Were I an entrepreneur with more time on my hands, I’d be petitioning local and state government bodies for funds, either via grants or novel P3 structures, to experiment with technologies on behalf of the state and then pair those dollars with private money. While the Paris Conference on Climate Change ushers in a new era with respect to global emissions that hopefully reduce long term sea level rise, the demand for coastal nations is not likely to dissipate any time soon.
I think Ana Benatuil, over at CityBiom, has the correct idea. They are small shop as of now, but I’m hoping the powers that be in Miami lend them a helping hand as they continue in their journey.
Digitizing Trade and Supply Chains
The third one, and here I have some more personal experience to offer, concerns the intersection between law and logistics. Miami is home to one of the extensive port systems in the world. The issue though is that American regulators cannot police the ports effectively, as our mischievous entrepreneurial counterparts grow clever in their shipping methods. And so the straight shooters get taxed. I can’t tell you how many times my shipments from the Dominican Republic are delayed by the authorities, or how much inventory I’ve lost due to inspection damage. There is an opportunity here to make this process of transport, of inspections, and — on the whole — supply chains and customs originating from these highly suspect areas, smarter. We’re seeing a growing interest in civ-tech (see here, e.g.) and in my experience there’s room for disruption in this sector. So let’s help the government manage and securitize trade. It’s not simple, as government institutions are slowed by their many barnacles, but there is promise in the result if done effectively.
A closing anecdote on that point: in the past my friends and I wondered why it was so hard to access and transport certain categories of fruit products from Latam and the Caribbean.
When we finally learned why, we worked on building supply chains out of those countries, all of which who in some form converge in Miami. (You can learn more by going to www.caribejuice.com). People told us we were wasting our time. That shipping and inventory would kill margins. Yes, initially the work is vastly difficult and involves a lot of traveling back and forth, but the potential payoff is immense. Go to these countries, try your hand at removing the barnacles (what I found works well is aligning domestic interests) and see what happens. If we want to make robust this notion of Miami as the epicenter for the Americas, why not start with trade, supply chains, the port business, etc.?
The Role of The University of Miami
Miami is for me, and I hope for many others, a representation of the best of American ideals: capable of intellectual as well as demographic diversity, enterprising if only in the ordinary sense for now, and accommodating to groups of vastly differing views. But if — as its residents — we don’t seriously engage in an honest conversation about our city’s future, and if we get too focused on vanity rather than substance (as we have a habit of doing) little of these ideas will manifest into promising ventures scaling out of Miami.
The culture needs to change.
The city’s leadership would do well to take account of the lackluster venture results of the last two years, and refocus the tenor of the market sentiment into those areas that present meaningful opportunities for big successes.
To reiterate, my position is simply that at the very least that promise begins with an honest conversation surrounding the future as well as the current limitations facing us.
One of those limitations has been the lack of a “central command”of sorts — Knight has tried to hold center stage here. An optimal locus for the tech scene when considering Miami’s competitive positions as outlined above, to me, is the University of Miami. The argument is often made that nascent tech sectors are best supported by universities. It is a familiar and well rehearsed one: Palo Alto had Stanford to credit for its rise in the world, and Cambridge had Harvard and MIT to tip its hat to, and so forth. Though I think there are serious issues with assuming a causal relationship here, I think it’s fair to say that a strong university supporter doesn’t hurt a nascent ecosystem. There are strong economies of scale and economies of scope arguments in favor of the linkage (researchers can outsource projects venture backed companies are better apt to undertake, those that require nimbleness, and those same companies can pull in talent and broader human capital from the university when need be). A healthy, sensible relationship is at least conceivable. Especially with Magic Leap sits close to us. And there’s this. Again — network effects are real, and they play an important role as a guard rail toward progress. Knowledge scales.
To end on a more promising tone, the University of Miami’s current President, Dr. Julio Frenk, seems to share in this view. “Those innovations — in democratic governance, in macroeconomic stability, and in social policy innovation — are hugely important, and we need a university that’s focused on the understanding of the translation of that experience and making it available to the rest of the world — not so that those experiences are adopted but adapted to local realities. The University of Miami is uniquely suited to play exactly that role.”
As to that point, one of my business partners and current Managing Director for Startupbootcamp, Christian Seale, can be often heard professing his belief “Miami is the city of 2050.” His argument is that this city can be the perfect petri dish to test out various solutions for problems that will affect the broader US population in years to come (as well as Latam and the Caribbean, of course). Whether those are healthcare problems, or issues related to climate change and sea level rise, or whether it’s figuring how exactly demographic diversity can be an asset to startups, or creating the new model for University + tech innovations in secondary markets so that other cities are guided in adopting a like strategy, the question we should continue to pose is “where are we on the progress bar?” To steal from Elon Musk, everyday for us should be an exercise in reducing our own wrongheadedness.
To close, this is also an exercise in the alignment and tempering of expectations. I say we go big, and others may correctly consider me a fool. So we also need to work out priorities and coordination, but let’s have that conversation. To be sure, there are people who will jump at the opportunity to object (legitimately) to the notion of Miami becoming the epicenter for health tech and civ tech, for instance. In my darkest days I find myself sympathizing with such nay-sayers. But on other days I run my own exercise and reflect on the special solicitude this city deserves in the imagination of entrepreneurs, and from here I want to invent the future.
I hope I’m not the only one who believes the same.
Ending note: I’m sure I’ve made a lot of mistakes in writing this. Your feedback would be invaluable in setting me straight. In subsequent posts I’ll dedicate more time for synthesis and analysis so that the different verticals I discussed above are treated more thoroughly.