How the pandemic is transforming Miami into a new tech hub (though it may not replace Silicon Valley)

Sitting on the balcony of her 56th floor apartment, Anisa Mirza marvels at the stunning view overlooking the bay of Miami, bathed in sunshine.

“Miami is somewhere I never imagined myself to be living,” she said.

The 33-year-old software entrepreneur, moved here with her boyfriend and business partner in early January, joining a Covid-fueled exodus of software entrepreneurs from Silicon Valley, New York and Boston.

Long considered as little more than a sunny vacation destination built in part on drug money, Miami was immortalized by the TV show ‘Miami Vice’ in the 1980s. Politically dominated for the last four decades by Cuban exiles obsessed with rooting out communism, Miami is fast emerging as something completely different: a vibrant, new, alternative tech hub for aspiring entrepreneurs from all over the world.

Oh, and the low taxes, warm winter weather and relatively Covid-safe, outdoor lifestyle, don’t hurt.

The move to Miami is gaining momentum after some major hedge fund and venture capital firms like Blackstone Group, Citadel and Thoma Bravo recently announced they are opening offices in the city.

Golden opportunity

The jury is still out as to whether this is just a passing remote-working fad, and everything will go back to relative “normal” after the covid-19 pandemic ends. Some question whether Miami has the talent and educational infrastructure to create and maintain a tech hub.

But, keen observers of Miami’s tech scene, as well as some veterans of the industry in Silicon Valley, say the city is doing an impressive job of seizing the moment, led by tweets and DMs from its tech-friendly mayor, Francis Suarez.

“Miami has a golden opportunity …. I don't think there’s another place in the United States that combines a beach, good infrastructure, low taxes and the quality of people,” said Marcelo Claure, a technology entrepreneur and CEO of SoftBank Group International, which opened an investment office in Miami in 2019.

“All my friends from the big investment funds … it’s as if they have discovered America again, they say, ‘Wow, I never thought that Miami could offer so much,’” added Claure, a Bolivian American immigrant.

SoftBank, the world’s largest tech investor, has launched a $100 million ‘Miami Initiative” to fund local technology start-ups, on top of a $5 billion fund geared exclusively towards Latin American startups, based out of Miami.

In the past few months, a number of major tech stars and venture capitalists have also bought multi-million dollar homes in Miami, like former Google CEO, Eric Schmidt, Shutterstock founder, Jon Oringer, Reddit co-founder, David Blumberg, and some members of the so-called ‘PayPal Mafia’, Peter Thiel and Keith Rabois.

Florida, also known as the Sunshine State, does not have a state income tax, unlike California which charges up to 13% and the 9% paid by wealthy New Yorkers.

Claure has a home in Miami and is also a part owner of InterMiami major league soccer team, with David Beckham, the former England soccer star. (Claure is also on the board of directors for Univision)

He argues that in the future the world will no longer be dominated by a handful of tech hubs, such as Silicon Valley, Boston and New York, and instead will be “democratized” into a dozen or so smaller hubs, each perhaps serving different niches.

The discovery during Covid confinement that remote working isn’t so impractical, made many software executives realize that there was no need to require all engineers work out of a company headquarters.

“The world totally changed the day the big tech companies said: you can work from anywhere,” said Claure, speaking in a Zoom video call from New York. “So, with the very high cost of living in San Francisco, you give this engineer an option, where are they going to go? San Francisco or Miami?,” he said.

“I wanted to leave a while ago”

Mirza said her decision to leave New York happened one evening in late December over dinner with her boyfriend, Uros Miljkovic, a 35-year-old Serbian-born former bartender at Employees Only, a top New York bar.

They were seated at a heated patio restaurant. “We're both in our head like, I'm freezing, I want to go home, but no one wants to say to the other, you know, you want to be like, we can do this. We love it. We're in New York. We have to be strong,” said Mirza, CEO and co-founder of Tiny Broadway, which provides online early literacy education to elementary school students.

When she told her boyfriend, she was freezing and wanted to go home, he replied: “I wanted to leave a while ago.”

Later that evening “he sort of looks at me and says, ‘How long can you do this? It's been a year. Do you think it's time to make a change?”

They debated over Miami or Austin, Texas, another emerging tech hub, and settled on Miami because they both love the sea.

A few days later they loaded a rental car with their two cats - Raja and Veer - and began the long drive south.

Young tech talent

“I've been in Miami for about a year. I'm here because this is the best city to be in in the world right now,” said Jake Schuster, 31, founder of a small sports health analytics startup hoping to raise funds and launch soon.

“This is a very exciting place. It's not just the taxes and the weather,” he said, after working out in Miami’s Midtown district at Barry’s Boot Camp, an outdoor gym, with his dog, Maverick, a Louisiana leopard dog.

“This is a city that is really innovating and really moving forward and not stuck in tradition and wanting to be a place where anything can happen. That's why it's called the Magic City,” he added.

Schuster grew up in Boston and moved to Miami just before Covid, after leaving his job with a big technology firm in Australia working with pro-sports teams to improve the performance of athletes.

He spent lockdown riding his bike, learning Python, a computer coding program, and working as a physical trainer at a Miami Beach gym. He also used the time to write three academic papers for his Ph. D in Sports Science, which are the backbone for his company’s business concept that uses advanced machine learning and artificial intelligence to reduce athlete injury and modernize athlete management.

One of his partners is an engineer at Facebook and the other is a data scientist waiting out Covid in Indonesia.

Just through his clients at the gym he said he’s found enough investors to launch the company. “I train at least four or five CEOs of multimillion-dollar companies, a couple of models. I tell them, ‘wait until it's ready, then we can talk,’” he said.

The mayor’s tweet

The latest boom was building steadily last year over the summer of Covid. But it took off suddenly on Dec. 4 when Mayor Suarez answered a tweet from a San Francisco tech founder who suggested moving Silicon Valley to Miami. His “How can I help?” response quickly went viral.

It set off a Twitter storm of praise, with Rabois announcing he was moving to Miami. A month later he tweeted that he’d “met more interesting people in Miami in 3 weeks than all of 2020 in the [San Francisco] Bay Area.”

Suarez’s tweet appeared to touch a nerve. “I never thought it would have such a great impact, that it would be seen by more than 2 million people,” he told Univision. His 800 tweets in December were seen by 27 million people, he said.

The response to his tweet made him realize that politicians in other cities were failing to engage the tech community. “The founders of these companies, the innovators, felt marginalized by elected officials in different parts of the United States,” he said.

“There was no public official of a major city talking about the importance of the tech ecosystem building a city into the future. Nobody really seems to understand that tech is part of our economy today and is going to become more and more part of our economy tomorrow,” he said.

Standing on the balcony of City Hall in the midst of a thunderstorm, he joked with a reporter that Miami’s sunny weather clearly wasn’t the only thing attracting the tech companies.

The city commission last month passed a resolution proposed by Suarez to study the use of the cryptocurrency to give employees the option to receive their salaries in Bitcoin, which could also be used by the public to pay for city services.

“Francis has demonstrated the ability to speak and communicate with the digital world, and he has done so on a platform where he is raising the importance of Miami,” said Maurice Ferré, the CEO of INSIGHTEC, an incisionless surgery company that uses innovative ultrasound technology to treat patients.

Insightec is one of a handful of Miami ‘unicorns,’ tech parlance for a company worth more than $1 billion, and Ferré, the 60-year-old son of a former Miami mayor, says Miami is developing into a hub for ‘med-tech’ companies, with 4,000 jobs already created.

Founded in Israel, Insightec opened its Miami headquarters six years ago, with a staff of 50, and plans to grow to 100 this year.

“I have 20 companies that we’ve invested in at various stages, and we can develop these technologies in Florida,” said Ferré, the son of a Puerto Rican father and a Venezuelan mother. “We want to invest hundreds of millions of dollars in these companies here, and so they develop here,” he added.

Tech had the potential to halt the long-standing brain drain of young Miami talent. Like most of his Miami-born generation, Ferré moved away from the city after graduating high school, only returning decades later.

“Before, the talent left this city. I think that's going to change, I think there are going to be many, many more opportunities,” he said.

“I was talking to an Argentine friend of mine who has had great success in several companies. He’s starting ten companies here in Miami,” he added.

Before Covid struck, Miami had been struggling for a couple of decades to get on the map as a tech hub, with modest results. Along the way it acquired a core of entrepreneurs who have stuck around, some with considerable success.

Melissa Medina, president of eMerge Americas, an annual technology conference in Miami, recognizes Miami still has a way to go to achieve its tech hub dream, but she’s also confident that its gained so much momentum that it’s passed the tipping point.

“What the pandemic has done is added fuel to the fire of actions that had already been brewing for a long time. I don’t think once this pandemic ends, that's it. This Miami tech story is not going to go away,” said Medina, the daughter of a Cuban-born tech billionaire.

For Medina it’s hard to ignore the advantages of working from home, sitting by a sun-drenched pool one morning at her home on a canal in a gated community in Coral Gables, a wealthy suburb of Miami.

Medina’s father, Manny Medina is one of the most successful Hispanic entrepreneurs in the country who helped plant the seed a decade ago by building a massive, six-story data center and Internet exchange point in downtown Miami, known as the NAP (Network Access Point) of the Americas, carrying data from Latin America across the globe. His company, Terremark, sold the NAP to Verizon in 2012 for $1.4 billion.

Last month, he took his data security company, Cyxtera, public as part of a $3.4 billion deal. That came two weeks after announcing his cybersecurity group, Appgate, would also be going public in a $1 billion deal.

Even so, Miami is still a relatively small player in the tech world. Last year, venture capital investors pumped about $2 billion into South Florida, less than 2% of what was invested nationwide. One third went to companies in the Bay Area. But the Miami/Fort Lauderdale area is now ranked #8 in the United States for dollar value of deals in all of 2020, beating Austin and Washington DC.

Miami enjoyed a short-lived tech explosion in 2000, with the so-called ‘dotcom’ boom of internet startups. But, after the bubble burst, city leaders continued to develop the infrastructure, including a revived downtown and investments in education.

Deals over dinner

A group of two dozen investors gathered recently on a balmy evening at a luxury home on a Miami Beach canal to hear a pitch from an innovative local health-tech start-up, NUE Life Health, using artificial intelligence and psychedelic medicines to treat mental illness.

After a champagne dinner in the garden, the evening concluded with a boat cruise on the bay.

“We think this is the beginning of better plant-based medicine technology,” said company co-founder Demian Bellumio, dressed in a black t-shirt and jeans.

Bellumio, 44, an Argentine ex-pat, brought the investors together via a message on a WhatsApp chat group he founded, MiamiTechLife. It’s grown from a handful of members to more than 500, with channels for a wide range of activities from dining out, bike riding, paddle boarding and kite surfing.

One of them, Lonny McLean, CEO of his own health-tech company, was visiting from Vancouver, Canada, and was quickly falling in love with Miami. “There is a tone and vibrancy around this whole Miami tech scene that feels real,” he said.

“Miami really is a truly international city with an international flavor,” he added. There’s even an ice hockey team, a must for Canadians, he noted.

Bellumio says what he sees going on in Miami is a dream come true.

“The last six months everything has changed, the caliber, the ambition of the people we see here now is crazy,” he said, over coffee at his modest south Miami apartment where he lives with his daughter and two West Highland terriers, Tango and Lola.

A copy of a book on the Miami riots of 1980 sits on a desk. Its title sums up the Miami of old: ‘ The Year of Dangerous days. Riots, refugees and cocaine in Miami 1980.’

“Before we had a lot of unsophisticated financial people coming here, some not entirely legit. The people today are coming here with money that was made in the tech business. They’ve done it one, two, ten times. Deals get done over dinner. You talk to the founders to see if they have the magic it takes,” he added.

The WhatsApp group meets regularly for evening get together to swap notes and network. “Other cities are not so welcoming. I have made more friends and connections in the last four months than the last three years,” said Ryan Rea, 33, over dinner with two dozen MiamiTechLife members at Salvaje, a popular Asian rooftop restaurant, just north of downtown.

Rea, a former Microsoft employee, moved to Miami in 2017 with a suitcase and a laptop. “In Seattle I couldn’t deal with the winter. I was depressed,” he said.

Now he makes AI chatbot software that gives automated answers to online ecommerce consumers.

He likes Miami’s tropical vibe, compared to the “snobbishness” of San Francisco and the hustle of New York. “If you look at this dinner tonight, there are people from every level, every sort of industry. To get into a dinner like this in Silicon Valley would take you years,” he said. “Miami is permission-less. Everyone can talk to everyone, even the mayor. There's no real barriers to entry,” he added.

Among the guests is a successful Hispanic entrepreneur down from Boston, who said he planned to start his next company in Miami. Another guest, Jalak Jobanputra, 48, is the founder of a New York venture capital fund focused on blockchain and cryptocurrency, who relocated to Miami in September.

A graduate of the Kellogg School of Management in Illinois, Jobanputra later worked at Intel and also has a blog, The Barefoot VC.

“I feel the city is poised for growth. I’ve seen so many ex-Googlers in Miami,” she added.

Growing up in Africa with Asian parents, she likes Miami’s international vibe.

“Miami is a melting pot. That creates diversity and entrepreneurial spirit," she adds.

Geographic bridge

Martin Méndez, CEO of Neoris, a digital ‘accelerator’ that helps companies digitize, sits in a newly remodeled office on Brickell Avenue in Miami’s financial district. The office is currently empty, which hides the fact that Neoris is expanding globally, with 4,000 employees mostly working remotely.

Méndez is one of Miami’s tech pioneers as he moved the company here from Argentina in 2000 seeking to exploit the city’s geographic location as a bridge between the United States, Latin America and Europe.

"It was a very good decision, and even more so if you look at it in light of what is happening today with a lot of people from the technology sphere deciding to come and live here. That causes a positive spiral ... the more that community grows, the more it creates connections between entrepreneurs, between businesspeople, between people who know the technologies," he added.

Mendez and others say Miami is producing more of its own talent these days, investing heavily in the next generation of computing and data scientists at Florida International University, the University of Miami and Miami Dade College, the largest public education institution in the country.

Miami Dade College has a partnership with Tesla to train electric car technicians, and also boasts a cybersecurity school with 350 students. “The talent we have is incredible. We’re not just getting started. This is a wave that was building,” said the Dean of Engineering, Antonio Delgado, who left Cuba in 2010.

The Knight Foundation, the largest Miami-based philanthropic organization, last month announced it is putting more than $14 million behind efforts at FIU and the University of Miami to expand data science and computing resources. Fast-growing FIU, Florida’s second-largest university has invested more than $100 million of new funding to the School of Computing and Information Sciences.

FIU is already No. 1 in the nation for the number of engineering and computing degrees awarded to Latino students, and No. 6 in degrees awarded to African American students.

“We are preparing these young people to be the leaders in the new economy,” Miami Dade County mayor, Danielle Levin, told a ceremony to announce the latest grants. “This is the moment,” she added.

“We’re going to be providing an even more invigorating hub of talent and innovation,” added FIU’s pumped up president, Mark Rosenberg.

The new investment includes new faculty and research dollars in areas such as artificial intelligence, smart robotics, bioinformatics, bio-devices and digital forensics.

Flagler’s dream

Among the local visionaries is billionaire businessman and real estate developer, Moishe Mana, who turned a document storage business in New York into a media, arts and entertainment empire in New York’s Meatpacking district.

Mana moved to Miami and sees himself as a modern-day Henry Flagler, the American industrialist who founded the Florida East Coast Railway that opened up the development of the state in the late 19th century.

“Since Flagler, nothing changed,” he said. “Now is the moment that Miami can play a major role.”

Over the last 10 years he quietly bought up large chunks of real estate, including 60 buildings on Flagler Street which runs through the heart of Miami’s long neglected downtown. He is also building the Nikola Tesla Innovation Hub in downtown, a 13-story office building that he is renovating for $15 million.

His vision is to turn South Florida into the Silicon Valley of Latin America, exploiting Miami’s strategic location as a bridge between different cultures in Europe, Asia and the Americas.

He calls it “the second step in Henry Flagler’s dream.”

After meeting initial reluctance from investor’s who weren’t convinced by the importance of Miami, he says his job has gotten a lot easier. “Now the word is out and there’s movement,” he said.

‘Tech-lash’

Like many veterans of San Francisco and New York, she says Miami should learn from mistakes tech companies made there, what some call ‘tech-lash.’

“Any large company that has the resources and decides that they want to be in a new urban environment, I think the lessons learned are that they should make sure that they’re providing an environment where the locals that were there before can participate in any growth,” she said.

By the same token, governments had a duty to inform the public about the benefits of hosting tech companies. “It has to work both ways. Tech has improved so many things in our lives at all social levels,” she said.

Rent and house prices have been steadily rising in Miami over the last decade, with one of the highest rates of appreciation in the country, according to Neigborhoodscout.com. But prices still remain relatively cheap compared to other major cities.

The average rent for an apartment in Miami is $1,708, a 2% increase compared to the previous year, according to RENTCafe.

But as more people arrive, that could change. Florida sees 660 new residents per day while 16 other states — including California, Connecticut and New York — are losing residents, according to the U.S. Census Bureau and the Pew Research Center.

As a result, Miami rent and home prices surged during Covid. Miami-Dade County single-family home prices increased 25.2% year-over-year in January 2021, increasing from $375,000 to $469,500, according to the Miami Realtors Association. Existing condo prices increased 14.3% year-over-year, from $245,000 to $280,000.

Avoiding a backlash in Miami will take government action and private sector investment to keep the city affordable, said Matt Haggman, one of the city’s early tech promoters at the Knight Foundation, who is now vice president at the Beacon Council, a public-private partnership, that is the official economic development organization for Miami-Dade County.

If rents and home prices go up too fast, South Florida could just as quickly lose its current optimism, he warned. “We’ve seen the movie. We know how this can play out if we are not smart,” he said.

Mayor Suarez says he is determined to make sure that the city’s tech growth is “a holistic and comprehensive endeavor so that every citizen in our city has an opportunity to succeed and thrive in the economy that's inevitably going to happen in the future,” he said.

The city recently allocated $40 million for affordable housing projects, leveraging that money to create 722 units of affordable housing.

“All cities have problems of poverty and upward mobility. We have to collaborate with tech. The tech community is very solutions based,” he said.

“Starting over”

Miami has a history of reinventing itself, says Paul George, the resident historian at City of Miami Museum. “It’s a place for starting over again and it has been since it was incorporated in 1896,” said George, 78.

Weather was a factor too back then. Many of the city founders were people who were wiped out by ‘the great freeze’ of 1894-95 in Florida. “The first railroad was coming to Miami, so they decided to start all over again,” George added.

It’s had that theme ever since then, whether it be refugees coming from Cuba and Central America or people escaping the cold weather.

The tech migration is just the latest manifestation of the American Dream, “that you can go somewhere, work hard and, with some luck and pluck, make it again,” George said.

Here to stay

Less than three months into their adventure, what started as a somewhat reluctant experiment now begins to feel more permanent for Mirza and Miljkovic,

“We're absolutely in love with it,” said Mirza. “I keep saying it feels like we're on vacation, even though we're working the same hours, nonstop,” she added.

They recently called a realtor and are looking at buying a home.