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WELCOME TO MIAMI

Miami’s tech boom started with a tweet but is sustained by more than hype

Two palm trees frame a skyscraper towering over Biscayne Bay in Miami.
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Silicon Valley rising?
  • Nicolás Rivero
By Nicolás Rivero

Tech Reporter based in New York

Published Last updated

Delian Asparouhov, like many tech workers in San Francisco, was fed up with his city.

The 28-year-old Founders Fund partner had dropped out of MIT and moved to the Bay Area in 2013, when he says it was still a relatively affordable place to live, brimming with brilliant weirdos and young startups. But by 2020, Asparouhov had grown disenchanted. Taxes were high. Rents were astronomical. Tensions between those who worked in tech and those who didn’t had boiled over. Activists and local politicians regularly excoriated the tech class for gentrifying neighborhoods and pricing out longtime residents.

“It’s not a particularly great experience when you’re paying shit tons of money for rent and yet you’re the villain,” Asparouhov said.

Asparouhov reached his limit on Dec. 4, 2020, when—amid a national surge in covid-19 hospitalizations and deaths—San Francisco announced it would shut down outdoor dining at restaurants. “It was like the one thing that was keeping me sane during the full lockdown was just gone,” he said. Frustrated and angry, he fired off a tweet.

Asparouhov says he wasn’t really considering moving to Miami. He only picked the city because Keith Rabois, his business partner at the Founders Fund, had just moved there and started telling everyone who would listen that they should join him in sunny South Florida. “I think it may not have been totally clear that I was being somewhat sarcastic,” Asparouhov later said.

It didn’t matter. Later that night, Miami mayor Francis Suarez was home, scrolling through Twitter, when he saw Asparouhov’s tweet. Like Pete Buttigieg, Suarez is a local politician with ambitions that extend far above city government. The charismatic 42-year-old has been floated as a potential 2024 vice-presidential candidate; in September, he (half-seriously) floated the idea of running for president himself. Nurturing a local tech scene had long been one of Suarez’s pet political issues, so that night, he saw a chance to post an on-brand response.

It’s been a year since the mayor sent that tweet—and it’s had a bigger impact than he ever expected. “I thought it was just going to be like a cool, funny tweet,” he said. Instead, it helped catalyze a torrent of interest in Miami’s tech scene. A wave of tech reporters and Silicon Valley transplants descended on South Florida. Softbank vowed to invest $100 million in startups based in Miami in January. Financial titans from Blackstone to Citadel and venture capital firms from the Founders Fund to Palm Drive Capital announced plans to open offices in trendy Miami neighborhoods.

Miami’s blueprint for building a lasting tech scene

Miami is one of many US cities trying to shave off a slice of Silicon Valley’s tech empire by establishing its own, local startup scene. Several cities have seen their tech scenes ride a wave of hype to national prominence, only to fade away soon after. (Take, for instance, the Downtown Las Vegas project, which fizzled out after an initial surge of attention and $350 million in investment from Zappos founder Tony Hsieh.)

So far, Miami is maintaining momentum. Venture capital investment is trending up. Two local startups, fintech firm PIPE and senior care startup Papa, reached billion-dollar unicorn status in recent months. Softbank has already doled out $250 million in Miami, more than doubling the investment commitment it made at the start of the year. The transplants who moved in have stuck around, and local entrepreneurs expect more to come as other tech hubs are hit with cold weather and a potential return of covid restrictions fueled by the omicron variant. Google search interest in “Miami tech” spiked in November, doubling the volume it saw during the #Miamitech tweetstorm that erupted in December 2020.

The conventional wisdom around Miami’s tech scene is that it’s the invention of a bunch of tech bro tourists who traipsed into the city during the pandemic to summon a startup hub out of thin air (and will likely fizzle out just as fast as it arrived).

But the truth is that Miami’s tech scene is the culmination of years, if not decades, of work by local entrepreneurs who have boosted the city’s legitimacy as a startup hub in the eyes of outside investors. After Suarez’s “How can I help?” tweet lit up social media, Miami’s startup founders pounced.

“We’ve been telling this story all along and saying, ‘No, you should really take us seriously,’” said Maria Derchi, executive director of Refresh Miami, an organization dedicated to growing the city’s startup scene. “I think what’s shifted now with this new wave of folks is there’s a lot more capital down here. They’re helping remove that stigma that people who build here can’t be taken seriously. And so this is opening up people’s minds and giving them permission [to launch startups in South Florida].”

Tech transplants take Miami

On a Friday night, Chino Lex, the 27-year-old founder of subscription bundling startup Keyring, pushed his way through a packed crowd at E11even, a flashy Miami nightclub known for its elaborate parties and topless dancers. Dollar bills fluttered through the air. The pulsing beat of a Deadmau5 track vibrated the room.

As Lex made his way from the bar to a spot on the dancefloor where a knot of tech industry friends had gathered, one of them caught his eye, pointed across the room, and mouthed: “Evan Spiegel!” There, Lex says, was the CEO of Snapchat dancing with his wife, Australian model Miranda Kerr.

Lex had traveled from New York to Miami for Bitcoin 2021, a cryptocurrency conference originally planned for Los Angeles; organizers eventually relocated the event to Miami in June because Florida was one of the few states that would allow such a large in-person gathering at that stage of the pandemic. Like many in tech, Lex had made the pilgrimage to Miami to see if the city lived up to its hype.

So far, it had exceeded expectations. Earlier in the day, crypto-enthusiasts speakers including Twitter CEO Jack Dorsey, former Texas congressman and libertarian icon Ron Paul, and (for some reason) skateboarding legend Tony Hawk declared bitcoin the future of global finance. That night, Lex says, he partied in the presence of Silicon Valley celebrities like Spiegel and Dorsey. While searching for an Uber outside E11even, he drunkenly befriended a venture capitalist who later invested in his startup—and invited him to the much-hyped boxing bout between former champion Floyd Mayweather and YouTuber Logan Paul. (Mayweather also attended the bitcoin conference, where he was booed for suggesting another cryptocurrency could become as big as bitcoin one day.)

This is Miami’s tech scene in the popular imagination: over-the-top parties and out-of-town tech bros, bound together by a generous dose of booze, sunshine, and viral tweets. To be fair, there’s a kernel of truth to this narrative. Parties have been crucial to growing the allure of Miami’s tech scene. They first attracted tech transplants to the city at the end of 2020, and those new arrivals have helped spur a wave of investment hype fueling Miami startups’ growth today.

While established tech hubs like San Francisco, New York, and Boston endured cold winters and pandemic lockdowns in 2020, Miami reveled under a warm sun and lax covid-19 restrictions. Keith Rabois, the Founders Fund venture capitalist and Miami booster, remembers how easy it was to recruit people to Miami between December 2020 and March 2021—the height of the US’s worst covid surge, and the peak of Miami’s winter tourism season. “The rest of the world was so locked down,” Rabois said. “People would come here from the Bay Area and they felt like they landed on another planet.”

Many of Miami’s tech transplants planned their visits to the city during this long covid winter. (One local entrepreneur compared their sudden, coordinated arrival to a “tech bro flashmob.”) While in town, the tech visitors tended to flock to the same places. They went to the same mixers, meetups, and house parties organized by Miami tech groups. They formed their own cycling groups and book clubs. The tech crowd particularly loves Panther Coffee, a chain of six upscale cafes that feel like the kind of hipster coffee shops you’d find in Brooklyn or San Francisco.

Nicolas Rivero
Revelers gather at a Miami tech happy hour on Nov. 24, 2021.

As a result, visitors have experienced Miami as a place that is already full of familiar faces in tech. David Goldberg, a partner at Alpaca Venture Capital who moved to Miami from New York in August 2020, remembers walking into the Panther Coffee on Miami Beach one day and feeling gobsmacked by the number of people he recognized. “I think in that one day I ran into a dozen people I knew,” he said. “It had that South Park San Francisco feeling, like, ‘Okay, there’s something here and this is actually the real deal.’”

Tech transplants now compare their run-ins in Miami to the atmosphere of “serendipity” in San Francisco, where a billion-dollar startup might be launched after a chance encounter between software engineers at a coffee shop or a house party. Tech people take those social interactions very seriously. “These parties do actually matter,” said Asparahouv, the venture capitalist who helped spark the Miami tech movement on Twitter. “Legitimate business outcomes come out of those because you have more spontaneous connections in your day-to-day life.”

Enthralled by the social scene—as well as the warm weather, low taxes, and friendly mayor—the prevailing feeling among visiting techies was that something big was happening here. Many visitors signed leases and decided to stay in Miami. Once they moved in, they started to invest.

But parties and outside investment alone don’t make for a sustainable startup scene. Miami’s advantage is that it has a strong, local network of entrepreneurs and investors who are committed to building a company—and a life—in a city for the long term. That tech community has been years in the making.

Miami entrepreneurs laid the groundwork for the boom

In the 1990s, Miami didn’t have much of a tech scene. The city was better known for its cocaine cowboys and beachfront nightclubs than its startup founders. But when Rony Abovitz graduated from the University of Miami with degrees in mechanical and biomedical engineering in 1997, he set out to launch a robotic surgery company called Mako in Miami. The advice from friends and family was unanimous: Leave. “Everyone was telling me, ‘Move to the West Coast,’” said Abovitz, who grew up in Hollywood, Florida, just north of Miami.

In a moment of rebellion, Abovitz launched the company out of a University of Miami grad student dorm. When it came time to fundraise, his decision to stay close to home didn’t do him any favors. One prominent Silicon Valley venture capital firm agreed to fund Mako, but revoked its offer when Abovitz refused to move to San Francisco. Whenever he met with potential investors, they always asked what he was doing building a startup in Florida. In every pitch meeting, he said, it was the “alligator in the room.”

Abovitz’s experience is common among local founders. “Every single Miami entrepreneur that pitched an investor had to explain, like, ‘Okay, you’re doing a great job, but why Miami? What, do you guys go to the beach every day?’” said Brian Brackeen, a partner at Lightship Capital, which specializes in funding startups in overlooked regions like the South and the Midwest. “You had to defend Miami and your company in investor pitches.”

So in the mid-2000s, local entrepreneurs began knitting together a community around tech startups in Miami, as a way to support each other and put their city on the map. This is the version of the Miami tech scene’s you’ve heard less about: the slow, grinding work that local entrepreneurs have put in for years to legitimize themselves and their city in the eyes of venture capitalists. Without that foundation, the city wouldn’t have been able to capitalize on the spurt of attention and investment it has received during the pandemic.

In 2006, entrepreneur Brian Breslin founded Refresh Miami to host meet-ups and share news about local startups. In 2012, the Knight Foundation began investing in tech community spaces: It funded The Lab, Miami’s first co-working space, invested in professional groups like Refresh Miami and the Miami Venture Cafe, and helped launch networking events like Black Tech Week and the Emerge Americas Conference. “The idea was to focus not on funding companies, but building an ecosystem,” said Matt Haggman, who oversaw the Knight Foundation’s Miami tech funding efforts until 2017. “We wanted to create the resources that could help support entrepreneurs and to connect them, to create a sense of community.”

Over the next decade, a small but tight-knit community of Miami tech true believers committed themselves to evangelizing the city’s charms to outside investors. These are the people who rolled out the welcome mat when a wave of new arrivals from Silicon Valley showed up last year. They organized mixers, talks, and parties to weave the transplants into the fabric of Miami’s tech community. Refresh Miami wrote an orientation guide to help the newcomers get acquainted with the city. In January, a coalition of local tech groups drafted a Miami Tech Manifesto and asked the new arrivals to sign on to their vision for a tech scene that respected and included local Miamians.

“We’re talking about [Miami’s tech scene] as if it were an organic blossoming from nowhere, when actually these seeds were planted by some really thoughtful and committed people that have been in the community for a long time,” said Rodrigo Gonzalez, creative director at the e-commerce startup GOJA.

Local entrepreneurs are starting to see those long-term efforts pay off. On a recent fundraising trip to San Francisco, Chris Adamo, who founded a newsletter startup called Letterhead, said investors were enthusiastic about South Florida in pitch meetings. “They wanted to know who else had invested from Miami, which never would have been asked before, ever in a conversation with an investor,” he said.

“Now, we’re even hearing of people who are flying here to raise rounds, which is absolutely bizarre to most people here,” said Derchi, the Refresh Miami president.

Ultimately, the success of Miami’s tech scene hinges on investors’ perceptions; if investors believe Miami is a legitimate startup hub, they’ll be more willing to fund local startups. “[Startups founded in] cities that are not in that top tier have dramatically lower valuations,” said Brackeen, the Lightship Capital partner. “We need Miami to move up in the tiers in the minds of venture capitalists, so that our [funding] rounds are larger, and larger rounds lead to more success.”

The money flows into Miami

Miami’s tech scene is still just a fraction of the size of Silicon Valley, which raked in $35 billion in investment last year. But local investors say that’s okay. “The goal isn’t necessarily that Miami is number one above New York and the Bay Area,” said Rebecca Danta, the head of the investor group Miami Angels. Instead, they’re hoping for a future in which outside investors take local startups seriously, and Miami founders don’t feel like they need to move to San Francisco to have success.

Investment in Miami spiked at the end of 2020, and has remained high ever since. In the first three quarters of 2021, Miami startups raised $2.4 billion, tripling the $811 million they raised in the same period in 2020, according to data from CB Insights. The combination of these two forces—the influx of experienced, well-heeled investors and entrepreneurs from tech hubs like Silicon Valley, plus the long-term community-building by local groups—promises to create steady, long-term growth for Miami’s tech scene.

“I think everybody realizes it’s better when [startup funding] is distributed, and everyone should be able to live where they want to live,” said Derchi. “Miami happens to be a great place to live, so we may get a bulk of the people that are moving, but it’s going to be really the rise of many cities.”

Will it last?

Keith Rabois is happy. On a sunny Tuesday morning in July, seven months after he moved from San Francisco to Miami, the venture capitalist is holding court at a table outside Panther Coffee’s Miami Beach location. He’s animated: grinning, gesticulating over the remains of a yogurt and granola breakfast, one foot energetically bouncing in a black Nike sneaker. Some days he sits here for hours, holding a series of outdoor meetings, telling anyone who will listen how great Miami is.

“Everyone smiles here,” he says, with a tinge of wonder. He says he’s been sleeping better since he arrived. The sunshine has brightened his mood. He’s going out six nights a week, compared to the three nights a week he left the house in San Francisco. “There’s just more interesting people and more interesting things to do.”

There was a time when the old guard of the Miami tech community worried that transplants like Rabois would drift away within a few months of their arrival. The muggy Miami summer would turn the air into a mosquito-infested soup, hurricanes would threaten the coast, and the newcomers would grow bored of the city, pull up stakes, and drift back to their old homes in San Francisco and New York. “Everyone was kind of holding their breath,” said Derchi.

But the summer came, and Rabois and his ilk stayed put. “We were all laughing about this allegedly unbearable Miami summer…It’s quite pleasant,” said Rabois. Hurricanes don’t faze him: “The good news about hurricanes is that they’re much more predictable than earthquakes.” Even the threat of rising seas, which regularly flood the streets surrounding the coffee shop we’re sitting in, can’t rattle Rabois out of his conviction to stay in Miami: “If you do the mathematical probability, statistically, of dying of a climate disaster in Florida vs. Seattle vs. the Bay Area, you’d be much safer here,” he says. (It’s unclear if anyone has actually crunched those numbers.)

Rabois says he lives his life according to a philosophy of “path dependency,” which means that once he makes a decision, he doesn’t take it back. “I don’t believe in options,” he says. “I believe if you say you’re going from point A to point B, you commit every resource you have, every energy, every moment to going from point A to point B.”

And moving to Miami was one of those decisions. The former Silicon Valley venture capitalist is fully committed to convincing his friends and fellow investors to spend their time and money in Miami.

In December, a year after he moved to Miami, I emailed Rabois to see if he still felt certain about staying in the city. He wrote back a one-word email: “100%.”

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