The Twittersphere exploded in recent weeks with the back-and-forth between recently relocated San Francisco venture capitalist Keith Rabois and Miami mayor Francis Suarez. Unlike the outright hostility from California politicians towards their homegrown successes, Suarez replied with a disarming “how can I help?” If you haven’t caught up, the story is neatly summarized by ex-Facebook employee and writer supremo Antonio García Martinez.
Rabois was tired of living in a dysfunctional San Francisco which, despite a massive budget increase over the last decade (mostly taxing tech wealth), can’t seem to fix problems, like homelessness, that have been fixed elsewhere. “I think San Francisco is just so massively improperly run and managed that it's impossible to stay here,” Rabois said in November.
Although Rabois didn't mention it specifically, ongoing threats of confiscatory taxes in the state of California (including a failed proposal that would create an exit tax for ten years after leaving the state) must have also weighed on his decision to move.
In his own way, he’s gone Galt.
Not So Fast
Miami as a tech hub? Sounds crazy. The reason most tech innovation has come from the Bay Area is because of the massive network effects of an ecosystem that has been built up over decades: hundreds of thousands of engineers, designers, product managers, entrepreneurs, as well as every stage of funding from angel to late-stage VC and post-IPO funds. Miami has none of these.
There’s data to back this up. Boston, a tech hub that's much more developed than Miami, had total exits measured by dollar value at a mere 6 percent of the Bay Area’s over the decade ending in 2019. Miami isn’t even on the map.
And yet… I’m reminded of an old joke Ben Graham told Buffett (recounted in Berkshire’s 1985 letter to investors):
An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence”, said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.”
After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.”
Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.”
If Rabois talks about Miami as a tech hub often enough, does it make it true?
Rabois, the Bootstrapper
Rabois began his Silicon Valley career at PayPal, with subsequent stints at LinkedIn, Square, Khosla Ventures and now Founders Fund, Peter Thiel’s venture capital firm. He also had a hand in co-founding OpenDoor and has invested in several successful companies such as DoorDash and YouTube.
In his early operational roles, he frequently had to figure out how to create network effects: usually there is some method of “growth hacking” or “induced virality” involved.
Regular folks come to Miami to hustle and build things; billionaires however tend to come here to chill out (or worse: I can think of two who moved here in the past 20 years only to see their fortunes decline significantly).
When Rabois announced he was moving to Miami and claimed it could become a tech hub, initially I dismissed it as just a gimmick by a billionaire who wanted to retire in the sun.
But then he started to sound like he’s still hungry to build. On the last day of 2020, he wrote on Twitter:
Then, on January 2, he posted these as “Professional goals for 2021z” (sic):
When Amazon shortlisted Miami for HQ2 in 2018, I thought Miami had a real chance. A company with thousands of technical employees would inevitably put the city on the map and create a diaspora that would go on to found other businesses. Rabois himself is part of the early PayPal diaspora, a group that went on to create dozens of multi-billion-dollar companies.
Rabois’s list is quite specific: he’s trying to bootstrap the network here by creating the conditions to get the flywheel going. By attracting the capital (venture capitalists) and the talent (1,000 designers and engineers), new companies can be formed. He's applying the same growth hacking techniques to Miami as he did in his previous operational roles.
Attracting promising startups—“top 10% of YC” is a high bar—would give the city an even stronger imprimatur than hosting Amazon’s second headquarters. It would be the equivalent of a massive Bat-Signal to every other startup launching in the Bay Area: “Hey, it’s OK to do this in Miami. It works.”
What Suarez Must Do
Hiring high quality designers and engineers in the Bay Area is extremely competitive, but at least the supply exists. If Rabois is successful in attracting 1,000 of them to Miami, the supply will quickly run out (a high-class problem, to be sure). What types of policies can the administration adopt to ensure this doesn’t happen? In other words, how can Suarez help?
Attract an Engineering University
Northwestern University launched its Kellogg Executive MBA campus in Miami in the mid-2000s. Why not attract similar programs for computer science? Back then, the MBA was the epitome of the high-paying job; today, software careers have taken the mantle.
In a surprise to no-one, the Bureau of Labor Statistics estimates that high-paying information technology jobs will grow much faster than other occupations over the next decade. Training those folks in Miami so they can work at local startups is the path to success.
Canadian company Shopify has created a Dev Degree in which students work and study computer science at the local university. If Miami had more competitive computer science programs, something similar could happen here. (Maybe the answer is to turbocharge the work being done at FIU and Miami-Dade College.)
Education could be supplemented remotely by schools like Lambda, where students pay $0 up-front to learn software skills. After landing a job that pays $50k or more, students reimburse Lambda 17 percent of their income for two years. Interests are aligned: there’s no need to take on student debt for a degree that might never result in a well-paying job.
Every Public School Should Teach Computer Science
Only 30 percent of Florida public schools teach even the basics of computer science. We are way behind: coding and CS concepts are as important as learning English or Spanish and we should prioritize it so that every single school has a competent program teaching actionable skills. This is how we train the workforce of the future.
Grow Local Large Tech Company Offices
HQ2 didn’t work out for Miami, but many other tech companies (such as Twitter, Microsoft and Wix) have offices here. What’s preventing them from growing their local workforce? How can the administration make sure that these offices grow faster in Miami rather than, say, in New York City?
Keep the City Clean
One reason for fleeing San Francisco is the uncontrolled homeless problem. I’ve seen it firsthand in my many business trips to the city.
Miami doesn’t have a meaningful homeless problem, but over the last two years I’ve noticed an uptick in homeless folks around the city (just walk around the Brickell area).
This problem needs to be nipped in the bud; figure out the root cause, and come up with a solution, fast.
Bring Tech Conferences to Miami
The Bay Area hosts many notable tech conferences by companies such as Twilio, Okta and Zoom. The most-used venues include the Moscone Center, Civic Center, the Piers in San Francisco, and the San Jose Convention Center. Whatever doesn’t happen in the Bay Area ends up in Las Vegas.
Why isn’t Miami grabbing a bigger share of the action, especially now that it has a state-of-the-art convention center in Miami Beach?
Create a Tech-Forward Environment
One of the key lessons Jeff Bezos learned at Amazon was that “you can’t fight gravity.” If technology is inevitably moving in a certain direction, it’s always best to lean into it and take advantage of the opportunities rather than to live in denial.
If Suarez wants to attract tech-savvy folks to Miami, act like a tech-savvy city.
One of Rabois’s favorite books is Bill Walsh’s The Score Takes Care of Itself. One key section is titled “Winners Act Like Winners (Before They’re Winners)”:
“The commitment to, and execution of, the specific actions and attitudes embodied in my Standard of Performance—some picky, some profound—may seem far removed from Super Bowl victories, but they were crucial to creating and cementing a 49er level of professionalism that I viewed as the foundation on which future success could be constructed. [...]
Consequently, the 49er organization increasingly became known for our businesslike and very professional behavior even when we were losing more games than we were winning. [...] And phones were answered in a professional manner: ‘San Francisco 49ers headquarters. How may I assist you?” All calls had to be returned within twenty-four hours.
Eventually—within months, in fact—a high level of professionalism began to emerge within our entire organization. The 49ers’ self-perception was improving; individuals began acting and thinking in a way that reflected pride and professionalism.”
Many parts of the city have access to Google Fiber. Make that fast Wi-Fi available outdoors to everyone for free, or for a small fee. Fix the Wi-Fi at Miami Airport and make it free to everyone (the current provider is unreliable and spotty).
Transition the city’s public transportation to renewable fuels and electric vehicles (why did we recently approve a diesel-powered trolley?). Modernize the city’s tech stack: citizens can do a lot online, but most interactions with the city are still clunky, involving a lot of mail and in-person interactions. Let our newly trained high school students pitch in for extra credit.
If Suarez did nothing and Rabois succeeded, Miami would probably have a decent shot at showing up on the league tables. But Rabois’s arrival has given Suarez a real chance to grease the flywheel and make it spin that much faster. He could be remembered as the mayor who finally helped put Miami on the tech map in a big way.