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America’s Tomorrow City

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from the magazine

America’s Tomorrow City

Miami seeks to build a startup haven for tech entrepreneurs and cryptocurrency innovators. Winter 2022
Technology and Innovation
Cities
Economy, finance, and budgets

José Miró Cardona’s six-week tenure as prime minister of Cuba ended when Fidel Castro began unleashing firing squads on his political enemies. Two years after Cardona’s break with the Communist government, he ended up, as have countless other Cubans since, in Miami. It was Miró Cardona whom the U.S. State Department tapped to lead the Cuban Revolutionary Council (CRC), a collection of anti-Castro exiles formed in 1961 and tasked with spearheading the Bay of Pigs invasion. In Miami, this group of doctors, lawyers, and politicians devised a wild scheme to launch an amphibious invasion of Cuba and catalyze a popular uprising against Castro. Few of the renegades of Brigade 2506, as the group came to be called, had military experience. But they were products of the conspiratorial style of politics native to Latin America, where revolutions and counterrevolutions are dreamed up in haste and where experience and expertise are of little importance.

To Americans today, the Bay of Pigs seems the stuff of fiction. But Miami’s Cold War–era exiles had imaginations that could outrun reality, and their romantic ideals survived the plot’s spectacular failure. In subsequent decades, anti-Communist groups would use Miami as a launching pad for a series of bombings and assassinations on U.S. soil. Having once embraced the city’s counterrevolutionaries, Washington would have to dispatch federal agents to Miami to quell anti-Castro agitation. But federal forces failed to stop the institutionalized embrace of la lucha (the struggle) in Miami. When Eduardo Arocena was charged in 1983 with trying to assassinate the Cuban ambassador to the U.S., mayoral candidate Xavier Suarez donated to his legal defense fund. Suarez’s lackluster poll numbers jumped, and he won a close election.

Now, Francis Suarez, son of Xavier and the current mayor of Miami, has hatched his own conspiracy, though a far more benign one—aimed not at Havana but at San Francisco and New York, and not at counterrevolution but economic transformation. With the help of disaffected tech investors and hedge-fund managers, Suarez has put together a twenty-first-century version of Brigade 2506 to dislodge the coastal enclaves’ grip on the U.S. tech economy.

“Miami post-1960 is shaped by exiles from Cuba and Venezuela traumatized by an ideology that promises the world and delivers misery,” Suarez tells me. “That’s where this story begins.” New Miami indeed resembles Old Miami in certain ways. Those who fled socialism have a deep appreciation for the work of entrepreneurs, which contributes, in Suarez’s telling, to the region’s business-friendly environment.

It began with a tweet from technology investor Delian Asparouhov in December 2020, during the height of the pandemic’s first winter: “ok guys hear me out, what if we move silicon valley to Miami.” Echoing a mantra of California venture capitalists, Suarez replied: “How can I help?” In the ensuing weeks, Suarez built a hype machine to lure startups and investment funds from coastal metros to Miami. On Twitter and via back channels, the mayor engaged in informal exchanges with billionaires and pseudonymous followers alike. He began livestreaming “cafecito” talks with local entrepreneurs and, in a characteristic move, invited Elon Musk to City Hall to discuss building subterranean tunnels in Miami.

Suarez’s pitch was simple. Along with paying zero in state and local income taxes, transplants to the city would enjoy the services of a responsive government that encourages innovation. Miami offers an expedited electronic-permitting process and a host of incentive programs such as Follow the Sun, which provides up to $150,000 in grants to local companies. Florida has codified the contractor status of drivers for rideshare apps such as Uber.

San Francisco, by contrast, charges a Sugary Drinks Tax, a Traffic Congestion Mitigation Tax, and a Cigarette Litter Abatement Fee, atop the 14.8 percent in state and local income tax levied on top earners. California has tried several times to classify gig workers as employees. And if Golden State lawmakers can’t kneecap a company, they might go after its executives. Last year, for example, San Francisco’s board of supervisors condemned the naming of a hospital after Mark Zuckerberg, following a $75 million donation to the institution from the Facebook founder. Not long before, a San Diego assemblywoman posted “F-ck Elon Musk” on Twitter.

Longtime Silicon Valley figures gave Mayor Suarez a hand in recruitment. One was Keith Rabois, an early employee at PayPal, former COO of payments company Square, and partner at the legendary VC firm Founders Fund. Rabois made his fortune in the Bay Area but started searching for a new home during the pandemic. Miami was his choice. Over coffee at a Cuban café, he told me that Covid-19 marked a breaking point in an already-strained relationship between San Francisco and the tech sector. The city’s “absurdly restrictive” Covid policies, he says, “were completely irrational and anti-science and pushed a lot of people to escape.”

Rabois sees San Francisco’s status as a tech hub as a historical accident, the consequence of a clustering of angel investors in the South Bay in the twentieth century. “Sand Hill Road is the most boring place on the planet,” he says. “The only reason it mattered is there was a certain set and concentration of investors who had a slightly different risk/reward profile than anywhere else in the world at scale.”

Rabois used his Twitter megaphone to exhort entrepreneurs and investors to join him in Miami. “All success is path-dependent,” he says. “You found a company, then you will it into existence. In Miami, we did the same thing.” The social-media blitz wasn’t preplanned; before becoming the face of Miami tech, Rabois says, he had not even met the mayor. But he saw an opportunity with Suarez, and even agreed to teach workout classes at a local Barry’s Bootcamp to generate buzz for the city.

Convinced by Rabois’s pitch, tech investors Shervin Pishevar, David Blumberg, and Jon Oringer also left San Francisco for Miami. And when New York City emptied out during the pandemic, a significant number of investors and bankers decamped to South Florida. Forced to conduct business from home, financiers chose the tax-free tropics of Palm Beach and Miami. Financial firms such as Icahn Enterprises moved parts of their offices to South Florida, while Goldman Sachs announced its intention to do so; others opened de facto branches there, with employees working remotely.

The hype around Miami set off a flywheel that seemed to bring a new business to the city every week. SoftBank launched a $100 million fund dedicated to the Magic City, and Microsoft, Spotify, and TikTok all announced plans to open South Florida offices. A total of $1.1 trillion in assets under management have moved to the city since the campaign began. Venture-capital deal volume in the greater Miami area hit a record $1.9 billion in 2020, up from $800 million the previous year.

The sense of excitement is palpable. Miami Tech Week, a spontaneous April gathering of investors and entrepreneurs, morphed from an informal meet-up into a Who’s Who of tech. Asparouhov tells me that Founders Fund had initially planned a small gathering for its portfolio companies but that a series of promotional tweets “memed the conference into existence.” “The local ecosystem globbed onto it, the mayor did a ‘cafecito’ event, and a bunch of other venture firms decided to host parties that week as well,” he says.

One investor thus turned hype into something tangible, in what is fast becoming the Miami way. With larger cities still restricting in-person gatherings, Miami offered a chance to meet tech fellow travelers face-to-face. Following the event, cryptocurrency investor Balaji Srinivasan waxed poetic: “Miami Tech Week shows that politicians have a new path to power, demonstrates a new way for citizens to exert influence over governance, proves that Silicon Valley has finally achieved its destiny of decentralization, and indicates that the era of startup cities is now underway.”

South Florida may seem an unlikely venue for techno-futurism. Its economy depends largely on real-estate speculation and tourism, as well as a large number of retirees, who bring in a steady stream of Social Security, Medicare, and pension payments. It’s an economic model seemingly at odds with the small-government vision favored by the city’s largely libertarian tech crowd.

And Suarez’s startup city project has not been without its detractors. Critics on the left see a starry-eyed utopianism that serves the interests of capital at the expense of real people. Skeptics point out that the state lacks a university on par with Stanford or MIT, though the University of Miami does boast an entrepreneurship center to support startups. Journalists have derided Suarez, a Republican, as unserious.

But the incumbent cities that Miami wants to compete with have worn out their welcome for many. Silicon Valley, where our nation’s best and brightest perfect ad-targeting algorithms by day and dodge muggers by night, hardly resembles the place where Apple and Intel were founded. “The Californian Ideology”—a term coined by two British academics to describe the freewheeling early 1990s ethos of Silicon Valley—rested on a “profound faith in the emancipatory potential of the new information technologies.” The Valley’s tech entrepreneurs once aspired to “create a new ‘Jeffersonian democracy’ where all individuals [would] be able to express themselves freely within cyberspace.” Now Big Tech firms devote mammoth resources to content moderation, sanitizing their platforms at the behest of advertisers and politicians. Mounting cash balances at the largest tech firms suggest a dearth of ideas. The Valley’s Big Tech companies pay well, of course, but for those looking to be at the forefront of technological innovation or hoping to work with people who truly “think different,” the consumer-Internet giants increasingly look like dead ends.

Likewise, the hedonistic and high-flying image of Wall Street that pervades popular culture is mostly dead in New York’s overregulated, overtaxed financial sector. Freshly minted Ivy League graduates could once place exotic, multimillion-dollar bets in their first year at an investment bank. Now they spend as much time in compliance workshops as in the capital markets. For better or worse, the next Jordan Belfort will not be a penny stockbroker.

Miami offers not just low taxes and a friendly regulatory environment but a culture comfortable with risk. Those seeking novelty can find it in South Beach nightclubs, where overpaid twentysomethings brush shoulders with cocaine kingpins, and in the city’s startups, which look to build a decentralized Internet instead of enterprise software tools. Free from the regulatory hurdles of ordinary finance, a young coder in Miami can play the volatile cryptocurrency markets by day, spend $2,000 on bottle service by night, and fit in perfectly.

“The incumbent cities that Miami wants to compete with have worn out their welcome for many.”

Early this year, Suarez introduced a resolution to put bitcoin on Miami’s balance sheet—an unacceptably risky move for cash-strapped cities like New York and San Francisco. The mayor himself has disclosed personal holdings in cryptocurrencies and regularly sings their praises. In September, Miami embraced a project called City Coins, which issues digital tokens tied to municipalities. Investors can now bet on the Miami token while generating revenue for the city’s coffers.

Suarez argues that crypto comes naturally to Miami, whose exiles have firsthand experience of hyperinflation. His constituents, he says, value a currency system that is “not government controlled, and not susceptible to the things that have always created problems with currencies, whether corruption, mismanagement, or excess government spending.” Suarez sees ballooning federal spending as a risk to the dollar’s utility as a store of value, no less so because it can be “manipulated” by federal authorities. Meantime, authorities in other states are beginning to crack down on digital currencies: a recent order from New York’s attorney general shut down two crypto platforms.

Miami newcomers are attracted by politics and policy alike. Cryptocurrency investor Nic Carter, who left Boston during this past summer, describes Miami as a “sanctuary, one of the most politically free cities in America.” “There’s a huge number of Cubans and Venezuelans here who completely disdain and hate socialism,” he says. “That’s incredibly refreshing when the rest of America is undergoing some sort of socialist awakening.”

At a dinner I attended in the city’s Brickell neighborhood, a crypto entrepreneur placed two AR-15 magazines on the table—a gift, he explained, for a friend who later joined us. Young investors spoke of the inevitable collapse of the U.S. financial system due to the Federal Reserve’s reliance on money-printing to fund federal deficits. When I visited the team at Swype, a cryptocurrency startup, they told me with certainty that their company would be the Apple of the decentralized Internet—the successor not only to Big Tech but also to the U.S. government as we currently know it.

Miami has long blurred the line between creator and crook. At a restaurant in Coral Gables, you never know whether the man at the next table, clad in a custom suit and impossibly large Rolex, is a diplomat or a money-launderer. The city is home to both crackpot counterrevolutionaries and seasoned political pros. In the same way, the Miami tech movement involves both serious investors and smooth-talking hucksters. It’s not always easy to tell them apart.

Is the Miami vanguard launching the next Bay Area, then, or the New Economy version of the Bay of Pigs? The uncertainty is the point. Suarez’s campaign to lure businesses can be criticized, but it seeks to break free from the risk aversion that increasingly constrains contemporary American life. For entrepreneurs dreaming up new currencies, new Internets, and new economies, Miami is America’s city of the future.

Photo: Mayor Francis Suarez, shown here speaking at a 2021 bitcoin conference, is leading an effort to transform the city’s economy. (EVA MARIE UZCATEGUI/BLOOMBERG/GETTY IMAGES)

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