Miami Vice Capital
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Since the start of the COVID-19 pandemic, an SF tech exodus emerged. There are many well documented reasons for the exodus, namely a high cost of living, unaffordable housing, and increased crime - all accelerated by the switch to remote-first work. But few have been more vocal than Keith Rabois, the paypal mafia venture capitalist, after physically moving and encouraging others to move to Miami. The level of hype raised tech eyebrows, including my own, to wonder if this is self-serving publicity, or something more?
Before I dive in, let me get a few things out of the way. First, I don’t have anything against the city of Miami. Second, I actually think it’s a good thing for tech to diversify and have many intellectual strongholds, not just one mecca. One of the few positives of the pandemic is making people reevaluate their lives and figure out what matters to them, including where to live. I also agree with many of the criticisms of SF. Lastly, I don’t have anything against Keith and while I realize in this day and age it’s heresy to criticize a Silicon Valley influencer, sometimes you have to call a spade a spade.
Let’s start with the hype. On the surface, it sounds like satire. What could be more contrarian than a rich person moving to beachfront property with lower taxes? It’s not like Miami is a secret. People on the east coast have been moving to Florida for winter and retirement for eons, but to the SV twitter crowd, it’s as if they’ve discovered a new land!
So why move to Miami? Rabois’ pitch can be broken down into quality of life (weather, crime, public schools, culture, nature), governance, tech talent, and money.
I won’t spend too much time on the quality of life piece, since I want to avoid a Miami vs. San Francisco debate. In short, it’s a wash. Both have excellent weather (a personal preference between shorts or hoodies), while crime is slightly higher in SF recently, crime has historically been much higher in Miami (stats for SF and Miami), SF has an edge in its proximity to nature, think hiking and natural parks, both cities have vibrant cultures, and I assume both have comparable public school systems.
Governance is the next major argument. The current VC narrative is that California, and the city government of San Francisco in particular, is hostile to tech companies, whereas Miami has a new mayor that gets it. Francis Suarez became an overnight Twitter celebrity by tweeting a famous VC phrase “How can I help?” to people considering moving to Miami. So yes, how? I tried to look up specific policies beyond the tweets and welcome cafecito chats, but only found a VC in residence that was appointed in 2021. Sure it’s nice to be welcomed, but how is it not simply lip service, especially when compared to cities, like Tulsa, that are paying real dollars for people to relocate? And you do have to hand it to the mayor, if you go to howcanihelpmia.com you’ll see startup-like tactics with a swag store that’s ready to monetize.
This does not mean SF’s increasingly draconian measures against tech companies should be ignored, the opposite in fact. However, it’s worth noting that the city did pass many tech centered policies in the 2010s (i.e. the Twitter Tax Break) that did move the epicenter of Silicon Valley to San Francisco, making it what it is today. And I would have a little more sympathy for Rabois if he hadn’t already benefited so much from the city and state that made him. A rank-and-file tech bro that can’t stomach the exorbitant rent prices after a few years is one thing, but a 20+ year industry veteran that inculcated Silicon Valley, made about a billion, and had ample opportunity to shape and improve government policy looks more like a parasite (now maybe he did try and fail, but he hasn’t mentioned it).
To paraphrase another argument, there’s a buzz in Miami right now where everyone bumps into each other and is meeting other interesting people (there are many tweets). A few thoughts here: 1) I’m sure you’ll meet interesting people anywhere you go, especially after social distancing, and just about anything can be refreshing after living in a tech monoculture for so many years (that the aforementioned perpetuated). 2) You shouldn’t be bumping into people during a pandemic! This goes back to what real governance looks like, is it tweeting or protecting your citizens? According to the New York Times, as of February 26, 2021 “1 in 21 people who live in the San Francisco metro area have been infected and at least 1 in 1,557 have died, where at least 1 in 9 people who live in the Miami metro area have been infected, and at least 1 in 603 have died.” So by all means go to a meeting of the minds, but acknowledge that it is 2.5 times more dangerous to your health.
At this point, there’s no clear data unless you think SF is in a death spiral, or COVID is not real. So why all the fanfare to convince people to move? It’s the money. A state income tax rate of zero is a big incentive, and the only clear one. But moving to save money looks greedy, and not very contrarian. So what does a contrarian do? Since contrarians only prosper if the world bends to their will, they shout it from the rooftops! They need to create the FOMO so a herd will follow in order to build a critical mass of tech acumen* to create companies and hopefully be proven right (btw it’s quite amazing to me that people can be convinced to move somewhere by tweet). It all boils down to self-serving publicity.
But I do admit that even if it is self-serving publicity, bordering on arrogance, the plan is well intentioned, quite ambitious, and better than Keith’s retirement. And if he turns out to be right, it will be better for the world.
So in the VC manner of trying to be helpful, here are a few pieces of advice:
To better replicate Silicon Valley, make sure you don’t enforce non-competes in business contracts, and better yet, remove it from the state law.
Focus on climate change technology, it’s the future.
Avoid becoming a parasitic industry that eats the world one city at a time; learn from the lessons of San Francisco.
*Don’t get me started on the VC hypocrisy that just a few years ago claimed Silicon Valley’s competitive advantage was the people, and it’s centralized ecosystem of network effects.
