Miami, the new tech mecca, and other fantasies in the WFH economy

Looking back, the timing of Miami Tech Week couldn't have been better. The late April gathering of techies occurred after widespread vaccine access in the US but before the Delta variant quashed all hopes of a rapid return to normal.

Investors and founders assembled maskless in the sunshine while the rest of the industry remained pinned to home desks, hopelessly jealous in their unwashed pajamas.

The week of happy hours, one-on-ones and dinners accelerated a "techodus" of those who were fed up with San Francisco and New York. It also kicked off an informal experiment to see if a critical mass of money and hype could boost Miami from a startup laggard to a leader. On the latter point, the early numbers are in and … it's complicated.

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Miami Tech Week was, as far as I can tell, tweeted into existence by venture capitalists Keith Rabois and Delian Asparouhov of San Francisco's Founders Fund, with help from other notable transplants like David Blumberg of Blumberg Capital.

It wasn't all hype. Venture deals in the Miami area have risen considerably this year, with $3.5 billion raised across 234 transactions—nearly triple last year's dollar amount—according to PitchBook data.
   

The population of tech investors has started to grow, and it's not just one-off venture partners looking for a sunnier place to work from home. Billion-dollar managers have opened or expanded offices in Miami, including Steven Cohen's Point72 Ventures, Blackstone, Thoma Bravo and G Squared.

SoftBank launched a $100 million fund for Miami that has since grown to more than $250 million. It too is said to be seeking more office space in the area.

If you're a Miami booster, savor the above and stop reading. Because once you dig deeper, you realize it's more fiction than reality.

If globalization made the world flat, the coronavirus made it distributed. Tomorrow's companies are everywhere and nowhere. The way we used to think about geography, about building networks and ecosystems, is now irrelevant. A company is based wherever its CEO lives; employees decide where they want to pay income tax.

In the WFH economy, is there really such a thing as a genuine headquarters?

Pipe, a fintech startup, raised $250 million in one of the largest single rounds for a Miami-based company this year, according to PitchBook data. But the reality is that Pipe is fully remote, with an engineering team that spans Portland, Ore., Helsinki and Kyrgyzstan.

Distributed workforces like Pipe's are fast becoming the rule, not the exception.

In November, "Miami-based" elder-care platform Papa raised $150 million led by SoftBank. Nearly every job posting on its careers page has the option to be remote. It's the same story for blockchain company QuickNode and gaming startup Faraway, two other Miami-area tech darlings.

Startups aren't the only ones abandoning the concept of headquarters. Nearly 60% of venture capital firms plan to keep a hybrid work model going forward, and just 6% are mandating a return to full-time work in the office, according to a survey of more than 250 VCs by law firm Gunderson Dettmer.

Remote work is just one part of the equation. Many in the tech world consider digital assets and decentralized systems to be the future of the online economy. Facebook is now Meta. Square has become Block.

The idea that physical tech hubs are a dominant force in entrepreneurship is quickly becoming outdated in the post-pandemic business world.

This shift has implications for local politicians, accelerators, angel networks and others trying to build geographically defined startup ecosystems. The city-specific playbook for attracting high-growth companies will have to be reconsidered from the ground up. The efforts of Miami Mayor Francis Suarez to make the city a tech mecca are rooted in a worldview that may no longer apply.

Founders are increasingly starting—and running—companies from cyberspace, not using traditional workplaces. They're prioritizing a state of mind over a business-friendly state.

So while it's perfectly fine for Miami boosters to rally around their city and its economic development, one should be skeptical of anybody claiming that tech hubs of the future can be built using outmoded ideas of the past. Moreover, just about every US metro area has seen job losses during the pandemic—including Miami—according to government data.

That is not to say that Miami's tech community doesn't have a bright future ahead. The point is that wherever Miami is headed, it's not toward some second-rate Silicon Valley.

Southern Florida's sunny climate and low taxes will continue to attract the Bay Area's newly mobile investors and founders. And people will always seek out periodic gatherings à la Miami Tech Week.

The startup world will continue to prize Miami, not because it's a tech hub, but because it's a state of mind.

Featured image by Julia Midkiff/PitchBook News

This article originally appeared on PitchBook News