Headlines during the COVID-19 pandemic would have you believe that Silicon Valley and New York are dying an inevitable death and that Miami is a bright star of hope for the next wave of tech. Proponents of this general analysis point to socio-economic themes that have been accelerated by the global pandemic citing high taxes, unfriendly local policymakers, rent costs, and the weather as the reasons talent is being pushed out of by-gone hub cities. In contrast, Miami has lower taxes, friendly local policymakers, and the best weather on the east coast. By this logic, you do not have to think hard to imagine a new funnel of talent taking shape. However, correlation does not mean causation. Few if any articles give any hard data on the actual movement of the talent, which made us want to look deeper.
To begin to understand what is happening, we analyzed over 100 companies headquartered in Miami, with a minimum of 1 million dollars venture-funding raised over the last 10 years, to understand where talent is coming from. Layering on information about where those startups are hiring, how fast, and where; we can form a more complete, data-backed analysis.
If you believe the headlines, established, venture-backed startups in Miami should have no problem snapping up all the juicy talent flooding into the area. Furthermore, they should have no reason to look elsewhere as operators since the location is advantageous due to the friendly business and tech environment. The hypothesis, therefore, is simple: Established startups in Miami, if they are growing, should be growing their headcount fastest in their headquarters location.
The data tells us a different story. Only 58% of the startups we analyzed show the fastest headcount growth in their HQ location; the next fastest locations of growth among startups were either Central or South America (14%) or other Hubs like New York, Raleigh, or Austin, etc. (10%).
With a surprising 42% of the fastest-growing locations deviating from companies’ headquarters, it begs a reexamination of the general themes that so strongly influenced the hypothesis and hype surrounding the location and raises new questions. Why would a local startup grow faster in Central or South America if talent is migrating en masse from Silicon Valley, New York, or other overpriced tech hubs? What makes Miami special if venture-backed startups are near-shoring talent in Central & South America—something available to most if not all operators? What advantages do startups have to gain by choosing to be headquartered in Miami?
Taking a more granular view we can get a scope of both ends of the spectrum. On one end there is Arteza—an Art Supply E-Commerce startup—that proclaims itself as one of the fastest-growing private companies in South Florida. It offers a platform to buy a unique offering of art supplies. The data back up their claim. Among the sample of established startups, Arteza is growing fast and is staunch support for the hypothesis—posting 150% year-over-year growth. The company has hired sparsely in offshore locations; however, a cursory inspection of their careers page shows many open positions solely in their headquarters location.
On the other end of the spectrum, there are companies like Technisys—a digital banking technology company founded and headquartered in Miami. Technisys’ fastest growing location over the last three years has been Uruguay—not Miami. Only a select few employees, namely executives, appear to reside in Miami. The other 99% of the company resides in other states or countries.
The data do not necessarily debunk the headlines but show a fork in the narrative. The bump in talent siphoning from other locations does not seem to tie with actual growth activities. While there are certainly many startups growing in Miami, it is not the next Silicon Valley some claim it to be in terms of being an engineering talent hub. Potentially the real attraction of Miami is not low taxes and weather. Instead, as suggested by the 14% of companies growing fastest in Central and South America the real benefit is access to near-shored talent pools. Miami’s diverse population, cultural overlap, and time zone advantages may lend itself greater synergies than similar startups in other tech hubs. Miami’s startup scene has been traditionally leaner, and the ability to scale in emerging tech locations outside of the U.S. fits that model.