WHAT IS STATE OF MIAMI TECH SCENE?
Silicon Valley investor gives his take
Silicon Valley entrepreneur and angel investor Jason Calacanis has resisted moving to Miami, but he invested in tech startups here before it was fashionable.
A founder who sold a blogging startup to AOL for millions in 2005 and an early investor in Uber, Calacanis is visiting South Florida this week. On Wednesday evening, he and Miami Mayor Francis Suarez will headline a private event at the citizenM hotel at the Worldcenter in downtown Miami organized partly by Venture Miami, an arm of the city dedicated to luring tech and finance firms here. The two men will have a poolside conversation about building and scaling a startup.
Today, Calacanis counts over a dozen young South Florida companies, including Miami’s ZenSports and Fort Lauderdale’s SailPlan, in his portfolio. He has also backed Gramercy, a Miami salestechnology company now called Blanket, prior to the COVID-19 pandemic emerging in March 2020.
Whether Calacanis and Suarez discuss cryptocurrency — a sore point for Miami last year with the blowback from FTX imploding and MiamiCoin’s value plunging — will be interesting to watch. Calacanis was an early skeptic. At an event in 2018 in Miami organized by Refresh Miami and Miami’s Downtown Development Authority, he said the sector has some people with genuine good intentions and some interesting technology, but it was “coopted by criminal elements.” He described crypto then as “a giant, huge scam.”
The Miami Herald had an exclusive interview with Calacanis ahead of his trip to the Magic City. He discussed Miami’s tech scene, how layoffs at tech giants Google and Microsoft might spawn new startups, and what the Little Havana eatery Sanguich de Miami can teach tech entrepreneurs worldwide. The interview was edited for brevity and clarity.
Question: How do you see Miami’s tech scene today?
Answer: It’s only gotten better. Now that there’s a density of investors and entrepreneurs, you don’t feel like you’re the odd person out. That really is what’s changed. You used to feel like if you lived in Austin, Salt Lake City, L.A., San Diego or Miami, you might be a second-tier entrepreneur and wouldn’t get taken as seriously.
Nobody thinks that way anymore.
Q: What kind of startups do you look for?
A: I’m always looking for people who previously worked together. And one of the things we have in our database of founders is when there’s two or three founders of a company. We highlight that.
The startups we like to invest in have three or four things in common: one is they are product-led, which means the founders of the company know how to build product. The second thing is they have delighted customers, even one, maybe two. You’d be surprised how many people are not focused on their customers. Then we look at product velocity. This means how often is this product updated.
And we really do think world-class design matters. If you look at the design of the restaurant Sanguich de Miami in Little Havana, it is a strikingly simple but beautiful space to sit in. I sat at the counter, I had a café con leche, and I tried both of their top sandwiches. And the detailed level of the design and the experience was so extraordinary that I’ve told no less than 50 people about it.
People really love things that are designed well. And so, I have made it a point to look for founders who understand the customers, obsess over them, and design a product around those customers.
Q: Do you anticipate investing at a higher rate this year?
A: I think this will be the largest number of startups I invest in, maybe not the dollar amount. We’ll be doing a lot of smaller investments in earlier-stage companies.
Q: You viewed crypto skeptically in past years. What do you think today?
A: I hate to say I was right, but I was right. I told somebody years ago in an interview that 99% of these things are either a grift or they’re run by incompetent people. And 1% are legitimately interesting technology projects, but they’re not yet companies. That wasn’t an estimate. I had met with 100 companies.
It was pretty obvious to us after over a decade of meetings that there was way too much hype. Also, because it included a builtin way to sell your position in the company via tokens or NFTs, it had this very perverse incentive, which was the more you hyped up your crypto project, the more money you can make before you had customers. That was a recipe for disaster.
There are charlatans in every cycle. The problem with crypto was the system was designed to attract them.
It doesn’t mean that there weren’t a collection of real technologies there that will have success in the future. It’s very important to point out that there could be things that come out of NFTs, come out of DAOs [decentralized autonomous organizations], and come out of smart contracts. Will they make great businesses? We’ll see.
Q: Are you concerned about a possible shortage of technical talent in Miami, particularly mid-level engineers?
A: A lot of talent is remote now and a lot of it is international. So, you really only need to have a core group together — the top five employees. You don’t need to have everyone in the same room anymore.
Q: Do you expect the layoffs at large tech companies to produce a new wave of entrepreneurs?
A: We’re already seeing it. The number of people contacting us with ideas has spiked in the last three months.
If you’re a group of three people from Microsoft or from Google that got laid off last week, one of the best things you could do is get together. You’ve got six months to a year of severance, and you might have had your stock options vested going forward. In other words, you might have the most runway personally that you’ve ever had in your life. If there ever was a time to take a risk, now would be the time.
So, instead of going off and taking a six-month vacation, I would really encourage people to stop what they’re doing and think for a second: “Is there any great idea that the big tech company I worked at wouldn’t let us do? Or they said no to, but we think is an opportunity?” And then the three of you get together and work on it for three to six months. Now is the best possible time to start a company. In a down market, there is a massive amount of talent looking for something to do and it creates massive periods of creativity.
Q: How did Wednesday evening’s event with Mayor Suarez come about?
A: The mayor and I met when I did the All-In summit [All-In is a podcast featuring Calacanis and three colleagues] there in Miami last year, and we struck up a nice friendship. I’ve met with him several times since then, and I’ve been recruited pretty heavily to move to Miami by my friends.
I’ll be there for the week. I’m doing a fan meetup Wednesday night. And I always like to get my Sanguich at Sanguich de Miami in Little Havana.
Q: This is speculative, but if Mayor Suarez runs for president in the GOP primaries in 2024, would you back him?
A: He would seem like a natural candidate, maybe not in this election, but certainly in coming elections. I think he’d have incredible appeal.