The startup community in South Florida is interesting right now -- just on the cusp of something great but still grasping for something tangible. The scene here is a startup in and of itself. Up until about 2 years ago, you probably would be hard pressed to come across any startups, but it's really exploded since then for better or worse. There is a lot of money here made in non-tech related areas (largely real estate or foreign money), but local investors are starting to become very interested in the startup space and the community is starting to gain traction with them. We're rated number 2 on the Kauffman Index. Unfortunately for local investors though, the startup scene, while budding, is still in its infancy.
The average startup here is much less mature or refined in many regards. We have some disadvantages such as lack of tech talent as well as lack of experience in the space. While we have several solid companies that are taking off, there is still a lot of fluff that isn't getting filtered out at early enough stages (although I imagine this is common everywhere because becoming a startup CEO with that "hot app" has become the new Hollywood star of our generation.1) I can't count how many angels and VC groups we've talk to that have said, "We'd love to invest here, but we just can't find many worth investing in." DLA Piper's Jeremy Elman here in Miami supports this with data. They conducted a flash survey of investors and overall common thread was more investment will follow when we start to see higher quality companies.
From our perch in this market, we work the mostly with very early stage companies with our incubator program or large corporations in our corporate skunkworks program. We see a lot of mistakes being made just due to a lack of proliferation of tried and true startup lessons. We see pre-product founders more worried about a patent than actually building a product. Startups without growth worried about trademarks. Founders who have built a product, but never tested whether their potential customers even had the problem they were "solving." The 80-20 rule is lost on many and the list goes on. To summarize, a big gap is just education on the Startup Way™ -- learning how things are done in this world of moving fast and breaking things.
For all of our shortcomings, there are some very commited groups and people that are really beginning to turn this around. Several new startups, angel groups, VC firms, and mentors have put our region in a good trajectory and we've garnered a lot of attention in several publications as being an up-and-coming startup community. The Founder Institute will have its first cohort in about a week (Disclosure: I'll be mentoring companies in this cohort). We're starting to see some early success stories - companies with good fundamentals, decent revenue, good teams, and solid growth like Boatyard and LiveNinja. We also have companies tackling very disruptive industries and technology like Magic Leap. Others, like AdMobilize whose product MATRIX just launched on Kickstarter and Outnix (and others which we will definitely write about once they launch) have some very promising products which solve their customer's problems which we're excited to see grow.
We recognize our weaknesses, but we're obviously here and taking a solid bet on the community because we see a lot of opportunity. We hear quite a few people down on our differences with the Valley, Austin, NYC, and other hot locations, but instead of lamenting weaknesses we need to accept the differences in the market and take advantage of them. We will win by building businesses that learn from the good of the valley (tech, disruption, lean methodologies such as the MVP, recruiting, etc), but also learn from their weaknesses.
Unlike the SV darlings, we will build self-sustaining businesses with real revenue. Our investors are not nearly as patient towards year of year losses as they are SV. Sometimes that's what a startup needs in particularly new and disruptive technologies, but as DHH said, "In the abstract, economic sense, a 30% chance of making $3M is as good as a 3% chance of making $30M is as good as a 0.3% chance at making $300M."
We also have the advantage of opportunities in emerging markets. Most startups in other areas focus on the US until they've hit their Series B. We're particularly advantaged with Latin America as young, bright people from all over the world are coming here with an understanding of their local markets and a fascination with America's entrepreneurial spirit and innovation. While I don't think this is the only market we will succeed in, our connections, common language, and common culture2 give us a leg up that we shouldn't ignore.
There are other advantages that we have as well3, but in particular building startups with good fundamentals4 and our international diversity are two that stand out. We have the benefit of seeing what has worked and what were probably short-sighted wins in other communities. If we can learn from brilliant product and startup advisors like Paul Graham, gleen best practices from the other communities, create an environment where investors and startups have access to each other (and understand each other), and ground investments to reality and fundamentals while attacking markets that are relatively untouched by the valley we stand a very good chance to make our mark.
It's GREAT that so many people want to build companies. It's good for the world. People doing it for the wrong reasons is not though. Founding a startup for status will result in failure or burnout. Failure because you never really were passionate about the problem you wanted to solve in the first place. Burnout because status is not enough to keep that internal fire lit. You need GRIT. ↩
There's a joke we have locally, "The great thing about Miami is how close it is to the United States." ↩
Like lower burn rates when compared to SV/NYC cost of living and cost of doing business, advantageous tax laws, and while we do not have a great density of tech talent here in the region, we have access to it in LATAM. We have markets that just do not exist in areas where there are seasons such as the one Boatyard is tackling. We also have a massive tourism industry, maritime industry, and banking where professionals can leave the big players with expertise to found a company ↩
One oft forgotten point, is that if we have a lot of big losses with investment into shiny startups with poor fundamentals, this will scare some of the currently motivated investors away. Remaining grounded will prove more successful in the long game. ↩
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