Welcome to the fourth edition of The Digital Diaspora, a weekly short column covering the rise of new tech hubs outside of Silicon Valley. This week’s post will center on the key arguments that elected officials of three major technology hubs are making on behalf of their own cities, and how we might interpret them.
Specifically, we will focus on public comments made this weekend by mayors London Breed (San Francisco), Francis Suarez (Miami), and Steve Adler (Austin).
Battle of the Mayors 2021: SF vs. Miami vs. Austin
This Saturday evening, the mayors of three major technology hubs debated the long-term prospects of their cities over a virtual dinner party on the invite-only audio app, Clubhouse.
There was plenty of star power in attendance from the worlds of technology, media, music, and more — but it was the politicians who took center stage.
I have summarized below the relevant arguments put forth, and what founders of tech companies might take away from the conversation.
San Francisco (Mayor London Breed, “The Incumbent”)
Mayor Breed had the unenviable position of representing the only city “playing defense” and trying to limit outflows of talent to other geographies. Admirably, she acknowledged many of the city’s challenges, including downtown emptying out and the tech community feeling unwelcome. This was a welcome surprise given the prevailing view that San Francisco officials have often pretended the tech community’s gripes were make believe.
Unfortunately, the solutions Mayor Breed offered to these issues were unlikely to inspire confidence in those debating whether to stay or leave San Francisco. The cliff notes version:
Appealing to loyalty (guilt?) by calling out residents who earned their wealth in Silicon Valley, and are now fleeing in a time when the city “needs them”
Claiming that further raising taxes on the wealthy will be an important part of the solution (taxes are already substantially higher than in Austin and Miami)
Building significantly more housing units — but in the same breath blaming our inability to do so on the Board of Supervisors without offering up a solution
Reading between the lines: Mayor Breed played up the Bay Area’s natural beauty (valid), top universities (valid), and dating scene (what?). But many listeners identified a notable omission from most of Breed’s commentary — the fact that despite recent momentum shifts, Silicon Valley’s tech scene continues to dwarf all potential challengers.
Miami (Mayor Francis Suarez, “The New Kid on the Block”)
Mayor Suarez came out swinging with his usual playbook of hustle and optimism. He started with what can best be described as his “Twitter stump speech” on actively recruiting tech and finance leaders, great weather, and low cost of living.
Suarez continued to hold his own when pressed beyond his go-to talking points. Most thoughtful was the stark contrast he drew between the building codes in Miami vs. San Francisco that will enable Miami to scale up affordable housing in a way that SF never did. He also noted that Miami recently passed a $400M general obligation bond, approximately 75% of which will be directed toward climate change solutions and affordable housing initiatives to stay ahead of gentrification.
While Miami’s ability to execute on these issues is yet to be determined, it is impressive that Mayor Suarez has given real thought to the early criticism that Miami is headed towards becoming a playground for Silicon Valley’s ultra-wealthy, destined for the same gentrified fate that San Francisco has fallen into in recent years.
Reading between the lines: Mayor Suarez has made it clear as day that if you are a technologist or an investor, he actively supports you moving to Miami. The appeal to Bay Area professionals who feel politically ignored (or worse, unwelcome) is obvious.
Austin (Mayor Steve Adler, “The Established Challenger”)
With Mayor Breed and Mayor Suarez talking policy, Mayor Adler brought a different approach to the conversation. He focused on community and culture, and framed the technology industry as one piece of a well rounded city filled with art and creativity.
Although Mayor Adler acknowledged the relative tax-friendliness of Austin vs. Silicon Valley, he quickly pivoted to defining Austin based on a set of shared values rather than a set of policies.
Reading between the lines: If Mayor Breed was “playing defense” and Mayor Suarez was “playing offense”, Mayor Adler was standing at midfield picking dandelions while the game went on around him. It was apparent that Adler does not spent as much of his time thinking about these topics as his fellow dinner guests do. In his defense, a thriving tech ecosystem is likely far less important to the long-term prosperity of Austin than it is to that of San Francisco and Miami.
Additional Recommended Reading
Alex Danco (Shopify) published a long form piece this week entitled “Why the Canadian Tech Scene Doesn’t Work”. The column makes a number of compelling arguments, mainly about the incentives created by the fashion in which early stage Canadian tech startups are financed.
The short version is that (i) Canadian investors are myopic about company milestones, which tends to bound outlier upside outcomes, and (ii) Canadian startups often take government grants that require a clear articulation of what the money will be spent on — a likely-fatal handcuff for many startups that are pre- product market fit.
If you have the time, you should read the full version; it is well-written and far more nuanced than I was able to capture in this space.
Thank you so much for reading this week’s edition of “The Digital Diaspora: Is Tech Really Fleeing Silicon Valley? And to Where?”.
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About The Columnist: Matt Levine is currently the CEO & Founder of ValueTrace, an enterprise software startup built to help Finance and BizOps teams keep their company’s SaaS spend under control. Prior to founding ValueTrace, he worked on the operating team at Andreessen Horowitz, and as an M&A banker advising technology clients at J.P. Morgan.
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