Part One: What is Regional Transformation and Why Did It Not Happen Here?
The transformation of a region into a successful high technology epicenter brings significant economic benefits including desirable employment opportunities, positive publicity and a number of other substantial benefits rewards.. This type of transformation has occurred in several areas such as Silicon Valley, Boston and Austin, Texas, each of which have realized (and continue to realize) huge benefits from the transformation. South Florida has flirted with regional transformation in the past, but has never fully achieved it. What are some of the factors that can lead to successful regional transformation, and is a successful transformation likely for South Florida?
To effectively achieve regional transformation, a region must develop a complete and ongoing technology and entrepreneurial “ecosystem.” The key here is that a critical mass of all the components required for the successful establishment, growth and eventual monetization of technology and entrepreneurial companies are present in such an ecosystem. These components then set up an ongoing business cycle, with new companies continually being started which then progress and grow and eventually produce a liquidity event (such as a sale of the company or an initial public offering) for their equity holders. Obviously not all companies will succeed, but a sufficient number will thrive and complete this cycle. Ideally each of these cycles will produce a set of wealthy entrepreneurs who then provide financial, management, creative and other support to a whole new generation of young companies and entrepreneurs, ensuring the cycle continues to function.
Why has South Florida not undergone successful regional transformation to date when many of the required components are present? Our region certainly appeared to be heading in the right direction in the late ‘90’s, when it looked like “Silicon Beach” might be the next technology and entrepreneurial hotspot. Full regional transformation did not occur, however, and in some ways the South Florida technology and entrepreneurial communities have not made significant process toward regional transformation in recent years.
There are a numerous theories and opinions as to why South Florida did not achieve successful regional transformation. Certainly the technology/Internet implosion of the early 2000’s was a major negative factor. However, the problems run deeper deeper than that.. The lack of a steady stream of successful technology and entrepreneurial ventures is probably the most significant component hindering regional transformation in South Florida. While there have been a number of technology and entrepreneurial companies in our region that have been very profitable and have enjoyed very lucrative liquidity events, these incidents have been isolated e and do not suggest a continuing pattern of success. This continuous pattern of success is crucial to regional transformation, and it would help to resolve many of the problems that we have experienced. This has clearly been demonstrated in other regions.
One overall pervasive problem has been the significant lack of communication, cooperation and trust among the various components of the South Florida technology and entrepreneurial communities. While it sometimes seems like South Florida is one big city, in reality numerous “silos” have developed that cover and seclude technology and entrepreneurial activities and transactions, and there is often very little if any cooperation or interchange among the silos. This is a generalization, of course, and there are numerous examples of successful collaboration and cooperation down here, but these are largely isolated events. This dynamic has been a substantial roadblock to regional transformation.
Another serious and very frustrating problem is the lack of access to investment and growth capital. We are lucky to have a substantial amount of personal wealth in South Florida, and this should ultimately become a strong advantage for regional transformation. Historically, however, a relatively small amount of this wealth has been available to finance technology and entrepreneurial companies. This situation appears to result from the dynamics of the South Florida population – many wealthy South Florida residents came from other locations, and many of them made their fortunes in businesses other than technology or entrepreneurial investments. Accordingly, a culture of successful ventures in technology and entrepreneurial companies does not exist, and this has led to a lack of availability of access to investment and growth capital. Ideally wealthy South Florida residents should be financing early stage companies both as angel investors and as participants in early stage and seed capital investment funds, but this has not occurred to a significant degree. Since this participation in financing is a key component of regional transformation, its lack of success has hurt this process in South Florida.
Numerous other problems and roadblocks exist. Some of these problems are improving on their own, but this is a slow process and it leads to considerable frustration for entrepreneurs. I have also personally seen several promising local entrepreneurs move to Silicon Valley, Boston and Austin because they perceived these locations would offer better opportunities for the development of their businesses. This perception is the true cost of the failure to achieve regional transformation – we lose promising local companies and entrepreneurs and other entrepreneurs refuse to locate their businesses here.
What can we do to to fix these problems and achieve successful regional transformation in South Florida? Is such transformation even possible? More discussion on these topics and some possible answers will come in Part Two of this blog post.
For more information about Robert C. White, Jr., click here.
« Return to Gunster’s Focus on Florida
