Fulfilling Miami’s potential
Business & Investment speaks with Chairman of Miami Downtown Development Authority, Marc Sarnoff, who is optimistic that the city of Miami will be the U.S.’ most important city in five years’ time, thanks to a renewed focus on attracting industry and technology
Miami was awarded, “the Best City to do Business in Latin America”, among several other accolades. What would you consider to be the largest contributors to these rankings?
Primarily location and trade, which is Miami’s second biggest economic engine – although many argue the largest is the Port of Miami. Port of Miami, which is what is called PortMiami now, is changing and growing. The Deep Dredge is a critical link between Port Panama and PortMiami.
The tunnel project will keep the trucks from deepening and hopefully healing the scar that trucks had put on the streets of Miami, so there will be a natural healing process for the downtown urban poor but more importantly, the Port will add additional 26,000 jobs in the next four years.
The lawsuits have been resolved so we’ll move forward now. That’s probably the most critical engine now in Downtown Miami. We all stand on the shoulders of our ancestors, and the only reason we’re here is because of Port of Miami. The location of the port makes it the southernmost port in the United States and the closest to Latin America. And, from there, 70% of all port goods are consumed within 100 miles of Miami. So just as important, the spoke, if you will, which is the port and the wheel goes as far as 100 miles; 70% of all goods are consumed making Miami an extremely robust metropolitan area.
What needs to be done in order to attract more companies to operate out of Miami?
I think we need to attract industry segments. For instance, Miami has never attempted to attract technology and yet we have the NAP here – in case you didn’t know there are only five NAPs (Network Access Points) in the world – and we have one of the five here.
And, just yesterday, we created a joint venture between the University of Miami and ourselves called “Launchpad Miami”. Just yesterday, the Mayor of Miami-Dade County, Carlos Jimenez, agreed to partner with the DDA, University of Miami in creating a technology hub here in Miami at the NAP where we will do what is known as incubating. We’re going to start an incubation and acceleration program for technology companies. That’s an industry we didn’t have to begin with.
My philosophy is that any locality, city, or municipality especially needs to have a three-legged stool. We have tourism and that’s already the two legs. You could say another is international banking but not quite anymore because of the 2008 meltdown. It may be quarter of a leg, half a leg.
Legal and medical services could be a potential quarter leg but not medical in general because if you’re just serving your population, you’re not really creating industry, just like a CVS drug store doesn’t create industry. It may employ people but it’s feeding off of something that exists already. You want to bring something brand new. Medical tourism is another story, this presents an opportunity and it could be a leg of that stool.
What I decided to do is go after something we didn’t have previously: technology. Miami’s weakness was technology yet its strength is one of five NAPs in the world. So we’re going to attach to that “Launchpad Miami” and we’re going to have a partnership between the DDA, the Mayor of Miami-Dade County and University of Miami.
The second thing that we’re going to investigate (we just started talking about it so you’ll be on the forefront of this) is what’s called “Hedge Fund Row.” We’re going to try and attract the hedge funds down to Miami. We’re going to find out what it’s going to take or what it would take to attract the 30 largest hedge funds to Miami so that Wall Street will be Wall Street and now, Brickell Avenue will be hopefully Hedge Fund Row.
Talking about the Downtown Development Authority, we know that the objective is to grow, strengthen and promote the various sectors, of how does the DDA work to achieve these goals?
Well, I think that DDA needs to get back to its core function, which is development. For about four or five years, it’s been what’s called a “business improvement” district which means that it’s been using its funding to help improve the services of Downtown Miami and that was as a result of the financial crisis.
But we’re now getting back to our core role and function and that is development. I’m very proud to say it’s the DDA and I that have created the joint venture between the University of Miami and Launchpad Miami so we’re returning to our core role. It’s going to take us two or three years because you want the city to come back and absorb its services that it should have been performing. Downtown used to promote the Downtown.
How closely does the Downtown Development Authority work with the Mayor’s office?
Gimenez is on his first year of being Mayor and he is a Miami boy, meaning, he lives in the city, he was a former City Manager, he’s former Fire Chief so he’s using the DDA as a filter process. In other words, when an idea comes through the DDA, he feels like it’s been filtered, thought about, formed so that he can put his input on it and then he can get behind it.
For instance, yesterday we had a meeting with Mayor Gimenez. He agreed to be a partner with Launchpad Miami and his partnership is $250,000 a year for what’s called an “Incubator Accelerator Program,” where he’ll put $250,000 a year towards startup companies. DDA agreed to put $237,000 a year.
So I always try to say to him, we’re going to bring the same scheme to the game that you’re going to bring down. Though we can partner, I’m nothing compared to him in terms of the volume of what he’s got to work with.
A great example of a project in action is Susan Amat’s, who is integral in Launchpad Miami and is now starting a program called, “Mentoring on the Fly.” She wants to link a businessperson with the businesses being developed here in Miami directly from the airport. It is a mentoring program where you’d mentor for an hour, anywhere from two hours, or maybe just thirty minutes. This is at the American Airlines terminal, where you could put people together and make their two-hour or three-hour layover a worthwhile venture.
Susan has been given accolades by the President of the United States so you’re dealing with a very substantial person. And Susan, yesterday, received a little over $2 million in funding in one meeting so she is extremely happy.
What do you think are the most notable projects and initiatives happening downtown today?
People – I think the two biggest entrepreneurs, they happen to be builders, would be Tibor Hollo and Jorge Perez. They are the architects of Miami, literally and figuratively.. Everybody else is a “filler” compared to them. They put the braces up or they put the great big pillars up and everybody’s a back-filler for the pillar.
Both of their offices are right here, and I call this the “Spoke of Miami.” This is the hub right here and from here, the spokes go out. These are the guys that are building Miami. These are the guys that have I think a deep love affair with Miami.
Jorge just donated $35 million to the Museum of Art. Tibor helped us buy a park on Brickell, 1814 Brickell; both of them are also part of the DDA.
You’ve served in this role for several years and now you say it’s changing from being a business improvement district to a development-focused district. What are your personal goals as Commissioner within the coming year?
I’d like to see Miami creatively like a three-legged stool. I’d like to see a whole new industry come in here whether it’s hedge funds or technology. I think tourism is great and I think it’s a great way for us to build other industries and I think elected officials should start learning and understanding what an industry means versus retailing.
Medical tourism, could be the best thing, but is medicine an industry? A guy coming from Argentina with a faulty heart or a woman coming wanting plastic surgery is what you want for medical tourism. She comes in here, she brings earnings and spends it in Miami and leaves. Yet 15, 20 people now have a job because behind her are 30 other women or men and they keep coming and now you have medical tourism.
Bringing Hedge Fund Row, that’s a real industry too.
What do you think are the biggest challenges? We spoke with a consultant who has worked closely with the Mayor’s Office and she said, “You have a fantastic tourist brand. Now it’s time to communicate that this is a great place to do business.” What is missing here?
What do you say to an artist who is three quarters away done with a piece of artwork but it still doesn’t look beautiful? Just give a little time. Let him finish his artwork. So I’m a bricks-and-mortar kind of guy. Let me build you that building, it will speak for itself. But if you don’t announce the building is there, no one will know about it, so I must get better at messaging.
You can’t only be messaging because you have to have a message worth messaging. I will never announce something that’s not worth announcing.
So, you have to build mass, you have to build buildings, you have to build ideas. I wish it would happen overnight. They don’t happen overnight.
Susan Amat will probably tell you this happened overnight. It took nine months. It took nine months with me sitting in on 14 meetings and willing to continuously change my idea because, to me, bringing technology is I have to get a 20,000-square-foot facility, then I have to have so many desks and then I have to have a rented room and from there, and this is to me how you do it. It turns out that’s not how you do it.
But maybe I’m 52 years old and maybe I think old. I don’t know. But every time I would go through a different permutation on how to do it, I’d always circle around on Susan Amat, and finally I said why don’t I just partner with Susan Amat?
She’s a dynamic woman. I guess I’m talking a lot about her because I’m very proud of this because I don’t think we have brought – in 20 years, someone’s going to say, “I don’t know how this tech sector came to Miami.”
My name may not even be a part of it but I think I’ll know I started it. I think Susan Amat really started it and all I did was lift her up high. She needed a lift and I think we gave her the little lift at the right time at the right moment. The Downtown Miami, this is going to be the most important city in America in five years. And, yes, that is including New York – and I’m a New Yorker, by the way. I was born in Brooklyn, raised in Long Island.
It is a bold statement that “this is going to be the most important city in America.” What role do you think Latin America and its presence here will play in getting Miami to be the most important city in America?
This hemisphere has come of age now. There are parts of this hemisphere that are concerning, like Argentina nationalizing things. It’s not a direction you want to go. Capitalism, like it or not, fits human nature. Hard work, greed, all those things we have, avarice, jealousy, those are all parts of being a human being. Like them, dislike them. Hunger, passion, hatred – it’s all components of being human. Do away with passion, you’re a pretty boring guy. Do away with hatred, nice thing to say, but you probably take away from your passion. They’re all parts of us.
Socialism is sort of like putting your head against the grinder and – yeah, why get up in the morning? Why should I get up before 11 and why should I go to bed before 5 in the morning? Why – if it’s not going to matter a thing to me or make a difference to me – why do I do that?
Capitalism – and I don’t mean to be Ivan Boesky – greed is good. I’m not saying that. But every part of what makes you a human being is also what makes capitalism great because sweat, tears, that’s what capitalism is based on – sweat and tears.
And, unfortunately in this country, as in other Latin American countries, you’re losing some of your capitalist pride and you’re becoming dull because there is entitlement out there, there’s entitlement that’s happening throughout America. It is certainly happening in Argentina, hopefully not happening in Colombia and hopefully now Brazil is saying enough of that because that only brings me 1,080% inflation a year.
Markets have to work and the only way markets work is through capitalism and unfortunately, by definition, in Capitalism, somebody’s on top and somebody’s on the bottom. You want to modify the bottom. You never want it too modified at the top, meaning you want to make it palatable living for the bottom but if you say to the guy on top, you can only earn this much, once again, why does he take risks? Capitalism is based on passion, risk-reward. It’s like a beautiful woman or a beautiful man. Most people desire that. Now, all of a sudden you say, “Oh, no, no, no. There’ll be no beautiful women and no beautiful men.”
There goes your passion. Everybody should have a burning desire to get up in the morning. It’s that same burning desire when you first saw your girlfriend, same burning desire when you first saw your boyfriend. It’s why you live. You don’t live to eat – to go to Starbucks unless you’re in love with the Starbucks guys serving you there. But that makes you through the day. It’s that hour at night. It’s that hour in the morning. You live for those moments. Capitalism capitalizes on those moments. Socialism has nothing to do with it.