Startup City: Panama
This post responds to Balaji’s post on 1729.com called Miami Tech Week: The Start Of Startup Cities. They selected my response as a contest winner, so I won $100 in Bitcoin.
Panama was born like a startup out of the Panama Canal. Since its inception, Panama has experimented widely with Startup Cities. In this post, I will expand on trends like the increase in remote workers, how cities must adapt to them, the definition of startup cities, Panama’s success with Startup Cities, and Porta Norte — the Startup City I am building.
Geographic Independence Enabled by Remote Work
The Covid-19 pandemic dramatically accelerated the adoption of digital infrastructure worldwide. Lockdowns forced remote work on most companies. Now, as we reach herd immunity, companies have a choice whether they go entirely physical, remote, or something in between. As we all know, many more companies are now remote than before the pandemic.
CEOs who choose to go remote are unlocking new features like attracting more talent from a bigger talent pool and reducing costs by avoiding paying for office space. Remote employees can avoid commute and choose to work from ideal places.
The number of remote workers has spiked worldwide, and it is not going back to how it was before. It will be something in between, but as the digital infrastructure continues to improve, the market of remote workers will continue to expand.
Remote workers can stop thinking about their company’s location and relocate to places that offer them the highest quality of life. They can do arbitrage by earning in the US and spending in Latin America. Newly minted remote workers are weighing options with some of the following questions:
- Is it safe?
- Is there good food?
- Can I satisfy my hobbies?
- Can I adapt to the culture?
- Can I connect with nature?
- Do they embrace foreigners?
- Can I find like-minded people?
- Can I get a resident visa quickly?
- Should I move closer to my family?
- Are there good schools and universities?
- Can I get a direct flight to my hometown?
- What city gives me the best bang for my buck?
Nowadays, remote workers go online to compare and contrast what cities are best for them to visit and hopefully relocate. They use websites that rank countries like nomadlist and teleport to inform themselves. It is a similar process to how people choose vacations or universities.
Remote workers are essential for cities because they are educated, bring know-how, are tech-savvy by default, and many more reasons. Immigration of talent leads to a higher productivity per capita, increased tax base, and results in a virtuous cycle — great citizens attract great citizens.
City as a Product
Talent is the leading indicator of a great organization. A great company is a group of talented individuals led by a talented CEO; a great city is a group of talented citizens led by talented leaders. To improve any organization, you must improve the individual contributor and recruit more talent.
Lee Kuan Yew, the founding father of Singapore, focused on improving talent as he led Singapore from rags to riches. He often spoke about the importance of education, interbreeding amongst intelligent people, and attracting foreign talent.
Singaporeans, if I can choose an analogy, we are the hard disk of a computer; the foreign talent is the megabytes you add to your storage capacity. So your computer never slows down because you got enormous storage capacity.
— Lee Kuan Yew
Recruiting is more relevant than ever before. It is an effective strategy for elevating the talent pool. Cities must align incentives with remote workers. They must be pro-technology, pro-immigration, pro-capitalism, pro-diversity, and proactive.
If successful, the concentration of remote workers leads to increased production of startups, which begets a startup ecosystem that leads to a Startup City.
What are Startup Cities?
Here I am going to expand on Balaji’s definition:
- A city where startups happen along with thriving startup ecosystem like San Francisco and New York. In the pandemic, Austin and Miami have positioned themselves as THE next place.
- A city that acts like a startup with a clear vision and competent governance. A great example is Miami, where Mayor Francis Suarez is serving as the CEO of the City. For him, Miami is the product he iterates. He listens to feedback from startup founders, signals the acceptance of bitcoin, recruits through Twitter, etc. A CEO of the City delivers results and positions their city as a great to move.
- Urban development with startup DNA are projects with a defined territory focused on delivering economic growth or a better way of living through an innovative vision. They are public or private enterprises, public-private partnerships, for-profit or non-profit, or a combination. Some examples:
- Neighborhood Upgrade some examples of upgrades are Panama’s Historic District, through better infrastructure and fiscal incentives, Wynwood through art, and Times Square, through removing cars. Usually, there is a combination of public investment towards infrastructure and private investment towards buildings.
- Master-Planned communities are mixed-use neighborhoods with a large number of recreational amenities. They tend to have sports centers, lakes, parks, public spaces, playgrounds, swimming pools, stores, restaurants, businesses, schools, universities, cultural centers, medical centers, etc. They are greenfield development — building in undeveloped land. They must push the envelope of what is possible with urbanism and have a strong vision like being car-free, an eco-village, off the grid, etc. Examples: Cayalá, Celebration, Culdesac, Kalu Yala, Las Catalinas, Porta Norte, and Punta Mona. The typical pattern amongst these places is active public spaces and walkability, which, unfortunately, is uncommon.
- Special Economic Zones are geographically limited places with regulatory, fiscal incentives, and trade laws that differ from the rest of the country to foster economic and/or cultural prosperity. Examples: Prospera and Shenzhen.
- Seasteading means living on environmentally restorative floating islands with some degree of political autonomy. The term derives from homesteading, which means making a home for oneself in uninhabited places. It generally has associations with self-sufficiency and a frontier lifestyle.
- Micronations or Microstates are small sovereign countries or colonies. Examples: Liechtenstein, Monaco, and Vatican City.
Panama is a country of immigrants with a long history of experimenting with Startup Cities. Many businesses choose to settle here because:
- It is peaceful.
- It has good quality of life.
- Our currency is the dollar.
- It has open immigration laws.
- It has a robust financial sector.
- It has been a politically stable country.
- It is a tax haven with many fiscal benefits.
- It has a great relationship with the United States.
- It has a strong logistics sector with the Panama Canal and a big airport.
The following are some examples of Startup Cities in chronological order.
Panama Canal Zone was an unincorporated territory of the United States surrounding the Panama Canal. The United States enabled Panama’s independence from Colombia to build the Panama Canal in 1903. They kept some land and set up a Microstate that infused Panama with American culture.
Colón Free Trade Zone is the largest free port in the Americas and the second-largest in the world. It started operations in 1948 and occupies 600 acres (242 hectares). It is a Special Economic Zone with fiscal benefits for importing and exporting.
In 2017, the government expanded some of the benefits of the Colon Free Trade Zone to Colon City. It is a Special Economic Zone and a Neighborhood Upgrade called Colón Puerto Libre.
City of Knowledge (Ciudad del Saber) was born from the idea of converting some former American military area located in the former Panama Canal Zone into a center for knowledge exchange. It is a Special Economic Zone and Master-Planned Community of 296 acres (120 has.) full of academic organizations, technology companies, and non-governmental organizations run by a non-profit foundation.
Panamá Pacífico is a former United States Air Force Base in the Panama Canal Zone. The government created a Special Economic Zone and a Master-Planned Community as a public-private partnership covering 3,450 acres (1,400 has.) of land. Many multinational corporations have already located in Panama Pacifico, including Samsung, DELL, FedEx, Pepsico, 3M, and Caterpillar, taking advantage of special tax, labor, and legal incentives.
Panama’s Historic District (Casco Viejo) is a Hispanic colonial town where the elite lived. By the 2000’s it was a run-down and insecure neighborhood full of abandoned buildings. The government decided to do a Neighborhood Upgrade by improving the infrastructure and giving tax breaks for development within Casco Viejo. It is one of the most visited places in Panama, and it has the highest price per square meter in the country. I lived there for six years.
Kalu Yala is an eco-village that targets digital nomads and students who take undergraduate courses for accreditation. They are building a new urbanist Master-Planned Community with their strong community.
Selina is a company that has built a network of hostels/hotels that cater to digital nomads. It was founded in Panama and quickly grew around the world with over 60 destinations. Recently they joined Kalu Yala, and you can now book your stay at Selina Kalu Yala.
Ocean Builders is a company experimenting with Seasteading based in Linton Bay Marina, a Master-Planned Community in Colón. They are pushing forward the Seapod, residential pods in the sea, in collaboration with the Seasteading Institute.
The following are essential laws that improve our position as a Startup City:
Law for Multinational Companies (Ley SEM) gives them regulatory benefits, including residence visas to their employees and dependents. Since 2007, it helped attract 175 multinational companies paired with highly educated employees. In 2020 the government added more fiscal incentives to multinationals that did manufacturing.
Law for Free Trade Zones (Ley de Zona Franca) paves the way to create more Special Economic Zones and experimentation with Startup Cities within Panama’s territory. There are 10 active free trade zones and another 10 in development.
Laws to Obtain Residency & Visa:
- Remote Worker Visa: You have to be a remote worker who earns a minimum monthly salary of $3,000 outside of Panama to receive a Visa for 18 months. The government passed this law in May 2021.
- Friendly Nations Visa: Fast-track a permanent residency from over 50 friendly nations. You need to own a Panamanian legal entity, "a business," and temporarily deposit $5,000 into a local bank account. You opt to have Panamanian nationality after 5 years.
- Economic Solvency Visa: Invest $300,000 in real estate and/or a Certificate of Deposit in a Panama Bank.
- Business Investor Visa: Invest $160,000 in Panama’s stock market.
- Reforestation Investor Visa: Invest $80,000 to purchase at least 12 acres (5 has.) of land in a government-certified reforestation project.
- Retired or Pensioned Program Visa: Permanent visa for those with over $1,000 in pensions.
- Marry a Panama Citizen.
I was born and raised in Panama. Since 2014, I have been pushing the envelope of Panama’s tradition of experimenting with Startup Cities by leading Porta Norte.
I am CEO and Town Founder of Porta Norte, a new-urbanist solarpunk master-planned community of 650 acres (262 has.) located in the city’s northern periphery, just 15 minutes away from the airport. Andrés Duany, the founding father of the new urbanist movement, designed the Master Plan.
Porta Norte has human-scaled urbanism integrated with dense nature and adapted for micro-mobility. It has a network of open, public spaces. We believe social interactions in public spaces are essential to fight the loneliness that remote workers often feel. You can get a clearer vision by reading A day at Porta Norte.
Porta Norte has a unique vision, different from what has been built before in Panama. We are incorporating the best practices from Silicon Valley. My hobby for over a decade is watching interviews and reading blogs from Paul Graham, Elon Musk, Naval Ravikant, Balaji, Sam Altman, and Y-combinator founders.
One example of applying what I have learned is the importance of iterating the product. To increase fidelity and feedback loops, we have a developer in-house whose job to put our construction documents in Virtual Reality. Then we gather feedback from our engineers, architects, clients, etc., to do another iteration. The following is a video of our latest iteration:
We build first-world infrastructure with underground utilities, fiber optics, internet in the public areas, cycling lanes, ample sidewalks, tree-lined streets, parks, pedestrian plazas, and much more. It is handicap and pet-friendly. Right now, we are finishing the roads of the first phase.
My most important job is to create a virtuous ecosystem of prosperity by attracting residents, companies, and institutions. We incentivize them with an excellent urban product and private subsidies for anchor tenants like universities, schools, sports centers, hospitals, etc.
After writing this post, I am committed to studying what laws we can use for our advantage as a Startup City and push the idea of making Porta Norte a Free Trade Zone. This is another step towards organizing the economy around remote work.
In Panama, we need to embrace our history of Startup City and continue experimenting towards an optimist and definite future. We must react to worldwide trends like remote work and crypto to position Panama as THE next place.
Please let me know how to do a better job attracting remote workers, companies, and great institutions to Panama and Porta Norte. How can I help?
Read more from the other 9 winners of the contest detailed on 1729.com/miami:
- Do We Still Need Cities?
- So you want to start a startup city?
- A Silicon Valley VC’s Startup City in Asia
- A Decentralised Network of Startup Cities
- How Startup Cities Could Change the World
- Digitalization and the Rise of "Startup Cities"
- Reimagining Remote Work and Startup Cities in a Post-Pandemic World
- The Age of Startup Cities: How Sovereign Individuals Will Build The Future
Join my blog:
Startup City: Panamá (Es)June 2021
In "Desarrollo Urbano"
Podcast #5 - Felipe Echandi - Startup CitiesJune 2021
In "Desarrollo Urbano"
Stefanos Polyzoides on Traditional UrbanismMay 2018