Austin At Risk

The Flip Side of the Tech Boom

Former SOS Chair Robin Rather
Former SOS Chair Robin Rather (Photo By Jana Birchum)

So, is high-tech killing Austin? Uh, no. Well, maybe. It could. But it hasn't yet. Or it hasn't killed most of Austin yet. It depends on what you mean by "Austin." You see, it's hard to answer this question, because nobody had ever asked it before. At least not in public. But now they are. Today in Austin, people aren't talking just about "growth," Smart or otherwise. They're talking about growth caused by the explosion of the Central Texas technology industry. Update your conversation-starters accordingly, if you haven't already. It's an important difference. For when the Boom became the Tech Boom, Austinites finally had someone to blame when the noxious waste products -- clogged roads, inflatable rents, dirty air, chain stores, demographic inequities -- began to obscure the wholesome benefits, just as we had someone to blame for the defilement of Barton Springs.

So the leaders of the tech industry, who for the past 20 years have been the golden children of Austin Tomorrow, are now on the defensive. Luckily for Austin, those leaders have not taken Jim Bob Moffett as their model. Rich, smart, powerful, and motivated techies, in numbers stronger than you might realize, are lining up to show up and do their damnedest to keep high-tech from killing Austin.

The reasons are obvious. They, too, love this place. And other people love it -- "love" being a fair synonym for "quality of life" -- and will thus come here, or stay here, to labor within their high-powered and hard-core tech concerns, which depend totally on the talents of their workers. A trashed-out Austin, a Third Coast annex of the once-desirable but now deplorable Silicon Valley, is not in the tech industry's self-interest.

But what can they, or we, do about it? Well, who are "we"? That's the 64-dollar, 32-bit question. When our hills were first sprinkled with silicon, Austin thought technology industries and their "human assets" would naturally blend with what was already here. Instead, we ended up with a whole different "Austin" -- physically, economically, and culturally. And there ain't enough room in this town for two different cities.

If high-tech does kill Austin, it will smother it the way kudzu kills trees. Of course, it doesn't have to go that way. High-tech could save Austin instead. But to do that, we need to figure out how to crossbreed today's two Austins into one brand-new species of community, a place unlike any seen before.

It's Raining Money

So how big and how bad is the Tech Boom? That's like asking "How hot is too hot?" But consider: According to John Thornton, general partner at Austin Ventures -- the largest venture-capital firm in the Southwest -- "in 1996, there was $60 million in venture capital employed in Austin technology companies. In 1999, there was $1.1 billion. Anybody who says they saw that kind of boom coming is either really, really smart -- and has now become rich from his prescience -- or is making it up, which is more likely."

The big boys of technology, as opposed to the startups bottle-fed on VC money, have similar stories to tell. You may have heard about this outfit called Dell Computer, which ran out of room in Austin -- where it has about 12,000 employees -- and moved its latest outpost to Nashville. Then there's 10-year-old Tivoli Systems, another local firm made good. Says Tivoli corporate communications director Yvonne Donaldson, "At the time that IBM bought us in 1996, we had 240 employees and $50 million in revenue. We closed out 1999 with more than $1.8 billion and 5,000 employees worldwide." Two thousand of those employees are based in Austin, a number Tivoli expects to grow to 5,000 within five years.

And so on. So much for big. But how bad is the boom? How bad can success, wealth, and abundance be? "My sense is that the majority of our local businesses are a band of happy campers. The services sector is especially showing strong gains," says Kerry Tate, president of the TateAustin PR firm and former chair of the Chamber of Commerce. "Those who have picked up the pace, captured the most talented workers and held onto them, expanded to meet demand, and utilized technology to do things better and faster, are seizing the day. Those who have not are suffering losses to those who have."

But Tate also notes that, even though "we can argue that many economic forecasters did, in fact, project potential for growth at or near today's pace and levels, we clearly did not use that forecasting to adequately prepare for what was to come. It would have taken a decade, or more, of extraordinary political will to develop adequate infrastructure ahead of time. So now, we find ourselves strapped for the kind of underpinnings to comfortably stand up to this heavier load. We are working now to catch up."

Kerry Tate, president TateAustin
Kerry Tate, president TateAustin (Photo By Jana Birchum)

Even self-described boosters leaven their rosy scenarios with dolor about Austin's failure to prepare for growth, and the resulting "challenges" and "constraints" we now face. But such pessimism is tempered by memories of the bust and how hard that sucked, and those with wider frames of reference find it hard to cry too hard now. "Coming from Buffalo, I've experienced the polar opposite of the boom we're having, where all the people and all the money deserted the city for good," says Capital Metro board chair, UT business lecturer, and original Dellionaire Lee Walker. "For all the problems we have, the opposite is much worse."

At the same time, though, former Save Our Springs Alliance chair Robin Rather -- lauded by the Austin American-Statesman, and not without cause, as a level-headed pragmatist -- is hardly alone when she says, "the 'good' part of the boom is far, far outweighed by the potential for damage. I'm convinced that the boom could be far worse for Austin than the bust ever even thought about being." And it's going to get a lot worse before it gets better.

After all, even with dozens of people moving to Austin every day to work in technology, the industry still faces a critical labor shortage. "There's good talent here, but we need more of it," says Tivoli's Donaldson. "The shortage in high-tech talent is not going to go away. We're going to need to accommodate much more growth and many more people into our community. ... The growth in Austin is akin to how the industry has grown overall."

That's just to meet the needs of existing outfits. Thornton notes that the billions invested as venture capital have now been amply magnified as those initial startups have gone public. "In the next five years, there is absolutely no way that Austin can attract enough people to supply the demand caused by the idea flow. There are more ideas than there ever will be actual companies, because the people aren't here. There won't be a peace dividend. It's never going to get easier."

Not that Austin would have a choice, even if we took up our staves and pitchforks and held off tech migrants at the county line. "The entire economy is in a kind of gravitational pull to high-tech," says Gary Chapman, director of the 21st Century Project at the LBJ School and former director of Computer Professionals for Social Responsibility. "There's a pattern of massive concentration in most other industries, with related downturns in employment. So there aren't many alternatives to high-tech these days for any community. Most [local] economic-development strategies seem to focus on three sectors: high-tech, tourism, and, for some, gambling."

The Million-Dollar Wound

Many longtime Austinites, who remember the now-quite-absurd hoopla over quaint artifacts like MCC and Sematech, may feel we gambled our future on technology and lost. But really, you can even feel this way after having been here for just 10 minutes. "You don't have to spend a lot of time researching Austin -- if you drive from out on RM2222 to downtown once, you totally get it," says Robin Rather, who left SOS to devote herself to the Austin Network, a high-tech CEO roundtable designed to take action on our critical issues. (Rather is also a tech CEO herself, whose Mindwave Research has also boomed in the last two years. For more about her leaving SOS, see "Covering New Ground," p.36.)

"The changes in Austin have accelerated so quickly to create a sense not only of urgency but emergency," Rather continues. "Even people who moved here two years ago see the changes -- the pavement, the traffic, the scary vanishing culture. And even the busiest people see all this change and say 'God, I've got to do something.'"

Meanwhile, the old-timers -- which by now includes everyone who remembers when Lee Cooke was mayor -- are "grieving," in Rather's words. "My husband's musician friends have rents that are out of control, and there's a big backlash. I spent a long time (at SOS) begging Intel not to build over the aquifer, and after the deal broke" to locate the chip giant's research campus downtown, "I got e-mails from people asking 'Robin, why didn't you just run them off altogether?'"

We could go off on this riff all day, but we won't. Let's just say that the backlash does not only flow from the tangibles -- the impervious cover, the traffic counts, the median home prices. There's a perceived attitude shift as well. Tech Austin will probably never be forgiven for "killing" Liberty Lunch, imperfect though that saga is as a fable. And catch the Buffalo Billiards billboard on West Fifth, inviting you to view an about-to-be-struck ball at your IPO-enriched friend's head. Or note this (hopefully ironic) observation in a recent Statesman piece by Patrick Beach: "This is Austin, baby, and if you've got it, you spend it. And if you don't have it, why are you still here?"

Gary Chapman, 21st Century Project
Gary Chapman, 21st Century Project (Photo By Jana Birchum)

Austin veterans fear that tech-fueled, money-lubed "culture creep" will bleach their slice of paradise. But what the Slacker Nation has sustained is what they called in Vietnam "the million-dollar wound" -- the hit that got a soldier sent home to recover in safety. The People's Republic of Austin is just hobbled enough for people to be concerned about its welfare. Meanwhile it's the Old Austin, the folks who brought tech here with great flourish, and whose culture the slackers deigned to counter -- that is taking the fatal hit.

It is almost too apt, if sadly so, that the grandfather of Austin technology, Tracor founder Frank McBee, passed away right as his New Economy descendants were ready to assume the mantle of civic responsibility he wore for five decades. But it is also ironic that the daily, in its memorials of McBee, made great hay of his role in founding the Headliners Club, the seat of Old Austin shadow government. The cultural distance between Tech Austin and the Headliners Club is interstellar.

But the cultural distance between Tech Austin and the new center-left elite can be measured in microns, and despite recent post-Bradley attempts to expel, with much dyspeptic outrage, the resurgently radical environmental movement, as long as technology controls the Austin economy, the progressive "fringe" will always be a hell of a lot more mainstream than the Headliners Club. Or at least it will be until the direct actioneers of the New True Left (the folks who made the World Trade Organization sleepless in Seattle) take on the New Economy here on their shared turf.

Until then, not only the Watsonian centrists but also the progressives are connecting the dots. "The tech industry is simultaneously the problem and the solution," says former City Council Member and SOS co-founder Brigid Shea. "They're driving the growth that's making the financing work for the new office buildings and subdivisions over the aquifer. But they also have the biggest financial stake in preserving quality of life of any industry. So they're the people to partner with on the environment, on transportation, on affordable housing. At SOS, we worked for several years to enlist their support, educate them, and bring them into the tent. And they were incredibly responsive."

Tech Austin denizens, by and large, don't remember the bygone days (like, a decade ago) when MoPac ended at U.S.183, or when a minimum-wage job could pay for a West Campus apartment, or when Bee Cave was really a "village." But they do remember those same days in Silicon Valley, or the Research Triangle, or east of Lake Washington, or southern New Hampshire, and their mission is to keep Austin from becoming another dull-ass, horribly overbuilt tech town. "Without the cultural environment, Austin is just San Jose with trees," says Austin Venture's Thornton. "Without the natural environment, it's just San Jose." Or worse.

Says Rather, "When people come to Austin, it doesn't look like Palo Alto, where there's nothing but chain stores and white people. It's boring as hell, and people who come to Austin don't want that."

Austin's advantage, not unnoticed by the Gods of High-Tech, is that before we were a tech town, we were a town, not an exurban lettuce field. "We have a large university community, the state government, and a well-established culture of music and the arts," says Gary Chapman. "But we need to nurture those assets, and regard them as independent assets, not just handmaidens or attractions to high-tech workers. The tech community needs to look beyond its immediate business interests and toward the long-term goal of creating a community that works, in the broadest sense of that term."

Is Austin a Fixer-Upper?

Enter the digital cavalry. Actually, that may be the wrong attitude to take. "We're talking about issues affecting the entire community," says Jason Fellman, president of the online ad agency FG Squared and a prime mover behind the community-involvement Web site (see "Get With the Program," below). "Everyone benefits, directly or indirectly, from the boom, and everyone has the same responsibility to solve the problems it's caused. It's not fair to pin it on any one group, tech or otherwise."

True enough, but through the "synergy," to borrow a fave New Economy term, of manifest need and obvious power, the tech industry has stepped up to the plate. First breaking the public horizon with last January's second edition of the 360 Summit -- tech potentate Peter Zandan's project to "connect the emerging technology community and to encourage greater participation in Austin's future" -- industry-based social efforts, including the Austin Network,, TechNet Texas, the Austin Entrepreneurs Foundation, and the Austin Social Ventures Project, have snowballed to tackle Austin's woes in a new way. (See "Join the Club," p.34, for more details on these projects.)

UT economist Steven Tomlinson
UT economist Steven Tomlinson (Photo By Jana Birchum)

That's as opposed to tackling them the same old way, through philanthropy and lobbying, which at least some tech magnates are learning how to do. For example, after years of criticism of his apathy toward community issues, Michael Dell alone has now unleashed more money on Austin than it quite knows how to spend. "What is relatively new is the wave of philanthropy we've seen to groups and programs [that are] only tangentially related to high-tech interests," says Gary Chapman. "I hope that kind of giving continues and expands. I think it's a sign of the maturing of the people who have made money in the high-tech field."

But the New Economy, being new, is producing a new concept of "good corporate citizenship" that transcends philanthropy. "There are new opportunities for businesses to be social entrepreneurs," says UT economist, playwright, and social commentator Steven Tomlinson, "and use the tools of technology to improve quality of life in ways that are not mediated through markets. People who've seen it work this way in business can help their neighbors create social value."

Despite the vulgarity and money-grubbing we have all seen, in what used to be a city where people flocked to thrive without wealth, tech people are people -- desiring a higher purpose, and feeling guilty over their piggishness, just like everyone. Even though its self-interest requires social engagement, Tech Austin also listens when it's scolded -- when people like Tomlinson say things like, "It's always the obligation of people in society who are blessed to consider those who lack opportunities. Always. That's just what a spiritually healthy community does.

"Right now, the market has put people with a certain set of mental abilities in the drivers' seat," Tomlinson continues. "Their responsibility is not just to give their money away, which is relatively uninteresting, but to use their talent and charisma and insight to create social wealth. But because the new economy is still hatching, still in this frenzy of Darwinistic sorting, there's very few New Economy moguls who have allowed themselves the time to think about how their ideas and opportunities can serve others."

Therein lie Rules No. 1 and 2 of the new social responsibility. Rule No. 1 is that individual efforts mean a lot more than corporate ones. That's largely because the New Economy is itself steeped in an ethos of individual power -- where teams are "self-directed," labor is "human capital," employees are "assets" -- that's hard to control from the top down even if such was the desire.

"The right focus is definitely at the individual level for anyone who wants to get 'the tech community' involved," says Thornton, who sits on the board of the Entrepreneurs Foundation. "It's amazing how much discussion and debate even a project like the Foundation gets within these companies, down to the receptionist level. It's the people, not the companies, that take action."

And Rule No. 2 is that nobody has any time. "One hundred years ago, there was time for discussion of community needs, and for cause and effect to be observed," says Lee Walker. "Today, we're asking a lot of young people to get up to speed very rapidly on social and communal consciousness. What we need is the system -- a safe place for people to leverage what little time and what great money they do have to make a difference. These guys are so young, and when they have 18 minutes to spare, what's the mechanism that gives them a fulcrum to change?"

The industry's new portfolio of civic ventures aims to create that system, using models, as Tomlinson suggests, borrowed from their own successful enterprises. You have interactive Web content sites like; "hot teams" focused on specific problems spun off from the 360 Summit; philanthropy via IPO at the Entrepreneurs Foundation; social venture capital at the Austin Social Ventures Project; and strategic alliances for social action at the Austin Network. These are out-of-the-box approaches in two senses -- they're different from traditional corporate citizenship, and they're different from traditional public problem solving.

"The right ingredients for civic entrepreneurship, in my view," says John Thornton, "are small teams, working on problems that they're passionate about, in which the members are willing to invest time from the same day they're trying to build a company. Serialization of community involvement behind individual achievement is just a busted model. And so is taking on a sense of civic causes with a sense of urgency that's several levels south of what gets brought to their companies."

Capital Metro board chair Lee Walker
Capital Metro board chair Lee Walker (Photo By Jana Birchum)

This flurry of new efforts sends a not-so-secret message: The old efforts, the old ways that Austin businesses and leaders got together to solve civic problems, weren't cutting it. "It's unrealistic to expect people whose whole lives revolve around speed to work through existing channels that are totally ossified," says Thornton. "We should and should and should -- but we won't."

Many observers see a disconnect between Austin's public culture and the Tech Austin culture, deeper than the difference between real time and Internet time. "I really believe there's a difference between the new and old economies, and to be completely honest, I don't think the old economic structures, both government and nonprofits like the Chamber of Commerce, have done such a hot job recognizing that high-tech leaders operate at a different pace, have their own intensity, and often have different values," says Rather.

"In market terms, there seemed to be a sizable gap that needed to be filled" by groups like the Austin Network, Rather continues. "They sense that what's out there is not exactly working. And in classic venture-capitalist and high-tech fashion, they've seen an opportunity and seized it. We need to get faster, more integrated in our thinking, and more unified as a community, or we're seriously blowing it."

Anyone who's sat through a City Council meeting until 2am, waiting to deliver their three minutes of public passion on an issue that's been dragging through the process for a year or 12, can surely relate. But "I don't see in the cards, ever, that there's going to be a tectonic shift where Austin government is not process-driven," says Walker, who in his Cap Metro hot seat has heard dozens of choruses of "Why don't we have light rail yet?" from high-tech leaders. (A prediction: This November's light-rail referendum will be the first Austin vote where tech-industry money and advocacy are fully deployed.)

"I think what people like me can do is understand the velocity. In high-tech, you need to go from the idea to the marketplace in 90 days or you're chopped liver. In 90 days at Capital Metro, I can't get a resolution to sing a hymn to the Blessed Virgin Mary. As more of these guys get engaged, they'll bring that to bear -- it won't make process go away, but it'll improve it. If we can get something through in four months instead of six months, what's wrong with that? But it'll never be as fast as they are, though, and I just don't think it ought to be. High-tech has this sense that vision is action, and you can't do that in a public arena, because the risk of breakage is too great."

As long as techies are frustrated by the glacial pace, and the insistence on public accountability to absolutely everyone, that characterizes Austin politics, they'll at the very least support politicians like Kirk Watson who likewise fire before they aim. More likely, though, they'll go around the perceived obstacle of the public process. "Institutions need to be competitive just like companies," says Thornton, "and if it becomes clear that an institution makes decisions so slowly that it becomes irrelevant, new channels will spring up. If citizens are energetic and involved and raise a ton of money to support a city-sponsored initiative, pretty soon they'll start asking themselves 'How do we do this without having to deal with the City Council?'"

Which is when, if not before, you will see the earnest new tech-industry apostles of social responsibility getting their asses handed to them on a platter, by people who feel that high-tech already has too much power over their lives. "New Economy companies are now stepping up, but I fear what will turn them away," says Kerry Tate, "is a disposition of blame that they cause our ills, rather than a spirit of cooperation in helping solve them."

Or, as Thornton puts it, "The risk is that tech people will sound like they're reading decrees from the mountaintop -- 'Look at me, I made $250 million before I was 30, and let me tell you what to do.' That brings on the worry that there will be a backlash when people try to help, because they'll do so outside of traditional channels."

But as tempting as it may be, keeping high-tech hands off the levers of public life, because we feel that they've already done more harm than good, is the best way to ensure that high-tech does kill Austin. "It's important to me that, as a community, we don't cave in and say 'We lost it, we missed our chance, it's over.' We need to say that we're behind, but that we can still do what we need to," says Rather. "If people are trying to figure out what's great about the high-tech sector and what it can bring to the community, it's a sense of optimism. It's not over. We aren't going to be just like San Jose."

Says Gary Chapman, "There's so much talk about Austin being at a crossroads, which is true, but no one has yet taken the turn we need to take before us. We'll be the first. We'll be the pioneers. That's why it's exciting to live in Austin right now. A lot of people mope about how we're losing the old Austin, and that high-tech is taking over. But high-tech is taking over everything; we're living in an economic revolution, and Austin is at the center of it. We're on uncharted terrain with a choice to make Austin either a garden or a dump. Having that choice is what makes all the difference." end story

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high-tech, austin network, robin rather, kerry tate, gary chapman, steven tomlinson, brigid shea, 360 summit, growth, traffic, light rail, housing, kirk watson, lee walker

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