BusinessDallas Who’s who in Dallas High Tech

OUR EXCLUSIVE SURVEY OF THE PEOPLE WHO ARE TRANSFORMING THE DALLAS ECONOMY

Geek is in. Nerd is hip. Techies rule the world and set the style. Engineers with their short-sleeved shirts, open collars, and plastic pocket protectors are so in demand that everybody’s wearing short-sleeved shirts and open collars. Expect plastic pocket protectors to be next autumn’s rage.

In Dallas, the engineers have always been among us. High-tech has been a mainstay of the Dallas economy since the founding of Texas Instruments and Collins Radio. But the engineers toiled away with their slide rules unobtrusively, while all the attention went to the Divine Trinity of Dallas Wealth: Oil, Banking, and Real Estate. Oil is depleted (or moved to Houston), regional banking is a memory, and real estate-in the form of REITs-is just another languishing old-economy stock. Suddenly high-tech is hot, and engineers can write their own tickets. Many of them are tossing their tickets in the trash can and striking out on their own: More of our high-tech entrepreneurs {nearly a fourth) earned engineering degrees in undergraduate school than any other major.

A highly touted study by the American Electronics Association (and how could anyone gel nerdier than that?) and NASDAQ released in May says Texas ranks second in high-tech growth since 1993, adding more than 132,000 jobs through 1998. But by the time the study was announced, the data was already two years old. While it says Texas ranks third in software services with 50,800 jobs and second in semiconductors with 47,300 jobs, it doesn’t even mention the dot.coms. Two years ago in Internet time was the last century. (OK, it was last century for everybody, but it seems more last century to Internet types.)

Last year, the Milken Institute, the Santa Monica think tank founded by former junk bond trader Michael Milken, developed a way of looking at cities as “poles” that attract high-tech industries. Dallas ranked second behind San Jose. “Dallas’ position, second on the index, might surprise,” the Institute noted in its understated, institutional way of reporting, “But with a diversified high-tech base-seven industries out of a possible 14 are more concentrated than the national average-it deserves to be high on the list.” Austin, which often gets more attention than Dallas, didn’t rank in the top 10. “Dallas exceeds Austin’s production by over 20 percent in terms of value of output and exceeds its employment by 4,200 workers,” according to Milken.

Of course, the telecom industry has led the way in Dallas’ emergence as a high-tech center. Dallas has GTE’s global headquarters, as well as the U.S. headquarters for Nortel, Ericsson, Fujitsu, and Alcatel. More than 600 smaller companies serve these giants or have spun off from them as entrepre neurial ventures.

Internetcompanies in Dallas are so new–and popping up so fast-that there’s no accurate count. Forty-six percent of our respondents are dot.coms, split almost evenly between those serving consumers (B2C, in the current terminology) and those serving businesses (B2B).

Who are the people who are propelling Dallas1 growth as a high-tech center?

Surprisingly, even though nearly half are involved in the Internet, our respondents are not kids. Trie average age is 42, with the youngest at 28 years old and the oldest at 67. Only 19 percent of them are Dallas natives; the great majority moved to Dallas for business reasons (or because of their spouse’s job). Bui once here, they’ve made their mark. The majority-53 percent-started their companies in the last three years (which, once again, is why data two years old is obsolete), with the bulk of funding coming either from the principals themselves (36 percent) or from venture capital firms (23 percent).

A 1998 Arthur Andersen study reported that 96 percent of North Texas high-tech companies said business is rising steadily or booming, and 81 percent expected to expand their workforce by 10 percent or more over the next two years. Apparently their expectations came true: The unemployment rate for Dallas in April was 2.9 percent, which is hovering at the lowest in 20 years and has been holding there since it struck bottom in December 1998. (Remember economics class in college when you were told full employment was 4 percent?)

The job market may be incredibly tight, but one of the reasons our high-tech leaders like Dallas for its headquarters is the availability of high-tech workers. “Dallas has an incredible talent pool,” says John Ferguson of epicRealm. In fact, it is one of our key strengths, according to Jeff Rich of Affiliated Computer Services: “Dallas has a highly skilled, motivated, and talented workforce.” Dallas is a hot spot because of “the availability of talent at all levels,” says Brian Walker of ExchangePoint.

The Dallas difference is not just numbers, but attitude. “In Dallas, you’re never broke or busted.” says Targetbase’s Jack Wolf, “just merely between fortunes.” Adrienne Beam of InSite Productions likes the “highly competitive entrepreneurial attitude” and the “high energy environment.” There’s an elusive term if we ever heard one-energy-and yet it was cited more often than any other quality. Dallas seems to be bristling with-energy.



Here are some direct answers to direct questions we put to our panel of high-tech leaders:



Why do you think Dallas is such a hot spot for high-tech comnanies?

“…affordable living and a great family atmosphere.”

-William Hannigan, Sabre Holdings

“The fast pace and how business people are willing to offer help to one another.” -Barry Duman, KMA Interactive

“The amount of talent, energy, and momentum.” -Robert Gibbs, Aperian

“Smart people.”

-Laura Rippy, Handango

“Proactive and pro-business, which, having lived in New York and Boston, I can testify is not a cliché.”

-John Sughrue, Brook Partners

“Opportunity-and the feeling with just about every person I meet that opportunity is available.” -Melisa Anderson, Internetinteriors.com

“Young and aggressive.” -Robert Miller, Digital Globe and The West.com

“Young and dynamic.”

-Sharon Ellis, FurnitureGuide.com

“Central location.” -Tim Riddle, Custom Information Services

“Infrastructure.” -Bill Loughborough, HomeLoan.com

What’s the biggest miscon- ception about the Dallas high-tech industry?

“That Dallas is in the backwaters of high-tech.” -Krish Prabhu, Alcatel

’That it isn’t.”

-Judy Odom, Software Spectrum

“Thai it doesn’t exist.”

-Mort Meyerson. 2M Companies

“We are more than just telecom, chips, and old DOD business.”

-Kirk Hullison, NewData Strategies

“Austin has the highest mindshare when it comes to the web. but high-tech is much larger than just the web.”

-Lee Blaylock, ServiceLane.com

“That all good Internet companies are on the West Coast.”

-Peter Pathos, ThePlanet.com

“No one understands how large it is.” -Vin Prothro, Dallas Semiconductor

“That the city is aggressive in attracting high-tech companies. It could be twice as aggressive.”

-Ray Baron, Baron Communications



What do you think is Dallas’ weakness in supporting high-tech growth?



“Small number of venture capital firms.”

-Lance Cunningham, iChoose

“The city should…encourage venture capital funds from outside to establish themselves with local offices here.”

-Gil Marmot, Luminant Worldwide

“We need someone to stand up and be a high-tech leader and help attract more attention to us and to the city.”

-Kevin Gardner, UltimateU.com

“Physical limitations on how fast accompanying infrastructure can be built out.”

-Charles Hrebenach. WorkNet Communications



“Getting the word out.”

-Peter Gudmundsson, jobs.com



“Lack of coordinated focus.”

-Suresh Mathews, Rare Medium



What one thing could make Dallas better for your company?

“Repeal the Wright Amendment. Important business cities typically have multiple airports.”

-John Ferguson, epicRealm

“An airport on the east side of the city.”

-Terry Young, SixtyFootSpider

“Airport on east side.”

-Kelson Elam. DBK Technologies

“More airline competition.”

-Royce Holland, Allegiance Telecom

“Across the board, more training of potential employees.”

-Rolf Haberecht, VLSI Packaging

“More electrical engineers.”-Chuck Brockenbush, Blue Ware Systems

“More talent.”

-Lee Wright, AnywhereYouGo.com

“Lower costs for technological training and education.” -Luanda Belden, Diverse Web Options

“More venture capital firms.”

-Matt Hawkins, Etail Ventures

“Better transportation systems to reduce congestion.”

-Abid Abedi, Aden Group

“A strong, nationally reputable university.”

-Krish Prabhu, Alcatel

How excited are our panel members about the future? When we asked them whether they were looking to invest in startup companies (we told them not to worry, we don’t have one), 51 percent said yes.

We don’t make any claims about the statistical validity of our study. We merely e-mailed a set of questions to a group of high-tech CEOs we know. Our panel ranges from some of Dallas’ largest employers and some of its best-known high-tech names to tiny little start-ups by people who only hope to someday see their names in lights. Our purpose was not to paint a complete portrait but rather to get a snapshot. We were less interested in the data (although the data is interesting) than in their attitude.

The results are telling. Our high-tech leaders are gung-ho. But they are also practical. They are promoters of their industry, but they also know that in Dallas-no matter what the analysis from the Milken Institute shows-they are operating on their industry’s outskirts, at least as far as venture capital and media attention goes. When it comes to Texas, Dallas may produce the money, but Austin still gets the buzz.

Yet our high-tech leaders’ self-confidence and optimism are palpable. High-tech has deep roots in Dallas. Erik Jonnson and Ross Perot are two of our city’s most famous names, and the business institutions they founded are still thriving. From those roots sprouted a microchip industry in which we are a leader and a computer outsourcing industry in which we are No. 1. Our history as the center of innovation in telecom makes us a natural player in the convergence of wireless and the Internet. Our tradition of encouraging entrepreneurs makes us a fount of new ideas for the web.

Dallas has a way to go, but every city has a way to go. In Dallas, the pieces are in place. All around us, every day, the city’s basic economy is being changed. The basic message from our high-tech leaders is that our city is undergoing one of the greatest-and fastest-economic transformations in any city’s history.

Our High-Tech Panel



Abid Abedi, Adea Group Inc.

Melisa D. Anderson, InternetInteriors.com

Ray Baron. Baron Communications

Adrienne Beam, InSite Productions

Lucinda Belden, Diverse Web Options, LLC

Joel Bines, eLogo.com Inc.

Lee Blaylock, ServiceLane.com

Chuck Brockenbush, Blue Wave Systems Inc.

Lance Cunningham, iChoose.com Inc.

Barry Durman, KMA Interactive

Laura Kelso. uBundle.com

Kelson Elam. DBK Technologies

Walter Engelbrecht, UltimateU.com

Sharon Ellis, FurnitureGuide.com

John Ferguson. epicRealm

Kevin Gardner, UltimateU.com

Robert Gibbs, Aperian

Peter A. Gudmundsson, jobs.com

Thomas E. Haack. Thomas Technologies ltd.

Rolf R. Haberecht, VLSI Packaging Corporation

Daniel D. Hammond. InterVoice-Brite Inc.

William J. Hannigan, Sabre Holdings Corporations

Matt Hawkins. Etail Ventures Inc.

Royce Holland, Allegiance Telecom Inc.

Charles Hrebenach, Worknet Communications Inc.

Kirk C. Hullison, NewData Strategies

Bill Loughborough. Homeloan.com Inc.

Howard LaMunion. ReservedMovieSeats.com Inc.

Gil G. Marmol. Laminate Worldwide Corporation

William L. Martin, White Rock Networks

Suresh V. Mathews, Rare Medium

Morton Meyerson, 2M Companies

Robert Miller. Digital Globe and The West.com

De Wayne A. Nelson, NEXTLINK Communications Inc.

Judy C. Odom, Software Spectrum Inc.

Peter M. Pathos, ThePianet.com

Krish Prabhu,Alcatel

Vin Prothro. Dallas Semiconductor Corporation

Suzanne Rawlins, NewData Strategies

Jeffery A. Rich. ACS Inc.

Tim W. Riddle, Custom Information Services

Laura Rippy. Handango inc.

Jeff Saunders. 360murkets Corp.

John Sughrue. Brook Partners Inc.

John M. Todd, Allied Riser Communications

Brian D. Walker, ExchangePoint

Jack D. Wolf, Targetbase

Robert A. Wood, Shabang!com

Lee Wright, AnywhereYouGo.com

Terry Young, SixtyFootSpider

Top 10

“Tech Poles”

The Milken Institute’s best cities for high-tech.

1. San Jose

2. Dallas

3. Los Angeles

4. Boston

5. Seattle

Washington. D.C.

Albuquerque

Chicago

9. New York 10. Atlanta

“[Dall needs] stron national reputab university.”

-Krish Prabhu

Where did you go to college?

21% UT Austin 11 % Harvard

Northern Illinois Dartmouth Texas A&M SMU

Are you a Dallas native?

Yes: 19% No: 81%

Does Dallas need a research university?

Yes: 70%

No: 11%

Undecided: 19%

Are you a shareholder in your company?

Yes: 98$

No: 2%



If so, what percentage do you own?

Majority

(50% or more)

owner 38%

Shareholder 40%

No answer: 22%

What primary industry are you in?

Internet B2B: 25%

Internet B2C: 25%

Telecom manufacturing: I3%

Services to high-tech industry: 13%

Wireless: 10%

Softwaie:6%

Semiconductor 4%

Fiber Optics 2%



Other:

e-commerce service provide Internet marketing IT solutions ami services global networking services broadband communications services

e-commerce in&astructure

Was your company started in the last three years?

Yes: 53%

No: 47%

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