Greater Greater Washington

What is a tech company? How do you build a tech sector?

How do you build a tech sector when there is no such thing as a tech company or tech sector anymore? That's the challenge that DC faces as it seeks to support the recent rise of a tech sector in the District.


Photo by dzingeek on Flickr.

There is unquestionably a cluster of related technology firms growing organically in the District. The challenge is to find ways to support them that are targeted to this cluster. If governmental support for this cluster isn't targeted, we risk wasting money, thus undermining our ability to invest in this sector.

For example, the DC Council is considering sweetening the tax incentives offered to tech companies in DC in order to build a tech sector. The DC CFO, however, says that companies will simply reclassify themselves as tech companies to access these incentives. How can we design incentives that are more targeted?

At the recent DC Tech Meetup forum on government support for the DC technology sector, David Zipper from the Office of the Deputy Mayor for Planning and Economic Development, said that "the city sees this as mostly a semantic distinction". But how can we target precious dollars for a sector that we can't define?

Matthew Yglesias recently claimed that "there's no such thing as a 'tech' company and no such thing as a 'tech' sector" and makes a good defense of that claim. Is Amazon a tech company? Then why isn't Best Buy, the largest online electronics retailer?

Does Starbucks not appear to be a tech company? They just appointed a Chief Digital Officer to consolidate all of their digital technologies, "web, mobile, social media, digital marketing, Starbucks Card and loyalty, e-commerce, Wi-Fi, Starbucks Digital Network, and emerging in-store technologies".

That's why Starbucks is 24th on Fast Company's list of the most innovative companies of 2012, right between Dropbox, Kiva, Genentech and LegalZoom. Should Starbucks qualify for tech tax incentives if they move their headquarters to DC?

It used to be that there were technology companies and companies with traditional business models, but now that innovation is becoming a necessity in all sectors, the line between a tech and non-tech company is becoming blurry. Any company that wants to survive in the future of their sector has to innovate.

Peter Corbett, head of the DC Tech Meetup, once responded to the question whether LivingSocial is a tech company by telling me that what really matters is not whether you sell a software product, but whether you innovate. And LivingSocial innovates.

I think Corbett is absolutely correct. Why is Tesla Motors in Silicon Valley and not Detroit? Tesla innovates. And innovation is what drives a tech sector.

What should DC do?

So what does this all mean for DC's strategy to target support for the tech sector? First, it means that the number of companies that we should target is much broader than it used to be. We should target companies that innovate.

Second, it means that the departments within those companies that we care about are likely to account for a small percentage of the company, like Starbucks' R&D Lab or Best Buy Online. And so incentives should (a) be structured to the size of those divisions, not the size of the entire company, and (b) be conditioned upon the location of those divisions in DC.

That's why it was so important for LivingSocial to commit to keeping its product development division in Washington, DC in return for $32.5 million in tax credits to stay in DC. Only 15-20% of their DC employees actually work in product development, and that's where the innovation is happening. Those are the employees who are likely to jump onto other innovative companies after LivingSocial.

DC can and should help the tech sector. When it does, officials need to first understand the actual benefits that will come to DC, and be careful to design incentives that attract those benefits and don't just throw money away indiscriminately.

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Ken Archer is CTO of a software firm in Tysons Corner. He commutes to Tysons by bus from his home in Georgetown, where he lives with his wife and son. Ken completed a Masters degree in Philosophy from The Catholic University of America. 

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Why not just give the tax breaks directly to the innovative employees (with degrees in STEM). That way we can subsidize the rich.

by MW on Jul 16, 2012 2:24 pm • linkreport

From an outside perspective I guess the most obvious question would be why is the Dulles Toll Road Corridor the de facto place to locate a tech company?

by Kevin Diffily on Jul 16, 2012 2:36 pm • linkreport

FWIW, have you ever read any of the literature on the development and diffusion of innovations? (e.g., Rogers, Moore, Saxenian, agglomeration economies, etc.)

Building a tech sector in DC is hard because the tech sector that spun off the military is centered more in NoVA. DC's business sector is mostly based on manipulation of political access, which because it is based on personal relationships, doesn't lend itself to computerization.

In DC proper, we have weaker computing engineering academic departments, limited low cost rental buildings, a minimal financing infrastructure, and a general business sector that isn't focused on bringing innovation to "market" in either the public or private sector.

So if you want to build a tech sector, I'd focus on the "infrastructure" that supports tech development, especially the university side, along with space and financing.

For now, space wise, even though it's not well located, just rent out St. E's East campus space for next to nothing, and similarly with space that might be cobbled from AFRH, which has an advantage in that it is close to CUA which does have a computing engineering program.

Build from there.

At least a critical mass of poor businesses has the ability to generate forward momentum without a lot of opportunity costs.

by Richard Layman on Jul 16, 2012 2:39 pm • linkreport

D.C.'s locational advantage is that it has become a walking/transit city where people, especially young innovative people, want to live. That is what draws tech firms here, and protecting that advantage should be the priority.

The most important thing to build the tech industry in D.C. is to bring back reliable, frequent weekend and late-night Metro service.

by Ben Ross on Jul 16, 2012 2:55 pm • linkreport

Does DC want a tech sector? The jobs aren't for people who live in Wards 7 and 8. We get the rich people already -- look at Jim Kimsey's Bently double parked on Pennsyvania Ave.

I suspect ONE rasons Tysons/DTR blew up as a technology area is rents were below the GSA minimum. I see a lot of commercial real estate underused in DC , and I suspect they are waiting until they can rent it to the goverment.4

by charlie on Jul 16, 2012 3:05 pm • linkreport

Why would DC try to grow a tech sector, when barely 20 miles across its borders, there is a large cluster of very happy tech firms? The only thing equally stupid would be to try and get a biotech cluster "because DC is so close to NIH".

How about DC find something that is not found 20 miles across its borders?

If DC wants to do anything with tech, I agree with Richard Layman, it should exploit the STEM (science, technology, engineering and math) it has within its borders: the universities, hospitals, advocacy groups (NAS, AAAS, ACS), the Carnegie Institute, the Smithsonian, and NRL. It would be extremely logical to do so. After all, these are some of the largest non-political employers in the city.

As much as people see DC as a political center, it is in fact also a massive STEM center. DC could also be a STEM hub, if it increased its ties with science and engineering centers just outside its borders: NIH, NIST, NASA-Goddard, APL, GMU, UMD, AIP, and I'm sure I'm forgetting some acronyms.

Please someone surprise me and show me DC's STEM policy.

It would not be very hard to set up a successful entrepreneurial STEM policy where DC, in collaboration with the existing STEM players, would help recent graduates to start businesses.

Too bad GW already outsourced its servers to its Ashburn campus.

Giving random tax breaks so small sectors because it sounds fancy is wasted money, and favoritism.

by Jasper on Jul 16, 2012 3:06 pm • linkreport

I agree that it's difficult to define "tech company" and agree with other commenters who are skeptical of the value of trying to focus resources on the "tech sector" (whatever that is).

What would make more sense for DC is to focus development resources on the tech components of existing clusters in not-for-profit/education and the legal industries. Resources DC can provide are not just limited to financial. Sometimes what organization's trying to beef up their tech offering need most is relief from petty ANCs who are denying the greater good to preserve their parochial interests. For example, an easy first step is for DC to facilitate the tech education expansions of Georgetown U. and GWU. Other examples of non-cash help could be helping to facilitate leasing space at St. E's or building transit infrastructure to St. E's once tech companies arrive.

Another principle of helping the tech sector should be that whatever help is provided to that sector should also directly benefit ordinary citizens. For example, establishing a tech educational institution or building infrastructure for tech development at St. E's would have wide benefits that impact citizens, not just companies.

by Falls Church on Jul 16, 2012 3:18 pm • linkreport

"For example, an easy first step is for DC to facilitate the tech education expansions of Georgetown U. and GWU."

You must be new around here.

by charlie on Jul 16, 2012 3:20 pm • linkreport

Why is Tesla Motors in Silicon Valley and not Detroit? Tesla innovates. And innovation is what drives a tech sector.

I think there are a lot of reasons that Tesla Motors is located in Silicon Valley; namely, that's where its founders reside and that's where most of the funding for startups is located. Not necessarily because the company is inherently innovative. Just a note.

by Scoot on Jul 16, 2012 3:22 pm • linkreport

I had a conversation this weekend with two tech geeks who live out in Herndon. They just bought a house there. They bitched and moaned about the traffic on 66 and having to come into Rosslyn. Horror stories of paying $16 a day to park in Rosslyn. I mentioned the Silver Line to them and they said they've never taken metro.

You may not like their attitude. They didn't like mine when I said I walked to work. However, it is pretty typical.

by charlie on Jul 16, 2012 3:31 pm • linkreport

There is one tech opportunity in DC that I think has been more or less squandered, but perhaps has some potential left.

Howard University had one of the original nodes of the National Nanofabrication Users Network (NNUN), a user facility cleanroom which at one time was one of five in which outside researchers and startup nanotech firms could have access to millions of dollars worth of equipment. I know that at one of the other nodes, at Cornell University, there was a constant stream of students from other universities who came to do their fabrication, and additionally, there were well-defined ways for outside commercial firms to use the facility. Startups based on work which had its origin as a student Ph.D. project were encouraged, and there was a "business park" set up to house these startups.

Even ten years ago, cleanroom nanofabrication facilities were rare enough that it was quite common for students even in major engineering programs to need to travel to one of the NNUN nodes to prepare their devices. In the past decade, however, such facilities have mushroomed and most schools with large engineering departments have their own facilities. Nonetheless, places like Cornell continue to draw outside users, academic and industrial, by maintaining cutting-edge capabilities. Howard, unfortunately, not so much.

Howard is listed as one of 14 major centers in the National Nanofabrication Infrastructure Network (successor to NNUN) and the only such center in the area; the closest other node is at Penn State. Of course, there are scores of other facilities not part of the NNIN, such as the Maryland Nanocenter, and any advantage Howard has as a NNIN center is fading fast.

by thm on Jul 16, 2012 3:32 pm • linkreport

Why should government even offer incentives to profit-making businesses? Spend government money making DC a great place to live, where a company can find good employees with the right skills (i.e. good schools) and can pay their fair share and still make a profit.

by John Flack on Jul 16, 2012 3:38 pm • linkreport

I'd rather see a broad based tax cut on the corporate rate rather than anymore tax breaks for specific industries.

by H Street Landlord on Jul 16, 2012 3:54 pm • linkreport

Totally agree with the points made about DC's universities. Seemingly, the former students (myself included...) that stay in DC do so for politics/no-profits/law and likely didn't even study a STEM discipline.

by Ian on Jul 16, 2012 4:00 pm • linkreport

Is Amazon a tech company? Then why isn't Best Buy, the largest online electronics retailer?

This is why Amazon is a tech company. At this point, Amazon's online retail operation is almost a side-business. (Albeit a side business that's constantly innovating)

by andrew on Jul 16, 2012 4:37 pm • linkreport

At this point, Amazon's online retail operation is almost a side-business.

A side-business that still produces the vast majority of their revenues.

by Alex B. on Jul 16, 2012 4:45 pm • linkreport

D.C.'s locational advantage is that it has become a walking/transit city where people, especially young innovative people, want to live. That is what draws tech firms here, and protecting that advantage should be the priority.

The most important thing to build the tech industry in D.C. is to bring back reliable, frequent weekend and late-night Metro service.

Wrong on every single level.

First off, DC's only locational advantage is access to government, especially the military. However, increasingly government IT solutions need to be located outside of the the city itself for security reasons. Its why every single federal agency and contractor now operates at least some of its IT closer to Dulles than the National Mall. Plus, that's where everything already is, so that is where the new businesses will congregate.

What about access to venture capital? DC has none. Unless you think that a tax break from the DC government is venture capital?

So the "young innovative" people who make up the tech sector want to live in walking/transit cities? Since when? Ever been to Silicon Valley? Suburban Boston? Southern California (the center for video game development)? If anything this sector has shown it is nearly always going to be located in suburban areas. They need big office spaces that means campuses that can't fit into cities. Facebook has a NYC office yes, but most of its employees work in Menlo Park surrounded by parking lots.

Metro running after midnight? These are very highly paid people who own cars and drive them. In fact, there is a highly competitive atmosphere in this industry and flashy cars and other "toys" are a big part of that. These people are not relying on public transit.

By the way, ask the people of Rhode Island about throwing public money after a feel good IT company with little prospect of every making a profit...

by dcrepublican on Jul 16, 2012 4:55 pm • linkreport

What brought around the tech sector in Dulles? Was it just companies that wanted to be near AOL? Proximity to the airport? Cheap rent?

I think transit is a good draw of the city, but it needs to be strengthened. The city should advocate for a new Yellow Line stop by Hains Point, connecting to the Fish Market and the new offices there. And we should advocate for Green Line access to BWI, to make the land on our Green Line stations more valuable.

by Michael on Jul 16, 2012 4:57 pm • linkreport

Jasper, one acronym you left off in the outside of the city arena is USDA and their experiment station in Beltsville. Although for obvious reasons, technology innovation in that sector is driven from the farmer utilization side. (E.g., I just read a pretty amazing article somewhere about John Deere and GIS/IT integration with their equipment + farm management.)

Scoot -- I sorta disagree with you about Tesla and Detroit (and I am from Detroit). Yes, Tesla isn't in Detroit because Detroit no longer stands for innovation in automobile manufacturing.

At the same time, yes Silicon Valley is home to the largest grouping of start up financiers, plus the software end. But at the same time, don't forget HP and the basis of manufacturing out there (Fairchild, Intel, etc.) + aerospace in Southern California.

Yes, I think some of the tech financiers have a lot of hubris in terms of their belief that they can transform the energy sector, still, Stanford has been focused on energy technologies in their various engineering departments for a long time. Berkeley too probably. And you have ag technology at UC Davis and CSU Chico. Etc.

by Richard Layman on Jul 16, 2012 5:04 pm • linkreport

I see a lot of commercial real estate underused in DC , and I suspect they are waiting until they can rent it to the goverment.

Basically this.

there is a highly competitive atmosphere in this industry and flashy cars and other "toys" are a big part of that.

Actually, the exact opposite-- flashy cars are essentially the height of tackiness in the tech industry.

In any case, the greater DC area has a huge tech industry of its own, unique kind, but it's not the kind that's really conducive to a venture-backed startup model that has office space in DC proper. That's just what it is. There's a huge lack of repurposable office space that is unwanted by high-paying clients (something Boston/Cambridge/Somerville has/had in spades), and office space is grabbed up quickly by high-paying lobbying firms, law firms, corporate associations, and government agencies.

There's a niche for defense contracting and various forms of political organizing/social media companies that could exist. The former are always going to be located in the VA and MD suburbs, and the latter are going to be smaller-scale shoestring operations rather than multi-million-dollar companies.

More crucially, there's simply a lack of smart people in DC with a hardcore technology background. I mean, in all seriousness, why would they come here when they could go elsewhere? The personality type that ends up working for the defense contractors are precisely not those who are going to want to live and work in DC proper for a startup.

This whole series of "how do we build a tech sector in DC?" posts is ridiculous. More important is, "how do we encourage economic development beyond government, law, and lobbying?" and then whatever pops up in the city is something we should consider fostering further.

by JustMe on Jul 16, 2012 5:09 pm • linkreport

"What brought around the tech sector in Dulles? Was it just companies that wanted to be near AOL? Proximity to the airport? Cheap rent? "

first, a lot of DoD contractors, including system integrators etc, moved to Tysons, as a good location with highway access, between Dulles and the Pentagon. Second a lot of aerospace firms moved to be near Dulles (but not too far from the Pentagon). That was all before the telecom/internet firms moved up that way, I think.

by AWalkerInTheCity on Jul 16, 2012 5:10 pm • linkreport

"Ever been to Silicon Valley?"

Redwood City, years ago. Anyway, my understanding is that for some time folks have been reverse commuting from SF to the Valley and that in recent years firms have been locating in SF, both for the reasons mentioned above.

http://www.sfgate.com/realestate/article/Allure-of-city-itself-a-factor-in-S-F-s-tech-boom-3483078.php

by AWalkerInTheCity on Jul 16, 2012 5:16 pm • linkreport

All the big tech companies are in Silicon Valley, not SF. SF is too expensive and too hard to commute to. Some young, single workers may prefer to live in the city, so it may work for some small startups whose employees are in their twenties. But most married workers with kids are probably going to want to live outside the city, where housing is more affordable.

by Bertie on Jul 16, 2012 5:34 pm • linkreport

@Bertie

If you are going to make rash generalizations, and use words like "probably" in reference to people on the other side of the country, in an industry you "probably" have little knowledge of, please don't call out other commenters for their lack of citations and such.

The sword cuts both ways.

Also, take another look, there are plenty of large tech companies in SF. Yelp to name one.

Oh, and I think you are wrong. I think people are moving to the city, and the type of technology worker that you are referring to will increasingly look to live in a place like SF or DC.

by Kyle W on Jul 16, 2012 6:17 pm • linkreport

I don't consider Yelp to be a large tech company. I'm talking about Intel, Google, Apple, HP, Facebook, Yahoo, eBay, etc. They're all in the Valley, not SF. Apple is building its huge new headquarters in Cupertino. Facebook recently moved into its new headquarters in Menlo Park.

As I said, SF may be attractive to certain young, single workers who don't mind sharing a townhouse or paying exorbitant rents for small apartments, but people who want a decent house of their own, especially married people with children, are going to look elsewhere.

by Bertie on Jul 16, 2012 6:54 pm • linkreport

...in an industry you "probably" have little knowledge of...

It would be a mistake to make that assumption.

by Bertie on Jul 16, 2012 6:58 pm • linkreport

people who want a decent house of their own, especially married people with children, are going to look elsewhere.

Yes. They will live in Dublin and take the BART into downtown SF.

Silicon Valley is actually suffering from the problem that it is so hard to commute anywhere that you can only draw employees from the local area. So if you start a company in Palo Alto, you're sort of limited to the immediate area around Palo Alto, and so on. Apparently this has become industry specific, where one part of the bay area is a good place to start a networking tech company, because there are plenty of available employees there who don't have to commute to far, while another part of the bay area is better for mobile device companies for similar reasons, and so on.

by JustMe on Jul 16, 2012 7:18 pm • linkreport

"What brought around the tech sector in Dulles? Was it just companies that wanted to be near AOL? Proximity to the airport? Cheap rent?"

Read:
Internet Alley: High Technology in Tysons Corner, 1945-2005
http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=11467

Interestingly, part of the early draw of office development in that area was that it was touted as an easy commute from Montgomery County.

by spookiness on Jul 16, 2012 7:21 pm • linkreport

A major factor in the technological prominence of the Dulles Corridor is that Tysons, Reston, and Ashburn are literally the epicenter of the internet from a technical perspective. Especially Ashburn, where a lot of extremely critical switching infrastructure is located. This was a result of cheap rents, investment incentives and some extremely foresighted local planners who were willing to provide the necessary infrastructure.

Also for companies like IBM and Accenture, proximity to a major international airport is a big plus.

by Phil on Jul 16, 2012 8:08 pm • linkreport

@ thm:a user facility cleanroom

I actually did not know about Howard's cleanroom. But UMD has one. User accessible. Georgetown has one, and is building a new one in their new science building. User accessible. NRL and NIST both have massive (and underused) cleanrooms, but they're harder to get in. Still doable with careful planning, good connection and preferably American citizenship.

So, plenty of cleanrooms around.

My grad-school (located in a rural area) actually worked with the local government and managed to turn into quite a successful incubator for small micro- and nanotech start-ups.

The government gave students a cheap modest loan (basically a modest salary for a year), and the university would give the students a room, plus indoor rates for access to the labs, first-license rights to certain IP - usually developed by the students starting the company themselves.

The investment was cheap enough that the failed companies did not cost too much, but some of the successful ones now have tens of employees. And that in the region that is only had agriculture. Meanwhile, the university benefits because after the first year, these companies keep coming back, paying external rates for access to the labs (and new employees).

One of the companies that came from there created a 3d motion sensor that ends up in a lot of runner's shoes and was used by Hollywood to track realistic motion for animated movies.

by Jasper on Jul 16, 2012 8:25 pm • linkreport

One area to look at that's is supporting tech development is Pasadena. Of course, it helps that they have Caltech right there, but groups like idealab an d CALSTART make a huge difference for startups. Ther are, I believe a number of similar groups around the LA area that are successfully helping young businesses get off the ground and. Believe the local governments are involved in their work. It might be worth it for DC to look at what works and what could be applied here.

by Alex on Jul 16, 2012 8:41 pm • linkreport

@Kevin

One of the reasons the Dulles corridor is such a massive draw for tech companies (think sheer IT job numbers), is the availability of carrier neutral data centers.

Which of course leads to cheap connectivity for companies. If you're looking for a carrier neutral facility in DC proper, you've got one - CoreSite 1275K which is pretty much at capacity.

XO and Cogent do absolutely nothing with their telco style data centers scattered throughout the city. No one is going to dump servers in a place with open relay racks and single provider.

Get some IX's in the city with carrier neutral facilities and you'll see a lot more companies starting to locate jobs within the city. Real estate too expensive? Not really. Look at NYC (60 Hudson St, 25 Broadway, ...) and Chicago (350 E. Cermak, Chicago Board of Trade Building, ...).

350 E. Cermak handling almost all the traffic for the midwest.

[OT: Going slightly OT but 350 E. Cermak is an awesome building. It used to be a giant newspaper printing building and was converted to a data center. Pics > http://6me.us/Zgqjg ]

Going a step further, I'm not sure what DC needs is Web 2.0 companies. That bubble is going to burst. Your workforce is also very mobile, as in they can pack up and move if someone gives them a better deal elsewhere. Web 2.0 is 90% marketing, 10% tech. This won't happen with larger infrastructure companies.

If DC wants to become like Reston or Ashburn, throw money at Equinix and get them to open a huge IX in DC. You get peering, then you'll get the content companies to come here and locate facilities inside or very near the city.

You'll get the infrastructure jobs which pay everyone from construction works, security guards, electrical engineers, sys admins, networking guys, programmers, etc. You'll also get the benefit of better connectivity for the city.

So ICANN has offices right next to Google in DC and they're having to send their employees out to Reston (Reston Parkway area) almost daily (where anycast roots L sits). If not for political reasons, they would likely already be out there with ARIN and ISOC.

by Will on Jul 16, 2012 8:42 pm • linkreport

Phil responded before I did about the tech. infrastructure in Ashburn. MCI... Plus because of the Pentagon and other military installations in Northern Virginia some really hard core telecom capacity (cf. the fiction book _7 Days in May_ for some ideas about the importance of telecommunications infrastructure) was in place.

WRT Silicon Valley vs. SF, probably there is a scalar difference in type and size of company, e.g., the SV companies are a preponderance of the Internet plumbing, even if they are at the application level, these are high level apps (like Google) vs. secondary kinds of applications like Yelp, places that aren't going to be gargantuan, fit well in the center city.

But that's fine.

The other thing is achieving critical mass of clusters that are regionally based. It takes a long time to build.

The funny thing though is that this discussion (at least the original posts in this series) does act as if the experience pre-2010 is irrelevant.

All these same discussions happened in the 1990s, the financing especially. Silicon Valley Bank opened branches in Tysons, etc. (I was trying to create a cable tv company that focused on tech...) Mario Morino, the publication _Washington Technology_, creation of the Virginia Center for Innovative Technology, creation of the TJ science high school in NOVA, the various tech councils, etc.

- http://pqasb.pqarchiver.com/washingtonpost/access/24579873.html?dids=24579873:24579873&FMT=ABS&FMTS=ABS:FT&type=current&date=Dec+26%2C+1997&author=Peter+Behr&pub=The+Washington+Post&desc=Information%2C+Please+--+and+More%3B+Mario+Morino+Helps+Fledgling+Firms+Find+Funding%2C+Advice&pqatl=google

- http://pqasb.pqarchiver.com/washingtonpost/access/35797770.html?dids=35797770:35797770&FMT=ABS&FMTS=ABS:FT&type=current&date=Nov+09%2C+1998&author=Shannon+Henry&pub=The+Washington+Post&desc=A+High-Tech%3B+Hothouse%3B+Mario+Morino's+New+Building+in+Reston+Will+Be+a+Hip+Home+for+Internet+Start-Ups&pqatl=google

Gosh, the failure of TechWorld in the late 1980s. That building was supposed to be the basis of technology companies and building a tech base in DC proper. Of course, then the real estate market in the city totally sucked.

- http://pqasb.pqarchiver.com/washingtonpost/access/73896583.html?dids=73896583:73896583&FMT=ABS&FMTS=ABS:FT&type=current&date=Sep+02%2C+1989&author=David+S.+Hilzenrath&pub=The+Washington+Post+(pre-1997+Fulltext)&desc=Techworld+Plaza%3A+Searching+for+Identity%3BConcept+of+D.C.+Complex+Changes+to+Mixed+Use+to+Attract+Tenants+Techworld+Plaza+Searches+for+Tenants+and+a+New+Identity+in+Downtown+D.C.c&pqatl=google

Of course during the first Internet boom and the pre crash MCI/WorldCom various rollups, PSI, (remember Kozmo?), Network Solutions, etc., there were crazy valuations. If the crash hadn't happened, probably the area's tech. businesses may have reached self-replicating critical mass, although yes, they'd have been centered in NoVA.

The big problem is that viable businesses get purchased by companies generally not from around here, not unlike how investment banking (other than that in SF/SV) outside of NYC ended up getting acquired, e.g., Alex Brown in Baltimore no longer exists.

by Richard Layman on Jul 16, 2012 9:00 pm • linkreport

DoD is not the only big govt tech customer, but the other agencies probably have more mundane needs. DC is not a hub for engineering schools and even that is no guarantee. Cleveland (where biomedical engineering first took off) and Pittsburgh are not major tech hubs despite having first rate tech universities. Route 128 has had ups and downs and Atlanta's second string tech belt quickly vaporized in the early '00s. The techies I've known in DC service specific sectors or happen to live here while working in the 'burbs. Good paying jobs of all sorts--skilled blue collar work, professions tend to go where there is a pool of workers and access to markets. It's pretty unlikely that all the incentives in the world will grow qa big tech sector here.

by Rich on Jul 16, 2012 9:16 pm • linkreport

Dupont Circle is starting to blow up with small start ups. It is a vibrant area that appeals to younger entrepreneurs.

by NikolasM on Jul 17, 2012 12:21 am • linkreport

Let's be clear why MCI and other telcom firms started to cluster around DC. Yes, Pentagon contracts helped.

However, it was lawyers. MCI was a law firm functioning as a telecom firm in the early days befor the first big win against ATT. You had to lawyer up -- hard -- to fight ATT back in the day.

MCI famously hired every firm in DC so ATT would be conflicted out. It didn't matter to ATT since they could build up on the largest legal departments in the country at the time -- much like IBM.

by charlie on Jul 17, 2012 8:01 am • linkreport

Remember when XM radio came into DC? I forget if they were given any incentives. But did their presence help bring more radio/entertainment jobs to DC? I think they get partial credit for bringing life to NoMA.

by Michael on Jul 17, 2012 2:01 pm • linkreport

A "tech company" could be anything, and a half-way decent lawyer could make many companies "tech" if the incentives were enough. I think this misses the point: the city should be focusing on attracting people to DC based on their fundamental strengths, not handing out candy to the flavor d jour.

by SJE on Jul 17, 2012 2:43 pm • linkreport

wrt XM, DC has a lot of tv production because of news. But the industry is so focused on cost reduction that it becomes difficult to develop broader infrastructure. A lot of the support companies (Atlantic Video, etc.) go out of business. Not many shows are run out of DC (e.g., Atlantic did a couple ESPN shows for awhile, which helped them a lot).

So with media you have PBS, NPR, Discovery, BET, and the XM part of Sirius. XM started here I think because of the need to deal with FCC for frequencies and some of the people who started might have worked for Comsat/Intelsat or related companies.

It's hard to develop critical mass vis-a-vis NYC and LA.

by Richard Layman on Jul 17, 2012 4:39 pm • linkreport

The most important thing to build the tech industry in D.C. is to bring back reliable, frequent weekend and late-night Metro service.

That is laughable. Tech firms are here first and foremost because of a certain five-sided building located in Arlington County.

Better to make DC a good place for all businesses, not just the politically (or socially) popular ones.

by WRD on Jul 17, 2012 10:37 pm • linkreport

I liked this post and meant to write earlier. My view: Most incentives are defensive. They're needed because DC is competing with other locations. But I don't know if DC needs to worry about this so much.

First, DC is developing a healthy tech sector without targeted incentives. Second, it's biggest attraction - a talented, high-skilled workforce - can't be improved by tax incentives. Third, the DC Metro is an ideal location to live, work and conduct international commerce.

That said, I like the direction NYC is taking. What helps make Silicon Valley hyper-successful is Stanford and UC Berkeley. NYC is investing in its Innovation Island (which has already been discussed on these pages) in an effort to help replicate this strong academic-to-successful start-up link. That's where I think the focus should be. How connected and aware are DC's universities, Howard, GW, Georgetown, AU, etc., to DC's emerging tech sector?

None of this discounts the benefits of some targeted tax incentives, but I think economic development policy can cover this generally. Such a policy, already in place, doesn't have to try to make sure a certain company plugs in perfectly to a definition developed by a committee.

All DC has to do is make sure that people are aware that it has a tech sector, and that it has all everything a tech sector company needs to be successful: Great infrastructure, world-class education opportunities, a highly-skilled and educated workforce, and global transportation links. The list of cities in the U.S. that can truly match what DC has is a short one.

by kob on Jul 25, 2012 2:22 pm • linkreport

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