Good-bye to All That
Unlike Houston or Dallas, Austin wasn't going to mess up its boom. The city would remain hip, relaxed, unchanged by billions of new dollars. And, of course, the good times would last forever.
As symbols of Austin's high-tech bust go, the unfinished building abandoned by the Intel Corporation is a logical and popular choice, and it's easy to see why. Construction of the $124 million project on the western edge of downtown was halted by the world's largest semiconductor manufacturer in February. Now the spotless, skeletal six-story concrete hulk—surrounded by chain link and barbed wire—lends itself flawlessly to metaphor, serving as indisputable proof to the Wall Street Journal, Fortune, and just about everyone else that Austin's boom has been mothballed. As a joke, the Austin American-Statesman invited four designers to suggest alternative uses for the site. The best idea was christened Casa des Cartas (House of Cards), described by its creators as affordable housing "for downsized dot-com executives [that] represents the tenuous nature of the high-tech industry at this time."
But there is a better symbol of the tenuous nature of Austin's high-tech adventure a mile or two to the east, near the intersection of Interstate 35 and Sixth Street, on the way to the city's flashy new airport. It's the neon-lined clock with wildly spinning hands that adorns the headquarters of Aperian, a medium-sized high-tech firm. Aperian is just over a year old. Its communications director describes the business as "a professional services and systems integration company," which means that it tells other companies what kinds of computers they need to buy and what kind of Internet operations they should have. The souped-up clock, salvaged from the previous occupant, a Tex-Mex restaurant called Don Limon's, is inscribed with the words "Internet Time." It was supposed to illustrate the point that no one was moving forward faster than Aperian. But soon after Aperian went into business—at about the same time tech stocks collapsed on the NASDAQ in the spring of 2000—the meaning of Internet Time changed. In March 2001, for example, Aperian cut its workforce by 20 percent, and its stockholders probably started paying more attention to the boilerplate disclaimer in its corporate literature: "The statements made by Aperian may be forward-looking in nature. Actual results may differ materially from those projected in forward-looking statements." By early May its stock had fallen from a 52-week high of $50.25 to $1.21. But the hands on its clock are still spinning, serving as a dizzying reminder of just how quickly and just how crazily everything went to hell.
Denial is the hallmark of most good times, especially those good times that involve making lots of money. Denial ruled in Houston in the late seventies, when everyone knew that the price of a barrel of oil could never possibly decline; denial ruled in Dallas in the early eighties, when everyone knew that growth would continue and borrowers would never go broke; and denial has ruled in Austin since the mid-nineties, when the high-tech boom brought the New Economy to town and promised to rewrite all the old rules except one: that money would never change Austin. People in Dallas and Houston lost their heads over their booms and therefore deserved the economic catastrophe that followed. But such a fall was inconceivable in Austin, because Austin had the right values. Unlike Houston or Dallas, it had never been graspy or materialistic (in the real estate boom of 1985, one of the richest guys in town was worth a mere $10 million, and he still wore Birkenstocks). It valued its own culture (Willie, et al.) and took great pride in its ecosensitivity (i.e. the sanctity of Barton Springs).
As times got better and better—1997, 1998—Austin's virtue was validated. It seemed to transcend Texas, suddenly having more in common with tech centers like Silicon Valley, Seattle, and the suburbs ringing Boston's Route 128, places where a much younger generation was remaking the future at breakneck speed. American Airlines' "Nerd Bird," the morning nonstop between Austin and San Jose, looked a lot more critical than any Southwest run. New businesses with names like living.com, Garden.com, and drkoop.com were poised to export the Austin ethos—hipness, nature, health—on a global scale. One reason Michael Dell, the founder of the world's largest PC maker, easily bested musty politicians, professors, and developers to become the embodiment of the new Austin was that he understood restraint: Yes, he was spectacularly rich, and yes, he had hired Charles Gwathmey to build his private kingdom on a hill—but you could hardly see Dell's place from the road. It was possible, by assembling the evidence just so, to assume that nothing like Austin's boom had ever happened before. The capital of Texas was going to host a good-taste-good-works boom, and it would last forever.
Everything about this boom looked new and different. The city was overrun with savvy new lawyers, bankers, and investors, while the value of companies like Dell, Motorola, and Advanced Micro Devices exploded (Dell's stock price increased 8,000 percent from 1995 to 2000). IBM paid an unprecedented sum—$743 million—for a small, homegrown software company called Tivoli. "At the time," says one of Tivoli's investors, "that was a 'holy shit' amount of money." The glamour play was on the Internet, where a new crowd of young venture capitalists and even younger technicians was going to discover new applications—though no one was quite sure what they might be. The dot-coms, recalls John Thornton, a general partner in the venture capital firm Austin Ventures, "were building something that was plus or minus unique." What appeared to be unique was that investors could reap millions of dollars, or hundreds of millions, by funding businesses that existed solely in the ether. No one needed a store from which to sell goods anymore, and no one needed to waste money on overhead. All anyone needed was a clever marketing campaign that would steer hungry consumers to cool retail Web sites.
That kind of thinking bred new job titles, a new employment philosophy, and a new language. A person who once made a living writing copy for an ad agency could now earn significantly more, for instance, by performing the same function as an "information architect" for a Web-based retailer. Software companies lured potential executives with $10,000 signing bonuses and enticed high school kids with the promise that, if they worked hard to get the company to the IPO stage—toward "a successful lucrative exit" or a "successful liquidation event"—they wouldn't have to worry about paying for college. Forget medicine or law or even screenwriting; the future lay in toiling around the clock for a company like KD1 ("KD" stood for "Knowledge Discovery"), which sold software that showed retailers that customers who bought duct tape could be induced, simultaneously, to buy light bulbs. KD1 had revenues of under $5 million and sold for $126 million, making some of its employees incomprehensibly rich. The things they bought—Land Rovers, Armani jackets, a supersize Craftsman "bungalow" with copper rain gutters and a home theater—had been luxuries just a few years back, but the Austin boom had transformed luxuries into essentials. "You don't understand the difference between $10 million and $100 million," an exasperated dot-com executive who had made a successful lucrative exit explained to me. "It's jets."
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