“Boom” Is a Four-letter Word

Thanks to high tech, the Texas economy is surging—just as it was in the early eighties. So how come nobody wants to talk about it?

JOE LIEMANDT HAS BEEN DOING PRETTY well lately. Last year, at the age of 28, he became the youngest self-made member of the Forbes 400, a list of the wealthiest people in the country. He is worth a sweet half a billion dollars. What is most remarkable about Liemandt’s achievement is that he did not make his money the old-fashioned way: drilling for oil or developing real estate. He didn’t even make his money assembling computers. Liemandt is the founder of Trilogy Development Group, based in Austin, and he made his money designing software programs. As the Industrial Age wanes and the Information Age waxes, high tech is usurping the place of oil, just as oil once supplanted agriculture. Next year for the first time economists are predicting high tech will contribute more to the state’s economy than oil. The rise of technology began with Texas Instruments, grew with Michael Dell, and has now reached maturity with Joe Liemandt. In the past Texans commonly made their fortunes from the land—first with cotton, then cattle, then oil, then real estate—but Liemandt’s success proves that the state finally has a truly modern economy.

The surge of high tech has also coincided with an upswing in all parts of the economy, making the prosperity of people like Liemandt emblematic of the prosperity of Texas as a whole. For ten straight years the state has experienced steady economic expansion. Not every region has benefited equally—thousands of jobs have been lost along the border and in the oil patch—and in the past two years the pace of growth has slowed down somewhat, but the length of the expansion is still exceptional. This period of sustained growth is nearly as long as the eleven-year stretch that culminated with the oil craze. In other words, we’re in the middle of something akin to a boom. So how come we can’t admit it? Well, it isn’t a boom in the old sense. The expansion has been gradual, not jet-fueled. But compared with the debilitating bust of the eighties, the nineties have been good times indeed. Nonagricultural employment in the state, the most widely used indicator of economic growth, has been climbing at an average of 2.58 percent (as opposed to an average of 5.38 percent during the oil boom). Yet Texans feel a widespread aversion to the very word “boom,” which only conjures up thoughts of its corollary—“bust.” “A boom is such a thing as is apt to terminate and go backward,” says Dallas developer Trammell Crow, who nearly lost his real estate empire to his bankers after the bottom fell out of the market in the late eighties. Texas Department of Commerce analyst Branner Stewart adds, “‘Boom’ almost has a negative connotation.”

The current expansion does possess many of the hallmarks of a boom, however, such as increased productivity and low unemployment. After a decade of steady gain, even oil and real estate are once again showing signs of health. Call the cheery good feeling permeating the state the New Boom. It is a cautious, thrifty, highly disciplined, sometimes mean-spirited phenomenon that bears little resemblance to its freewheeling, free-spending older cousin. During the bust, cars displayed bumper stickers that read “O Lord, Please Send Us Another Oil Boom—We Promise Not to Screw It Up This Time,” and the New Boomers tend to make money with exactly that kind of wariness. Joe Liemandt earned his money by designing “sales configuration software,” a tool that allows companies to buy and sell products more efficiently—basically he made a mint by helping others pinch pennies. Despite his net worth, which could easily support several homes, Liemandt doesn’t even own one. He rents an apartment near his office, an austerity he explains by saying real estate isn’t a wise investment.

The New Boom also differs from the old in scale: The biggest winners last time were behemoth companies that employed armies of people, while this boom involves a large number of start-ups that employ just a handful of people. But the biggest difference of all lies in the prevailing attitudes. The Old Boom made us think we were better, smarter, luckier, and richer than the rest of the nation. The bust popped the great balloon of our narcissism; if anything, it seemed to say that we were dumber, unluckier, and poorer. This time around we are prospering in tandem with the nation, and what we have learned is that we are only a little bit better than everybody else.

Boomtown

AUSTIN HAS BECOME THE EPICENTER of the New Boom in the way that Houston was the epicenter of the old one. From 1990 to 1995 Texas led the nation in the creation of high-tech jobs, surpassing California to become the country’s leading producer of computer chips last year. Laid-back Austin is now ringed by factories that process silicon 24 hours a day, 365 days a year. Motorola has become the city’s largest private employer, and the factories have attracted more than 150 equipment suppliers to the area as well.

Austin is also the headquarters of several leading producers of personal computers. There is no more prominent example of Austin’s new af�uence than Michael Dell, the 32-year-old billionaire who became an industry legend by manufacturing cheap computers and selling them directly to consumers. As profits at Dell Computer climbed to $518 million last year, Dell began building himself a Bill Gates—style palace—reportedly a 33,000-square-foot estate with ten bedrooms, twelve bathrooms, and two pools. Perhaps more typical of the New Boom, however, is the austerity of cybermogul Stephen S. Kahng. Four years ago Kahng’s Power Computing Corporation, based in suburban Round Rock, became the first company to manufacture Macintosh clones. No fancy architecture here: When the company ran out of space, he leased a building that had previously held a Wal-Mart. Never mind that Power Computing has been called the country’s fastest-growing start-up; revenues are predicted to hit $700 million this year.

A bevy of smaller firms has sprung up alongside these large operations. Austin

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