Cover Story
Entrepreneurs all over the country are taking matters into their own hands and transforming their communities into wired cities. Here’s how you can compete from anywhere
Over and over again, we keep coming back to the same maxim: When it comes to growing a business, location matters. Traffic and shipping routes, the availability of skilled labor, tax rates, economic incentives, the presence of nearby universities — they all play a significant role in determining whether your business thrives or dives. Now it’s time to add a new ingredient. When you’re thinking of moving, opening a new branch, expanding markets, or hiring telecommuters, ask yourself this: How wired is the place you’re considering? Can you get high-speed access to the Internet? What will it cost you? How prepared is the workforce to toil in a digital world? Is the area up-to-date enough to lure friendly competitors and colleagues with whom you can share ideas, do deals, and attract employees and financing? (Or, hell, just get your network serviced?) What does it really mean to be connected, anyway?
A few months ago, Inc. Technology writers set out to answer those knotty questions. When we began, we thought we’d find the 10 or 20 most digital places in the country and that would be that.
But it didn’t turn out that way. Sure, we can tell you where to find the largest number of domain-name registrations (McLean, Va.) and where the highest number of Web-connected households are (Austin). Practically anyone can name the hip dot-com havens — the Washington, D.C., metro area; Seattle; Cambridge, Mass.; Portland, Oreg.; Atlanta; New York City’s Silicon Alley — and the 80-plus places that have adopted Silicon nicknames, like Silicon Sandbar (Cape Cod), Silicon Swamp (Indiantown and Perry, Fla.), and the 10 Silicon Prairies. Not to mention all the cities that have claimed they’re the most “wired,” like Louisville (“America’s Most Wired City”) and Stillwater, Okla. (“The Most Wired City in America”).
But what we wanted to know went far beyond those sorts of lists. We wanted to find out not just where dot-coms will spring up next, but how you should think about location if you’re not a dot-com. Where should you look if you’re a savvy company that is adopting modern methods of communicating and transacting business with customers, workers, and suppliers?
What we discovered was twofold. First, broadband access — the collective term for rapid connections to the Net by T1, DSL, cable, and the like — is far from ubiquitous, despite the hype. DSL and cable-modem services are available in a meager 5% of towns that have populations of 10,000 or less. Second, all over the country, diverse groups of people are taking matters into their own hands to turn their communities into wired neighborhoods, connected cities, and even digital states. And in the process they are transforming their businesses and improving both the economy and the civic life of their areas.
Why should you care? Because regardless of how low-tech your company might be now, the ability to do business over the Web — and very soon with wireless devices — will radically change your business and your industry. Not grabbing every bit of high-tech communication you can get is fast becoming a competitive disadvantage.
Consider, for a moment, two businesses in two very different parts of the country. The first is run by Darryl Lyons, a third-generation rancher and the proprietor of Lyons Farms, in Okmulgee, Okla. Last year Lyons started raising and selling registered Angus cattle. (If you like filet mignon and want to know the name of the bull that sired your $49 steak, this is the place to go.) Lyons sold about $140,000 worth of cattle and meat to buyers within a 100-mile radius of his ranch in 1999. But with the help of the Web, he expects to sell his animals and beef to buyers in Brazil, Canada, and other parts of the world. He estimates that revenues will climb to $600,000 this year and to $1.5 million in 2001.
But he’s got one little problem to solve before he can get his Web site — www.allangus.com — online. His phone service goes out when it rains, when there’s a “hard snow,” and, he says, “when something critical is happening.” (As if to prove his point, his phone service quit during our interview; he had to call back from a pay phone.) Lyons says that maybe a dozen times a year, the phone goes down for more than a day. Each day it’s down, he loses $3,000 to $4,000 in sales. “When an individual wants to buy a bull for breeding purposes,” says Lyons, “he wants it now.” No phone? No bull.
When we spoke, Lyons was considering ditching his ISDN plans and going for a more expensive and faster T1 line, which theoretically would be easier to install. And he was looking at wireless-phone systems, which he hoped might be more reliable than his weather-challenged local phone service is.
But OK, you say, that’s a ranch in Oklahoma. They have tornadoes there. It’s not a huge surprise that the digital world hasn’t yet reached Okmulgee. Amazingly enough, however, it hasn’t always reached the most urban places in the nation — like New York City, where economic-development agencies and private developers are trying to promote lucrative spin-offs of Silicon Alley.
Flanked on two sides by the massive Brooklyn and Manhattan bridges is a 20-square-block development dubbed with the unfortunate acronym DUMBO (for Down Under the Manhattan Bridge Overpass). Real estate developer David Walentas bought nearly every building in this old manufacturing neighborhood 20 years ago. Now, with the help of the New York City Economic Development Corp. and the Brooklyn Chamber of Commerce, his company, Two Trees Management, is rehabbing its 100-year-old buildings and marketing them to start-up dot-coms and new-media companies.
Into this gritty space moved a little, archly funny, venture-funded company called Modern Humorist. Partners and Harvard Lampoon alumni Michael Colton and John Aboud had every reason to believe that their new neighborhood would be as wired as any spot across the river in Manhattan. After all, the city had dubbed the area a “high-tech district.”
But it was not to be — despite the fact that Two Trees had tried its best to do its homework. Realizing that fast access would add value to its 2.2 million square feet of office and residential space, the company had gotten a variety of private network providers to lay millions of feet of fiber-optic cable both inside and between the buildings. But when Modern Humorist first set up shop, it had live connections to absolutely nothing. No phone. No Internet. (And no pictures on the walls either, but that’s another story.)
The company quickly got Internet access — using a T1 line — with the help of a sweating, cursing, but determined worker from Gillette Global Networks, which had invested more than $500,000 in wiring the neighborhood. But it took more than four months for Brooklyn’s local phone-service provider to hook them up. The problem: Brooklyn is still an outer borough, and DUMBO’s inhabitants — at least half of which are start-ups with fewer than 100 employees — don’t have much clout with the large telecommunications companies, says Joe Chan, a Brooklyn Chamber of Commerce honcho who is marketing DUMBO. And the telcos had been loath to invest in infrastructure for what they thought might be a handful of tiny, unprofitable dot-coms.
Not surprisingly, Aboud says that was the wrong attitude to take. “The new economy, if you believe in that construct, is made up largely of 10-person companies. It’s a start-up world. The degree to which unnamed telco monopolies can be limber and aggressive in servicing those kind of companies, the better for the economy as a whole,” he says.
After relying on cell phones for the first few months, Aboud, Colton, and their growing team of comedy writers finally got the local phone company to activate their service. How’d they do it? They believe it didn’t hurt that they publicized their plight; they told their story to the insider magazine Silicon Alley Daily, which published a parody of its own on the problem. (Ever heard of “Hell Atlantic”?) And they got some help from Chan, who called the phone company on their behalf.
Today, Two Trees and the City of Brooklyn are aggressively promoting DUMBO as the next Silicon Alley. With rents of about a third of what people are paying in Manhattan and the promise of high bandwidth (not to mention high ceilings and terrific views), the area may well live up to its billing.
That kind of thing is happening all over the country as entrepreneurs take matters into their own hands to get themselves wired, like Darryl Lyons, or turn to public-private partnerships, like DUMBO, for their new-economy infrastructure.
Wiring a community can make a world of difference to the area’s economy. In Tacoma, Wash., long a stepsister to glamorous Seattle, the municipally owned electric utility installed a fiber-optic network that covers 180 square miles and in the process brought new businesses and economic vitality to a place that was once bleakly described as “postapocalyptic.” (See ” On the Wired Front.”)
Evanston, Ill., has taken a different tack toward wiring its residents and businesses. A private organization with a mission to make civic life more vibrant, city services more efficient, and businesses more competitive has created E-Tropolis Evanston on the Web. (See ” Parallel Universe.”) Time will tell what effect this virtual city will have on its real counterpart. In the meantime, its developer is fielding calls from numerous other cities that want to build their own E-tropolises.
We also took a look at what’s coming up next. Though a digital infrastructure is necessary for the new economy, it’s not sufficient: what brings about transformation is the people who can create in innovative and collaborative ways. Writer Samuel Fromartz takes a look at the thoughtful teachers who work at the Perry School Community Services Center, in Washington, D.C., helping inner-city kids learn the skills that companies of the future will demand. (See ” Tomorrow’s Workforce.”)
As we discovered, it doesn’t take a large telco or a government agency to get a community wired. Electric and gas utilities, economic-development agencies, chambers of commerce, private developers, and passionate volunteer groups are creating wired communities and helping to make both fast access and 21st-century skills widely available.
What’s truly exciting is that these initiatives are already paying off today, in ways both profound and practical. At the Perry School, 17-year-old Vincent Hawkins, who, as he says, “couldn’t get a job at Blockbuster” before attending the school’s Networked Learning Center, is now inventorying PCs and teaching younger kids how to use computers. And in Brooklyn, John Aboud still sounds just a bit amazed at Modern Humorist’s good fortune. Due in part to the affordability of space in DUMBO — and the availability of broadband connections — Aboud and Colton have the resources they need to grow their company. “By the end of the year we might be up to 15 people or so,” says Aboud. “Certainly, by the third quarter 2001 we will have hired every human on earth.”
Elaine Appleton is the editor of Inc. Technology. Send your comments to editors@inc.com.
Please e-mail your comments to editors@inc.com.
