All's Dell

So long to slackers and laid-back lifestyles. Now that cash-rich techies have taken over, can Austin survive the great digital divide?

So Austin's gone to Dell, in a big way. That can raise concerns from advocates of economic diversity, and last month's NASDAQ volatility underscored those qualms. While the tech markets and Dell stock have stabilized, Michael Dell himself had $1.25 billion in value drained from his holdings. Austin naysayers have only to point to Houston's reliance on the oil industry in the roaring '70s and the resulting multiyear crash of the Bayou City's economic base.

Jon Roberts, a partner in the economic research firm with former Chamber of Commerce executive Angelos Angelou, stands behind the description of Dell Computer as a public citizen with few, if any, flaws. Arguments that the city is becoming overly dependent on Dell, or on technology in general, are misguided, he says. Roberts, who moved to Austin from Seattle, points to the presence of more than 100,000 Boeing workers in the Washington city, which is otherwise comparable to Austin. "This is not a one-company town," he says. "We have an employment of 631,000 people, and Dell is only at 20-some-odd-thousand. So you're looking at well under 10 percent."

Roberts also points to the way the Austin technology community is composed of four distinct parts: computer manufacturers like Dell, semiconductor companies like Samsung and Advanced Micro Devices, Internet software companies such as Vignette, and the dot-com Internet commerce companies, including Garden.com, an on-line landscaping supply retailer, and Living.com, which peddles home furnishings over the Web. These industries, especially semiconductor equipment suppliers, may be subject to downturns. But the four big Austin tech industries tend to follow different cycles, he says. "People who worry about Dell's influence may be exaggerating a little bit."

Despite Dell's dominance, Jon Roberts says Austin's not a "one-company town.
John Anderson
Despite Dell's dominance, Jon Roberts says Austin's not a "one-company town.
Mona Gonzales leads an effort to get less affluent kids interested in high tech.
John Anderson
Mona Gonzales leads an effort to get less affluent kids interested in high tech.

Local tech veterans such as Gene Lowenthal say there's no doubting that in the last few years the changes wrought by the technology boom have been phenomenal. "There's an old saying that perception lags reality," notes Lowenthal, a high-tech venture capitalist with Sanchez Capital Partners in Austin. He talks about how venture investors are only beginning to catch on to the idea that Austin has investment opportunities, but the comment echoes when he talks about how the tech boom has changed Austin. "It was a small-town feeling," says Lowenthal, his words breaking up as he talks to a reporter from his car through a cell phone over Austin's crowded airways. "Now, it doesn't have that feeling."

Tech goes back a long way in Austin, however, even further than Lowenthal, who founded MRI Systems in 1967. The first technology company in Austin, Tracor, was started way back in 1955 by, among others, a University of Texas professor named Frank McBee. Tracor went public in 1964 and became Austin's first Fortune 500 company in 1984, the same year a UT dropout named Michael Dell started a firm then called PCs Limited. McBee, who ran Tracor during some of its most successful years, died earlier this year. His passing in some sense marked the end of Austin's years as a technological teenager and ascent into full adult geek-hood. And if McBee and Tracor were midwives at the birth of a new high-tech hub, Michael Dell and the astonishing corporate juggernaut he founded in a Jester Center dorm room are the princes of its postadolescence.

You'd never know Dell Computer Corp. is actually based in suburban Round Rock, an exit or two north of Austin. The Texas capital's children's museum is called the Dell Discovery Center, and its Jewish population meets at the Dell Jewish Community Center Campus. The distinctive name and logo dominate countless events, such as the Juvenile Diabetes Foundation walkathon and the annual Trail of Lights holiday display in Zilker Park. It doesn't stop at the city limits either; Nolan Ryan's brand-new Round Rock Express minor league baseball team plays in the Dell Diamond.

Some Austinites feel the Dell imprimatur is decorating a sufficient number of local edifices. Cindy Carroccio is founder of the Austin Zoo, a center for wildlife rescued from unsuitable homes. The funky, homegrown operation recently went nonprofit and almost immediately got a $20,000 gift from out of the blue to help build a lion cage. The donors were a thirtysomething Dell employee and his wife, a retired teacher who now is a volunteer at the zoo and is also expressing interest in doing the leopards' quarters as well. "I'd like to have her cloned," Carroccio confides. But despite her luck with Dellionaires, Carroccio is shy of approaching Dell -- the company or the man himself. "They've done a whole lot for the community, but I would like this to be everyone's zoo," Carroccio says. "I don't think it needs any one person's name on it."

Outside the city Dell Computer is known for making reasonably priced, high-quality computers -- and for the Dellionaires. These are Dell employees, numbering in the hundreds and perhaps thousands, who have become millionaires from shares of Dell stock acquired through options, discounted purchases and outright gifts from the company. They include people such as Lee Walker, Mort Topfer and Tom Meredith, former Dell senior executives. They are now so wealthy they have retired -- often while still in their thirties -- and in some instances followed Michael Dell's lead and set up their own charitable foundations to distribute their gains. Those and other Dell exes watched the stock price, adjusted for splits, rise some 88,000 percent in the last decade.

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