[NYTimes] Austin, we have a problem

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From: Adam Rifkin (Adam@KnowNow.Com)
Date: Sat Aug 19 2000 - 16:18:49 PDT

Sounds like a nice place to visit, but I'm not sure why people are so
insistent on living there right now... Jeff or Lorin, set me straight,
what's so nice about Austin?


Austin, We Have a Problem
Over the last decade, the high-tech economy has rolled through the
laid-back capital of Texas. Now even the new-money crowd thinks it's time
to restore a bit of the old peace and quiet, if it's not too late. By HELEN

Earlier this summer, I went for a swim at Barton Springs, a freshwater pool
that lies at the geographical and spiritual center of Austin. Under an oak
tree, I found Stuart Stevens of the Bush campaign, typing on a Dell laptop.
He was writing the script for the video that would be shown at the
Republican National Convention. All around him, half-naked kids with ornate
tattoos lolled on the grass, working on nothing except their tans.

Austin has always been a city of distinct worlds -- a college town, a state
capital and a live-music center all in one. But lately the number of worlds
that Austin contains has been multiplying, and now, everywhere you look,
there is the spectacle of worldviews clashing.

Over the last century, the population of Austin has doubled every 20 years,
and in the metropolitan area there are now more than one million residents.
Thirty-five thousand people, the equivalent of a fair-sized town, moved
here last year alone. And in the last five years, Austin has produced or
acquired 17,000 new millionaires. Now an upper class of tech barons lord it
over a middle class of state government and university workers; a national
Republican campaign machine whirs above a local Democratic power structure;
yuppies infiltrate the habitat of punk rockers. It's as if every Austin
stereotype has spawned its opposite: easy-going Slackers live beside
hard-driving Techies, and old-school liberals drink at the same bars as
new-school conservatives.

The magnitude of this transformation was not wholly apparent to me until I
spoke with John Thornton in mid-April. Thornton is a general partner at
Austin Ventures, the most powerful venture capital firm in town. That puts
him at the epicenter of the New Economy. "The rate of change in activity in
venture capital has been larger in Austin than probably anywhere else in
the country," Thornton told me. "In 1996, venture capitalists spent $67
million in Austin. In 1999, we told people that we thought, Gee golly, $700
million would be spent. The actual number ended up being about $1.1 billion."

The impact of all this new money on Austin is debated endlessly over
breakfast tacos and barbecue dinners. Is the laid-back hipster's paradise
doomed to become another mess of a big city? People talk a lot about it,
but few end up doing anything. An exception, Thornton told me, is a guy
named Ross Garber, one of the city's freshly minted tech millionaires.
After Thornton introduced us via e-mail, Garber and I arranged to meet at a
Starbucks in his neighborhood southwest of downtown. Garber's mild-mannered
looks disguise an intense personality. He began his career in the tech
corridor along Route 128 in Boston, he told me, and moved with his wife to
Austin in 1994. Their reasons for coming, I learned, were remarkably
similar to those of most Austin newcomers. Jobs, yes, but also that
amorphous allure known as "quality of life." With its bars, bands and
barbecue joints, its lakes, parks, low crime and temperate winters, Austin
is a lifestyle mecca that attracts all kinds.

Garber and I took a driving tour of Austin when we met for the second time.
As we nosed under an elevated highway, we came face to face with a
modern-looking fortress of red brick and glass. "That's Vignette," he said,
tapping on the window. He helped start Vignette four and a half years ago;
today it is the largest e-business software firm in the world. "Vignette
has created about $3 billion worth of employee wealth," he noted with
pride. Garber himself is 33, and his net worth is somewhere upward of $200
million. On Garber's side of town, brand-new mansions have spread as
rapidly as cedar trees across the rolling limestone hills. The recent
history of Austin is written on those hills. For a generation, the
definition of a political fight was a developer wrestling with
environmentalists over how fast the city should grow. Those fights seem
almost quaint compared with what's on the horizon.

Because of all the new people, Austin now suffers from world-class traffic
jams, polluted air, a serious lack of affordable housing and a school
system in disarray. Eager to become part of the solution, Garber recently
formed a coalition of tech leaders to hustle a light-rail project through
the city's cumbersome political process. "We're like Dorothy, you know?"
Garber told me. "We've left Kansas, we're walking down the Yellow Brick
Road and we're going to end up somewhere. I'll tell you where it's not
going to be -- Kansas. 'Cause we ain't going back. We're either going to
the Emerald City, or we're going to the witch's castle to fly around on
green brooms." The Oz rhetoric may be overblown, but Garber's perspective
on Austin -- that its extreme rate of growth threatens to wipe out the very
qualities that attracted people in the first place -- may be the one notion
that finds support across the city's disparate worlds.

Of all the pretty state capitals, of all the funky university towns, only
Austin also plays the role of Nashville's little sister. Music, not high
tech or politics, put this town on the map. Barbara MacDonald, better known
as Barbara K, is a central figure in local music circles, and I caught up
with her one night in May at a club called the Speakeasy. She had a black
guitar slung at hip level, and was jamming on a song from her solo debut.
Barbara K used to be in a band called Timbuk3, which had a hit called "The
Future's So Bright I Gotta Wear Shades."

That was in 1986, four years before the movie "Slacker" came out, and
Austin was in the grip of a profound economic malaise. Rent "Slacker"
today, and it's like flipping through a scrapbook of how much has been
eradicated in one busy, busy decade. Gone are the vacant lots, the Quack's
coffee shop near campus, the bookstore staffed by J.F.K. conspiracy nuts.
Gone is Les Amis restaurant, where one character snapped: "To hell with the
kind of work you have to do to earn a living!" Today the local paper
publishes breathless stories about $500 bottles of wine.

On the surface, it would seem as if the boom has been kind to people like
Barbara K. She lives in a large, rambling house, bought with money from
recording deals. The place is now worth almost three times what she paid
for it. Most days, she considers herself lucky, but not when she gets her
new property tax statement. "Oh, man, I got slammed so hard," she told me.
Next year, she will owe $800 per month in property taxes alone. And though
Austin still brags that it is "the Live Music Capital of the World," for
most musicians, acquiring property in town has become impossible. Bukka
Allen, who plays accordion on Barbara K's latest CD, recently bought a
house in Buda, 13 miles south of Austin. He's part of a silent diaspora,
one of countless musicians who have been forced out by the boom.

Meanwhile, the maker of "Slacker," Richard Linklater, has appropriated
technology for his own ends. He is working on an animated feature called
"Waking Life." When I visited him at Detour Filmproduction, every room was
filled with artists sitting in front of Macintosh computers, transforming
film footage into animated action. "It's very human," said Linklater of the
results. "It's a great marriage of film and computer. I think Austin is the
kind of place where that cross-pollination can happen." On the other hand,
Linklater doesn't think he could start out here today. "I came to Austin 16
years ago. My rent was $133 a month, all bills paid, and I could live on
$3,500 a year. So I spent all my time watching movies, editing, shooting.
Film students are like, How do you do it? I don't know. If you have to work
all day just to pay your rent, I don't know. If I was just starting out
now? Might go to San Antonio."

People moving here today come for different reasons. In June, I drove out
to a fancy subdivision named Rob Roy, up in the hills. It was a bone-dry,
brilliant day. In almost every vast and perfectly manicured front yard,
brown-skinned men clipped and trimmed and dug. The houses were ridiculously
large, like caricatures of houses. Parked in the driveways were Porsches,
Jaguars, Mercedeses and all manner of S.U.V.'s. Within minutes, a green
Audi was tailing me. Security. The driver snapped photographs with a little
digital camera. I don't know what he saw; what I saw was the balance of
things shifting.

nlike the rest of Texas, Austin has always been a place where what mattered
most -- music, film, education, public policy -- was supposedly motivated
by concerns that were not entirely commercial. Now Austin has developed an
indigenous business scene. First came Dell, later Tivoli, Trilogy and
Vignette. These days Austin has a 1.9 percent unemployment rate and has
been named the best city in the country for doing business by Fortune and

Day-to-day living, however, has become harder for a lot of people. The
public schools, for example, used to be considered pretty solid; now the
Austin Independent School District struggles to keep up with the profound
population shifts. For every new computer programmer who arrives in town, a
gardener, a housecleaner and a couple of construction laborers follow. In
recent years, the greatest job growth has been not in the software industry
but in the restaurant sector: busboys, dishwashers, short-order cooks,
waitresses. These service workers are generally poor -- their incomes have
not kept pace with the rising cost of living -- and the school system
struggles to find a place for their children. One thousand new kids
converge on schools in the southern part of the district every year.

One bright spot is Travis High School, which, by all rights, should be a
catastrophe. Travis is a hodgepodge of yellow brick buildings that stand
alongside I-35, on the edge of East Austin, which is the poor side of town.
The student body is 90 percent minority, 80 percent low-income. So many
students get pregnant that there is a waiting list for their infants to get
into the nursery that Principal Nelda Howton set up. I met with Howton in
May. She has a blond bob and was wearing a lemon-colored linen dress, but
she's a lot tougher than she looks. Her job includes figuring out whether
her students have a place to sleep, food to eat, responsible parents to
watch over them. "We had a kid who had been receiving assistance for
diabetes," she told me. "Turns 18 and it's cut off. Well, the kid kept not
coming to school, and we find out it's nothing except he can't get out of
bed because he's in a comatose state. Then we had to get him back on insulin."

Four years ago, Howton was working as a principal of a middle school in
Temple, about 60 miles away, when she heard that Austin was looking for a
high school principal -- a step up, she thought. "I didn't know that I was
coming to this school," she sighed. "I cried when I saw it. There was
graffiti everywhere; we had two kids shot outside; lots of gangs, lots of
gangs." Howton took the job anyway; after studying what 21st-century high
schools were supposed to look like, she realized that she couldn't possibly
afford to create such a place on her budget and set up a foundation to
accept donations of money and equipment. Howton is good at marketing. She
says what she thinks, uses plain English and tells stories that deliver an
emotional wallop. So when she set up meetings with executives at companies
in town, they responded generously -- particularly hardware companies like
AMD and 3M.

Howton looked at what was happening in Austin and decided to start classes
in C++ and Java computer languages, and set up a multimedia lab where
students build Web sites. (They were doing one for the L.B.J. ranch when I
visited.) She filled classrooms with orange and aqua i-Macs, got every kid
an e-mail address and wired up the shabby brick building with fiber-optic
lines. She marched me down the hallway to show me the black Novell servers
stacked in an old janitor's closet. It's a blinking, glowing declaration of
progress where you'd least expect to find it. Since the servers were
installed, there have been no gang problems at Travis. "A lot of it was
consistent discipline, but the other thing was getting the kids to believe
they can do something," Howton said. In the multimedia lab, Howton
introduced me to Sylvia, who moved to Austin from Nicaragua at age 4. Her
mother cleans houses for a living. This year, Sylvia won first prize in the
South by South West contest for student-designed Web sites. Another student
finished school and got a job making $65,000 a year at a local software firm.

Howton's work is inspirational, but it hardly seems like a replicable model
-- based as it is on the extraordinary force of her personality. And
money's getting tighter. This year, for the first time, Austin has been
declared a "property rich" district, which means it has to give away $26
million in revenues to poorer districts in the state, and to forgo $22
million in financing that it formerly received. The law is intended to take
money away from affluent students and give to students of need, but that's
not the effect it's having in Austin.

Superintendent Pat Forgione arrived in town 11 months ago and can't believe
his lot. When I met with him in June, he jumped up off a couch in his
office and grabbed a binder of statistics to illustrate the differences
between Austin and other "property rich" districts. "If you take the
percent that are considered 'disadvantaged,' in the typical district, it's
a quarter of their kids," Forgione said. "We're double that. Notice 'at
risk.' That means truant, absent, bringing guns, don't have parents, those
issues. The average is 24 percent -- we're 42 percent. The average
property-rich district has one out of six students for whom English is not
the first language. We're one out of four!" This is the paradox of the
boom: people like Ross Garber build luxury homes on one side of town, while
the other fills up with poor kids and suddenly there's $48 million less to
spend on education.

Austin's politics have been changing right along with the economy. Mayor
Kirk Watson represents a fusion of old and new priorities and has earned a
reputation as perhaps the most effective mayor in memory. Early in May,
Watson wooed the New Economy crowd at a mixer to raise money for his
re-election. Watson wore a white ruffled shirt, charcoal bow tie and gray
tuxedo pants as he stood on the steps of a limestone mansion that belonged
to Jeff Garvey, chief administrative partner of Austin Ventures. Venture
capitalists and software C.E.O.'s lined up to shake Watson's hand, then
write him a check. It has been a difficult constituency to seduce. Many
hardware companies have a long tradition of civic engagement. But the
software types are younger, more arrogant, less responsible. Their
start-ups also have no tradition of corporate philanthropy, and few, if
any, local clients.

National politics has a certain luster to it, and many of Austin's tech
lords have gotten swept up in George W. Bush's bid for the White House. Two
local tech stars, the hardware king Michael Dell and the software guru
Steve Papermaster, have formed a team of high-tech executives to advise the
campaign; I spotted both of them at a recent gathering of the team at the
Dell Jewish Community Center. Back in 1998, Papermaster gave a party for
500 at his mansion in Rob Roy to introduce Bush to the local tech crowd.
Later, Papermaster squired Bush around Silicon Valley, helping make
connections and raise money. "Directly and indirectly, it's certainly been
in the millions -- many millions," said Papermaster of the sums he has
delivered to the Bush campaign. Papermaster went to U.T. and used to hang
out at the Armadillo World Headquarters. Doesn't he think it's weird that
this liberal enclave should become the launching pad for a possible
Republican presidency? "Austin has changed from being a purely liberal city
into being more centered, though still with a liberal bent," asserted
Papermaster. "It's a place that has aggressively embraced growth. And that
reasonably approximates the governor's philosophy. It's not a clash. It's
closer to a parallel, and perhaps even a convergence."

Stuart Stevens agrees that the mellow gestalt of Austin has influenced the
Bush camp. "Being in Austin creates a nonhierarchical campaign," he said.
"There's a certain lack of self-importance. Nobody at the Bush campaign
cares about wearing ties. Nobody worries about getting in the gossip
columns, because there aren't any gossip columns."

As for local affairs, the various tasks of making a city function, well,
that just isn't as sexy, compared with national politics. Earlier this
year, at a gathering of local software C.E.O.'s called the Austin 360
Summit (which Papermaster helped start), Mayor Watson delivered an
impassioned speech about the challenges facing the city. While the mayor
was talking, a baby-faced C.E.O. raised his hand. "Why are you looking at
us to help with these community issues?" asked the software C.E.O. "That's
your job."

ust when it seemed as if the tech barons deserved to be cast as villains,
matters took an unexpected turn. Last year, after Vignette went public,
Ross Garber sold a large amount of stock, turned down a bunch of job offers
and spent nine months wondering what to do with his time. "I always thought
if I won the lottery I would retire and go to the beach for the rest of my
life," he said. "But you find out that it's really hard, because it's
isolating, and you can't retire at 33. Retire is a word for when you're
like 65 and you go to Miami to play mah-jongg."

In March, Garber was sitting in traffic when his cell phone rang. It was
Lee Walker, whom he knew from the 360 Summit. Walker is Old Austin (he has
shoulder-length white hair and wears a suede hat) but possesses a New
Austin resume (he was the first president of Dell). He's now the volunteer
chairman of Capital Metro, the city's public transportation system.

Walker approached Garber with a small request. In November, the city was
going to vote on whether to build a light-rail system. By law, Capital
Metro could not campaign for the ballot initiative. And the idea faced
stiff opposition from people like Gerald Daugherty, a conservative figure
in Old Austin circles who had formed an antirail group called Reclaim Our
Allocated Dollars, or ROADS.

"I need a high-tech poster boy," Walker told Garber.

In Texas, light rail is a deeply countercultural idea. Natives consider the
pickup truck roughly equivalent to the American flag in symbolic value, and
public transportation a Kremlinesque conspiracy to undermine their way of
life. But Dallas, of all places, built a light-rail line that has proved
surprisingly popular, and now Austin's leaders were convinced that they
could, too.

Garber had his doubts about working with Old Austin. "The pace thing is
hard, it's very frustrating," Garber told me. "Most of the tech guys are
working with huge Wall Street pressure. They're not going to come to a
four-hour meeting once a week for nine months and finally decide who's
going to get to make a decision." But he had more time now, and he'd been
looking for a cause. Garber formed a team of techies to consider light
rail. John Thornton joined it, and so did Steve Papermaster, among others.
Light rail was imperative, the group determined; the city's air was
becoming so dirty that it would soon violate federal health standards.
Garber got all fired up. "I'm not a train hugger," he vowed. "But this
place is exploding."

Garber then embarked on something that might be called a 21st-century
political campaign. Early in May, we drove past rainbow-colored bungalows
smoldering in the heat in search of Garber's billboards. Downtown, Garber
spotted one: MORE TRAFFIC AHEAD. PERIOD. The black letters leapt from a
green metallic background, and a small oval depicted train tracks receding
into the distance. We headed over to I-35, a main north-south artery. A
yellow billboard announced: FREE PARKING AVAILABLE ON I-35. Then we drove
west. Metallic blue, same train logo. TRAFFIC BITES. BITE BACK.

Garber liked his handiwork. "Aren't the colors great?" he asked.

The colors were great, the look was clean, the lines were snappy. But what
really got my attention was this imported fondness for rail. By choosing
mass transit as their cause, the techies were picking a fight with Austin's
traditional business groups, the real estate developers, car dealers, and
oilmen who have always loved highways. Garber himself went through culture
shock. "Different language, different pace," he reported. "With Old Austin,
the art is the process -- the listening, the communicating, the cajoling,
the time it takes. In tech, you just don't work that way."

It had been clear what would happen if the tech people had remained
secluded in their parallel universe. This dusty Eden would turn into
another Silicon Valley, then everybody who could afford to would move on to
the next paradise. But what if Old and New Austin learned to work together
instead? This was what was so promising about the rail project: maybe
someday Austin could become the kind of place where the private sector gets
involved and stays involved, instead of just sitting idly by while the
public sector falls apart. A school like Travis might become the rule, not
the exception.

But as time passes, the balance of things keeps tilting the other way. In
July, Nelda Howton gave up. The buzz around Austin was that she wasn't
appreciated sufficiently. Howton said that wasn't true. "I couldn't get to
work!" she told me. She lives in a town called Salado, and she used to be
able to get to work in 45 minutes. But as Austin kept expanding, her
commute did, too, until it swelled to two hours. "I was spending 20 hours a
week on the road," she said. There was a lightness in her voice, as if some
great frustration had eased. She was going to open a brand-new school in
Killeen, about 60 miles from Austin, and now it would be somebody else's
job to worry about whether the children of Austin's housekeepers and
gardeners and short-order cooks had food, or beds, or access to modern
marvels like the i-Mac.


So it's Thursday, you want to start your weekend early but you have this nagging Project hanging over your head. You wished it would only take an hour or two but fear it may take the entire night. You sit down at your desk, stare blankly into the computer screen and wish things could be easier. Imagine that your desk didn't have to be strewn with dictionaries, thesauruses, or those encyclopedias you snuck out from library -- but you had more room to scatter that bag of Cheetos and your jug of Coke. Imagine if you knew you could visit one place or use one tool to get the information you need. And then imagine if every time you wanted an answer, everything was just a click away. -- http://biz.yahoo.com/prnews/000817/ca_gurunet.html

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