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Jobs Remain, But Area Could Feel Major Loss

By Zachary A. Goldfarb and Kendra Marr
Washington Post Staff Writers
Tuesday, September 18, 2007

AOL chief executive Randy Falco e-mailed employees yesterday to tell them the company would be moving its headquarters to New York. "I know this change raises questions for many of you, not all of which I can answer here," he wrote. "Suffice it to say that for most of you, this won't affect your jobs at all."

Although AOL said most of its 4,000 employees would remain in Dulles, local technology executives and economic development officials suggested that the move could set off a flight of talent from AOL and that the region might lose some of its shine as a tech center.

"This is a loss for our region, and there is no way to sugarcoat it," said Bobbie Kilberg, president and chief executive of the Northern Virginia Technology Council.

"It may not be that many jobs lost now, but over the long term, you can't help but wonder whether they will lose more people from the Dulles campus. That's inevitable when you take the leadership and you put the leadership in New York City. You have to question the direction of the employees left in Dulles."

Dorri O'Brien Morin, spokeswoman for the Loudoun County Department of Economic Development, said she was reassured that AOL executives said its presence was here to stay. "It's not pleasant to lose a headquarters designation," she said. "But we still have the most important thing: 4,000 jobs, 4,000 high-paying jobs."

Jay Rappaport, president of online widget maker Clearspring and former chief operating officer for AOL's Internet access service, noted that AOL alumni have already gone on to join or start Internet companies in the region and predicted that the headquarters shift might encourage more of that. "It may unleash a lot of talent here within the AOL corridors," he said.

But other former employees argued that AOL's decision means the last big Internet company is leaving the Washington region. When William Raduchel came to Washington from Silicon Valley in 1999 to serve as AOL's chief technology officer, he saw the region as an Internet leader, he said. There was not only AOL but also Network Solutions and telecom companies MCI and Nextel. Today, he said, "if you look for Internet firms, you look to Silicon Valley," adding: "All of the leadership companies are now gone."

Raduchel warns the move could have a lasting, negative impact on the local tech community. "You lose executives that came down and were part of the Washington community," he said. "For the Washington area, when you lose the corporate headquarters, it has long-term pervasive effects, as opposed to cataclysmic effects."

One AOL employee, who works in online advertising for the mid-Atlantic region, observed that some non-employees misread Falco's memo about the relocation. "Outsiders skimmed it and think the whole company is moving to New York," he said. "Insiders know that much isn't going to change."

"I haven't sensed a lot of stress about it," said the employee, who spoke on condition of anonymity because he was not authorized to speak for the company.

One Loudoun business that caters to AOL employees said it had reason to worry. "That's going to kill the area," said Doug Hisel, manager of Old Dominion Brew Pub in Ashburn, a hangout for techies and government contractors.

Anthony Pappas, who has started a marketing firm in Tysons Corner geared toward technology companies, said he was troubled by the announcement. "It's a little rough for us companies that are trying to build that New York attitude here," he said.

Other business leaders said they were not concerned about the announcement. Since the heyday of the dot-com era, they said, the local economy has become increasingly diversified -- even within the technology sector -- making it easier to absorb a big loss like AOL's.

"This absolutely is not the end of the technology community in Washington," said local technology entrepreneur Mark D. Ein. "It's been many years since AOL was the central engine of growth of the Washington technology community. The local technology community is diversified across technology industries, across company size, across stage of company development, and there is no single company that is going to single-handedly change the course of the region's technology industry."

"It is a sad day for the region, but we are not a one-company or one-industry town," said Raul Fernandez, chairman of ObjectVideo in Reston. "The good news is that there is a diverse employment base in the region and a lot of innovative companies looking for experienced talent."

Jerry Gordon, president of the Fairfax County Economic Development Authority, noted the recent announcement that Volkswagen of America would move its headquarters to Herndon from Auburn Hills, Mich. That "gives us reach into a different industry," he said. "If you look at communities that are not sufficiently diversified, their fortunes rise and fall with their companies."

Staff writer Thomas Heath and washingtonpost.com blogger Tammi Marcoullier contributed to this report.

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