Old Washington Meets Wired Washington
Charity-- and Self-Interest-- Link Tech Titans And the Political Establishment
By Sally Quinn
Saylor, whose wealth has fluctuated madly in recent days--on one particularly bad Monday, his net worth dropped $6 billion--is building a mansion on 50 acres of Potomac River frontage at Great Falls. The house, modeled partly on Versailles, will have a football field, among other amenities. "I want it to be like the White House," Saylor says.
Stories like these have the Washington establishment--or at least those in the establishment who are remotely aware of Michael Saylor and his high-tech brethren in Northern Virginia--nervous and wary about how these relative newcomers will change the nature of Washington.
Until this year, when America Online merged with Time Warner and AOL's Ted Leonsis brought Michael Jordan to the Wizards, too many members of establishment Washington hadn't really thought much about all those funny-looking buildings they drove past on the way to Dulles Airport.
Now the realization that those people across the river could, might, probably will have a major impact on the capital of the United States has many here wondering about their own status.
They are not wrong to wonder. With the emergence of these new high-tech entrepreneurs and the extraordinary money they bring to the party, this could be a transformational moment in the history of Washington.
This is no longer a one-industry town. For the first time, more people here are working in technology than in the government. And for the first time, money is competing with political influence as the going currency in the area. As Joe Robert, a real estate tycoon who hangs out with the tech people, put it: "The wealth in this area has been created overnight. It's unprecedented. And it's going to cause a sea change."
The region's high-tech millionaires and billionaires want to change the world and do it fast, and decidedly not through government bureaucracy. They aim to bypass government and get things accomplished in their own entrepreneurial way. And that gets establishment Washington--roughly defined as the people who run the three branches of the government, the diplomatic corps--plus those who write about them, represent them and lobby them--where it lives.
At this moment, the very beginning of a convergence is taking place between the establishment here and the nascent Northern Virginia technology establishment. "There's a lot of sniffing going on," says Jon Ledecky, financier and part owner of the Capitals and the Wizards. Consider this:
* Four high-tech businessmen are joining with superlobbyist Tommy Boggs to open a restaurant called the Caucus Room near Capitol Hill. Boggs is also opening a Tysons branch of his firm, Patton Boggs.
* President Clinton has begun to invite tech heavies to the White House--Russ Ramsey and his wife, Norma, attended a movie screening there several weeks ago with the likes of Vernon Jordan and the Saudi ambassador, Prince Bandar bin Sultan. Saylor, Ledecky and venture capitalist Mark Ein were guests at the White House millennium party. And Joe Robert and AOL co-founder Jim Kimsey gave a private dinner for the president of Colombia.
* Sen. John Kerry of Massachusetts and his wife, Teresa Heinz, recently had Saylor over for dinner. Just the three of them.
* The British ambassador hosted a black-tie reception for the Indian CEO High Tech Council. At the party, entrepreneur Mark Warner, a former Virginia senatorial candidate, took Sen. Chuck Robb by the arm and told this member of the Washington establishment, a longtime senator and the husband of a former president's daughter, "Let me introduce you to a few people."
* Tech luminaries are migrating closer to Washington or into the city itself. A tech couple just bought the former house of Luther Hodges Jr. and his wife, Cheray Duchin--in Georgetown, heart of the establishment--for $3.8 million. Raul Fernandez, CEO of Proxicom Inc., is renovating a house off MacArthur Boulevard. And Ted Leonsis has moved from Great Falls to closer-in McLean.
* And they're celebrating their major moments in the city, too: Saylor held MicroStrategy's 10th-anniversary party at the Corcoran Gallery of Art, and hosted an Oscar night party in the Fairfax Hotel ballroom.
This convergence couldn't come at a better time for the city, the establishment and the federal bureaucracy.
Washington has always defined itself by its respect for the institution of government. People have been drawn to live and work here by a sense of idealism and the notion that public service is a noble thing. For journalists, Washington has been seen as a place where worthwhile things can be accomplished and where the press's watchdog role is essential.
But with the Monica Lewinsky scandal and the president's impeachment trial, a sort of toxic pall fell over the city. The presidency had been dishonored, Democrats and Republicans alike had been sullied, the lawyers had had to represent clients they weren't proud of, members of the administration were tainted, and the press broke new ground with front-page stories about sex acts. It was as if the body of the Washington establishment had been declared Code Blue.
Then, just as the presidential campaigns got underway, the Redskins made the playoffs, AOL and Time Warner announced their merger, and Michael Jordan joined the Wizards. Anthony Williams was solidifying his hold as mayor, and the stirrings of new life were felt in the District.
People began to notice that the Northern Virginia crowd had begun to infiltrate local charities, assuming major roles at cultural institutions like the Washington Opera and nonprofits like the Make-a-Wish Foundation. They heard the high-tech people talking about "changing the world" and "giving back." They saw them on television, read their thoughts on the op-ed pages. They began to pay attention.
The timing may be perfect. But the few contacts thus far between wired Washington and federal Washington have set off feelings of insecurity and apprehension in both camps.
The Social Nexus
"I don't know many of them," says columnist and Georgetowner Rowland Evans. "I've met the AOL guy. What's his name, Case." The two cultures, he says, are "like water and oil."
"These people are in a different world. They never wear ties. Why should they? They retire at 30 in their fabulous houses. I've never seen the likes of it before. Some of these people make five or six billion by the age of 35. They're ambitious, they like excitement, they like gambling with life. And I would imagine some of them would go into politics.
"But the parties we go to--I haven't seen any of these people. We never run into them. There's a sense among my friends that these people are awesome. But I don't even understand their language."
Evans's discomfort is illustrative. "There's clearly a wariness," says Mark Warner. "The old world has not seen the energy this new group can bring to the table if they choose to come." In some charities, he points out, board seats are pretty much "reserved" for members of the old guard. "I'm not sure the new crowd will accept those barriers."
"There is a little bit of intimidation," says one multimillionaire. "Old Washington is imposing. The young group wants to be a part, but they don't want to be a part. There's clearly a feeling that 'I don't want to be a part of any club that doesn't want me.' They're proud of what they've done. But there is a feeling of inferiority."
Washington Redskins owner Dan Snyder is not surprised at this. Though he lives in Maryland and is not in the tech business, he has recently become part of this group through sports, wealth and philanthropy. "I would think," says Snyder, "that the Washington establishment would not be interested socially. We're all aggressive entrepreneurs."
There's some truth to that. Many establishment types are openly hostile. "There's something wrong with all of this" money, says one high-powered journalist. "It's not deserved. I wish they'd all go away and the market would crash and it would all go down the drain." He nearly had his wish yesterday.
Gahl Burt, former social secretary to Nancy Reagan and wife of businessman Richard Burt, former ambassador to Germany, has met a number of the AOL people and is open to social change. But "I don't think they care about the cave dwellers," she says. "It's a whole other life in Virginia. They have their own clubs, their own everything. . . . I don't know if these two groups will ever commingle. I think they are so on the cutting edge and they view everything else as out of it."
Some in the establishment think that would be a shame. Secretary of Energy Bill Richardson thinks that "these new high-tech Internet people will dramatically enliven a city that needs enlivening, especially in the social and political area. A Washington dinner party is mainly composed of political and media, and now there's a third party. They've already . . . put Washington in the New York-L.A. economic league. They're buying the best real estate. You're starting to see them at dinner parties, sporting events, at the White House."
"What this means," says Tommy Boggs, "is that the only game in town is not going to be the political game. The stars are going to be the people who are doing a lot for the charities and for philanthropy and not the chairman of some subcommittee. It's going to be a big change."
The question is: Do the techies even want to become part of it?
"A lot of people are impressed by meeting senators and governors," says Leonsis. "I'm not all that impressed."
A Matter of Style
"The Box," says Tommy Boggs, "is now the place to be."
He's referring to the owners' boxes at FedEx Field and MCI Center.
The Box is virtually the only place you will find high-tech people wearing ties. There is a National Hockey League tradition that owners and managers wear ties, which came as a surprise to new part-owner Raul Fernandez when he first bought in.
"We're almost religious about getting rid of ties," says software pioneer Mario Morino, a mentor to many of the young CEOs.
And it may be rubbing off. At the recent Potomac Conference, Giant Food's David Rutstein approached PricewaterhouseCoopers's Jim Lafond with a six-foot-long pair of scissors used for ribbon-cuttings. As participants watched in shock, he cut Lafond's tie off. "That was a $200 Italian silk tie," Lafond moaned in apparent anguish.
The incident was a setup, but the point was clear: The new era for Washington business is distinctly informal.
"Being socially adept is not important to them," says Ledecky. "They don't say, 'Oh, there's a black-tie event in Washington, let's run in.' And they're worried." They think they should be working, not socializing. "If I don't work 18 hours a day, my competitor will" is the common refrain.
"Socially," says Ledecky, "a lot of the high-tech kids are misfits. They've concentrated so much on work that they're not comfortable in that atmosphere. But it's not a tech divide; it's an age divide."
Which is a salient point. Many of the most successful techies are younger than the average inside-the-Beltway player. They have small children and don't want to be out every night.
Leonsis, for instance, spends most of his social time in the Box these days, surrounded by friends, Michael Jordan and other sports luminaries. The Washington social scene? "I don't like it," he says. "I dedicate my free time to my wife and kids. We could go to a black-tie event every night if we wanted to." They don't.
Says Ledecky, who wears a coat and tie when he's in Washington but not when he's at the office: "They don't understand the Alfalfa Club or the Alibi or the Gridiron--the institutions they could inherit if they got involved. When I go to the Alfalfa, the nexus between business and politics is unbelievable."
Ramsey and his wife, Norma, live in Great Falls, as does Mario Morino. AOL Chairman Steve Case lives in McLean. Their preferred socializing is small get-togethers with three or four other families, usually in Virginia.
In this--as in other ways--Michael Saylor is the exception. His plans to build a massive house with a price tag between $28 million and $50 million in Great Falls make some of his high-tech friends uncomfortable. "It's not humble," said one.
"It will be part house, part embassy, part ceremonial," explains Saylor, sitting in his Tysons Corner office, dressed in his signature black pants and turtleneck. "There are a lot of socioeconomic and political considerations in this house. I'm building a facility to entertain a ton of people. In my case, a tech CEO is a politician. I mean, this is like the White House. You use it to entertain. If you have a big charity event, you need to fit a thousand people into a place."
(At 35, Saylor is a bachelor and there are no signs of that changing. At the White House millennium party, his date was his mother.)
"We can't afford to be invisible," he says. "Technology CEOs are politicians as much as they are entertainers. That's why they call us rock stars--because we have to be exciting. And if we're not exciting, then people won't cover us. And then we won't succeed. So I don't have the luxury of hiding behind a wall and not giving interviews."
The irony is that his attitude may have created a lot of the gloating that followed his recent financial trouble. This interview preceded his company's problems; afterward, his lawyers told him to give no more interviews. He would only say, "We signed up to change the world. No one said it would be easy."
More than any of the others, Saylor is determined to create, single-handedly if he has to, a convergence between the high-tech community and the Washington establishment.
He wouldn't put it in those words, though. "I don't know what you could consider establishment, because I'm so far out of the mainstream I don't even know who's important," he says. To him, "Georgetown" has no other meaning than "that strip and all those restaurants on it. I don't even know who lives there.
"Really famous people like the Rockefellers don't even know who I am," he says. "We don't normally go and mix in with the Cabinet or senators or the political establishment or the old social establishment. The Kennedys or the Shrivers or Mrs. Graham."
But, Saylor says, things are changing rapidly. "In just this past six months or nine months, tech people have become significant, as to almost being accepted here--or, at least, let's say looked over--by the establishment of D.C. But it's still not really quite mixing yet. You know, 'new money' is taking over the institutions. In essence, we're buying with our money the teams and also the charities, and that's the source of culture in this town."
Russ Ramsey demurs. "I would not have thought that Mrs. Graham would have any interest in us," he says.
To the contrary. Katharine Graham, chairman of the executive committee of The Washington Post Co., responds to the possibility of meeting some of the new entrepreneurs with enthusiasm. "Bring 'em on!" she says.
Jim Kimsey, a co-founder of AOL, is one of the rare tech millionaires who have been mixing with the establishment for a long time. Kimsey, a West Point graduate who spent two tours of duty in Vietnam, just had his 60th-birthday party, with a World War II theme. Among his guests were Vernon Jordan, Alexander Haig, John Hechinger, Lloyd Hand and Leonard Slatkin--all serious members of the Washington establishment. "That's just an example of the crossbreeding that's going on," says Kimsey.
Several weeks ago, he and Joe Robert flew to Colombia to try to persuade leaders of that violent nation's largest guerrilla group to make peace--a very high-tech, save-the-world thing to do. Kimsey is on numerous boards and belongs to the Metropolitan Club ("More and more of the guys are doing it," he says), and he, along with Robert, Ramsey and Saylor, was a guest at the Alfalfa Club this year. He calls this "a harbinger of things to come."
Another techie who straddles the boundaries is Raul Fernandez, founder of Proxicom. He was only 19 and a student at the University of Maryland when he went to work for then-Rep. Jack Kemp. That was 14 years ago. Today Fernandez is 33, one of the youngest billionaires in the area, and Kemp is on his board.
Fernandez is clearly a political animal. "A lot of people come to Washington to be something," he says. "People in the tech world come to make something." Fernandez found politics invigorating and frustrating at the same time, and decided that he could accomplish much more on the outside.
The high-tech world is like "Darwinism on steroids," he says. "There's a different attitude, philosophy and measure of success. One is about positioning; the other is about doing."
It was only four years ago that Russ Ramsey organized a small dinner for about 10 of the more important local high-technology types at the tiny Hidden Creek Country Club in Reston.
"I invited about half a dozen people I didn't know," he says, "but assumed that they all knew each other because they were all at the top of the technology business. And what was mind-boggling was that no one in the room knew each other.
"And Jim Kimsey walked in the room--I think he was still head of AOL--and had to introduce himself. The remarkable part about the dinner was that this was, like, 1996, and there was no community."
The entire concept of a high-tech community is just beginning to take hold--not only among Washington observers but among the players themselves. At a recent dinner party, when some of the guests were joking about how establishment Washington didn't "get it" about the high-tech scene, Ramsey joked that they didn't get it either until recently. They had all been working too hard to realize what the others were up to.
Later Ramsey, Morino and Warner started the Capitol Investors Club. Now the most exclusive gathering of the high-tech crowd in Northern Virginia, its members include such high-powered executives as Alex Mandl, CEO of Teligent Corp. They meet once a month, and members and their wives also socialize together. The wives in almost every case are young, beautiful and blond. (Saylor, Ledecky and Kimsey are single, and Fernandez is engaged.)
Bob Pittman, though president of AOL, is not considered a player locally in the social sense. Friends say he plans to return to New York and has little interest in the Washington scene. "I've tried [without success] to cut his umbilical cord to New York," Kimsey says.
No women or blacks are in the club, whose membership was limited to CEOs of companies with a certain net worth. "We're very aware of the need for diversity," Ramsey says.
A woman--Bobbie Kilberg, a former Bush White House aide--has recently become president of the Northern Virginia Technology Council. Kilberg has enlarged the membership, jazzed up the programs and increased the number of women. But there is still an obvious divide in Northern Virginia, and it's sexual and racial, not digital.
Last May, Mark Bisnow, chief of staff of Saylor's company MicroStrategy, organized a bus tour for nine senators to visit several Northern Virginia technology companies and have lunch with some of their leaders. "It was as if they were going to the zoo and looking at strange animals they had never seen before," one of the techies said later.
But the tech entrepreneurs went along with it, allowing themselves to be put on display. The wake-up call was the Microsoft antitrust case. A lot of them saw for the first time that government regulation was a fact of life and they were better off having some input than not. As for the politicians, they realized that this thing was big and they had better get with the program or be left behind.
"If you ignore the government," says Fernandez, "you're asking for it. It touches you on privacy, security, taxes. And it's refreshing that members of Congress realize something big is going on and they don't want to screw it up. They're coming out here to learn about it and listen."
They don't always get a warm reception. "To be really candid," Ramsey says, "I've probably spent most of my time running from those [establishment Washington] people because they just come when they need money. . . . I've been around a few of those folks, but I can't tell you I've ever made an effort to get out and see them because there was never any reason to."
Ramsey thinks most politicians don't understand the new digital economy. Which is why he is supporting his friend Mark Warner for governor.
Warner, managing director of Columbia Capital Corp., was in Washington long before the high-tech revolution. "I came here in the '70s because this was the place to change the world in terms of politics," he says. "Now we're an entrepreneurial hotbed." Warner knows that many of his high-tech friends feel "that we can dismiss government. It's wrong, but it's out there. Most of them have a basic lack of knowledge of politics.
"The politicians from Washington will come out to Virginia just for the money," he says. "The politicians view these guys as raw meat. And the high-tech guys snicker at them after they leave.
"The energy and excitement and passion that were what once attracted people to politics are now out in Virginia in the high-tech world," he says, which explains why so many Washington people seek him out for jobs and advice. "The opportunities will come out of the new economy," he says, and there's a fear that the "people who are left out will never catch up."
In fact, many politicians are looking to Northern Virginia for life after politics. At a Indian technology council reception at the Ritz-Carlton in Tysons recently, Gov. James Gilmore gave a rousing speech against taxing the Internet, which was greeted with enthusiastic applause. "In two years," he joked a bit wryly before the speech, "I will have no house, no car and no job."
Up for Grabs
"For all of us on the Hill, there's a huge learning curve here in terms of technology," says Sen. Ron Wyden of Oregon, who was appointed co-chair of a tech council for the Democratic Senatorial Campaign Committee. "There is no awareness of the treasure trove of knowledge and expertise in Virginia. They're literally a half-hour away. They definitely don't break into the classic Democratic and Republican mold. They are fiscally prudent but socially progressive. They're for gay rights and abortion. There's a real libertarian streak. What they're hoping is that government doesn't pass laws that freeze their ability to innovate.
"This is a constituency that is up for grabs," concludes Wyden.
Jon Ledecky says that every time he goes to the White House, "all the president wants to talk about is stock options." Some of the political types "are fixated on the wealth created," he says. "And they're kind of jealous. I'm the president and in comes this guy who is barely shaving and he's worth $1.2 billion."
And Ledecky says there has been a certain amount of clumsiness in the way some politicians blatantly approach members of the high-tech crowd for money and contacts. But he says, "Unless the tech crowd begins to embrace the political crowd, policy will adversely affect technology."
Most of the high-tech people say that they are apolitical and give to all the major candidates. Fernandez, for example, said before the primaries that he had made donations to the Bush, McCain and Bradley campaigns--but not Gore's. The vice president's statement that he "took the initiative in creating the Internet" raised hackles in techland. Says Fernandez: "I thought somebody was joking. There was no way he could have said that. It's disingenuous."
Scratch the surface, though, and most seem to be closet Republicans. Surprisingly, there are very few Gore supporters--though several were high on Bill Bradley. Fernandez spoke more openly than most, though what he said reflects a general opinion among them. "I don't think Gore is honest, or grounded. He will say anything and do anything to get elected. That's the type of politics that turns me off and a lot of people off." Mark Warner is the exception--a Democrat who supports the vice president.
Mario Morino is sometimes referred to as Saint Mario by his many fans and admirers because he has instilled an ethic of giving in the region's high-tech entrepreneurs. In practically every interview, someone will allude to what has become Steve Case's mantra: "To whom much is given, much is expected." Philanthropic giving is so much a part of the culture that the peer pressure is enormous even on some of those who may not be so inclined.
Morino, a former software executive, founded the charitable Morino Institute in Reston. It is housed in a high-tech hothouse he owns, where entrepreneurs and venture capitalists work under one roof. It is at 11600 Sunrise Valley Dr., otherwise known as "Mario's building."
"The wealth here is out of the high-tech world," says Morino, "and they're operating with different rules. They're not going to wait. They're going to do it on their own schedule."
And so they have:
* Jim Kimsey is chairman of the AOL Foundation and is involved in a host of city charities. "One of my friends said to me, 'Thank God you weren't a woman, with your inability to say no.' "
Kimsey was appointed by the mayor to chair the Millennium & Bicentennial Commission to celebrate the 200th anniversary of the city as the capital of the United States. "This is a symbol of the regional focus," he says, "of making this city the best capital of any city in the world."
* Steve Case's passion is the digital divide issue, and he is dedicated to supplying D.C. schools with computers and people to train the children to use them, with his PowerUp initiative. His wife, Jean, former AOL communications head, is the driving force behind his philanthropic strategy.
* Russ Ramsey's company FBR was the lead corporate giver in the region this year. Many high-tech CEOs have started their own charitable foundations.
Events planner Carolyn Peachey says, "The dot-coms bring extraordinary things to the table." Their example "makes it possible for existing donors to perhaps give a bit more."
The tech people object to the notion that philanthropy involves just giving money. "We're not the easy marks to buy a table and you've done your good deed," says Leonsis. "I am deeply and personally involved with Best Buddies, Anthony Shriver's organization. It engages me intellectually. I'm looking at E-Buddies as a start-up."
"Mario has created a model," says Fernandez, "a social venture fund. You not only give money [to a charity], but you help it build its infrastructure. This group doesn't want to do the same old thing. We would like to make a difference in a different way."
Washington is one of the few national capitals that are not financial capitals as well. The tech entrepreneurs want to change that.
Mayor Williams has forged a relationship with them, and they are focusing their attention both philanthropically and economically on the District. As Steve Case puts it, "If you're going to change the world, a good place to start is in your own back yard." Williams has taken notice. "They don't believe in the doughnut," he says. "We're the center."
And people want to live, and even work, in the center.
Mario Morino already has an office in the District, which he hopes to expand. Raul Fernandez, too, is thinking of establishing a presence in the District. "It's getting harder and harder to recruit," he says. "Young people don't want to live in Reston."
Even AOL is in preliminary discussions to take over St. Elizabeths Hospital in Southeast Washington and make it a campus of the company, according to Kimsey and Williams.
Mark Ein recently launched a start-up called Venturehouse Group, and even though it's technology-focused, he has headquartered it in the District. "People thought I was crazy," says Ein. "But I'm thinking ahead. Young people want to be downtown. I'd like to be ahead of the curve, I want to be the first guy to plant the flag."
Williams is the main reason, they say. "It all starts with the mayor," says Fernandez. "What's refreshing about his administration is that they're really listening. And there's an opportunity today to attract families that are living in the suburbs. Mayor Williams is doing all the right things. The worry is that he could be beaten by a demagogue. I will spend a lot of money, and Jim Kimsey is even more passionate, to keep that from happening."
Says the mayor: "They've made a commitment to sponsoring schools, programs for youth and families. We're focused on a business-friendly environment."
It doesn't hurt, either, that so many of the entrepreneurs came from humble backgrounds, nor that at least four--Kimsey, Fernandez, Ramsey and Robert--are from this area, and are committed to the city.
"These people are a big plus for the city," says Jack Kemp. "I'm a big fan of Anthony Williams. He's created a climate in the city for doing things. I believe this is a unique moment, a seminal moment in the history of the city," says Kemp. "This could be an urban renaissance. This could be a model. If they can pull this off, there will be plenty of credit for all sides."
Michael Saylor's huge downturn a few weeks ago is yet another ironic moment in this tale of convergence. Because what could be more Washington than creating a hero and tearing him down? The city loves scandal, and Saylor has played right into the demand for raw meat that nourishes the capital.
His colleagues and fellow entrepreneurs have been conflicted about his travails. Though many like him and believe that he is a true visionary, they also felt that he had gotten too big, too overexposed, too out there.
There was an element of Schadenfreude here. On the one hand, they felt that Saylor got his comeuppance; on the other, what happened to Saylor reflects on all of them. Saylor's close friend Mark Warner feels bad for him, but is confident he will survive. But Warner is not unaware of the danger that the envy and resentment can cause the Internet community in the political world. "It will be healthy for all of us," he says, "if a little air comes out of the balloon."
That might actually make the convergence a little easier. The money gets in the way. There's so much of it, and so little of it in the rest of Washington.
Steve Case resists the notion that the difference between Washington and Northern Virginia is the difference between power and money. "If the debate is over who has the power and who has the money, I think we're missing the opportunity to work together to deal with some of these complicated, thorny problems," he says.
Working together is the key. "It will take time," says Dan Snyder, "but the establishment has no choice but to take notice or they'll end up on the outside. It will flip."
© Copyright 2000 The Washington Post Company