Go to Today's Top News

Go to Business Section

Go to Home Page

Area Internet Firm Decides Calif. Is the Place It Ought to Be

First came the idea, hatched by two friends at a Cleveland Park restaurant last year, to offer a faster way for people to surf the Internet. Next came the company, Freeloader Inc., based in Georgetown offices overlooking the Potomac. Then came the news that the infant firm was suddenly worth a cool $38 million to the company buying it.

All of a sudden, founders Mark Pincus, 30, and Sunil Paul, 31, became the latest chapter in the Washington area's ballyhooed Internet success story.

So, what's their next step?

Hightailing it for California.

Despite industry chatter about the Washington area's emergence as an Internet capital or "Netplex," about 30 of Freeloader's 45 employees, including Pincus, Paul and other top executives, plan to pack their bags and move to San Francisco next month.

Pincus said that, whatever the region's reputation, his company hasn't been able to recruit enough talented young computer programmers in the area, and Freeloader executives have found it difficult to network with other industry leaders, many of whom are based on the West Coast, primarily in California's Silicon Valley.

"If you want to do creative multimedia Internet software, this is not the place," Pincus said yesterday. "It's hard to find the people we need . . . and you don't have that same culture of little entrepreneurial Internet companies" here.

Pincus said the company has tried -- to no avail -- for the last few months to hire a qualified product manager to help launch its new Internet-related software, which increases the speed that people can view sites on the World Wide Web by saving the information to a computer's hard disk.

The company, now worth significantly less than $38 million due to the falling share price of its buyer, Individual Inc., also hasn't been able to entice anyone from California to take the job, Pincus said. "I'm a fish out of water here," he said.

The Washington area, where the Defense Department decades ago developed a national computer network that grew into today's largely commercial Internet, has long been home to certain types of Internet-oriented businesses.

Two of the nation's largest providers of commercial Internet service -- UUNet Technologies Inc. and PSINet Inc. -- are located here, as is America Online Inc., a commercial on-line service that provides Internet access to consumers. There is also a cluster of firms that focus on computer network security and management tools.

But when it comes to cutting-edge multimedia and Internet search services such as Freeloader, industry experts said, the Washington area lags far behind California and Boston's Route 128 corridor. And America Online, they point out, has been slower than its competitors to embrace the Internet.

"D.C. has a lot of talent, but it's in things like building big defense systems or large networking projects," said Pincus, who admitted that moving to San Francisco will not be cheap. He will have to pay more for office rent and salaries, not to mention one-time moving expenses.

Several local high-tech executives and industry watchers said they were disappointed by Freeloader's decision, which comes at a time when business and government officials in the region are actively trying to court computer-related businesses.

"What exists here is very real," said Mario Morino, who heads up the Potomac Knowledgeway, a project to increase Internet connectivity among local business, schools and community organizations. "Part of the issue is helping people to [find the] development resources here."

Morino and others acknowledge Freeloader's difficulties in recruiting top-flight talent, saying that it is a real and growing problem for area companies.

"What they're looking for are the hot graduates out of Stanford or Berkeley that we just haven't grown here," said an influential Northern Virginia high-tech executive who did not want to be identified.

"We're working hard to get the George Masons [universities] of this world and others to the point where they are producing people like that, but I'm not sure a young company looking for that talent has the patience to wait for those home-grown people," the executive said.

Ray Pelletier, director of the Northern Virginia Technology Council, an industry group, was even more blunt. "This is a clear signal to the education infrastructure that they have to be responsive to the marketplace or we're going to lose business and jobs and wealth to other regions," he said.

Despite the decision to move, Pincus said that starting Freeloader in the Washington area proved to be a boon.

"In the beginning it was good," he said. "We didn't get our heads cluttered with all the stuff that's going on in the [Silicon] Valley. But now that we're a member of the industry, we need to be where the action is. We can't be sitting in a vacuum anymore."

© Copyright 1996 The Washington Post Company

Back to the top