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    Shannon Henry's The Download Live
    Discussion With Cellular Pioneer
    and Former Senate Candidate Mark Warner

    Thursday, August 19, 1999 at 1 p.m.

    Shannon Henry Welcome to The Download Live. I'm your host, Shannon Henry. My guest today will be Mark Warner, a managing director at Columbia Capital, an Alexandria investment fund that has pumped millions of dollars into technology start-ups.

    "For a long time Washington was controlled by an echelon of people on Capitol Hill, the old business establishment in real estate and banking and the diplomatic corps," says Warner, a former U.S. Senate candidate in Virginia.

    A new group of technology executives is influencing a wide range of existing institutions and creating entirely new ones, from charitable and educational foundations to political action committees.

    "You're starting to see a maturation of techno-entrepreneurs," Warner said. "They've moved beyond building companies and creating wealth."

    Warner was online at 1 p.m. Thursday to talk about how Washington became a two industry town.



    Transcript Follows


    Shannon Henry: Hi, welcome to Download Live. Submit your questions now!


    Shannon Henry: Hi Mark. Thanks for joining us today. According to a recent study there are more tech workers in the Washington area than federal government employees. How is that affecting Washington culture? Is this really becoming a two-company town?

    Mark Warner: Yes, it's definitely becoming a 2 company town. The other night I was at a charitable function talking with three younger people, all in their mid-20s, each of them had the same plan - they wanted to work another year at their respective companies, then get out on their own and start their own high-tech start-up. You wouldn't have had that conversation with people in their 40s let alone their 20s 10 years ago in this town. Consequentially this region is becoming much more entrepreneurial.


    Shannon Henry: How are techies and politicians working together? I'm seeing a lot of policy people join tech boards, but what else is happening?

    Mark Warner: As you know, I travel in both worlds, the tech world and the political world because of my previous campaign for senate. A lot of people I know in the political world want to get into the high-tech world. They see this rocket ship taking off and they want to transition out of politics and into the high-tech community. I probably hear from a half dozen people a week who want to make this transition. Unfortunately the people in the tech world don't necessarily view their political experience as all that valuable. While actually, the skills one gains working in campaigns and politics - such as thinking on your feet, rapid response to problems, focusing on a lot of issues - are often valuable skills for the kind of start-up companies we fund.

    In a more formal sense, a lot of the political world in town, i.e., members of Congress, lobbyists, know they need to be tech-savvy, but frankly the just don't get it. And up until recent efforts like CapNet from the Potomac Conference, there has not been much effort from the tech community to get involved with politics. I think that will have to change.


    Alexandria VA: How early of a start-up do you invest in? IS a good -dare I say Internet-idea, a business plan, financial projections, and a partial team acceptable?

    Mark Warner: We used to invest very early. Now that we have a $450 million fund, unfortunately, we are a little later-stage. But groups like the Capital Investors, The Dinner Club, NextGen Fund, Draper Atlantic, and others are starting to fill the early-stage space. Also, The Netprenuer Program through the Morino Institute has been invaluable in pointing seed-stage companies in the right direction.


    Washington, DC: Has Columbia Capital invested in any women-owned or led companies?

    If so, how many deals have you done?

    How many business plans do you receive from women entrepreneurs?

    What do you think the pool is of qualified women entrepreneurs starting high-growth businesses here in the Mid-Atlantic region?

    Mark Warner: I have personally invested in Womens Growth Capital Fund, which is a venture fund aimed at women-owned companies. I also recently personally invested in WomenConnect.com, which I think has great possibilities. I think there is a growing community of women entrepreneurs in the community lead by people like Kathy Clark, Susan DeFife, Lou Scanlon, and others who are really helping women entrepreneurs in the region.

    I think the region could also support a venture capital fund targeted towards minority owned businesses, since many minority business owners face similar obstacles as women-owned businesses.

    We won't see another economic empowerment opportunity like the explosion of the internet, telecom and IT, and it would be great if we could make sure everybody gets an opportunity to participate.


    Washington, DC: Up until quite recently, technology companies and government largely ignored each other. Now, as the government contemplates regulating or taxing the internet, the tech companies have taken notice, creating the Lobbying firms-PAC's TechNet and NetCoalition. Do you think that we'll see the creation of more lobbying organizations by tech companies and an increase in donations to candidates as the government continues to eye the net as a source of tax revenue?

    Mark Warner: Yes, I think the emergence of the high-tech community which is generally neither republican or democrat, but instead views politics more as a conflict between new economy and old economy issues, is up for grabs. Unfortunately, most of our elected officials are still caught up in old-style left vs. right, republican vs. democrat ideology, which, frankly, most people in the high tech community think is out of date.


    Shannon Henry: I've heard many people say that the government integrator world and the Internet world here in Washington are so far apart. Do you see them as two separate tech centers?

    Mark Warner: They are separate worlds, but I think are trying to get to know each other. The systems integrators really dominated the region's local economy in the early to mid 90s after the collapse of the real estate industry. The Telecom-Internet crowd has really only come to the forefront in the last 3 or 4 years. The 2 worlds are oftentimes lumped together, but as you pointed out, are really separate. The systems integrators are usually large employers that work on a contract basis, whereas the telecom-IT players has been where most of the recent wealth in the community has been created. Part of the challenge of the region is to urge more of the folks in the systems integration business to become more entrepreneurial. I think that's starting to happen.


    Fairfax Va: What is the focus of the bulk of the technical startups companies that are appearing in the DC metropolitan area? Support,Maintenance, Development?

    Mark Warner: A few years back, a lot of the startups were more in the support area, as people moved out of systems integrators. Mocompanyre recently, we've seen successes in the development stage companies with new hardware companies like Torrent (a next generation routing company which we funded). I think a great new opportunity would be internet content. We have the networking people in the region, we have the raw content from the government, the Smithsonian, NIH, all of the trade associations. Will we have the creative people that can combine the technical expertise with the raw data to create interesting content on the web? Can we become the "Hollywood backlot" of the internet? I think its perhaps the region's greatest opportunity and challenge over the next 10 years.


    Shannon Henry: How is the wealth being created by technology entrepreneurs in the region affecting the Washington economy as a whole? Are we seeing more philanthropy? Higher housing costs? What changes are to come?

    Mark Warner: Some people have complained about the lack of techno-entrepreneurs in the region giving back in terms of charitable and community activities. I think that is rapidly changing. Remember many of our region's wealthiest techno-entrepreneurs were barely able to pay off their college loans 4 or 5 years ago. I think people are really stepping up. Mario Morino, Russ Ramsey, Jim Kimsey, Steve Case, all have started foundations that I think will become active donors in philanthropy. As you know, I have been involved in a series of projects such as working with at-risk K-12 schools, linking Virginia's historically black colleges with high-tech companies, working with colleges to create a technology certification exam for liberal arts students.

    I think if we can tap the entrepreneurial energy and wealth of our region's techno-entrepreneurs, we can make dramatic changes in our region. Changes that perhaps government couldn't accomplish.


    Shannon Henry: Any plans to run for office again? When and for what?

    Mark Warner: That's a good question. I am actively considering a run for Governor of Virginia in 2001. My campaign would be based on making sure people don't get left behind in the information age. But I must admit, sometimes looking at politics today makes me think that I could almost accomplish the same goals from the private sector.


    Gaithersburg, MD: Could you make some suggestions for techies wanting to get involved in government legislation?

    Mark Warner: I would suggest contacting the Internet Policy Institute. You can find them at www.internetpolicyinst.org. CapNet, which is part of the Greater Washington Board of Trade's Political outreach program. The Progressive Policy Institute's New Economy TaskForce (www.dlcppi.org). To name a few.


    vienna, va: Mark, do you see the internet craze in N VA spilling over to attract firms in other technologies. What besides say, software and telecom. Jeff

    Mark Warner: This region is also home to the satellite industry - IntelSat, ComSat, Orbital Sciences, Iridium, American Mobile Satellite Corp. and the new XM Radio. I think this sector is often overlooked by the press, and has huge possibilities.

    As I mentioned earlier, I also think if we can attract the creative, artistic people to the region who can take our raw data and turn it into creative content, that could be a huge industry as well.


    New York, NY: As a former Virginian, I'm curious -- where is the "Silicon Valley" in Virginia? Is it in DC or in the Old Dominion itself?

    Mark Warner: First of all, we're not "Silicon" anything, even though the press keeps trying to stick that moniker on us. Our high-tech community is made up of several distinct segments. The internet, telecom (especially the networking side), systems integrators, the wireless industry, satellite industry, and, broadly speaking, IT. The heart of this region starts at Tyson Corner and runs out the Dulles corridor, although there are growing high-tech communities in the District, Alexandria and Maryland, with Maryland being particularly strong in the bio-tech industry out the I-270 corridor.


    Shannon Henry: I love hearing people say this area is not "Silicon" anything! How true.


    Shannon Henry: I don't know if you saw it but Business Week just ran a story on the region calling the area "Silicon Swamp." How do you stand on the name issue? Does the area need one? Any favorites?

    Mark Warner: Yes, I saw it. I think we are still struggling for a name that sticks. Frankly, I've gotten tired of trying to think of what that name should be! I do not think it should be "Silicon" anything, because I think we are a different kind of center, and we have the chance with our internet focus to become much more important than the Silicon Valley.


    Shannon Henry: What do you think are a few of the milestones for this area as a tech center in the past few years? How is success being measured? And then tell us a few of the real failures of the region, things that need to be changed, or opportunities overlooked.

    Mark Warner: I think our successes are the emergence of companies like AOL to be community leaders. I think we will see MCI-Worldcom also take more of a leadership role. I think another success has been the growth of venture and early-stage capital in the region. A week doesn't go by that I don't hear of a new fund starting. I think our success can be measured by the amount of attention we have received from around the country and around the world that we are now a 2-company town. Perhaps our biggest challenge is to make sure that these companies, their workers and management feel a long-term commitment to our region. We all know too many people in this area who spend their lives here but when asked when they are from, still say "Missouri" or "Texas." My hope is that as we establish our long-term identity, we will all be proud to say, Yeah, I'm from the coolest place around - The Capitol Region, or Northern Virginia, or Maryland.


    Fairfax Va: Why are we not "silicon" anything? Because we don't mass manufacture chips?

    Mark Warner: Yes, we're not manufacturers. This is more an innovation center. Our biggest product, hopefully, will be intellectual capital. And I think when we say "Silicon" anything, it makes us appear to be Valley wanna-bes. I think we're something different.


    Rockville, MD: What is the most important change that needs to occur in Washington to meet the needs of technical businesses? Do you have any presidential candidate preferences, and why?

    Mark Warner: Washington has to realize that not all answers reside inside the Beltway. Government has to become flatter, more user-friendly, more consumer-focused. Go through the same transition that business is going through. Let's face it - successful organizations in the new economy are not distributed hierarchically. Government and Universities are probably some of the most hierarchical institutions we have left. So, I believe that Washington (as in government) will be one of the last to truly change.


    Shannon Henry: We're done for today. Thanks Mark for the great answers! We'll be watching to see what you decide about running for Governor. See you all in two weeks.


    © Copyright 1999 The Washington Post Company

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