Who would've thought a simple clause in some hefty paperwork could change the Washington economy so much?
Detail-watchers this week are buzzing about the fact that if the America Online Inc.-Time Warner Inc. merger goes through, AOL employees will get access to stock-option profits worth about $12.4 billion one year after the deal closes.
Assuming the merger takes a year to get done, that means that AOL's 12,100 workers will get to cash in--we're talking real money here--in two years.
Will new companies form? Will the area become more expensive to live in? It's not even clear yet whether the merger will go through, so who knows? But the prospect of a huge windfall has some people salivating.
"I ought to open my Ferrari dealership now," says Doug Humphrey, founder of Digex Inc. and chief executive of Cidera Inc. "Maybe we'll have a privatized outer Beltway." Ruminating further, he asks, "Will it be like Silicon Valley, where you can't buy houses?"
The clause in the AOL stock plan provides for employees to be fully vested in their stock options one year after a "change of ownership" that leaves AOL shareholders with less than 60 percent of the company. The deal calls for AOL to own 55 percent and Time Warner 45 percent of the new entity.
Once the initial wow reaction wore off, it was clear local techies were thinking domino effect.
"This kind of thing explodes money," says Mario Morino, local tech investor and philanthropist.
Roll-up king Jonathan Ledecky, who knows to look for such things, said when he heard about the deal he was immediately struck by the new wealth the vesting options would create. "You'll see an acceleration in mergers and an acceleration in new companies," he says. He also thinks AOLers, whether they stay or go, will be the region's new big-time investors. And Ledecky thinks we'll see an influx in the bankers and lawyers who manage rich people's money.
Besides thinking about Ferraris, Doug Humphrey has also been trying to come up with a new name for his Laurel company, SkyCache Inc., which uses satellites to broadcast Internet data. It's getting tougher and tougher to find names that aren't taken, so he's resorted to taking one from another language: Cidera, which, loosely, means "sky" in Latin.
"Try to find a decent name and try to find a domain name," complains Humphrey. He points to other tech companies that have gone his route: Akamai Technologies Inc., which uses a Hawaiian word, and Inktomi Corp., from a Native American language.
At first the company hired an agency to hunt for a name. But Humphrey was dissatisfied with its ideas. Finally, his wife, Lisa Losito, who runs the Phase 1 technology incubator in Laurel, came up with the name after flipping through an English-Latin dictionary (actually, "Sidera," with an "s," means sky, but that domain was taken).
Although Humphrey would not confirm it, industry watchers say Cidera, which has 90 employees, is likely to file for an initial public offering within months.
Also unveiling a new name this week is Mary Naylor, chief executive of Concierge Club Inc. of Washington.
For 12 years, Naylor has been running a concierge service, and for the past four years it's been online as ConciergeClub.com. Now she's shifting the business market of the site and renaming it VIPDesk.com. It's a concierge services site that will be targeted to businesses and staffed by real, live people. For example, Freddie Mac, one of her clients, has hired VIPDesk.com to create a special Web site for its employees to help find tickets, flowers, maid service and the like.
"They're turning over their to-do list to us," says Naylor.
Naylor also just landed $3 million of venture funding from a group led by Women's Growth Capital Fund of Washington, which invests only in companies owned or led by women.
Why change the name now? A typing issue. "You're going to laugh. No one can spell 'concierge,' " says Naylor.
She expects to hire about 350 "remote" part-time workers by year's end, she says, who will be the personal assistants behind the sites. She expects many of them to be students, retirees, at-home parents and disabled people.
Brian Loew, chief executive of Worldweb.net, just scored $18 million of venture funding led by ABN Amro Bank N.V.
The five-year-old Alexandria company has an XML-language-based technology that aims to help customers update their Web pages faster and easier.
He's also launched a new creative way to recruit workers. He lets every employee choose two of the following six perks:
* A cellular phone and monthly access.
* Broadband Internet access at home.
* A month's subscription to online grocery store Streamline.com.
* Regular car washes.
* A health club membership.
Loew also gives $2,500 to employees who recruit someone he hires. And once a quarter, one person chosen from names in a hat gets a two-year lease on a convertible.
"It sounds extreme, but if you look at how much you pay headhunters, it's worth it," says Loew. Worldweb.net had 32 employees a year ago, has 95 today and hopes to have 200 by the end of next year.
The burgeoning group of magazines and newspapers covering the Washington tech world got one more member yesterday. The Washington Post Co., which recently dissolved its publications Tech Gazette and TechCapital, unveiled Washington Techway, a twice-a-month magazine that will have a Web site at www.washtech.com. A pressing first question: With AOL Time Warner's new headquarters in New York, will all these locally focused publications still cover the cyber-giant as closely as they'd planned?
Send tips and tales of the digital capital's local people, deals and events to Shannon Henry at email@example.com.
TechThursday columnist Shannon Henry will host a live Web chat today at 1 p.m. with Brian Loew, chief executive of Worldweb.net of Alexandria, on creative ways to attract high-tech employees. To participate, go to www.washingtonpost.com.
CAPTION: Mary Naylor's Concierge Club Inc. is getting $3 million in venture funding. Its online site is changing its name to VIPDesk.com and will target businesses.
CAPTION: Cidera Inc.'s Doug Humphrey, with his wife, Lisa Losito of Phase 1, says America Online stock options could have a big impact on the area.