As the market's relentless slide forces
IT managers back to basics, it's time they reassess the simplest,
yet most crucial business reality: dirt matters. Locating an
IT venture is proving to be a critical, but overlooked problem
of the new economy. If the promise of information technology
is ever going to be fully realized, IT enterprises must consider
setting up shop in a far wider range of venues than ever before
Throughout the last decade, information age companies struggled
to find places where their disparate workforce could live under
one roof. Like siblings with profoundly different tastes and
ambitions, high-tech talent increasingly clustered in one of
three distinct, if not exclusive, communities.
IT engineers, systems specialists and nuts-and-bolts developers
overwhelmingly preferred what Joel Kotkin, author of The
New Geography, a current best-selling account of American
IT development, calls the "Nerdistans." These are the new homogenized
suburban areas that sprouted up to serve white-collar professionals
and little else. Marked by sparkling mega-malls, multiplex theaters,
Starbucks shops and the ubiquitous SUV, the Nerdistans' monotonic,
no-surprises society appealed deeply to new economy technicians.
They flourished in such formerly exurban areas as Southern California's
Route 101, bucolic Northern Virginia and aggressive, upwardly
mobile areas such as Raleigh-Durham, North Carolina.
At the same time, creative content types were flocking to gentrified
urban areas such as San Francisco, Seattle, Santa Monica and
Manhattan -- places where largely childless, single workers
with substantial disposable incomes could experience a bit of
after-hours edginess. Most importantly, these "Boutique Cities,"
as Kotkin christens them, let IT entrepreneurs intensively mingle
with their peers in the print and broadcast media.
Then there are the Valhallas -- the precious, high-end mountain
and coastal hideaways that attracted information age owners
who wanted to continue being IT players but couldn't wait to
live the successful retiree's good life. Places such as Naples,
Florida, notes Kotkin, or Jackson Hole, Wyoming, accounted for
a massively disproportionate number of dot-com domain registrations.
Accommodating the diverse locational preferences of IT personnel
can spark a management crisis. Before Broadcast.com was sold
to Yahoo, owner Mark Cuban wanted to relocate from Deep Ellum,
the colorful inner-Dallas community where his creative staff
was happiest, to North Dallas, a pristine, sterile, white-collar,
coffee-shop Nerdistan. Conflict over the proposed relocation
threatened the company's ability to retain its key personnel.
(It remained in Deep Ellum.) A similar struggle marked Southern
California-based Broadcom.com's decision to move from one of
the region's most attractive Nerdistans, coastal Manhattan Beach,
to more creatively inclined Westwood.
What this means is that effective IT managers have to be as
sensitive to real estate as they are to virtual reality. Where
a company chooses to open its doors determines its character
as a content or technically driven enterprise and its ability
to recruit top-line staff. Nerdistan companies will have trouble
attracting well-connected, savvy, media-oriented workers. Companies
located in Boutique Cities will struggle for the very best technicians.
Valhalla companies located in whatever ski or surf playgrounds
their owners may desire often have the thinnest skill base and
Although these important location considerations were overshadowed
by go-go Internet hype, many IT managers were at least dimly
aware of them. Such concerns may prove even more critical in
the future. A big reason for the market's sudden devaluation
of IT-oriented companies is that they never contributed to the
economy beyond the limited suburban, cosmopolitan and upscale
hideaways in which IT elites ensconced themselves. Self-absorbed
media hype went only so far. As soon as the economy downshifted,
information age companies without demonstrable links to other
business enterprises were the first to decline.
In the coming decade, the savvy IT manager would do well to
open shop somewhere other than the information-age ghettoes
of the past. For one thing, places where "old" economy businesses
locate are usually less expensive. Even more important, only
by understanding other sectors as keenly as they comprehend
their own business can information age enterprises form the
enduring competitive links that generate sustainable earnings
Pampered technical and content staffers may resist working
anywhere other than near their favorite coffee shops or blues
clubs. Business realities will almost certainly collide with
More than megabytes, "location, location, location" may be
IT's management mantra for the 21st century.