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Archive for Thursday, October 19, 2000

City is online for success

Forbes publisher says college towns key to New Economy

October 19, 2000

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The Kaw Valley could become the next generation of Silicon Valley, as emerging technology companies search for homes flush with intellectual capital.

Take it from someone who knows.

Rich Karlgaard, publisher of Forbes magazine and co-founder of a leading startup capital firm, said university towns would be among the big winners in an evolving New Economy where dot-com optimism is giving way to real-world expectations.

Karlgaard said already-booming areas Silicon Valley in California; northern Virginia; Austin, Tex.; and Route 128 in Boston were becoming too expensive for many companies. Menlo Park office space in Silicon Valley is renting for $240 a square foot, compared with $100 in mid-town Manhattan in New York.

Companies cutting salaries and staffs are looking for other ways to trim costs without harming productivity, he said, and Lawrence fits the bill. Top-shelf space in Lawrence goes for less than $20 per square foot.

"Where would you move?" Karlgaard said Wednesday, before delivering a speech at Kansas University. "You'd certainly move to a big university city. You'd want to be fairly close to a major airport. I think Lawrence's proximity to Kansas City is an advantage over other competitors."

Karlgaard, whose office space near San Francisco rents for $96 a square foot, delivered his "Winners and Losers in the New Economy" speech at Budig Hall as part of the Anderson Chandler Lecture Series.

His description for "loser" companies in the latest technological revolution: Microsoft, AT&T and "anybody who's dominant now." That's because an industry leader today is more likely to cling to proven methods and services, instead of taking chances on cutting-edge possibilities.

All this as the New Economy's three core technologies "processing, storage and bandwidth" double in productivity for the same cost every six to 18 months, he said.

And as U.S. venture capital has grown from a $2 billion industry in 1990 to a $100 billion market today, look for more players to pressure established companies into even more change, Karlgaard said.

"We have to get used to the phenomenon of smart young people tapping all this venture capital, harnessing the underlying technology and putting it to an innovative use," he said. "The end result is those who are managing an incumbent business be it a bank or a car dealership will be under attack all the time. Your opportunities will continue to be huge, but your stock in the world will be more tenuous."

Consider Lawrence among the young innovators going up against Silicon Valley, Karlgaard said.

In a knowledge-based economy, he said, such cities have the raw material to succeed. When paired with an emerging venture-capital presence nearby, the potential is unlimited.

"It's the university that's pumping out the intellectual capital, and it's Kansas City that may have the financial infrastructure," Karlgaard said. "It's just like the corridor from Washington, D.C., into northern Virginia (home to America Online and other high-tech giants). It's just exploded."

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