2005: Digital Capital of the New Economy
Remarks by Mario Morino,
Chairman, Morino Institute,
at Potomac Conference XII
January 8-9, 1999
"2005: Digital Capital of the New Economy," were presented by Mario Morino at
Potomac Conference XII. Morino is the founder and Chairman of the Morino Institute http://www.morino.org and the Potomac KnowledgeWay http://knowledgeway.org and founder of the
Netpreneur Program http://netpreneur.org.
The conference, a
project of the Greater Washington Board of Trade, was the twelfth annual convening of a
representative group of the region's leadership from the public and private sectors to
consider the long-term future of the Greater Washington region. Its purpose being to build
a vision for the future and the means of attaining that vision, with the guiding principle
for this vision to build a world-class connected community.
Thank you and good morning. It is a
pleasure to be here and to share with you my optimism for the future of the Greater
Peter Schwartz, the cofounder and chair of Global Business Network and author of
Art of the Long View
, characterizes the time we are in as a remarkable period of
transformation, which he describes as a "long boom." In fact, he sees this as a
40-year boom, spanning from 1980 to 2020. This period of economic and societal
transformation, he says, is driven by a continuing stream of new technology, not the least
of which is the Internet. Another factor is the relentless process of globalization, which
opens up national economies and integrates markets to drive global growth. As we approach
the year 2000, half-way into this 40-year boom, we are surging forward as a New Economy
This New Economy, although global in nature, is clearly emanating from within the
United States. And, we, here in the Greater Washington region, possess the tools for
fostering its growthtelecommunications, Internet and E-commerce. We also have the
raw materials in abundancetalent, ideas and intellectual capital. Already the most
powerful government in the world, Washington has evolved into a global technological
Much of this will unfold on its own, as part of the natural economic evolution of this
region. But to realize our full potential, there is much that we can and must do as a
community of leaders, not only to further stimulate economic growth but to ensure a high
quality of life that is pivotal to our success over the long term.
We must intensify our efforts to create and sustain an environment conducive to the
entrepreneurial ways of the New Economy, and we must provide for a quality of living that
will attract and retain the best and brightest talent. Ultimately, our goal is to create a
better way of life for our children and their children and for all those who call this
Our efforts of the last few years have only started us on this journey. What we do in
the next five to six years is crucial to our destiny. If we truly come together as a
region, widen the circle of leaders who can propel and nurture change, and extend the
already significant efforts underway to build a critical mass around the New Economy, we
can, indeed, become its Digital Capital.
II. A Trip to the
Future of the Greater Washington Region
To envision what is possible, let's
jump forward to January 9, 2005, just six years from now. Imagine that we are visitors to
the region, about to take a tour of this 21
century community, which, by
2005, has become one of the fastest growing metropolitan areas in the world. Our flyover
starts as we depart from Dulles Airport. It is hard not to notice the expansiveness of
this facility, now the hub of a world-class network of regional airports.
As we clear the runway, we immediately notice the names of telecom, Internet and
E-commerce firms that mark the new development around Dulles Airport and the Center for
Innovative Technology, as well as the string of new corporate campuses along routes 28 and
7 in Loudoun County. In Tysons and Reston, E-commerce and Internet firms are so densely
concentrated that they have blurred what had previously been separate commerce centers.
The signs along the Dulles Toll Road read like a Who's Who of E-commerce. Rosslyn, Old
Town Alexandria, Ballston and Falls Church have all become centers of this InfoComm
activity, with the expansion moving westward along route 66 well into Prince William
County. From the air, it is abundantly clear that the efforts of recent years to make
Virginia the Internet State have paid off handsomely.
Heading over the Potomac River into Maryland, as we look down we see the brick and
glass buildings of more than 500 bioscience firms and research labs, bordered by the
National Institutes of Health in Bethesda and Johns Hopkins University in Baltimore.
Maryland's long-time commitment to biotechnology and life sciences has now yielded the
returns that folks had forecast for the 1990s. Panning back across I-270 and over to I-95,
we find a concentration of telecommunications suppliers, a cluster that has grown from the
anchors planted in the late 90s by Yurie Systems, now part of Lucent, and Ciena, just
outside of Baltimore. And a little further south, satellite, wireless communications and
spatial systems firms extend out of NASA Greenbelt. Closer to the District, we view the
long awaited revitalization of downtown Silver Spring, now a multimedia entertainment
strip with new media and content businesses that have grown up around the American Film
Institute and Discovery Communications.
As we come back down over the District line, we witness a heartening commercial and
cultural renaissance in the District of Columbia. We are told that for the first time in
decades more people are moving into DC than leaving it, and experts say its population
will grow significantly by 2020. Fueling this growth are clusters of new media firms and
design studios that have sprung up in Georgetown, Lafayette Square, LeDroit Park and Van
Ness. Along New York Avenue, we see a growing industrial corridor, and in NoMA, the area
north of Mass Avenue, there is the further development of a telecom and media complex that
has been growing since Qwest Communications located here in 1999. A bustling, high-tech
community stands on the site of the old Navy Yard, while across the river is a revitalized
As we tour our region, something else
is evident, though harder to see from the air. Throughout the region there is vibrancy as
economic success has helped energize the region's cultural institutions. The influx of
young professionals has created a demand for new theaters, cinemas, galleries,
restaurants, entertainment centers and museums. The universities are more naturally
integrated into their communities, adding to the quality of life in their surrounding
neighborhoods. The region is teeming with activity. People are out and about, yet
surprisingly our streets and thoroughfares appear less congested. The region is alive.
After landing at Reagan National Airport, we shuttle over to the new Convention Center,
built in 2003, where the fifth annual Internet Policy Summit is in session, with
more than 5,000 attendees from all around the world. As we listen in, people are talking
about two moments that forever changed the region.
First, the Human Genome Project, coordinated by the U.S. Department of Energy and the
National Institutes of Health, and advanced by entrepreneurial firms in the region,
completed the full mapping of the three billion human DNA building blocks in 2003, several
years ahead of the original schedule. This success has triggered what some call the
"biocentury." And, with the convergence of InfoComm and bioscience, companies
here are developing "bioinformatics" services for the global marketplace.
Second, America Online has become to E-commerce what GM was for cars, IBM for
mainframes and Microsoft was for PC software. Its growth has fueled an entire industry of
digital suppliers across the region and, in collaboration with the research labs here,
advanced breakthroughs that spawned a thriving new industry known as "usability
engineering." As a result, centers like the University of Maryland's Human Computer
Interface Lab and GMU's
Visual Information Technology Lab are now recognized as
preeminent in their fields.
What is clear is the depth and breadth of the regions strength in the New
Economy. That strength developed because leaders here were committed to creating a
connected communityone where ideas, information and trust flow freely, breaking down
traditional geographic and industry barriers. Here is what happened:
Access to Capital Increases
. The region now ranks with Silicon Valley
as the top place in the world of VC financing, as mezzanine, venture capital, angel
funding and M&A transactions rose dramatically. Several hundred venture firms are
located in the region, thanks to the efforts of the Mid-Atlantic Venture Association
(MAVA) to increase awareness of the region's potential. Even Kleiner Perkins Caufield
& Byers, the preeminent Silicon Valley VC firm, opened an office in the region in
2001. And, those entrepreneurs who made a significant amount of money in their own
ventures gave back by investing in young startups. Two angel groups, the Capital Investors
formed in 1998, and the Dinner Club founded in 1999, sparked this angel-investing boom.
We Reach Critical Mass. Internet professionals in the region, those
who build the tools, pipes and software to make it all work, mushroomed. Many work in the
government research labs and agencies and in universities and think tanks on the
development of newer, faster versions of the Internet. Internet and software giants like
MCI WorldCom, Cable & Wireless, Network Solutions, MicroStrategy and SkyCache employ
thousands. At the same time, increasing numbers of Internet-focused entrepreneurs feed off
the demand of the larger companies and provide components to make networks function
faster, better and easier.
The Federal Government Joins the New Economy. Business and political
leaders fully understood the unique benefits of the federal governments presence
here. As the largest consumer of InfoComm, the government has swelled the ranks of
technology vendors that set up operations to serve the federal market. As the world's
largest producer of information, it has spurred the growth of a thousand businesses that
mine and package federal informationall of it distributed over the Net. And as the
country's venture capital source for basic research, it has channeled huge amounts of
funds for research into our universities and labs. This research has resulted in important
breakthroughs, nascent commercial applications and has stimulated yet another wave of
entrepreneurs. Finally, as the world's largest integrator of technology, the federal
government serves as a spawning ground to develop talent that moves into private
enterprise or creates new entrepreneurial ventures.
An Ecosystem Takes Form. The region has taken significant steps to
preserve its most treasured assettalentby developing a network that matches
the growing needs of businesses in the New Economy with the people and firms that can
fulfill them. This network has taken on the qualities of an ecosystem. Firms in dire need
of talented people have forged links with colleges and universities, regional
organizations and associations to create this flexible network. Operating over the Net, it
now allows those with the expertise and critical skills to connect with those who seek it
quickly and efficiently, anywhere, anytime, all the time. This network has been
instrumental in mitigating the region's talent shortage and has served as a powerful
incentive to attract and retain talent here.
A Knowledge Industry Emerges. The Greater Washington region is the
center of the knowledge industry, which encompasses everything from corporate training to
biological research to federal and financial data banks. This industry came into being as
entrepreneurs exploited and integrated unique regional assetshuge repositories of
information and cultural objects, content production firms, digital networks for
distribution, and associations and trade groups that provide affinity marketing. Phillips
Publishing, National Geographic, VerticalNet, the Library of Congress, the Smithsonian
Institution, HealthScribe, Engenia, Discovery Communications, Caliber and the
Nature Conservancy are all part of the knowledge industry.
Services Go Global. The region's professional services firms
and associations are benefiting from a global demand, as they use the Net for service
marketing and delivery. Companies, like the architectural firm Dreamscapes, deliver
high-end residential design work to locations around the world using digital networks from
here in the region so that the principals seldom have to travel. Similarly, firms here
that provide services in management, finance, transportation, defense and aerospace,
hospitality and environmental management now have a global reach.
The Region Creates an Internet Institute. An Internet policy and
research institute, established in 1999 by leaders from business, academia and technology
associations, has gained recognition as the forum for legal, economic and technical policy
matters of the Internet. Its very formation was a symbol of the cooperation for which this
region is now known. The institute, in conjunction with the regions universities,
has 25 endowed chairs, each with a $1 million or more in support, and has become an
invaluable resource for businesses and for federal and state public policy makers.
Government Goes Digital. Business and community leaders lobbied
heavily for appropriations, especially at the federal level, and then worked with federal,
district and state officials to digitize the delivery of government services. An
ever-increasing amount of government information is being put online. Much of this work is
contracted to systems integration firms in the region, generating significant revenue into
the regional economy, with the flow expected to continue until 2010. Over the Net,
citizens can now process permits, file their taxes, seek out specialized information, and
reach out more effectively to local, state and federal lawmakers, agencies and other
voters. Polls indicate that Americans, having directly benefited from these actions, are
less cynical about government than they were in the late 1990s.
Break-through Occurs in Education. The region's leaders ensured that
the educational system, at all levels, was fostering the development of critical thinking,
analysis, problem solving, communication, adaptability, team work and technology and
information literacybasic skills for the New Economy. And they concluded this work
was not best done by focusing on filling classrooms with PCs and Internet
connectionssomething that technology vendors advocatedbut by advancing more
basic solutions: improved professional development and support of teachers, better models
for parental engagement, alternative sources for education and more effective leadership
in education. They viewed technology as a powerful tool in a larger arsenal for
educational reform, rather than an end itself in educating our children.
Internet Is Viewed as a Regional Resource. The region accepted the
Internet as a vital part of the daily life of its citizens. Just as the railroads,
automobile, electricity, telephone and interstate highway systems radically changed the
way we live and work, so have telecommunications and the Internet. Planners integrated the
use of communications networks into a larger strategy that included improving roadways and
expanding the Metro rail system necessary to address the regions traffic problem.
Regional planners now consider the Internet an essential component of transportation,
healthcare, real estate development, environmental management, entertainment and public
safety. These developments have helped to market this region as a gateway to the future.
Last Mile Is Connected. More than 80% of the regions households
are linked into the Net, with more than half of them using high-speed access. The region's
leaders advocated for increased competition in local markets to push this low-cost
high-bandwidth connectivity. And, the regulators delivered, with policies that helped to
open the market to more companies to provide this crucial resource to tens of thousands of
home offices and small businesses.
So in the year 2005, the New Economy is flourishing across the region, with greater
economic balance among Northern Virginia, Maryland and the District. Telecom, the Internet
and E-commerce continue to be the driving force of our economys growth, with
bioscience poised to deliver the next wave in the following 10 years. A healthy trade in
exports in professional services and the knowledge industry continues to grow rapidly, while
international business in the region continues to expand.
Our leadershipboth the younger guard and the more established grouprose to
the challenges facing our region in a creative form of civic entrepreneurship. They
advocated improvements, whether in the new foundations they formed for philanthropic
purposes, in the creation of the new groups like Capital Investors or Regional
Professional Women, their engagement of political leaders and actions, or through
innovative partnerships with educators. They were also a
groupmore women, races and nationalities represented at the table than in the past.
They formed working groups, at times outside of formal channels, to resolve issues and
then disbanded as the situation dictated. In this way, the leaders themselves took on all
the qualities of the New Economy, acting with speed and efficiency, free of rigid
boundaries, and recognizing the importance of key people with the right skills to get the
The marvel is not only the booming growth that the New Economy has spawned, but also
the quality of leadership that has brought us to where we are in 2005.
PART III. Conclusion and Call
The vision I have outlined is,
admittedly, optimistic. But it should be. Today in 1999, we understand the opportunities
better than we did just a few years back. A rapid succession of events over the past 12 to
18 months, among them WorldCom's acquisition of MCI, AOL's buyout of Netscape and the
Washington Post's front page series portraying the region as the "Digital
Capital" of the New Economy, confirmed that this is a region of enviable potential.
Recognition is one thing. Fulfilling a vision, however, is quite another, and in that
regard there is much we can do, as the leaders in the earlier scenario I outlined
If we fail to tackle these problems, we risk losing our greatest resource:
peoplethe very asset that can make us the Digital Capital of the New Economy. And
these people are free to move to other burgeoning centers or rural areas that would only
be too happy to accommodate them.
So what do we do? I propose a five-point call to action.
1. Become Advocates for the New Economy.
We must define and communicate the importance of the New Economy to enable people to
understand why a digital infrastructure, digital products and a futuristic outlook are
critical. We must coalesce all of our organizations around a single image and message. We
can do this by organizing a "get digital" campaign.
2. Bring Elected Officials and Public Policy into the New Economy.
With a few notable exceptions, most of our elected officials have yet to be brought into
the digital age. We need to convince them to move beyond symbolic actions, to act
on substantive investments in strategic areas such as infrastructure, digital
government, basic research and professional development within our educational systems. We
must work with and bolster our legislators to ensure they understand and enact legislation
that supports the New Economy and the entrepreneurship that drives it, and hold
them accountable for these outcomes. Most of all, we must commit ourselves, as civic
leaders, to this action.
3. Make Regionalism a Core Principle of Every Leader, Business and Organization
in the Region.
The Greater Washington region will best succeed by recognizing
that the whole regionwhat was once proposed as the State of Potomacis far
greater than the sum of the parts of Northern Virginia, Maryland and the District.
Although some organizations have long advocated regionalism, others remain opposed to such
a vision. The New Economy is not about existing jurisdictions and boundaries. We must come
4. Advance the Potomac Network.
In his keynote, Steve Case urged us "to work together in an unprecedented regional
collaboration to create a greater community." As one who has invested time and
resources trying to overcome barriers to regional collaboration, I echo his call to
recruit "civic leaders who tear down the walls." We must communicate more openly
and frequently, team up on initiatives more often and generate a broader awareness of
existing efforts that require substantial commitment of resources or interest. We must do
more to bring together the various regional groups, reach across industry clusters and
widen the circle of leaders to promote civic leadership and public policy engagement. That
is the purpose of the Potomac Network.
5. Define a New Economy Charter.
We must define the bold actions needed to create the connected community of the 21
century that others will emulate. We must do all we can to fuel our key industry clusters
and solidify our position in a competitive and rapidly changing world. This alone,
however, will not be enough. Our charter must go further to ensure that all people have
the chance to contribute to and benefit from the New Economy. The charter must be driven
by civic leaders who are prepared to "tear down the walls," with a commitment to
inclusiveness. And, it demands that we be prepared to invest in and support its platform.
Four years ago, I delivered a speech to about 100 business leaders on what we now call
the New Economy. A few of you here today were there at that time. I spoke of
economic and social change, propelled by the Internet, and described how our region
possessed the resources and attributes to be a leading port of commerce in the 21
st century. Many were taken aback by my enthusiasm and conviction, but few were ready to
break the apathy that has long inhibited systemic change in this region.
Today, the setting is different. You have heard a chorus of voices speak of the New
Economy and its importance to the region. This time, the words came from luminaries like
Steve Case and Mary Meeker and a compelling group of business leaders. Five years ago, the
potential for gain or loss was not apparent enough to drive substantive action. Now it is.
We have a remarkable opportunityone that is so good, so rich, so exciting, that it
is difficult to fully comprehend. We are blessed with a future that other regions envy.
- We are home to the exploding InfoComm and bioscience sectors that are the backbone of
the New Economy.
- We possess a vibrant, growing entrepreneurial community.
- We have both the physical and virtual gateways to support the New Economythree
world-class airports and the Internet exchanges through which over 50 percent of all
Internet traffic flow.
- We possess the world's largest and richest repositories of information and cultural
objects and an enormous talent base to exploit these resources.
- We have the presence of the federal government, its agencies and labs and an
international community of global institutions, foreign missions and embassies.
- We have a multicultural population and spectacular cultural, historic and natural
resources, including world-class attractions, rivers, mountains and parks that enhance our
quality of life.
The Greater Washington region is unlike any other region in the world, different from
Silicon Valley, Austin, Singapore, Boston, Bangalore or Seattle. We are the capital of the
United States and, with our unique assets, we can and should be the Digital Capital of the
But, our vision will only be complete when we use our new-found wealth, talent and
technologies to solve the vexing social problems that have longed plagued our region. It
is then that we will have written our own proud page in the history books.
This is why we must become engaged in our community. Investing in the future of our
region is an investment in your own future as well as that of your business, your children
and their children. We must believe in ourselves and in this region. Let us be truly
leaders, leaders who can and will make this vision a reality by 2005.
Special thanks to the many people from a wide range of backgrounds whose insights
and suggestions helped shape and refine this vision for 2005.
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