Georgia Tech Scandal

I got a shock yesterday.

An interview with a "local" tech company turned out to be one with a company 3,000 miles away. Appcelerator CEO Jeff Hainey, a veteran Atlanta entrepreneur, told me straight-out he found himself getting more done in a single Mountain View afternoon than he could do in a month from Buckhead.

For me this was the last straw. I have spent nearly my entire journalism career covering Atlanta technology. The state has long claimed the most active tech-development operation in the nation, with an incubator called the ATDC, an active software trade group, and a host of VCs and angel investors, not to mention the "economic development engine" of Georgia Tech.

When I moved here Atlanta did indeed have a thriving high-tech sector. I launched the tech beat at the Atlanta Business Chronicle in 1982 and remember them well. We had hardware outfits like Hayes and Quadram, software outfits like MSA and Crosstalk, we had satellite companies like Scientific-Atlanta. All gone. PR legend Pam Alexander got her start in Atlanta, operating out of a house a few miles away from me.

There were some successes in the 1990s as well, outfits like Internet Security Systems and Mindspring (later Earthlink), which began life at Georgia Tech. For the most part momentum moved from the lab to the marketing desk, with companies like iXL and Macquarium. Doubleclick started here. I should have screamed louder when they moved less than six months later. Instead I joked that Atlanta was "where the engineer met the salesman at the Airport."

But in this decade, nothing. Silence. The best start-up of the open source era, JBOSS, was actually denied space at the incubator, Hainey told me. They sold out to RedHat in 2005 for $350 million, a great deal and a smart one. Then the operation moved to North Carolina.

What Hainey was telling me, in essence, is that you're a fool now to think that Atlanta is any place at all to launch a tech company. He tried it, he succeeded for a time, but he had to give it up, because he was too far from the action. And the action isn't here.

It has been years since I attended a major tech event in Atlanta. One by one all the major shows -- E3, Comdex, CTIA, SuperComm -- have moved on, closed, disappeared.

What happened?

In a word Atlanta tech became insular. As the amount of money flowing through Georgia Tech grew, its vision narrowed. You really can't get a space in the ATDC now unless you know someone, unless you're previously "plugged in," and real entrepreneurs don't plug in until after they get rolling.

There are important lessons here, not just for Atlanta but for any area trying to improve its place in the tech development world:

1. Don't spend big. Better to give many companies a little help than to give a few a lot.
2. Don't fall in love with yourself. In this decade Georgia efforts have become bureaucratic and political. Both are enemies of serious business development.
3. Every season is a new battle. You need to roll out four sets of new companies a year, all on the cutting edge. Most will fail. The vast majority will fail. But it's the law of numbers, and the failure funnel, that breeds success.
4. Recruit broadly. If you're to have a chance of getting a few good deals, you need to find possibilities throughout the region. And you need to recruit top researchers on a nationwide level.
5. Recruit young. Look at the ideas that came out of this year's Siemens competition for high school students. Anti-microbial coatings for medical equipment? One of these kids is worth more to your school than 10 NFL linebackers. Most breakthroughs come to those under 30.
6. The playing field changes constantly. Software start-ups are possible, but that's not where to put your effort in 2009. Look to win the War Against Oil, and the war against bacteria.
7. Turnover. You should be turning over your internal staff every year or two. Every hire should be looking for an exit strategy. That's the way to stay fresh.

Atlanta and Georgia have been wasting money on their tech development efforts for over a decade, and as a result the city is losing its allure to the Creative Class. That's how cities grow, by attracting the best and brightest. You stop doing that, you die. And it can happen fast.

If Democrats want a political issue on which to fight for Georgia in 2010, one that will attract the business and professional votes they need to win, this is where they should look. Georgia's tech is a scandal, a money-wasting sinkhole. Republicans may just say kill it. Change it instead.