It seems quaint now.
Four or five years ago, MindSpring Enterprises founder Charles Brewer was a trailblazer in Atlanta. He was the first local tech honcho to embrace what became standard culture at dot-coms and software houses. Brewer brought his three-legged dog to work, and put plastic patio furniture and funky art in his cramped office. Rank and file MindSpringers parked mountain bikes in the hallways outside.
Hard on MindSpring’s heels came a couple other companies with charismatic leaders who built a singular corporate ethos. At WebMD, 20-something maverick Jeff Arnold ignored Atlanta’s buttoned-down tech finance cliques during an audacious deal-making spree that produced a company worth nearly $10 billion at one point (though not now).
Meanwhile, former TV station magnate Bert Ellis contrived an Internet Shangri-la of lavish offices and perks meant to engender such good will that no one would ever want to leave his Net services firm, iXL Enterprises. Unfortunately, most of them have left, and not by choice. IXL laid off more than 1,000 people as the company tumbled toward irrelevance.
Now iXL itself has left town, its headquarters now in New York after a merger closed in November with an equally desperate competitor, Scient Corp. WebMD met a similar fate months earlier. Marketplace realities also forced MindSpring to join a rival, Earthlink, in 2000. MindSpring’s name and beloved “core values and beliefs” are a memory. Brewer dumped all his stock and, along with every MindSpring board member except Mike McQuary, now Earthlink’s president, left the Earthlink board.
So, Atlanta’s three most distinctive technology companies of the ’90s, when tech became more than an afterthought in the ATL, are pretty much history. They’re either based elsewhere, barely recognizable from their origins, or both.
It’s happened before. HBOC roared through the early and mid 1990s, gobbling up other hospital software firms like bite-size Snickers and amassing a multibillion-dollar market capitalization. Then HBOC itself was acquired amid controversy about shady accounting. Its headquarters moved to San Francisco. Rewind to the 1980s and three of Atlanta’s signature tech companies of that decade similarly faded:
n Hayes Microcomputer Products, which like iXL, MindSpring and WebMD was closely identified with a founder’s powerful personality, filed bankruptcy twice before finally expiring in 1999.
n Publicly traded Digital Communications Associates, DCA, was acquired by a privately held rival, Wall Data, and its headquarters shipped to Washington state.
n And Management Science America, MSA, the seminal Atlanta software firm, was acquired by Dun & Bradstreet and subsequently sold again.
The upshot is that Atlanta still claims no multibillion-dollar tech giant like a Compaq, Dell or Intel. Is something wrong here?
Don House, a tech investor and founder of publicly traded Clarus Corp., wonders if Atlanta has in its midst a potential powerhouse, an acquirer instead of an acquiree. That’s an open question, but the ingredients of a healthy tech community — talent, risk-tolerant capital, professional services, quality of life — have to be abundant, House says, if Atlanta’s ever to produce a true tech giant.
Those ingredients have multiplied greatly since the 1980s, House says. But local angels’ response to the train wreck of the past year and a half will be critical: Will new angels, many of them burned in their first deals, keep gambling on early-stage tech companies?
House thinks they will. “That said,” he adds, “we still don’t have enough total venture capital here to support what I think is the real potential of the area.”
On another critical front, talent, Atlanta’s proven resilient, says John Yates, lead technology attorney with Morris, Manning & Martin and a key figure in the tech community for almost 20 years. Yates points to the aftermath of the departure of Hayes, DCA and MSA as a sign of tech Atlanta’s vitality.
“The community survived because, frankly, I think the key executives that were affiliated with those companies wanted to stay in Atlanta,” he says.
The most important of those executives has been former MSA chief John Imlay. Imlay has invested in numerous local startups, including ISS Group and Tradex (Tradex founder Daniel Aegerter, who brought his company to Atlanta from Tampa, and his $250 million investment fund also remain here after Tradex’s acquisition by Ariba).
At MSA, Imlay groomed dozens of local software executives such as ISS Chairman and CEO Tom Noonan and Clarus founder and angel investor House. Former DCA chief Garry Betty is CEO of Earthlink. He’d moved to California to join the company, but his Atlanta ties were important in the decision to base the combined Earthlink and MindSpring here. Hayes founder Dennis Hayes is still in town, though he’s little involved in the tech industry.
This time around, most leaders of the three spotlight companies also appear to be staying. MindSpring’s Brewer remains in Atlanta, tooling around in an electric car and planning environmentally friendly real estate developments. A couple of his top lieutenants, Mike McQuary and Alan Taetle, are also still here. McQuary is Earthlink’s president and sits on other tech company boards. Taetle is a partner at the venture capital firm Noro-Moseley Partners.
WebMD’s Arnold is still in town and running another deal-making venture, The Convex Group. So are a lot of his buds from WebMD’s early days, like Reggie Bradford, now the CEO of N2Broadband. The same goes for iXL. Ellis will stay in Atlanta, and former iXL President Bill Nussey is now CEO of a local startup, Silverpop.
In any case, there’s no question Atlanta’s tech community is vastly deeper than it was in the early and middle 1990s. Nevertheless, one thing hasn’t really changed. The biggest money in this town is in sugar water, package delivery, the phone company and hardware — two-by-fours and screwdrivers, not disk drives.
Consider the value of Atlanta’s biggest public companies: Coca-Cola’s market cap on Dec. 20 was $116 billion, Home Depot’s was $117 billion, BellSouth’s $73 billion and UPS’s $63 billion. The market value of the 12 biggest Atlanta tech companies combined was $14 billion.
Atlanta is Atlanta. Its technology community had a flirtation with glamour, but is perhaps returning to its true nature — steady and workmanlike, not prone to erect outlandishly huge signs along the Downtown Connector (as iXL did), wear sandals to work or pull off eye-popping IPOs. What’s more, it probably won’t soon produce a high-tech colossus capable of changing the city’s economic profile.
