Monday, January 17, 2000

Gerald L. Gordon, though not a part of America Online, felt like a proud papa after learning that an information technology company from his own backyard was buying media giant Time Warner for $166 billion, the biggest merger in history.

As president of the Fairfax County Economic Development Authority for the past 16 years, he has watched AOL and its now superstar chairman Steve Case grow from the roots of Northern Virginia. He has watched as Fairfax County has exploded in that same time from a quiet suburb of a government town to one of the leading information technology centers in the world.

While AOL does not get all the credit for Fairfax’s growth, the Sterling-based company’s emergence as a common household name like Ajax or NBC is a point of pride for Mr. Gordon.

Fairfax County, with 90 million square feet of office space, now ties Chicago as the fourth largest business region in the United States, according to Mr. Gordon who works to promote growth in the county. The same fertile ground that AOL has come from has generated more than 2,000 other technology-oriented employers.

The Washington Times sat down with Mr. Gordon to mull the merger, which he said has now shined the world spotlight on Fairfax County. Mr. Gordon is not worried in the least that AOL-Time Warner will be headquartered in New York. He is convinced that AOL and Mr. Case will always consider Fairfax home.

Question: When did you hear about the AOL deal, and what was your reaction?

Answer: Actually, I was in the office early that morning and our communications director told me that he heard it on the news. My first reaction was that it was going to be a really interesting merger of corporate cultures. You have this young, technology-driven, relatively new entrant to the world of business from Virginia and a staid, established New York-based publications company. It will be a interesting blend of corporate cultures.

We have just seen a lot of this blending of culture from the Exxon and Mobil deal. It is interesting to watch how those work out sometimes.

Q: Now we are trying to understand what it all means. From your vantage point does this seem like a smart move for AOL?

A: It does. And it is an even smarter move for Time Warner. Because Time Warner has all of the content and AOL the ability to disseminate it. So it gives AOL and new market to enter and an established, well-known firm that they can draw the content from.

From Time Warner’s perspective, it could spell their very survival because the Internet already provides so much content. They could become redundant without a significant means of distributing it.

Q: What has the growth of AOL meant for Fairfax County?

A: Actually, it has meant things in two different ways. One is in reality. That is new jobs, extraordinary contributions to the tax base, contract opportunities … Also, they are good corporate citizens involved in charitable works. And small businesses also have an opportunity to provide AOL with goods and services under contract.

The second way it has had an impact is that it says to the world that an established firm like Time Warner is interested in a company that has grown up in Northern Virginia. All of a sudden the world’s technology community is looking at Northern Virginia and trying to figure out why they are here. And that accrues to our tremendous advantage.

Q: Why are they here?

A: Northern Virginia now has the second highest number of information technology related companies in the United States, second only to Silicon Valley. We have the highest number of technology workers with Silicon Valley second. In terms of venture capital invested in information technology we are third, trailing Silicon Valley and Boston.

So we have really come of age. But there is a great deal of people in the world and in this country who regard us as a government town. As you know, no good ideas ever come out of a government town. We work to disabuse people of that notion. AOL grew up here in large measure because of the proximity of the federal government. When the Internet was actually designed here, Dr. Vinton Serf and Dr. Bob Kahn did their work here, lived here. They still live here.

Q: How will local companies stand to benefit from the AOL merger?

A: I think the growth of the new company is going to be dependent on the technology end. Time Warner is going to greatly expand their content. But I think the real expansion of the business is through dissemination of that content. All that is here in Northern Virginia and not New York. While the headquarters will be in New York, I think there will be job expansion here, tax base increments, many new opportunities for small businesses to contract with the new entity.

Q: Are there others like Steve Case in Northern Virginia?

A: There are Steve Cases all over the place around here. There are a lot of small and mid-sized companies at the point of taking off that AOL was years ago. The interesting thing is that Fairfax is sort of like the new melting pot. New York used to be the melting pot. Immigrants would come from around the world. Now they are coming here, but the difference is that they are coming well-funded, well-educated.

They are immediately becoming a part of the community. The next Steve Case might be an Indian, or an Arabic, or an Hispanic person or an African-American. Or a female. That is another thing you didn’t see so much 20 years ago.

Q: Do you know of a lot of smaller companies that have moved to the area because of AOL?

A: It’s not just AOL. It’s really AOL, UUNet, PSINet, Network Solutions Inc. They are all here. Any company that you find that is related to IT will be here mostly because of the proximity to those companies.

Q: Do you think this AOL-Time Warner marriage is a good one? And do you see any others on the horizon?

A: I haven’t seen any other mergers in the works. But … publishers [like Time Warner] are either going to have to acquire that capability through a purchase like this, or they will have to develop it in-house. You see a lot of that. If you look at USA Today, the Wall Street Journal and the Economist. They all have home pages and are disseminating content. You have to be able to do that.

Q: As far as the technology developing around Northern Virginia, what do you see as the next wave?

A: The interesting thing about Fairfax is we don’t really make things that you would hold in your hand, like in Silicon Valley. We make ideas and we make connections and connectivity and solutions. So you have companies that grow up that are like that. Because that is the kind of labor force we have.

One of the next iterations of technology won’t necessarily be information technology. I think the next big wave will be in bioinfomatics. That is the intersection of biotechnology the lab environment with software so that computer applications can expedite processes by years.

As an example, when a company starts to develop a pharmaceutical product they have to test it in the labs, then on animals and then humans. Then they sell it to the federal government and as soon as they get approval they can market it. That can take 10 to 12 years and be extremely expensive. Computer applications can abbreviate that process to a matter of two or three years. The dollar impact is extraordinary. And that is just one small piece of this.

Q: We are learning that the headquarters will be in New York. What impact will that have on Fairfax?

A: Any time a local company merges with a company of that caliber and reputation, particularly New York-based, it is to our credit because it focuses attention on us. It would be nice to have the headquarters operation here because that gives us bragging rights. But the introduction of Time Warner in a relationship here in Fairfax County is significant.

Here in Tysons Corner we now have Gannett’s new international headquarters breaking ground this spring. That is on one end of the county. On the other end you have a connection through AOL to Time Warner. All of a sudden we become a real player in publication and dissemination of information throughout the world. That is a great story to tell.

Q: What about the drop in AOL’s stock price that we saw last week. Is that making locals edgy?

A: I don’t think so. Every time something like this happens the company that is bought the stock soars. The stock of the company doing the buying drops. What really surprised me was that the stock dropped I think just two points in the first day. It took them two days to get the stock drop people were expecting. To me that is a good sign. It will climb back. I don’t think anyone is terribly worried about it.

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