From the Silicon Gulch to the Silicon Hills, Austin’s Tech Industry Continues to Thrive

By LAURA LOREK
Reporter with Silicon Hills News

IMG_7483“When the three of us moved here you could fire a shotgun down Congress Avenue and not hit anyone,” said Neal Spelce, founder of AustinLetter.com. “It was a small town and everyone knew everyone.”

Today, Austin is the nation’s 12th largest city and the fastest growing in the nation. More than 100 people move to Austin every day. And it is expected to overtake, San Antonio, the nation’s seventh largest city, 75 miles down the highway, some day, Spelce said.

So how does a small town known for its musicians, film making, university, technology industry and a cool factor that most people used to call “weird” maintain its character amidst such tremendous growth? Those are issues the city must grapple with to maintain its status quo as one of the most innovative places in the country, according to three panelists at South by Southwest Interactive. They participated in a panel discussion on “Reflections on Austin’s Tech Scene: Then and Now” on Saturday morning at the Austin Chamber of Commerce offices. They understand Austin now faces issues of affordability and traffic congestion.

The panel included Spelce, Pike Powers, CEO of the The Pike Powers Group and Howard Falkenberg, with Staats Falkenberg & Partners.

Powers recounted how the region worked collaboratively to bring the headquarters of Microelectronics and Computer Technology Corp., known as MCC to Austin in 1983, followed by SEMATECH in 1988. Powers got recruited in the effort by Henry Cisneros, Gen. Robert McDermott and a group in San Antonio. When San Antonio didn’t make MCC’s final list, San Antonio threw all of its efforts into helping Austin land MCC, Powers said. Admiral Bobby Inman, UT’s George Kozmetsky and a whole bunch of business, government and city and state leaders came together to head up Austin’s efforts to land MCC, Powers said.

At the time, Powers worked with Gov. Mark White and the governor put all of his efforts behind landing MCC also and that made a huge difference. At the time, Gov. White said he wanted to take bold steps for mankind and humanity and that he didn’t want to finish second or win by inch, Power said.

“We worked every day together for months,” Powers said.

At that time, in the 1980s the Japanese were whipping the U.S. in the semiconductor and chip making area, said Spelce. But when Austin won MCC people could see suddenly there was a future for developing technology and competing with the Japanese, he said.

The semiconductor technology industry sent their best minds to MCC and they worked collaboratively for the greater good of the industry, Spelce said.

Before MCC, Austin was not on anybody’s map. But afterward, the New York Times, the Boston Globe and all kinds of media outlets did stories on Austin and suddenly Austin was red hot. And a philanthropist donated 32 $1 million endowed professorships at the University of Texas at Austin, which further solidified the area’s engineering expertise. UT went from being 24th in engineering to being in the top 10 ovenight, Spelce said.

“MCC was a critical turning point,” Falkenberg said.

Austin did have a tech industry before MCC. It had a nice IBM plant that made typewriters. Texas Instruments made transistor radios and Motorola developed a plant here in 1973.

“MCC didn’t’ elevate Austin in the minds in the general public but it did in the minds of technology industry,” Falkenberg said.

Today, Falkenberg said Austin needs to continue its push as a technology powerhouse and not lay back and relax otherwise it might lose its momentum.

If Austin hadn’t gotten MCC, the city would never have gotten Sematech, we would never have gotten Applied Materials and later Samsung, Falkenberg said. Its investment was largest single investment by a foreign company in the U.S. Now Google, Apple and Facebook they all have big offices here.

When Austin landed MCC, the New York Times called Austin Silicon Gulch and Spelce knew that the New York Times was the Bible within the media industry so he came up with the phrase – Silicon Hills – as opposed to Silicon Valley.

“If we were still referred to as Silicon Gulch today we would have had a hard time getting anyone to refer to us favorably,” Spelce said.

The panelists agreed that Austin is undergoing another transformation with the Dell Medical School and it’s going to have a tremendous economic effect on the city.

They also pointed out the arrival of Conde Nast, a huge media company opening an Austin office with 50 people to drive their digital convergence as a huge win for the city.

Austin’s growth goes back to the ingredients listed in Richard Florida’s book, The Creative Class and the three things he describes as essential for growth: talent, technology and tolerance, according to Powers. Austin has that in spades, he said.

“We are a bit weird, we are a bit funky, we don’t care if you get angry about that. We like who we are,” Powers said.

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