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artwork by Andre Lucero

Northern Virginia will never duplicate the success of Silicon Valley, which was largely built on making faster silicon chips and more powerful computers. But it is creating its own info-tech niche. "In terms of Internet and communications," Selfridge says, "I don't see why it couldn't surpass Silicon Valley." By most measures, Northern Virginia and the rest of metropolitan Washington still lag their California peers. But some Northern Virginians are beginning to measure themselves against Silicon Valley. They're daring to think that someday they will supplant the valley as the world's most influential technology center.

When Virginians dream of supplanting Silicon Valley, they're not thinking about microchip design, high-tech hardware or computer software. They're hoping instead that Northern Virginia's info-tech specialties -- telecommunications, on-line content and electronic commerce -- will become more important than hardware in the latter days of the information age.

In the 1980s and 1990s, the information age has been defined by exponential increases in processing power and dramatic decreases in computer prices. As those advancements reach the point of diminishing returns, according to some futurists, the information age will focus instead on telecommunications and content.

The Washington metro area, with Northern Virginia at its core, is positioned to benefit from any such tectonic shift. James LaFond of PricewaterhouseCoopers calls Washington "the epicenter of the information communications revolution." A recent Pricewaterhouse-Coopers study, conducted in cooperation with a nonprofit promotional group called the Potomac KnowledgeWay, identified a new technology cluster -- an "InfoComm" industry -- that has emerged in the past decade. In a trend largely unnoticed by the outside world, Northern Virginia's systems integrators have been joined by a host of companies at the forefront of Internet development, electronic commerce, satellite communications and wireless telephony.

Like a nuclear chain reaction, Northern Virginia's entrepreneurial energy is feeding on itself. When CEOs sell their businesses, they often start and/or underwrite new ones. World-class managerial and technical talent is flocking to the region. Capital is flowing, and other technology companies are showing up just to be close to the action.

The Washington region is breaking through as a technology center, declares Fred Bollerer, CEO of Herndon's Potomac KnowledgeWay. "When you have 345,000 people that are employed in a particular industry -- the "InfoComm" industry -- that's pretty significant," he says. "That's critical mass."

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Silicon Valley's technology business started in 1939 in a Palo Alto garage when William Hewlett and David Packard built an oscilloscope to help Walt Disney modulate the music in the movie Fantasia.

From 1945 to 1958, Fred Terman built Stanford University's school of engineering into a research powerhouse by linking up with local industry. And then William Shockley invented the transistor.

In 1972, the year that Intel invented the microprocessor chip, electronics writer Don Hoeffler coined the term "Silicon Valley."

Since then this sliver of prosperity, shoe-horned into the Santa Clara Valley between San Francisco and San Jose, has developed a new business culture. Today Silicon Valley is characterized by rapid innovation, organizational flexibility and entrepreneurial energy.

Silicon Valley has a unique attitude, says technology forecaster Paul Saffo at the Silicon Valley's Institute for the Future. "There is a different feel in the terrain. Here is this extraordinary thing, teetering right on the edge of the continent. Everything works against permanence here." There's no point in trying to imitate Silicon Valley, Saffo says, because it's a moving target. "The place reinvents itself. ... In two or three years, even Silicon Valley won't be like Silicon Valley."

Although California pioneered the high-powered business culture of the high-tech industry, it has no monopoly on it. Many of its innovations are spreading to other technology centers. In the early development of the Northern Virginia technology community, businesses steeped in the bureaucratic culture of the federal government were slow to catch on, but they are beginning to adapt to private-sector risks and rewards.

Advanced technology in the Washington region can be traced to the defense build-up early in the Reagan administration and to the policy of outsourcing federal work to the private sector, says George Mason University professor Roger Stough. Consultants and contractors -- the so-called "Beltway Bandits" -- flocked to cities around the Pentagon.

But as the Cold War ended, cutbacks in defense spending forced federal contractors to seek new business in the private sector. Meanwhile, deregulation of the telecommunications industry prompted telecom titans to establish a presence in the Washington area to be close to Congress and the regulators at the Federal Communications Commission.

In a parallel development, the Internet exploded. While Silicon Valley companies garnered most of the press, Northern Virginia was spitting out hot new start-ups like PSINet, Cybercash and Network Solutions.

"Up until three or four years ago, the federal government totally fueled the Northern Virginia technology base," says Stephen E. Vandivier, president of Avanco International Inc., a McLean-based systems integrator. But in the past few years, AOL, UUNet and others are "breaking the mold."

Companies are going public and issuing stock options. Employees are getting rich, then going into business for themselves. Corporate metabolisms are running faster, and people talk about doing business on "Internet time."

Although the national press still stereotypes Washington, D.C., as a company town run by the federal government, many technology companies have discovered the region. Oracle consolidated and expanded a major East Coast facility in Reston last year, while Dutch enterprise software giant Baan set up its U.S. headquarters in Loudoun County.

In another breakthrough for the region, America Online recently announced plans to acquire Netscape in a stock-swap and to sign a three-year development and marketing deal with Sun Microsystems. Billion-dollar deals barely get noticed in Silicon Valley, but these transactions signal something new for Northern Virginia: For the first time, a Virginia company is shaping the national technology landscape. To many Virginians, the deal signals a shift in the balance of power and influence.

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Against all techno tape measures, Silicon Valley is clearly the No. 1 info-tech cluster. But the metropolitan Washington area is arguably No. 2 or No. 3.

The Silicon Valley is unsurpassed in its ability to raise capital. The cash flows and debt capacities of the mature high-tech corporations headquartered there dwarf their counterparts in Northern Virginia. Even its venture capital flow -- an indicator of emerging info-tech activity -- is tops in the country. In just the third quarter of 1998, $1.2 billion in venture capital financed 206 deals in the valley, according to Pricewaterhouse-Coopers.

But Northern Virginia, which only two years ago was a financial backwater, is coming on strong. In the first three quarters of 1998, there were 79 venture capital deals raising $412 million in the Washington-Maryland-Virginia info-com sector. That amount was twice the volume for all of 1997, and much of that money ended up in Northern Virginia.

Data from the National Venture Capital Association reveals that from 1993 to 1998, venture capital investment increased 44 percent annually in Northern Virginia, compared with only 30 percent in Silicon Valley.

Venture capital is growing as local angel investors shepherd new companies through the start-up stage. "We have a lot of wealthy entrepreneurs now who are creating angel networks [that] invest in other companies," LaFond says. "Success builds on success. That's what built Silicon Valley if you go back over a 20-year history."

In another important indicator of innovation -- research and development jobs -- Silicon Valley is hard to match. According to the Silicon Valley Network, a nonprofit regional organization, the percentage of the valley's work force in R&D-related occupations has held steady at around 15 percent -- about triple the national average. Washington logs in at 12.2 percent, ahead of Austin, Texas, and Boston, Mass. But there's a catch to this statistic. Much of the R&D in the Washington region focuses on biotech, not info-tech, and it takes place in Maryland, home to the Johns Hopkins University.

Northern Virginia has no research university that can touch Stanford, which has played a role in the creation of companies like Yahoo, Cisco Systems and Sun Microsystems. But Blacksburg-based Virginia Tech recently established a research center in Alexandria that specializes in information technology. "We have a dozen full-time professors and plan to have about 25" at the site, says Larry Hincker, associate vice president for university relations. The business community wants graduates, he says, but it "also wants access to our faculty." The research center's biggest clients are the Naval Research Laboratory and the Department of Energy, but Hincker says Virginia Tech will increasingly cater to the info-tech community in Northern Virginia.

Stough suggests that the absence of a leading research university won't necessarily hurt Northern Virginia. "Silicon Valley got built ... on product innovations, and product innovations need technical engineering schools and physics and chemistry and people with specialization in those areas that are breaking new frontiers and spinning concepts off that can be capitalized. But the current economic climate doesn't demand product innovation, it demands process innovation. ... You don't need engineering schools to lay out a lot of that."

So far Washington's info-tech sector seems to be proving Stough's point. Of the 500 fastest-growing technology companies in the United States, 58 were based in the Washington area, compared with 131 in Silicon Valley, according to Deloitte & Touche's 1998 Fast 500 list. Two Virginia companies -- Business Impact Systems in Herndon and Global TeleSystems Group in McLean -- were ranked number 13 and 15, respectively, in that field of 500.

Overall, Northern Virginia and Washington are about where the valley was 15 years ago, says April Young, a senior vice president at Imperial Bank in Reston. But, she says, "It's on a rocket path. The growth in Virginia generally has been exponential."

Young praises Silicon Valley's success, but she adds that "it's silly to say there is only one path to economic growth."

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Silicon Valley has one advantage that Northern Virginia can never replicate: California's climate.

But the cost of enjoying that climate is high. According to the California Association of Realtors, the median house price in Santa Clara County in December 1998 was $310,000, up 11.1 percent over the previous year. By comparison, the median house price in Northern Virginia -- according to the Northern Virginia Association of Realtors -- was $195,000, up 5.4 percent. And the problem in California is getting worse. Hemmed in by coastline and mountains, the Silicon Valley doesn't have much room to expand. Last year, only one new house was built there for every five jobs created.

"The cost of living in Silicon Valley is pornographic," says William T. Archey, president and CEO of American Electronics Association, a Washington-based national trade group. "But it seems not to deter people from coming to work there. ... They want to be part of the ferment in the high-tech community."

Still, there's a cost. Valley companies must offer greater compensation to key employees, and lower-level workers must endure long commutes along increasingly congested roads. Thirty-one percent of Silicon Valley's 286 freeway miles flunk federal congestion standards. And that extra commuting time is draining, especially on top of the valley's brutal business culture. Some workers who move there for the sunshine put in such long hours -- 70 a week seems common -- that they seldom see daylight. "The valley has a model. It's the total-dedication model," says Eric Schmidt, the CEO of Novell in San Jose. "You can't go halfway."

Northern Virginia has similar problems, though not to the same degree. Its real estate is the priciest in Virginia, and its roads are reputedly the most congested outside of Los Angeles. But there's plenty of space in the Virginia Piedmont beyond the metropolitan edge, and there's abundant potential for redevelopment. Virginia's taxes are lower, and life is generally easier.

"Knowledge workers want to work where they have a good quality of life," says LaFond of PricewaterhouseCoopers. "We have a good quality of life here in terms of culture, education, all the big time sports. It is a great area."

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The business climate in Silicon Valley hasn't been as balmy as the weather. For much of the past 50 years, says Archey, "California was one of the least business-friendly states in the country."

In 1996, the state's trial lawyers tried to pass a referendum that would have made it easier for stockholders to file class-action suits against companies whose shares fall on hard times. The proposal failed, but it put a scare into Silicon Valley, where stock values fluctuate wildly.

By contrast, Virginia prides itself on its business-friendly environment. Like other Sun Belt states, Virginia has low-to-moderate taxes, a light regulatory burden and a conservative legal environment.

In addition, under Gov. Jim Gilmore, the state is paying special attention to issues on the info-tech industry agenda. Gilmore "seems extraordinarily hip to the high-tech community's needs and interests, and brings a philosophy of, "Don't intrude on something that is working well," Archey says. Gilmore has appointed the state's first secretary of technology, and his Commission on Information Technology has drafted a model state law for the Internet.

Gilmore "brings a reasonable, common-sense point of view ... that is probably going to give Virginia, certainly over the medium term, an advantage," Archey says.

Northern Virginia in particular has momentum, not to mention an abundance of hungry new companies convinced that the next technology wave will crest here.

While comparisons with Silicon Valley are helpful, the confluence of events that happened there can't be duplicated, says Doug Koelemay, vice president of public relations for the Northern Virginia Technology Council.

On the other hand, he notes, "What's happening here now in Virginia, particularly Northern Virginia, is unlikely to be replicated either. I think we can be as unique as Silicon Valley but still be very different."